Top 10 issues video - CIMA SCS May & August 2020 - Most likely unseen issues - Runnabout

Top 10 issues video  - CIMA SCS May & August 2020  - Most likely unseen issues - Runnabout

Top 10 issues video  - CIMA SCS May & August 2020

In the CIMA SCS Top 10 Issues May & August 2020 Analysis, Astranti CIMA tutor Peter Stiff provides an analysis into what believe are to be the most likely issues to be tested on in the final CIMA Strategic Case Study exam this May. These predictions are also based on our analysis of previous CIMA Strategic Case Study exams, which have highlighted some commonly tested issues and some that are more likely to appear than others.





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Text Transcript of the top 10 analysis

Hello and welcome to this astrology oppressing video this is the top 10 most like the unseen issues for the may and all the strategic case study exam for run about so before we start I'm just going to go through a bit of an introduction to this particular video and where I've got the information on and what you need to do with said information so however I came up with these top 10 well first of all you look at the focus in the precinct if there's a lot of material in the pre scene on a certain topic then it's likely that there is some kind of importance of that topic it's likely to be brought up in the exam so there's more to talk about and that leads into the second point here the degree of importance attached to it by the examiner but a particular section extends beyond purely warts in the pre scene but also what  CIMA like to examine for example ethics it may be that there's no real mention of ethics in the case study but ethics is considered very important by  CIMA and therefore they are likely to examine it next is the strategic importance.

 How important is it to the organization if a certain topic is very important to the company for example say they're suppliers if they rely very heavily on a certain supplier then it's likely that there might be an issue on the supplier if something were to happen to that supplier what impact could that have on the business and also just more general experience in doing these videos in creating mock exams and reviewing exams in the past the typical kind of issues that come up and what kind of things have the examiner brought up in the past and my final point here is about how easy it is to write issues on that subject the people who write the exams are obviously people too and they will go forms that they though for once they know that they can write good questions on so what do you need to do for these issues well first of all it's important to prepare key models so this will be things like your SWOT exam like u.s. Watts and as it's like your pestle analysis because building up this information now whether helped you to adapt the new information given you in the unseen or help you to have that back context to apply the unseen material next we need to do is practice exam questions on these issues if this will help you to understand the kind of questions that will be asked around these topics and how to answer them and also this next session here it will help you to plan these answers in your mind so that when you go into the exam and you start writing you'll already have a background to in which to apply this new information you already have certain points to bring up in your head as you're writing for them and I've also put some more generic things here such as the advantages and disadvantages of these certain topics where they would be used and how models can be used to support them so let's move on to the top ten issues now and we'll start with issue number ten which is funding and the reason why I've chosen funding is because it's a key F three topic it links to a lot of the important topics from the p3 syllabus looks at equity funding debt funding cost of capital etc .

 most importantly it's often used as part of other questions you're not likely to get a question that is just on funding as in an entire exam question that's just talking about equity funding or debt funding etc it's often part of other questions perhaps you've got to analyze a project and then you have to mention you don't have enough money for it right now and we have to source additional funding and where would we get that funding from and it's also mentioned as part of the role that you are playing in these strategic case study exams so if you think back to those  statements those core activities etc it mentions about sourcing finance sourcing funding and this is a very common issue it's arisen in many different case studies in the past and there's no reason to suggest that it wouldn't appear again particularly given its use as an add-on and it's mentioned in the role given to us by SEMA and it's important to remember that cash is going to be needed to support large investment projects and as many potential ones that run about might pursue and they don't necessarily have enough funding at the moment and eased in cash and cash equivalents to source the funding needed for these different projects and so like the issues could be for a new project .

 it's an acquisition they're going to purchase a smaller company or they're good to purchase a smaller supplier so they reduce their dependence on managing robotics perhaps they've got new projects they want to branch out into several new cities or they want to start using a different service or they want to start offering a different service in addition to the hover boards they want to do scooters or something like that or just general organic growth as well they want to invest a lot into current operations to expand upon it or they want to improve their head office or whatever it may be it may also be for a short term working capital issue in the pre-seen we saw that the cash and cash equivalents was just over two billion G dollars and that sounds like a lot but remember that they did have trade payables of over 7 billion GE dollars already so they couldn't actually pay those trade payables with the cash that they have moment and of course there's a lot of other things that go into working capital there can't be pushback that must be paid staff salaries for example you can't push back paying star salaries tell them that I will probably have money in a few months time to pay you but for now just carry on as normal without getting paid can't arrange a credit line like you could with a supplier and it's most likely to appear as an add-on to an investment issue has already stated so it could be that we are going to acquire this particular company or we do want to branch into this particular market or export overseas etc but we don't have the money at the moment so we need to raise additional financing because we either can't afford it at the moment or if we do use all the money that we have we may run into short-term working capital issues .

so forth it's all conjoined together and some key points here from the pre seen that you can use in your analysis it's already mentioned they have just over 2 billion or just over 2.3 billion G dollars in the bank at the moment but a lot of that will be needed for working capital given that the current liabilities are already much higher in fact 3 times higher or so and that of course will need to be paid within the trading year and as such what we must remember what you must remember as a student is to not say we've got 2.3 billion G dollars available let's invest in this 2.3 billion dollar project because of course that is not what that cash for that cash is not to be used free on anything that takes your fancy a lot of that is going to be needed a for working capital so we do potentially to either raise more finance in certainly in order to pay for these project or source of funding elsewhere it's also very prudent to have a reasonable amount of cash in cash equivalents for working capital so also that cash and cash equivalents figure in the statement of factual position shouldn't drop below a certain amount because that cash is me could be needed for a rainy day.

so to speak as I mentioned here they budgeting for your cash flow is critical you must prepare four times we may have negative cash flow perhaps on a monthly basis and therefore have a reasonable amount of buffer cash ready for those situations and depth is already quite high as well gearing at fifty four point eight two or 121 point three percent there which method you usually use depth of equity or debt of a debt plus equity there's no right or wrong method to use as long as you are quite clear in which one you have used and you always use the same method so you're not preparing one year to another year or one company to another company using different methods but they do have a reasonable amount of tangible assets quite a high amount of tangible assets over a hundred and a 28 and 129 billion G dollars worth and that could be used as security to raise a debt again so it could be that they take on additional debt funding if you're wondering that these gearing ratios were quite high and that could cause a problem for raising additional debt fund II that is possible and banks will look at that but what I would also say is that this is a tech company and tech companies are renowned for having very high gearing ratios and that companies like Tesla in the past I've had gearing ratios in the hundreds of a percent and the suggested order for raising funds is to start with using cash if you have cash available we know cash might be a bit tight but it is for very very small projects as the odd 100,000 G dollars here and there there know perhaps it's best to use cash because money already have there's no real risk involved if you need to raise more than the best thing to do is to use debt funding either secured against assets and from a bank and finally equity and equity is usually the last resort because of the cost of all it cost millions to raise additional equity funding and it can take a month to take up to a year to raise that finance but this is perhaps the best way if you need to raise an enormous amount of money if you literally need to raise tens and tens of billions of G dollars then this is the best method to do that and the reason why it is better is because you do not have to pay it back dividends are optional and there's no need to pay back the capital investors invest at their own risk if they lose money that's on them that's not necessary on you as the company cost you you want to provide a good return to keep people investing in the company but unlike debt which does have mandatory interest payments it is perhaps sometimes an efficient way of raising a very large amount of money at a better cost to the business in the long run it's expensive in the short term but when you have high levels of debt you have very high interest payments and that can cost a company in the long term but for medium levels debt financing is often better because it's very quick it's generally low cost to raise that and when you are thinking about the people who've provided you or the stakeholders that provided the funding need to put those into your men lows matrix and your stakeholders matrix so where do they sit and that also determine .

how you treat the bank's often sit in the high power low interest in that they don't really mind as long as you are paying off your interest payments they don't really care whereas perhaps a really big powerful institutional shareholder would be in your high interest and high power because they will be a lot more interested and want to be much more involved in the way the organization is being run issue number nine now and that's ethics and ethics is it chosen again like funding because it is the most commonly examined SES topic and fact it's not even one of the most commonly examined is that the most commonly examined - topic at be strategic case study there's in most variants in fact since the strategic case that he was brought in all the way back in March 2015 there has been a some form of that ethics question be it an add-on issue would be it consideration be it an actual full question on ethics itself in 40 to 60 percent of all papers of that have been sacked in every single sitting since the very first one back in March of 2015 so 40 to 60 percent of the you watching this video right now could get an ethics question in their exam .

it's very important to see CIMA wants to be seen to be testing to people on ethics it's very important parts of being a measurement captain Seymour wants ethical people to be qualified management accountants so if you mess up really badly on an ethical question and you suggest something that's completely unethical then they'll be looking at you through a microscope thinking is this the person that we want as a qualified management council representing the body of a qualified management accountant and there's some specific focus in the pre seen the nature of the industry does tie in with ethics not necessarily in a morally right or wrong but with health and safety is a big issue here and there was talk in the articles as well about health and safety and also the values and the social responsibility of the organization as was mentioned in the value statement in the section along with the mission and vision statement so like the issues that could be to do with the environment and beneficial potentially for a company like run about it could be that there be some new laws brought in that affects motorists and affects public transport etc but as a very clean economical efficient way of traveling like using a hoverboard it might be of benefit although it could lead back to a question about where our electricity is coming from that's being used in the docking stations is it coming from renewable resources can we get additional tax credit if we do use one sir from additional sustainable and recyclable sources etc

as mentioned specifically in the values looking to reduce the carbon footprint and that will also have to factor in how we operate in the things we suggest in relations with our suppliers as well our our suppliers using the right sorts of materials that are beneficial and sustainable for the environment are they using recycled energy etc the time with our legal and safety responsibilities as well who do we owe a duty of care to to be our duty of care to our stakeholders such as our employees the users etc and all of this can have a negative impact on the reputation of the organization as well and that's important for raise that duty of care that what do you to think about when you are answering your question on ethics and other issues that have arisen the past rings ethics commonly in a strategic case that exams is issues over the treatment of suppliers and also the achievement of employees and suppliers we have a very  big powerful supplier in managing robotics who we rely on and they could be mistreating their employees we don't know at this point there's no mention of supplier audits etc they're based in a different country they may have different laws etc but we are expected to make sure that they are treating their employees well and to essentially stop operations with them if they are not example of Apple when it was using very large powerful Chinese manufacturer and there was a lot of mistreatment of staff going on and Apple wasn't auditing their suppliers and it was found that there was a lot of this mistreatment going on an apple got sort of blame for it even though they weren't directly responsible confidentiality importance well ensuring that this is often quite more internal to the organization rather than external to the organization or it more to do with individuals within the organization.

 if you have a manager or someone like that who is telling you things that are no really quite bad that they've been doing and if it's not if it's found out then there's gonna cause a lot of problems with the organization that you know do you keep quiet or do you have a duty to disclose that information to make sure that people are aware of it and that this issue can be resolved to show you're not passing on information about users they sign up to our app and making sure that we're not selling into third parties without approval first governance as well is there enough governments in the organization or is it complying with the code of governance the board at roundabouts was good but there have been issues in the past where it hasn't and finally bribery never ever try to justify bribery in a senior case study exam because CIMA will not like it one bit bribery is never acceptable in any circumstances and this even includes non direct bribes as in rather than the old traditional cartoony here's a briefcase full of money to ensure that we get the contract more the taking them out treating them to a nice five-star restaurant at a five-star hotel no buttering people up to try and get a contract and I appreciate it in the real world ethics is quite great and you do have to balance it with business needs etc

 but in the CIMA exam the attitude you want to take is that ethics is quite black and white is either ethical or it's not ethical and this is because SEMA expects you to take the moral high ground expect you to take action from an ethical perspective and to always act ethically and what I would suggest doing as well is to use your recommendations in your ethics questions and when you're talking about ethics but do it from a short and long term perspective and that not only boosts the amount of points you can bring up and material down it also shows you are dealing with it in the way that a senior manager should do so you bring up a short-term fix to deal with a specific issue perhaps someone's been injured on one of the other boards so you change the safety procedure that's the reactive issue to deal with that but then you also think how can we stop other people from getting injured before could we perhaps put increased training get new equipment by other boards that are safer to use etc what we're doing is we're then preventing it from happening again rather than just dealing with specific issues as they arrives we're preventing the general theme of incidents such as accidents from happen again and also pepper in the phrase if you can ethics is the right thing to do it's doing the right thing is being ethical as some key theories to use of CDC myrrh ethical principles integrity confidentiality professional behavior objectivity and competence since you care are part of the SEMA principles and that's very important it's important to use that but what I would also say even though the exams report says that you can basically always use this model when answering ethical questions is talked about the model mention the model maybe mention the five principles but then just talk about the one that is relevant if it's a confidentiality question say here are the five ethical principles integrity governance generation behavior etc the issue here is confidentiality confidentiality is XYZ here's why the confidentiality breach what we must do et cetera don't spend loads of time talking about integrity in talking about professional behavior and talking about objectivity because if it's a question about confidentiality then that's the only water that you need to use fully when answering the question otherwise you'll get no marked it may be your great it may be all correct what you've written but if it's not answering the question it will not get you marks and another model here the American accounting Association resolution model now of course this is a American model and it's not directly examinable in their fee CIMA model you do not need to learn it but it does have a few good ways in which you can assess ethics and also some key headings either perhaps create a plan around it in your exams.

 such as Judy UK who do we owe a duty of care to and you speak about who you care to ethical consequences was the end result and Wiser's bad values norms cultural norms internal codes illegal and the regulations and et cetera it's a way of building a plan to answer an ethical question use these as headers and turn these headers into paragraphs to get your marks so thank you for watching this video I hope you have enjoyed it and more importantly you have found it useful to finish by just telling you a few things about the products that we produce here at Australia and the ones of that are part of our course of these materials can all be purchased as part of the course or purchased individually so we have our study text we have three study texts for all the object to test exam so free study text for e 1 P 1 F 2 F 3 etc but we also have the study text specifically for the case study exams split into two parts the first is about how to approach the exam how to analyze the information how to plan your answers how to write your answers and also the second part which looks at the key theories from the objective test levels that are relevant to the particular case study so if you are looking at p2 p3 or sorry P 2 F 2 e 2 for the management exam F 3 p3 e 3 for these strategic a study exam and so on we have our course videos.

 which looked at how to plan your answers how to manage your time effectively these are the key reasons why people fail the exam if our pre seen analysis which looks at the precinct and a lot of depth applies key information to that and also concludes with these strategic analysis where we look at the various different models in the seam of syllabus and apply them to the case in also the top 10 most likely issues to arise in your exam to me we have a 70 to 80% accuracy rate on our top ten issues our industry pack which details in great depth the history and the current contemporary issues within the particular industry that's the pre seen is based on we also have 20 to 25 industry examples that you can use within your answers we have mock exams that can be purchased with or without marking and feedback where you can get some real exam practice in look for the kinds of things that the examiner is may bring up in the exam and also get marking and feedback from expert markers who have marked for SEMA and for us for many years who know exactly the kind of things that exactly the kinds of things that the examiner is looking for exactly the kinds of mistakes that students often make and can provide lots of detailed feedback to ensure that you improve on your performance you also have our master classes which are two day-long classes which look at all the key issues facing students in the exam we will also go through live planning showing you how to plan your answers effectively how to write your answers effectively again key things that the caused people to fail the strategic cased of the exam or any of the case study exams for that matter and also if you do sign up for our course provided that you have filled out your forms prior provided that you've submitted your marks provided you have done everything to show that you have really given it your all to try and pass this exam we also offer a pass guarantee giving a free reset to anyone who fails the exam . 

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