CIMA OCS MAY/Aug 2021: ACELLERATE
It’s arguably one of my favourite times of the year, the CIMA pre seen materials have been released for the upcoming OCS exam in May and August 2021.
This set of materials will be valid for the May and August exams this year, so I will be covering them a few times over the next couple of months.
You can find the official pre seen materials from CIMA here.
It can be tempting to jump straight into the pre seen analysis and learn it word for word, however, I believe one of the best approaches to tackling the pre seen at any level is to read the materials ONCE.
- Take a break
- Have a cup of tea
- Walk the dog
- or have a nap.
Then I would start to read the pre seen materials AGAIN with the idea to start drawing up your own SWOT analysis on the information you have been presented with.
I’ve done just that (well, I didn’t walk the dog but you get the picture).
Here are my thoughts and SWOT analysis on the May 2021 OCS pre-seen materials “Acellerate”
The CIMA Student: SWOT Analysis
STRENGTHS: Digital Technologies and The Board of Directors
I’ve picked two strengths here but the over-riding strength, in my opinion, is the digital technologies that Acellerate have employed so successfully. It’s a common theme that runs through the business and starts at the very top.
The managing director, finance director and IT director are all strong advocates of digital technologies as you can tell by reading the directors profiles.
Joseph is keen to continue to expand the business through the exploitation of digital technologies.
She is interested in exploring the use of digital technology to make the finance processes more efficient.
page 6 of the pre seen materials
He has been pivotal in the development of the company’s fleet management system which is seen as ground breaking in its use of digital technology.
The background and profiles of the board members also make for positive reading and make you feel bullish about the company, their profiles are perfectly in line with the company’s strategy
“The main objective is to continue to improve margins by utilising digital technologies”
It’s clear the board are delivering on their main strategic aim that is using digital technologies to gain an competitive advantage, this is backed up by the IT paragraph on page 12 of the pre seen materials.
“The company makes extensive use of digital technology both to manage its fleet of rental cars and to improve the service offered to its customers…….
page 12 of the pre seen materials
………… It plans to continue deploying new technology systems to support management decisions and to enable it to tailor products, services and price offerings to meet customers’ needs and react quickly to shifting market conditions. “
Not only that, but the board of directors have seemingly navigated Acellerate through the toughest part of the recession in Everland and their 2021 numbers are looking positive, unlike some competitors who have folded during the recession (see the end of page 3 of the pre seen materials).
WEAKNESSES: Maintenance and Accident Repairs
It might be a slight “under the radar” point made in the pre-seen about how the accident repairs are handled, but it peaked my interest and I consider it a weakness.
The ending bullet point on page 10 “Maintenance” states;
“Accident repairs are carried out by third-party suppliers. When the suppliers complete the body repairs, each car is inspected by an Acellerate mechanic before payment is made.”page 10 of the pre seen materials
To me it seems inefficient that the accident repairs are carried out by a third party, then one of Acellerates own mechanics inspects the car before payment is made – it all seems counterproductive.
They lose time, money and control of the repair process which goes against the opening paragraph;
“The quality of the maintenance process is considered to be of vital importance as it is fundamental to customer safety and customer satisfaction. Quick and proper repairs are also critical to ensure fleet utilisation rates are kept as high as possible”page 10 of the pre seen materials
OPPORTUNITES: Connected Technologies
Continuing with the theme of technologies, it’s clear there is a big opportunity with “Connected Technologies”.
It seems to be the next logical step for Acellerate who are clearly driven by the use of technology. The tail end of the industry analysis on page 15 tells us that over the next few years the industry itself will be focusing on Connected Technologies and Cars-as-a-Service.
What’s more, the news article on page 30 (always a good indicator of subjects that could come up on exam day), paints a positive picture of the use of connected technologies.
“Car connectivity presents the greatest challenges but also opportunities for the car industry.”page 30 of the pre seen materials
“The benefits for car rental and fleet management companies are immense. Car connectivity provides a new competitive advantage to run a smarter fleet and increase efficiency and reduce costs”
Despite the positive picture painted on the company background section, there is still a real risk and threat that the current global economic recession that is being experience by Everland could hit Accellerate harder than their early 2021 numbers suggest.
Taken from the Industry Analysis on page 14;
The industry, in common with other industries, has suffered a severe setback as a result of the recent global economic recession. Prior to 2020, market experts were predicting an average growth in sales revenue of around 7.5% over the next 5 years, however it is now predicted that the industry will not return to 2019 levels until 2025 and that some car rental companies will not survive.page 14 of the pre seen materials
SWOT ANALYSIS SUMMARY AND CONSIDERATIONS
Hopefully this has inspired you somewhat to think a bit deeper about the scenario rather than memorising facts and figures from the pre seen materials.
I’d also like to comment that the financial statements don’t tell us too much we don’t already know. I wouldn’t spend huge amounts of time here, performing analysis of ratios etc.
The very opening paragraph tells us “In the financial year to 31 December 2020 the company reported sales revenue of E$206.3 million, a decrease of 25% from the previous year”
And this 25% decrease is consistent and reflected in the P&L and Balance Sheet figures given in the pre seen materials. The revenue and fleet operating costs fell by exactly 25%, while the personnel and “admin costs” fell by 15%.
All of the current assets on the balance sheet also fell by 25% from 2019 to 2020. By all means, calculate it yourself but don’t focus your full attention here.
If anything, give more attention to the Costing Information on page 25 of the pre seen materials as costing can be a highly examinable area of the OCS (see the P1 syllabus around costing).
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