Lili Han Education Manager ACCA China P 3

Lili Han Education Manager ACCA China P 3 Business Analysis Exam techniques

Content § Mind map § Exam techniques § Learning support resources 2 ©ACCA

Mind map ©ACCA

Mind map Strategic Internal Appraisal Mission Stakeholder Appraisal Objectives Strategic Options Strategic Control Strategic Implementation External Appraisal Position Choice Action ©ACCA

Exam techniques 5 ©ACCA

Giving Different Points Could you give me 6 types of animals living in the Arctic? 4 seals and 2 polar bears. ©ACCA

As "Simple" As Possible “Simple” English “Simple” Question “Simple” Model “Simple” Points “Simple” Marks ©ACCA

Markers know nothing unless you can show them • Show working • Show explaination ©ACCA

Do Real Expand in "Meaning" Rather than in "Form" ©ACCA

Do As Required Do not highlight your answer Do not write beyond requirement Do not attempt all questions ©ACCA

Manage Time • During the course • In the exam (1. 8 min per mark + answer plan) ©ACCA

Don't Panic Be fully prepared Be professional Be confident ©ACCA

Presentation and Layout 8 -10 marks per page • Key words if time is urgent • Introduction Heading & sections • Don’t repeat what have said in scenario Space Table & diagram ©ACCA

Common Questions How many pages need to write? In which order the question should be answered? Can I just attempt part of the questions? ©ACCA

Illustration 1 - ONA (Q 1 Dec 2007) a) Using the information in the scenario, evaluate the strengths and weaknesses of ONA and their impact on its performance. Please note that opportunities and threats are NOT required in your evaluation. (20 marks) b) The CEO of Oceania National Airways (ONA) has already strongly rejected the re-positioning of ONA as a ‘no frills’ low-cost budget airline. i)Explain the key features of ‘no frills’ low-cost strategy. (4 marks) ii)Analyse why moving to a ‘no frills’ low-cost strategy would be inappropriate for ONA. (16 marks) Note: requirement b ii) include 3 professional marks. c) Identify and evaluate other strategic options ONA could consider to address the airline’s current financial and operational weaknesses. (10 marks) Note: requirement c) include 2 professional marks. ©ACCA

Answer and layout Strength Strong brand identity ONA’s brand is highly recognized by both local people and the traveler from overseas. Recent research tells the result that ONA presents a positive image of Oceania. Strong brand identity can help ONA to attract more passengers. High quality of food offered It is awarded by IPG for the food provided by ONA on flights. The award of “Golden Bowl” in some ways like an endorsement for ONA, giving passengers confidence on high-standard services provided by ONA. Well-established route network ONA has already established an impressive route network, covering 25 major cities for regional sector and 20 cities for international sector. This route network will let its passengers much easier to plan their itineraries wit transfer planes. ©ACCA

Answer and layout Weakness High pilot remuneration As a perceived excellent employer, ONA offer pilot nice package higher than level in job market. It leads ONA’s profit before tax decreased by 35% from $80 m (Yr 2004) to $60 m (Yr 2006), when gross profit margin is kept at same level. Channel of revenue generation Almost half of total revenue of ONA comes from travel agents, but only 4% of total revenue for competitor comes from agency approach. This sales strategy cause high commission cost to ONA, and it may be the reason why ONA’s gross profit margin has no improvements when revenue increases by 5% from 810 m (Yr 2004) to 849 m (Yr 2006) which is net off by increase of cost of sales. Average of aircrafts Average of ONA’s aircrafts is over 10 years, which is much older than it of competitor’s aircraft 4. 5 years. Keeping use old-aged aircraft will need high maintenance and repair cost. If ONA had a plan to replace old-aged aircrafts, it might require big capital investment. According to known investment in aircraft from year 2004 to year 2006, only three aircrafts were purchased, which tells that ONA is a conservative company that is risk-adverse. ©ACCA

Answer and layout Lower utilization Utilization of aircrafts of ONA is obviously lower than it of its competitors. It may because of poor duty condition of ONA’s aircraft due to its old ages or other reasons like much idle time offered to the crew. Lower utilization of aircraft impacts sales margin obtained from per passengers, and in further decreases operational profit. Key competitive competence ONA’s website doesn’t have functionality of online checkin, which is the most important competence for an airline to bring its passengers convenience as more as possible. Deficiency of this functionality somehow will lose ONA’s business passengers currently with contribution of 90% occupation rate of business class, as this group of passengers are used to use their time efficiently as much as possible, and it is doubtful that they would like to wait in queue at airport for check-in. High airfare ONA sell its air tickets with double price of airfare of its competitors. It may because of its cost structure – high commission fee and high employee cost, ONA is unlikely to greatly reduce its selling price except ONA adopt alternative approaches to cut down its cost. ©ACCA

Illustration 2 - Shoal Fish Q 1 Dec 2010 a) In the context of Shoal plc‘s coporate-level strategy, assess the contribution and performance of Shoal. Fish, Shoal. Pro and Shoal. Farm. Your assessment should include an anlysis of the position of each company in the Shoal plc portfolio. (15 marks) c) Portfolio managers, synergy managers and parental developers are three corporate rationales for adding value. Explain each of these separate rationales for adding value and their relevance to understanding the overall corporate rationale of Shoal plc. (10 marks) ©ACCA

Q 1 Dec 2010 Introduction • Performance/contribution • BCG ©ACCA

Q 1 Dec 2010 (a) Shoal Fish (L) Market growth 5% during 2007 -2009 Government introduced quotas (P) Over-fishing Fishing stock (E) (L) Market share 12% in 2007 11. 3% in 2009 Gross profit margin 5% in 2007 4. 9% in 2009 Divest challenging market place Sell, lease, rent their ships to individual owners Need to look carefully at the viability of maintaining the fleets Synergy Shoal Pro 40% of raw materials. If no Shoal Fish, cost Captain Haddock Raw materials. Cost ©ACCA Dog (De e)

Q 1 Dec 2010 (a) Shoal Pro (L) Market growth 2% during 2007 -2009 (H) Market share 40% in 2007 /2009 Gross profit margin 10% in 2007 Government grants due to high unemployment (P) 10. 6% in 2009 Modern facilities & relatively low costs Harvest, retain and maintain ©ACCA Cash cow (Maturity)

Q 1 Dec 2010 (a) Shoal Farm (H) Market growth 20% during 2007 -2009 New way to conserve fish supply (L) Market share 10% in 2007 9. 3% in 2009 Gross profit margin 14% in 2007 13. 4% in 2009 Build Operating cost Hard to securing areas ? ( Growth) Investment to become a key player (market leader star) Conclusion Level of dependence between companies (fish and pro) Conflicting environment forces Competitive advantage Synergy Max contribution ©ACCA

Q 1 Dec 2010 (c) Portfolio Managers • Balance of gain/loss (risk ) • Act as an agent on behalf of shareholders • Manage business with a low cost centre and do not intervene significantly in the running of business (set targets) • Acquire under-performing or under-valued companies to performance & sold at a premium. ©ACCA its

Q 1 Dec 2010 (c) Synergy Managers • 1+1 > 2 (the whole is worth more than the constituent parts). • Share resources & activities (brand name/skills/competence/customers) • Shoal Plc. Knows about sourcing + processing fish, but nothing about restaurant Captain Haddock synergy ? • But generally Shoal plc overall corporate philosophy is a synergy manager. ©ACCA

Q 1 Dec 2010 (c) Parental developer • Use the competencies of the parent to add value to business in the portfolio • Have the brand name that is recognizable throughout the world and whether it can help the business in the portfolio. ©ACCA

Learning support resource 27 ©ACCA

Learning support resources § ACCA approved tuition and learning materials § Student Accountant and its APP § Website – exam specific resources § ACCA-X on Xuetang X § BPP language programme § ACCA learning community § Student service wechat 28 ©ACCA

Exam specific resources § Syllabus and study guide § Examiners’ approach articles § Technical articles, study support videos and podcasts § Examiners’ reports § Self-study guide & re-take guide § Question practice: ü ACCA approved materials ü Specimen exams ü Past exam papers 29 ©ACCA

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