Crack the case studies

May 2020

We take a look at the pre-seens for the May-August exams – Runnabout, Alpaca Hotel Group, and ChargeIT.

Alpaca Hotel Group – the MCS

CIMA PQs for May’s management case study are working for the Alpaca Hotel Group as the financial manager.

Alpaca is a quoted company that owns and operates 50 luxury hotels. Procurement is an interesting area to look at, and it might be of interest to the examiner. Pricing and guest booking options also affect the bottom line. But does 20% sound like a high commission for travel agents, for example?

The pre-seen goes through the hotel industry early in the 27 pages, where we discover skilled staff are often well paid and valued. How the hotel group uses data ‘better’ could also be something looked at come May. Occupancy rates range from 79% to 85%, and you need to check out the operating profit margins. It’s all on page 18.

In the news is a rival’s redesigning of its fitness centres to attract guest and non-guests. While it is difficult to think beyond the current bleak economic outlook, another news story explains recent economic stability has meant businesses are happy to spend a bit more of their hard-earned cash on the nicer things.

Alpaca’s Mayburgh Principal Hotel’s 3.8 average rating on Visitadvisor isn’t great either, with cleanliness and quality of service not being marked well.

Runnabout – the SCS

Welcome to the SCS pre-seen, where you are a senior manager in the finance function at Runnabout, the parent company of the Runnabout Group.

The quoted company operates pay-as-you-go ‘hoverboard’ vehicles for use in major cities (if only, what a way to get to work!). But, just to be clear, these hoverboards do not actually ‘hover’, they are two-wheeled vehicles that are driven by electric motors and powered by rechargeable batteries. What we are talking about here is an upgraded Boris bike!

Runnabout was created to rent bicycles in what appears to be a flat, windy country. It’s move into hoverboards was an immediate success with both commuters and tourist alike. The one fly in the ointment is that fact that the cities where the company operate its scheme are looking at the effects the hoverboards have on pedestrians and traffic.

Check out the Geeland Daily News report on ankle injuries here.

Interestingly, its data capture information is highly sought after. With 30,270,000 registered users protection data is key, too – it holds credit card and validation numbers of all these people.

We are given the average revenue per journey of G$5.80 and cost to Runnabout of G$2.19. The pre-seen also includes extracts from the annual report, with the principal risks. There is also the P&L from Dokbyke Group, a major competitor and a news story to go with it at the bottom of the pre-seen.

ChargeIT – the OCS

CIMA’s 22-page OCS pre-seen was the first to hit the streets, ready for those May exams.
We say watch out for ChargeIT’s FD here. Ben Da Silva is known as a ‘techie’ and wants to improve digital technology to help processes become more efficient. He’s also got a bit of a reputation as being tight with money.

The finance teams role hasn’t changed since the company was formed in 2001, and the day-to-day transaction processes take up much of the small team’s time. I would expect that to change.

Sitters take on the mantle of the finance officer, whose main role is to support Sophie Jacobs, the FM. Your tasks include annual budget prep, producing monthly management accounts and other information when required. You also assist with the financial statements and deal with any queries regarding financial reporting.

You are working for ChargeIT, which develops cordless domestic electrical products, and the company is a leading light in battery technology. It’s a husband-and-wife firm – they own the equity.

One interesting move back in 2016 was to bring manufacturing
home (to Eastland) from South-East Asia. Lithium-ion battery power and robotic cleaners are the news stories at the tail end of the case, so watch out for something on this. Check out the profit margins on those robotic hoovers, too!

Remember that this case study covers the May and August Operational case study exams.