Page 18 - CIMA May 18 - MCS Day Tasks

CIMA MAY 2018 – MANAGEMENT CASE STUDY

TASK 3 – INTERNAL ANALYSIS

Trigger

From: CEO
To: CFO
Date: Today
Subject: Internal Analysis

I recently attended a meeting at the CEO Collaborative Forum and note below an extract from
presentation at a recent conference on the future of the public transportation:

Public transport is a large part of daily life and generates substantial revenues. Yet the industry
also faces significant challenges. Growing competition is encouraging new solutions in this arena
to which established companies must adapt. Public transport companies must learn to operate
more efficiently. The vision for the public transport players of the future is a significant decrease in
operating costs and improvement in customer satisfaction. This vision is likely to force industry
players to redefine what they are particularly good at, what their most distinctive capabilities are,
where they have the appropriate scale to compete and where they fit into the industry’s overall
value chain”.

I was particularly interested in this session on how important it is to understand what we are
“good at”. There were some interesting ideas about the use of the value chain (see attached
diagram) to establish which of an organisation’s internal activities are consistent with distinctive
capabilities. A greater understanding of this will no doubt help us to control costs and comply with
the overall strategy of delivering excellent customer experience at a competitive rate – i.e.
providing value for money.

The financial statements for 2017 indicate that whilst cost of sales is fairly static when compared
with 2016, we do have some issues with profitability when we consider the segmental analysis.
Approximately 70% of operating costs vary with distance travelled and vary little with the number
of passengers so I think it is an opportune time for us to look closely at what we do in more detail.

I would like you prepare a briefing note on this for circulation prior to the next board meeting.

Thanks in advance
Phil

34 KAPLAN PUBLISHING