Exhibit 1 Extract from recent article in the business journal The Lucland
Economic Times
Lucland Economic Times
Double election whammy
Recent elections in Lucland have failed to elect a particular party. As a result, the
current government structure is a fragile coalition. This creates uncertainty for
businesses going forward, as it will be very difficult to understand exactly what their
economic policies will be, and they are most likely to be a compromise of each party
in the coalition.
Lucland has been experiencing a recent economic downturn, which is likely to be
exacerbated by this recent result. It remains to be seen exactly what will happen to
the economy in the foreseeable future, and businesses should prepare for
uncertainty in the future.
Our current election results are likely to impact further the recent election outcome in
Farland, which is the most significant economic power in the world. The electorate
voted in President Dump who has been elected on a manifesto to Make Farland
great again and the new government is likely to rip up all existing trade agreements.
The new President Dump wants to focus on prioritising the Farland economy and
making sure that there is parity in trade with other countries who are importing goods
into Farland and any countries with a trade deficit are likely to incur large import
tariffs.
As President Dump has just been elected, the true impact of this political change is
unclear, but as the largest economy in the world, such a major change in political
leadership is likely to cause economic uncertainty in all markets.
Therefore, businesses need to monitor the economic impact of these political
changes carefully and take mitigating actions to minimize any risks that arise as a
result.
Exhibit 2 Portfolio analysis of the different types of footwear sold
Type of shoe Market Activity Competition
Formal Expensive high-quality shoes The sector is dominated by
targeted at 30 -50-year-olds. Parrish which sells its shoes at
Consumers are attracted to a premium price to others in
Lucland made shoes which the market
have less environmental Current market share is
impact and are prepared to 1. Parrish 42%
pay a premium for this. 2. Dearn 30%
3. Others 28%
Market growth rate is 11%
per annum
Semi formal These shoes are mass The competition in the market
produced and many of these is made up of two main
shoes are produced overseas manufacturers which are
in lower wage economies. Dearn and Betterby
The sector offers both high Current market share is
quality and lower quality 1. Dearn 45%
shoes in this segment 2. Betterby 41%
3. Others 14%
Market growth is 4% per
annum
Casual These are mass produced The competition in the market
shoes. The sector offers both is high and those
high quality and lower quality manufacturers that can
shoes in this segment respond to fashion trends most
quickly tend to be most popular
Market growth is 1% per with Flamingo making inroads
annum in this sector in recent years
Current market share is
1. Flamingo 43%
2. Rigo 24%
3. Dearn 4%
4. Others 27%
Children These are mass produced The measuring and fitting
shoes. The sector offers both service proved in its retail
leather and synthetic shoes in outlets makes Dearn very
this segment popular in this sector
Market growth is 2% per
annum Current market share is
1. Dearn 55%
2. Tiptoe 30%
3. Others 15%
Exhibit 3: Customer database management system [CDMS] financial
investment appraisal
(All figures $ Note 0 1 2 3 4 5
millions)
Investment in 1 (38·0)
CDMS technology
Operating costs (2·0) (2·0) (2·0) (2·0) (2·0)
Additional 2 22·0 22·0 22·0 22·0 22·0
contribution
Interest payable on 3 (3·0) (3·0) (3·0) (3·0) (3·0)
loan
Net cash flow (38·0) 17·0 17·0 17·0 17·0 17·0
Corporation Tax at (5·1) (5·1) (5·1) (5·1) (5·1)
30%
Post tax net cash (38·0) 11·9 11·9 11·9 11·9 11·9
flow
Discount factor at 4 1·000 0·909 0·826 0·751 0·683 0·621
10%
Present value of (38·0) 10·8 9·8 8·9 8·1 7·4
net cash flows
Net Present Value 7
Notes
1. Total investment comprises:
Initial capital outlay.
Sales tax on the purchase price recoverable through the Lucland tax authorities.
Installation and system testing costs.
Staff training on the CDMS.
Five-year maintenance and support contract with the supplier.
2. It is estimated that the CDMS will directly generate additional contribution from
new and retained customers.
3. A new $38 million loan will be taken out to finance the project, with interest
payable at 8% per annum.
4. The Dearn Shoes weighted average cost of capital of 10% is used as the project
discount factor.
Exhibit 4 Extract from recent article in Lucland trade magazine for
footwear manufacturers
Lucland Shoe News
There is strong evidence that the Lucland shoe industry is coming under increasing
pressure to act in a more sustainable way. Increasingly, protests by environmental
groups on Lucland high streets are starting to target retailers of fast fashion, where
retailers mass produce products of relatively low quality so that they can be sold
cheaply and quickly until the next trend quickly comes along. In some cases,
customers have been shouted at for their patronage of retailers that pursue a fast
fashion strategy.
The concern is that these protests could also start to target shoe retailers, potentially
impacting sales.
It is also interesting to note that some consumers are starting to vote with their purses
and happily pay a premium for shoes produced in a more sustainable and ethical way.
One company in particular, Kind Shoes Company, has demonstrated the financial and
customer loyalty benefits that can be achieved by producing shoes in a sustainable
way, as its sales have increased exponentially in the past few years.
The Lucland industry needs to be more transparent about how it sources materials
and manufactures its products so that consumers are confident that they are not
needlessly contributing to landfill sites and unsustainable practices.
Exhibit 5 Extract from Dearn Shoes Environmental and Sustainability
dashboard
Sustainability Principles Priorities Measure
Climate responsibility Carbon emissions CO2
reduction
Waste elimination Waste volume
Recyclability % of recyclable materials Actual % compared to
used previous year
% of products recyclable Actual % compared to
previous year
Customer and supplier Customer satisfaction Customer complaints
relationships
Ethical supply chain Independent audit of
management relationships
Employee relationships Employee satisfaction Staff surveys
Training and development Training days
Task 1
Economic Times further confirms that the economic situation in Lucland has made
trading conditions tough for businesses. Therefore, a good understanding of those
external environmental factors negatively affecting the Dearn Shoes business model
is essential so that action can be taken to remedy the current situation and improve
the future prospects for the company and its investors.
The board of Dearn Shoes wants to fully understand how the general environment
impacts the company, as this will directly influence its ability to enable the business
to succeed and prosper. The board has asked you to brief the board on this issue for
their next board meeting.
Required:
Prepare a briefing paper to be presented at the next board meeting, which:
(a)
Analyses the environment in which Dearn Shoes operates and consider how
this might impact its business model, mission and values.
(15 marks)
(b)
Assesses the major risks presented by Dearn Shoes current business model
and suggests appropriate mitigating actions to manage these risks.
(15 marks)
Professional skills marks are available for evaluation skills by assessing the
identified risks at Dearn Shoes objectively.
(4 marks)
(34 marks)
Task 2
Dearn board of directors is meeting to discuss its current shoe product
portfolio and how it should be managed. In advance of the meeting, the chief
marketing officer (CMO) has sent the members of the board the current product
portfolio information compiled by the marketing department to assist discussions.
The chief finance officer (CFO) has asked for your assistance in preparing for this
board meeting.
(a) Prepare a report for the CFO which assesses Dearn current
product portfolio to determine appropriate strategies to manage the
portfolio effectively.
(16 marks)
Professional skills marks are available for demonstrating analysis skills in considering and
reflecting on the marketing department's information to identify how Dearn Shoes could
manage its service portfolio effectively.
(4 marks)
A recent cyber-attack on a cloud service provider impacted many businesses in
Lucland although Dearn Shoes was not one of those affected. However, the chief
finance officer (CFO) has been asked to chair a meeting with some of Dearn
main directors to discuss the situation. Some are concerned that they have limited
understanding of cloud technology and how the risks of using a cloud service
provider should be managed. The CFO has asked for your assistance in preparing
some of the information she will present at this meeting.
(b) Prepare TWO presentation slides with accompanying notes which
assess the benefits and risks to Dearn Shoes of using cloud
technology.
(10 marks)
Professional skills marks are available for demonstration of communication skills
in clearly communicating the benefits and risks for Dearn Shoes of using cloud
technology.
(4 marks)
(34marks)
Task 3
Recently commissioned market research has concluded that it appears to have no
clear understanding of the profile of its customer mix, and as a result, operates quite
unsophisticated and ineffective marketing campaigns.
Recent financial results indicate that Dearn Shoes is finding it hard to retain and
attract repeat business from existing customers. The company is clearly losing
market share to established competition and newer e-retailers.
The sales and marketing director has been considering the development and
implementation of a sophisticated customer database management system (CDMS),
incorporating a customer loyalty scheme, to replace the existing very basic
customer database.
The marketing department has undertaken a financial appraisal of this proposal to
supplement the market research findings, and this indicates that it is financially
viable in terms of net present value (NPV). You have advised the Sales and
Marketing Director that for the board to agree to the proposal, a clearly stated
business case and a more reliable evaluation of the financial viability of the project
will be needed. She agreed and asked you to help her in this regard.
Required:
Write a report on behalf of the sales and marketing director, for presentation to
the board which achieves both of the following:
(a) Describes the benefits of introducing a customer database
management system, including the loyalty scheme for Dearn Shoes
(6 marks)
Professional skills marks are available for commercial acumen skills by
demonstrating awareness of business and wider external factors impacting on the
decision to implement the CDMS.
(4 marks)
the CDMS investment, questioning any underlying assumptions made.
(10 marks)
Professional skills marks are available for displaying scepticism about the cash flow
forecast used to support the proposal.
(4 marks)
Alerted by a recent article in Lucland Shoe News, the chief executive officer (CEO)
is concerned that currently Dearn Shoes does not have a clear structure for reporting
on its environmental and sustainability audit activities to its key stakeholders.
However, it does produce an environmental and sustainability dashboard for internal
use. She has proposed that Dearn Shoes should present an environmental and
sustainability audit report each year. She has provided you with a copy of the most
recent dashboard (Exhibit 4) and has asked for your assistance on this issue
(c) Prepare briefing notes for the CEO outlining the information Dearn Shoes
should report to its key stakeholders in the annual environmental and
sustainability audit report and explain how this suggestion would add value to
the business.
(8 marks)
(32 marks)
Marking Guidance
Task 1
Economic Times further confirms that the economic situation in Lucland has made
trading conditions tough for businesses. Therefore, a good understanding of those
external environmental factors negatively affecting the Dearn Shoes business model
is essential so that action can be taken to remedy the current situation and improve
the future prospects for the company and its investors.
The board of Dearn Shoes wants to fully understand how the general environment
impacts the company, as this will directly influence its ability to enable the business
to succeed and prosper. The board has asked you to brief the board on this issue for
their next board meeting.
Required:
Prepare a briefing paper to be presented at the next board meeting, which:
(a)
Analyses the environment in which Dearn Shoes operates and consider how
this might impact its business model, mission and values.
(15 marks)
Suggested answers
Up to 2 marks for a fully developed point on the potential environmental influences (up to a
maximum of 10 marks)
Remember the question asked about impact so pure environmental answer without impact
capped at 10 marks
If the answers are totally generic and make no reference to Dearn Shoes make a comment to
that effect and potentially award no mark if just a regurgitation of textbook theory
Suggestions could include:
Anything developed from PESTEL or any reasonable points not necessarily using a PESTEL
framework but MUST be applied and not just a brain dump of theory
(b)
Assesses the major risks presented by Dearn Shoes current business model
and suggests appropriate mitigating actions to manage these risks.
(15 marks)
Professional skills marks are available for evaluation skills by assessing the
identified risks at Dearn Shoes objectively.
(4 marks)
(34 marks)
The answer should focus on the risks mentioned in the pre seen ie
Up to 10 marks for assessment of the risk
Up to 10 marks for mitigation of the risk
Max 15
How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional
skills as follows:
Professional skills
marks are
available for
demonstrating
evaluation skills assess the
by assessing the identified risks at assessing the
identified risks at Dearn Shoes identified risks at assessing the
Dearn Shoes objectively assessing the Dearn Shoes identified risks at
objectively. identified risks at objectively Dearn Shoes
. Dearn Shoes objectively
objectively
0 1.33 2.66 4
Task 2
portfolio and how it should be managed. In advance of the meeting, the chief
marketing officer (CMO) has sent the members of the board the current product
portfolio information compiled by the marketing department to assist discussions.
The chief finance officer (CFO) has asked for your assistance in preparing for this
board meeting.
(a) Prepare a report for the CFO which
product portfolio to determine appropriate strategies to manage the
portfolio effectively.
(16 marks)
Professional skills marks are available for demonstrating analysis skills in considering and
reflecting on the marketing department's information to identify how Dearn Shoes could
manage its service portfolio effectively.
(4 marks)
Formal shoes
Up to 5 marks for evaluation and appropriate recommendation
Answer must explain and if justified as a cash cow (even question mark) that would be given credit if
explained
Semi Formal shoes
Up to 5 marks for evaluation and appropriate recommendation
Answer must explain and if justified as a cash cow (not really an alternative explanation here) that would
be given credit if explained
Casual shoes
Up to 5 marks for evaluation and appropriate recommendation
Answer must explain and if justified as a dog (not really an alternative explanation here) that would be
given credit if explained
Childrens shoes
Up to 5 marks for evaluation and appropriate recommendation
Answer must explain and if justified as a cash cow (not really an alternative explanation here) that would
be given credit if explained
Conclusion
Up to 2 marks for a well argued conclusion
Max 16 marks
How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional
skills as follows:
The candidate The candidate The candidate The candidate
demonstrated no demonstrated demonstrated demonstrated
Analysis skills analysis skills. limited good excellent
in considering The candidate analysis skills. analysis skills. analysis skills.
and reflecting failed The candidate The candidate The candidate
on to effectively effectively made made full
the information consider considered a reasonable use use of the
provided by any of the limited of the marketing
the marketing marketing amount of the marketing department
department to department marketing department information.
identify how information department information. There was clear
Dearn Shoes and there was information. There was evidence
could no There was evidence of of well applied
manage its evidence of some, but reasonable reflection
service portfolio reflection limited, reflection and applied on how Dearn
effectively on how Dearn on how reflection Shoes could
Shoes could Dearn Shoes on how Dearn manage its
manage its could manage Shoes could service
service its manage its portfolio.
portfolio service portfolio service The answer was
portfolio. presented in a
The answer was suitable
presented in a report format.
suitable
report format.
0 1.33 2.66 4
2. A recent cyber-attack on a cloud service provider impacted many businesses in
Lucland although Dearn Shoes was not one of those affected. However, the chief
main directors to discuss the situation. Some are concerned that they have limited
understanding of cloud technology and how the risks of using a cloud service
provider should be managed. The CFO has asked for your assistance in preparing
some of the information she will present at this meeting.
(10 marks)
Professional skills marks are available for demonstration of communication skills
in clearly communicating the benefits and risks for Dearn Shoes of using cloud
technology.
Lots of potential things to say here and up to 2 marks for each relevant and applied point
made to explain the benefits and risks of Dearn Shoes using cloud technology.
(Maximum of 10 marks in total)
Key points
Slide 1 Notes Benefits of cloud computing
Cost
Eliminates capital expense of buying hardware and software
Significant running costs and IT professionals to manage infrastructure eliminated
Scalability
Up or down scale as required depending on needs
Allows us to grow technologically without having to invest in upgrades
High degree of flexibility
Business continuity
Continuous back-up of data
Downtime minimised in the event of attack or crisis event
Essential in our business operations which run 24/7
Performance
Cloud computing regularly upgraded to latest generation of hardware/software
Greater economies of scale keep costs down
Business using most up to date technologies available
(up to a maximum of 6 marks)
Slide 2 Notes Risks of cloud computing
Greater attack risk
Cloud computing data centres bigger target for hackers and cyber criminals
Rewards for successful attack potentially huge for criminals
Accountability
Accountability for actual risks still resides with Dearn Shoes
Risk management framework must take account of cloud service adoption
Service level agreements (SLAs)
Complex responsibilities for cloud services effective SLA challenging
Service provider likely to have advantage in knowledge and experience
Tied into a long-term contract not entirely suitable
Reduction on own information systems expertise
Our operations largely driven by technology
Reliance of hardware and software management on a third party
Risk if competitors able to gain competitive advantage by retaining own expertise
(Up to a maximum of 6 marks)
Not at all Not so well Quite well Very well
Professional skills
marks are available for
demonstrating
communication skills in
clearly communicating
the benefits and risks
for Dearn Shoes of
using cloud technology.
in clearly
communicate the
benefits and risks
for Dearn Shoes
of using cloud
technology communicate the communication communicating the
benefits and risks benefits and risks benefits and risks
for Dearn Shoes for Dearn Shoes for Dearn Shoes of
of using cloud of using cloud using cloud
technology technology technology
0 1.33 2.66 4
Task 3
Recently commissioned market research has concluded that it appears to have no
clear understanding of the profile of its customer mix, and as a result, operates quite
unsophisticated and ineffective marketing campaigns.
Recent financial results indicate that Dearn Shoes is finding it hard to retain and
attract repeat business from existing customers. The company is clearly losing
market share to established competition and newer e-retailers.
The sales and marketing director has been considering the development and
implementation of a sophisticated customer database management system (CDMS),
incorporating a customer loyalty scheme, to replace the existing very basic
customer database.
The marketing department has undertaken a financial appraisal of this proposal to
supplement the market research findings, and this indicates that it is financially
viable in terms of net present value (NPV). You have advised the Sales and
Marketing Director that for the board to agree to the proposal, a clearly stated
business case and a more reliable evaluation of the financial viability of the project
will be needed. She agreed and asked you to help her in this regard.
Required:
Write a report on behalf of the sales and marketing director, for presentation to
the board which achieves both of the following:
Professional skills marks are available for commercial acumen skills by
demonstrating awareness of business and wider external factors impacting on the
decision to implement the CDMS.
(4 marks)
Task 3
How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional
skills as follows:
Professional skills
marks are
available for
demonstrating
commercial
acumen skills by
demonstrating
awareness of
business and
wider external
factors impacting
on the decision to
implement the
CDMS.
0 1.33 2.66
Professional skills marks are available for displaying scepticism about the cash flow
forecast used to support the proposal.
(4 marks)
Marking guide to Task 3 (b)
How well has Not at all Not so well Quite well Very well
the candidate
demonstrated
professional
skills as follows:
0 1.33 2.66 4
3c
Alerted by a recent article in Lucland Shoe News, the chief executive officer (CEO)
is concerned that currently Dearn Shoes does not have a clear structure for reporting
on its environmental and sustainability audit activities to its key stakeholders.
However, it does produce an environmental and sustainability dashboard for internal
use. She has proposed that Dearn Shoes should present an environmental and
sustainability audit report each year. She has provided you with a copy of the most
recent dashboard (Exhibit 4) and has asked for your assistance on this issue
(c) Prepare briefing notes for the CEO outlining the information Dearn Shoes
should report to its key stakeholders in the annual environmental and
sustainability audit report and explain how this suggestion would add value to
the business.
(8 marks)
(32 marks)
(c)
1 mark for each relevant point relating to the content of an environmental and sustainability audit report.
(Up to a maximum of 8 marks)
Key points:
Overview
Assurance of policies, processes and activities
Commitment of leadership
Key content
Leadership
Assessment of leadership in environmental and sustainability priorities
Identify and assess policies and procedures for sustainability practices
Review of stakeholder engagement
Identify and assess evidence of wider stakeholder involvement
Policies and interactions with external stakeholders
Audit assessment and findings of key priorities
Climate responsibility
Overall attitudes/objectives/targets set by leadership to climate responsibility
Assess activities/controls to manage/minimise carbon emissions, energy usage, waste
Safety
Assessment of key health and safety management procedures and controls
Assess any link with training and levels of health and safety incidents
H&S controls and report on key incidents and potential reasons
Customer and supplier relationships
Assessment of systems and controls to manage customer relationships
Supplier selection/responsibilities and management policies reported
Evidence of ethical supplier selection and management policy statements
Employee relationships
Evidence of on level and adequacy of training
Assess outcome of employee engagement surveys
To: Chief finance officer
From: Senior business analyst
Date: xx4
