*** P3 December 2014 Exam was.. Instant Poll and comments ***

I don’t remember getting a star either as I remembered the increase in relative market share was only 1% over the last 5 years from 8.8% (2009) to 9.8 (2013). Although there was an increase it was more stagnant in nature. Growth was very low and being 9.8% out of the industry sales isnt so significant IMO.

q 1 B ) Agree with @Ali, that was why they wanted to adopt the low price and differentiation strategy to capture more slice from a matured market. I discussed abit about it being in a mature stage and how price may very well be the vital factor to attract customers from other competitors. Since it was in mature stage, the company should reduce its marketing costs hence why the need to repaint the news trucks that are replaced every 3 years red and white. The brand was already well known refered the the fan clubs posting videos on the net. And the trucks should have longer life span than 3 years (shouldn’t be replaced every 3 years). Reduced costs here may contribute to offering cheaper prices to customers. I discussed how the operating margin of SRRT has been slightly higher than the industry average (cost managed effectively) and it gave them room to cut prices even more to achieve this strategy. How it differentiated itself was using the warehouses for storage as the customers demanded it. They responded to customer’s needs. That was why I concluded in q1ai) that the warehouse although it wasnt performaning well it should be kept in the portfolio for this purpose (Hold). Customers valued this service.

However for q1 A i) I do not think ashridge was an appropriate model because they were adopting synergy manager parenting style ( not parental developer) so I did alot of ratios commenting, propects, BCG and future strategy about whther to BUILD,HOLD or Divest or Harvest.

For Q1 A ii) Here was where I used Ashridge portfolio display since it was stated in the case that the $7m was funded from Retained earnings, The Roam’s Group resources and we can conclude that it is indeed using parenting developer. I explained how Roam’s Group (Cp) may have low feel as they do not have the experience,knowledge or expertise in steering an Airport company. This was evident from the previous acquisiting of warehouse where SRRT transfer their senior managers but struggled to make significant impacts so chances are that the same may happen. Concluded it being an Alien business and that the $7m invested into the Airport company has indeed proved to be a risky investment to the portfolio. I wrote more cant remember also about how no frills strategy may not be appropriate just as the person in the case said they need atleast 500,000 when only there was only 150,000 of population available. Talked about gearing effects and troubles that could arise. Used SAF format but was more all over the place lol

Time constraint was enough, I left quite some number of marks, q4 on regression forecasting left 10marks and diagram q2 for 15 marks I did not answer that well and full. Heres hoping for a >50% finger crossed

The paper was ok, but question one was very lengthy and time consuming. More than 3 pgs of information we had to read n digest! I had time to do only Q1 & Q4. Q1 took me sme 2hrs!

Q1
(a) i. was abt the financial performance of SRRT, SRW & SRR. I used the BCG matrix only and interpreted changes in revenue + changes in markets shares
SRRT – cow
SRR – Problem child – more investment to acquire more market share as this market has high potentials (adverstising to get more contracts)
SRW – Dog – can divest or invest in the mini container system which can allievate a little bit lack of warehousing space + be used for transportation of goods for long distance instead of using trucks
ii. Calculated the same ratios, found dat gearing ratio was too high n cash reserve of Godiva low, other ratios were not that attractive also. however acq was for 7m n the 450hectares value was 9m n said dat some land could be used for warehousing + strategically located

(b) I cudnt write much n just explain wat are the strategies n gave an example

Q4
Explained what is value chained n listed out primary n support activities. Used only inbound, operations, outbound, sales & marketing.
for each one i tried to give a strength n weakness + also calculated activity cost and tried to comment on same.
Cudnt do well on the regression part. Time was running out and I sort of messed up this question.
Don’t think ill be able to get 50 marks, iv failed!

q4 a was to evaluate strength and weakness. I focused weaknesses in inbound and outbound logistics and suggested improvements. The strengths was actually their operations with how they handled and cooked raw foodstuff as customers considered Noble Pet’s products to be of superior quality to competitors and they had Service too, this was their website where they gave guidance and advice. Although it was strength I also discussed how they can improved further with the site with higher ranking of search engines, creation of forums for interactions, better use of FAQs, suggested emarking, eprocurement, advs of of fully utilising its website basicly. I wrote more cant remember for for 15 marks they wanted quite some number of points.

i think this is why most of us ran out of time … we are not supposed to explain the theories but to apply it to the case loll

The paper was not hard but I bet examiner to sit in strict paper conditions and solve that paper within time, what does he expect from us in 3 hours. I recommend we all should personally email ACCA about yesterday time pressured paper complain, maybe they take this into consideration while marking our answer booklets. Question 1 was damn lenghty…

if any of you are using a bbp exam kit check the question polymats something or shoal pro somthing…. this was the approach expected from the examiner

I’M KEEPING EVERTYTHING CROSSED PEOPLE !!

50% IS ALL IM PRAYING FOR !

IT WAS A LENGTHY PAPER !

How about they improving the transportation by train as its more ‘green’. They can connect the lorries and trains which will make the whole process more efficient. Then they wouldn’t have to pay fuel charges and road taxes….Also, they can reduce the lorry fleet over the long term. Lorries can be used for only short distance and lorries and trains for long distance- I did mention about loading and unloading can be sometimes challenging (they cover whole country)

In the airport case, their strategy was to carry cheap food products by aircraft or giving the opportunity for cargo airliners.
If they were to buy aircraft to carry groceries, that wont be a viable business. Supermarkets operate in very competitive market and always look to save a penny or steal a penny form their customers. Therefore Supermarkets won’t pay huge sums for deliveries. Supermarkets know what they need, how much they need and when they need it in advance. So not really be looking for faster options.

Its sad that no body uses that airport except few tycoons. Also, passenger airliners do use that airport.

That airport value was $7.2m (Total Assets from balance sheet) but they managed to get it for $7m. So, it wasn’t a bad deal. but running an airport will be costly because of the laws and aviation rules, experienced air traffic controllers and maintenance fees.

Looking at the ratios, we had to compare the ratios with an slimier size of that airport. one could argue that just one airport ratios is just not enough to compare (but I forgot to mention that). Overall all their ratios were poor than given ratios. Also, gearing was far too high, staggering 60%. You all know what happens when gearing is high.
In my answer I recommended to sell the airport for balance sheet value making $0.2m profit and concentrate more on their core business operation, that is finding more efficient and cheaper way for to deliver foods and drinks for supermarkets.

In part (c) they have to get competitive advantage. So I recommended few ways to cut cost and few ways to improve the benefits they provide to supermarkets, making it to fit in hybrid in strategic clock.

This is a summary of what I wrote for question 1

That is the reason why you have to connect lorries with trains. Problem solved!!! Fast, cheap, green and more reliable 🙂

The paper was fair time was the major constraint especially with the detailed analysis needed for Question 1
Attempted 1,2,& 3 Left a total of 20 marks because of time

So where abouts does each one fit in the BCG matrix ?

In terms of the outsourcing/ keep in house I accidently forgot to times my answer by 3 to give 8 hrs x 3 = 24 hours which is what they operated.

I therefore got keeping in house as my answer instead of outsourcing. Will I get follow through marks? (This came to $500 to produce in house and $600 to outsource.)

Really worried now!

I based that part of it on the fact that the TCG company made $600 per day with 10 staff dedicated to SE. Therefore it would cost SE $50 x 10 staff – $500 per day for the same level of staff in-house.

But.. SE said $50 a day to “employ” a single member of staff, so I took that as the purely the cost of employing somebody without it including the other associated overheads of operating its own call centre, and suggested that it was still cheaper to outsource. Dropped in some advantages of it, and potential disadvantages of it.

Brought in the points about unemployment in the area and the growing customer dissatisfaction with overseas call centres due to language barriers and how SE might consider accepting the extra costs to raise its profile.

But concluded that I didn’t have enough information to form an overall opinion as to whether or not to continue to outsource.

It does seem from the number of comments that a lot of people found that question 1 took around 2 hours – myself included