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The May CIMA pre-seen
27 April 2016
Operational PQs work in the finance department of this luxury bath and body products manufacture as a finance officer. You have a fellow FO in Gail Honner, and you both report to Roger Dawson the finance manager who has worked for the company for 10 years.
Sanchez Navarra is 60% owned by the TRU group and the rest of the equity remains with the two founders. They have diluted their equity in the hope of becoming an international player.
One of the co-founders Freda Jones is the FD, although she is not a qualified accountant.
Some 25% of sales are now made via the highly scoring company website. Just 5% of sales come through its own retail stores. Concession stands accountant for the rest of sales.
The pricing strategy is a key component of this case. We are provided with the standard cost card for the firmís cheapest and most expensive produce The retail price is the same irrespective of the fragrance and ingredients used and the manufacturing time. Variable production overheads and fixed production overheads are also based on director labour hours, so this also changes for each product.
Management case studiers are as financial manager employed by IC Optical, a company that sells glasses and contact lenses though a chain of high street opticians. You have to prepare the annual budget and help with costing and pricing.
The company is now listed, but it started life as a wife and husband team. Itís rivals are Newspecs (IC has double its profits) and Zimchem.
Interestingly every citizen in Ceeland is entitled to a free eye test once every two years. The government then pays the optician C$100. If there was a change in government policy this might effect the market as in a SWOT analysis we discover there is little brand loyalty from customers.
It also appears competitors are spending a lot more on marketing. Franchising models, which Newpecs used to grow quickly, and internet suppliers are other threats.
The company is doing some exciting R&D. One project us developing variable lenses. The second project involves integrating glasses with other devices (such as your car).
Store budgeting and control looks set to be a key part of the case. At the tail end of the case you get a typical storeís annual budget.
Strategic case study students are being asked to transform themselves into the senior financial manger for Dreempark, a global theme park operator.
The vision of founder Burl Stanton is key here. He opened the first park in the UK in 1962 and Dreempark prides itself on offering family entertainment. Its major parks also donít sell alcohol or tobacco!
Dreempark concentrates on the complex itself, leaving it to third parties to build and operate hotels, which surround the parks. There is a new park being build in the Far East and the website is already receiving thousands of hits a day, even though tickets are not yet on sale.
The accounts show revenues and profits are up, as are visitor numbers.
Dreempark also have an excellent health and safety record. They have never had a fatal accident. However, we are told there is always the risk that accidents can occur, which could be serious. The last page of the case is a TV news flash about trapped visitors on a ride in the Far East, but we knew that was coming.
Animal welfare is also important as it has dolphins, sea lions and other sea creatures. There is also a petty zoo. One of the press clippings is all about the problems of dolphins in captivity.
Weather can have a big effect on attendance and covering its parks is being explored.
With parks in many different countries means the company is exposed to foreign exchange risk. We discover it utilises financial instruments to hedge against adverse currency movements.
Then we meet Happyworld the parks closest competitor. Could we looking at a takeover/merger? There is also an MOU with a engineering consultancy MIMC, which designs theme parks.
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