Page 14 - CIMA May 18 - MCS Day 1 Suggested Solution

CIMA MAY 2018 – MANAGEMENT CASE STUDY

Key risks associated with each of these options are:

 Market penetration – even though UK Government industry statistics indicate continuing
growth in passenger kilometres (801bn in 2016 the highest volume ever recorded, 80% of
these were by cars, vans and taxis). MENTA must continue to invest in e.g. meeting
tightened emissions requirements, continuing to expand in markets around the world, and
developing new vehicles. As such more detailed information is required to facilitate these
decisions which could be obtained by harnessing the benefits of “big data”. To be
complacent in this industry is not an option.
 Product development – in a similar vein to the above, manufacturers like MENTA need to
enhance and embrace new technology to minimise the risk of trends or technological,
regulatory, political and social changes. Failure to do so could dramatically affect the long
term future of industry players such as MENTA. The key risk in this context is having the
competences in place to do so.
 Market development – this would be a risk for MENTA without a detailed understanding of
new markets or segments targeted. The risk may be greater given the slowdown in the
more traditional markets e.g. UK passenger journeys on local buses are 60% lower than in
1950 mitigated to a degree given that MENTA will have gained knowledge by its
representations in different countries e.g. Asia and North and Central America.
 Diversification – the risk here lies with the lack of relevant skills, resources and
competences which is typical of diversification. MENTA may need to consider different
expansion options to secure these skills such as acquisition or joint ventures e.g. to feed
changing transportation needs. Despite a very positive cash position, these options will be
expensive and the availability and choice of funding will need more investigation.

It will be vital therefore that each option be thoroughly evaluated before any action is taken to
develop and implement the strategy.

This will need both financial and non‐financial analysis and by the end of this process, the Board
will need to decide on a shortlist of options that will be carried forward to the strategic
implementation stage.

58 KAPLAN PUBLISHING