The pre-seen materials for the February 2020 CIMA case study were released last week and I’ve had time to read through the materials and prepare my own SWOT analysis of the company.
You can find the official document from CIMA on your study planner here – it will require you CIMA ID and login.
Astranti Case Study Course: Lottie Graphite
I used Astranti to pass the OCS exam and would fully recommend their case study course with a particular focus on the mock exams and feedback.
SWOT Analysis: Lottie Graphite
A good place to start when faced with the pre-seen materials is to prepare a SWOT analysis, as the outcome will give you some focus areas when preparing for the OCS exam.
Below are some initial thoughts from me on the Lottie Graphite scenario.
Strengths: Strong Identity and Links to Community
Lottie Graphite is based in Gawland which has a high wage economy but despite this fact the majority of the 1000 employees are in Gawland. To quote the pre-seen;
“They believe the culture of the company is key to its success and that this would die if removed from its native and its dedicated workforce”
What’s more, there is also a mention that they run a public factory once a week.
This engagement with the local community will really create strong ties in the area and promote the brand as an open, welcoming and trusted company.
This compliments the fact that the company is a global player that manfactures over 300 hundred million pencils, yet they act like a local employer and remain highly visible in Gawland.
The pre-seen often points to the company being open to change and very innovative in it’s thinking, as illustrated with the PEXECO pencil.
However, the finance department is still using dated methods like incremental budgeting with a top down approach with gives little motivation or incentive to the functional teams and management that carry out the day to day operations.
This method of budgeting is time saving and straightforward to produce but perhaps a move towards zero based budgeting or even beyond budgeting would a viable option given the profile of the company.
Involving the functional managers in budget setting and looking at the whole cost base from zero may take longer, but it the benefits would improve motivation within the team and potentially improve the Operating Profit Margin of 8.71% in 2019.
Opportunities: Feland Expansion
The clear opportunity I can see in the pre-seen is the expansion into the region of Feland, however countries within this region are becoming more developed and there is a demand for Lottie Pencils there.
It would be a great way for the company to try to really establish itself among the big five pencil manufacturers in the world.
The competition in the industry is fierce as there are thousands of pencil manufacturers all over the world. But Lottie Graphite has established itself as a major player in the market with it’s focus on innovation and developing it’s strong brand.
Nevertheless, there are low barriers to entry in this market and the threat of competition will also be there. There was a concern with lower cost producers in the Far East, but fortunately for Lottie Graphite cheaper pencils produced there tend to have quality issues. But should those lower cost producers find a way to combat the quality issues, it could have be repercussions in the industry.
A final point to remember with the OCS exam is the fact you are playing the role of Finance Officer, where your role will be based around preparing the budgets, management accounts and providing analysis. You will not be expected to make or advise on strategic decisions.
Good Luck with your CIMA OCS exam preparation!