CIMA OCS May 23: Tracs Europe
The CIMA Operational Case Study (OCS) pre-seen materials were released on the 24th March, so it’s given me time to go through the document and put together a SWOT analysis on the scenario.
Before we go into the pre-seen materials, I’d suggest to check out my May 2023 Case Studies blog post which gives you a reminder of your role in the case study and some general advice on how to approach and pass your CIMA case study exam first time.
The May 2023 OCS exam is based around a company called Tracs Europe – they manufacture and sell tractors for agricultural purposes.
You can find the official pre-seen materials for the May 2023 OCS here.
STRENGTHS – The Sales Team
We are told that the Tracs Europe sales team are very knowledgeable and they are given the authority to give discount’s up to 15% off the normal selling price if they deem it necessary.
The role of the sales team is very broad, it ranges from signing up new dealers to setting up trade stands at agricultural shows and everything in between.
They play a vital role in the front line of the business and they appear to be well equipped and well managed – as the Sales Director Reena has been in post for 8 years and in that time has increased the dealer network by over 20%.
WEAKNESSES – Global Appeal
We are told on page 4 of the pre-seen materials that the big five global players in the industry offer a full range of agricultural equipment, whereas Tracs Europe only focus and produce tractors only.
The global market for agricultural tractors is dominated by five large global specialist agricultural equipment companies which manufacture and sell the full range of agricultural equipment including tractors, combine harvesters, trailers and ploughs.
If the future strategy is branch outside of Europe and reach a global platform, they would need to expand the range of agricultural equipment.
That said, it might not be relevant in the short term as we are told that Tracs Europe is still behind G Trators and Lands Trax for market share in Europe. Their immediate focus may be gaining more market share in Europe before expanding.
OPPORTUNITIES – E-Commerce and Branded Stores
We are told Tracs Europe does not sell directly to the end consumer, their customers are the distributors and dealers who themselves will sell the tractors to the end consumers i.e. farmers.
However, this leads me to believe that there is an opportunity to sell directly to the farmers through their own website. The sales flow always leads the consumer to the distributer/dealer, but why not look at selling DIRECTLY to the consumer via their own website or even setting up a physical Tracs Europe branded store.
Farmers can physically look at all of the products at one of the Tracs Europe branded store and purchase directly from Tracs Europe either in person or via their website.
This negative side of this could be the current relationships with dealers and distributors would suffer as it would divert revenue from them.
However, there could still be room for a direct to consumer approach with spare parts and accessories only – another point that really caught my attention was the budgeted gross profit for “Parts” was a whopping 40.2% which eclipses the margins on the tractors themselves.
THREATS – Slim Profit Margins
For the year ended 31 December 2022 Tracs Europe Gross Profit margin was 25.9% and Operating Profit Margin was just 8.7%.
Which, to my mind, doesn’t leave much margin for error with either an increase in their cost of goods and there is a risk this could realistically happen.
We are told on page 25 in the Agricultural Times news article that;
There have also been production delays, with shutdowns in the Chinese market leading to shortages of semi conductors. In addition, there have also been increases in steel and aluminium costs, all of which are expected to raise prices and slow market development in coming months
We might already be able to increase those margins though with the opportunities mentioned above i.e. selling direct to consumers and looking to increase the revenue on Parts.
CIMA OCS May 2023: Astranti Case Study Course
I used the full Astranti OCS case study course to pass the OCS exam first time many years ago, they have improved the course even further since then. The course includes;
- Pre seen materials pack (analysis, top 10 issues, industry examples & 30 questions)
- 5 x mock exams with feedback
- 3 x LIVE and recorded master classes
- Syllabus theory revision series
- Exam technique series
- Ethics and questions packs
- Tutor feedback
- Pass guarantee & money back guarantee