Page 12 - CIMA May 18 - MCS Day 1 Tasks

CIMA MAY 2018 – MANAGEMENT CASE STUDY

With a variety of sources of revenue (for example 55% based on tenders and submissions for
concessionary fares) a wide combination of bus types and associated routes and operating in a
heavily regulated environment the business model results in a complicated costing system. The
regulatory system, for example, is necessary because of public safety, both for passengers and for
other road users. Similarly some routes are heavily subsidised by local governments and are
therefore closely monitored to ensure that they are capable of offering a reliable service.

Menta currently has 30% share of the market in Centralia by revenue and as a result the
government believes that with bus travel accounting for only a small proportion of passenger
journeys, further opportunities for growth therefore exist in the home country. This will also be
applicable to overseas expansion. These opportunities are fuelled by external pressures with the
need for greater environmental awareness and improvements in technology (driverless buses)
recognising that public transport will cause less environmental damage. Similarly advancements
in IT have been adopted by Menta to gain more knowledge of the effect of changes to the pricing
and frequency of the services provided by Menta. This will be a key area as approximately 70% of
operating costs vary with distance travelled.

This makes for a complex process and a need to understand how each operating unit is
progressing to facilitate decisions concerning Menta’s growth ambitions. There is also a high
potential for dysfunctional decision making around the business if the units don’t have clearly
agreed, communicated and goal congruent objectives to work toward.

On a segmental basis Menta achieved mixed financial results in 2017, and with the public
transportation industry facing significant change the future seems challenging. Combatting these
changes will require significant reliance on tracking and evaluating performance over a wide range
of measurement categories, operating units and geographical regions to secure accurate
information for decision making.

3 KEY TOPICS

Key topics that this case would suggest are:

From an E2 perspective:

Environmental analysis
Menta has many challenges to face as result of changes in the environment in which it trades. A
thorough understanding of the effect of these on future strategy via PESTEL and Porters Five
Forces will be important.

Strategy options and choice
Given these challenges it will be important to consider options for the future direction of the
business. These could include decisions as to which markets or products should be invested in and
expansion options such as organic growth, acquisition or joint arrangements. Similarly the
evaluation of these options will be necessary in terms of their feasibility and “fit” with the
business.

Strategy implementation
The selected strategic options will not benefit the business unless they are implemented. This
could involve the integration of many topics e.g. tactical programmes which could include

8 KAPLAN PUBLISHING