CIMA SCS May 23: Daistruk
CIMA released their pre-seen materials for the May 2023 SCS exam this week and you can find the official pre-seen document from CIMA here.
Having looked through the pre-seen materials for Daistruck, I’ve drawn up a list of strengths and weaknesses of the case study scenario in the form of a SWOT analysis.
I’m a firm believer that a SWOT analysis is the perfect way to start your CIMA SCS preparations, it gets you thinking about the context of the company rather than mindlessly reading and highlighting the pre seen document itself.
STRENGTHS – Daistruk’s Focus on IT and Rail Transportation
What I like most about Daistruk is there focus on technology and IT and also their move towards rail transportation. The news article on page 26 of the pre seen materials from CIMA (pictured below), is a massive coup for Daistruk as they have the first fully automated container terminal in Roundland.
Not only does this illustrate they are pioneers in the industry in Roundland, but this automation will also help increase their footprint on rail which is a massive potential advantage to Daistruk.
We are told on page 9 that the benefits of rail include reliability, sustainability, reduced costs and reduced congestion on the roads. Which just emphasizes how important this shift from road to rail using technology is.
I also like the profile of the current CEO of Daistruk, who clearly has an IT and computer science background. This bodes well and makes me think that Daistruk will continue to lean towards technology and software innovations.
Henrik Gerding, Chief Executive Officer (CEO)
Henrik has a degree in computer science. He worked in software development with a major IT company before joining Daistruk as a senior manager in the company’s data centre. Henrik joined Daistruk’s Board as Chief Information Officer (CIO) in 2016. He was promoted to Chief Executive Officer in 2020.
WEAKNESSES – Recent Share Price
The challenge for any listed company is maintaining and improving the relationship with shareholders, after all, the main aim for listed companies is to create shareholder wealth.
Which isn’t necessarily something that Daistruk has been doing well over the last 12-18 months, the share price peaked at close to $16 per share in 2022, but now sits closer to $10.
We aren’t told specifically what has caused this recent slump, it’s likely they are many contributing factors. Among them could be the negative press the company received due to the motorway chaos caused by Daistruk vehicles (see the news article on page 27), as well as falling operating profit margins (10% to 9% in 2022).
OPPORTUNITIES – Rail
The pre-seen materials really paint a positive picture around rail as a mode of transport for third party logistic companies like Daistruk. I’ve highlighted the main reasons in strengths but it’s also a massive opportunity for two reasons.
- Daistruk owns 10 locomotive trains (equivalent of 800 trucks), as well as owning two inland ports in Roundland – group these facts with the automation at their ports and it gives them a big opportunity to increase their presence on rail and reduce their exposure on roads (which makes up 76% of their transportation expenditure).
- The non-executive director on the board of Daistruk (Mabalemi Maleka) was a politician with connections to the rail industry, this gives Daistruk some leverage to either lobby current government ministers or at the very least Daistruk can draw on the knowledge of Mabalemi to their advantage.
Mabalemi Maleka, Non-Executive Chair
Mabalemi had a long and successful career as a politician, including spending 2 years as a junior minister for railways. She has now retired from politics. In addition to her position on Daistruk’s board, she is a visiting professor of economics at Central City University. Mabalemi joined Daistruk’s Board in 2020.
THREATS – Health and Safety
One of the main principal risks identified by Daistruk are the health and safety risks that surround the business and the industry in general. There should be a keen attention paid to all matters health and safety.
Daistruk’s activities create significant health and safety risks. Handling goods and operating delivery vehicles can put employees and others at serious risk of injury. Daistruk’s operations can also risk damage to property belonging to third parties, including clients’ goods, premises and vehicles.
All staff receive health and safety training during their induction. Ongoing training is provided.
Daistruk has detailed procedures in place to minimise the risks of injury and damage to property. Those procedures include the need for specific training relating to tasks and the operation of equipment.
Detailed records are maintained about all events that have caused injury or damage or that had the potential to do so.taken from the CIMA SCS pre seen materials
That said, it does appear that Daistruk takes their health and safety obligations seriously as it’s highlighted and addressed in the risk register (above) and one of the company’s core values is;
“Daistruk trusts and respects its employees and provides a safe working environment”
I still believe, however, that Daistruk (and any other 3PL business) is exposed to lots of health and safety risks given their coverage and nature of business.
Hopefully the above SWOT analysis of the pre-seen materials gets your SCS revision off to a good start!
CIMA SCS May 2023: Astranti Case Study course
Astranti are offering three SCS different courses for the upcoming Daistruk exam in May 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.