CIMA SCS Feb 23: Hottayr

The February 2023 Strategic Case Study (SCS) pre seen materials have been released and you can find them direct from the CIMA website here.

Usually I’d avoid comparing the materials to a load of hot air, but in this case I will make an exception as we given a scenario based around a company called “Hottayr”.

Hottayr are a quoted company that manufacture domestic heating products and you play the role of Senior Manager in the finance department.

I considered putting together a SWOT analysis but after going through the pre-seen materials I thought it’d make sense to tackle one of the main themes I detected – Environmental Issues – and I’d like to look at this through three different lenses so we can gather the facts and information we are told in the pre-seen materials.

Hottayr – Company Profile

Before looking at the challenges they company faces, let’s understand Hottayr’s history and their position in the industry. Below are the main points I have picked up from the pre-seen materials

  • Established in 1952 and floated on the Norland stock exchange in 1967.
  • One of the first companies to enter the market for gas boilers.
  • Hottayr was the first domestic manufacturer to receive a safety award from Norland Gas.
  • They are heavily involved in product development and can be seen as a market leader.
  • Company vision is to “Lead the move towards a zero-carbon world”

Industry Dynamic

The industry and society in general is moving towards a greener footprint and that is reflected in the forecasted trends for global sales of domestic heating devices.

The clear trend is the evolution of Heat Pumps and Solar Thermal Panels that will be replacing the more traditional methods of gas and oil boilers. In the space of 10 years, gas and oil boilers market share will be reduced by around 40% of the whole market and swallowed up by renewable energy sources.

Norland’s government is committed to reducing carbon emissions to zero. Heat pumps are promoted as offering a contribution towards meeting that target. It has been estimated that 20% of Norland’s carbon emissions are attributable to domestic heating.

taken from page 10 of the pre-seen materials

The quote above gives us some specific information around Norland Government’s commitment to reduce carbon emissions to zero. Hottayr should use this information to their advantage, as the Norland government might be offering grants or subsidies to company’s who are working with them to reach a net zero carbon emission foot print.

The clear conclusion here is that Hottayr should be shifting their focus to the development of heat pumps and being seen, as they state their company vision, “to lead the move towards a zero-carbon world”

Social and Environmental Issues

It might be seen an easy path forward, but there are still several social and environmental issues to tackle with the production and widespread use of heat pumps.

There are four news articles at the back of the pre-seen materials and they almost sequentially tell us a story about consumers, their behaviour and their concerns.

The first article lays out the fact that Norland won’t be able to produce 100% renewable energy through solar panels due to the climate and constraints with some housing.

We should only consider solar panels as a supplement to other heating sources.

The following article emphasizes the fact that heat pumps will be able to heat your house all year round regardless of the temperature outside, adding more weight to the product itself in Norland.

Your new heat pump will reduce your family’s carbon footprint and is capable of keeping you warm right through the winter.

The third news article discusses the negative impact of Hydrofluorocarbons (HFCs) on the environment, which is an important point to consider, as we are told on page 5 of the pre-seen materials that HFC’s are used in heat pumps as a refrigerant. Eeeek!

While the news article continues with the fact there are alternatives that are less harmful to the environment, but there are other drawbacks as propane is highly flammable and ammonia can be poisonous.

Leading us to believe we will need to live with HFC’s in heat pumps.

Hottayr could, however, look to offset their own carbon footprint by developing more green areas in Norland. Planting trees and be a corporate social responsible employer can help negate the effects on HFC’s.

Finally, the fourth news article outlines the intentions of the Norland governments commitment to net-zero by 2040. Which really just sums up what we already know and cements the direction that Hottayr needs to follow.

One of the key facts from the news article is;

This legislation will have a huge impact on many aspects of daily life. For example, the Government will ban the sale of new petrol- and diesel-powered cars by 2035 as one step towards meeting the net-zero target.

Which could point towards the sale of gas boiler’s could also be banned at some point in the next 15-20 years.

CIMA SCS Feb 2023: Astranti Case Study course

Astranti are offering three SCS different courses for the upcoming Hottayr exam in February 2023, so you can pick and choose the level of resources you want. I used Astranti to pass all of my case study exams first time.

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