Page 11 - CIMA SCS Workbook November 2018 - Day 2 Tasks

STRATEGIC MANAGEMENT (E3) - PRACTICE TASKS

EXERCISE 3

UPDATE
It is early one Monday morning. Randal Edwards, Novak’s Director of Finance, asks you to step
into his office.

TRIGGER

“I don’t know if you saw the Cronland Times this weekend; there was a long article on Novak,
suggesting that shareholders are getting restless at the performance of our company over the last
12 months and the fall in share value since 2013. Here is an extract from that article for your
information.

I had a chat with Dirk Lepain yesterday by phone, and we are both of the opinion that this article
could trigger a request for a meeting with some of our institutional shareholders. Naturally we
will have to be ready with some answers should such a request be made – we will need to give
reassurance that we have a viable strategy for increasing the company’s profitability.

Dirk made 1 interesting suggestion, that Novak should streamline its manufacturing operations. At
present we have 12 factories in 10 different countries, which gives us an important strategic
positioning close to our markets. 3 of those factories are in Cronland, a developed economy and
therefore a relatively expensive country; what do you think about possibly closing 2 of these and
using spare capacity overseas instead? Could you please evaluate the benefits and risks of this
proposal?

If we decide to proceed, we will then need to think about which of the factories should remain
open and which to close. Could you please give me some ideas on how we might make such a
decision?

Many thanks.”

TASK

Prepare an email in response to Randal Edwards’ requests (Time allowed: 60 minutes)

(Refer to the reference materials overleaf)

KAPLAN PUBLISHING 27