Free Strategic Case Study Exam CIMAPRO19-CS3-1 Exam Practice Test

It is now three days since the start of the oil spillage crisis.

William Seaton, the Director of Finance stopped you in the corridor a week after the Head Geologist’s announcement that reserves had been overstated:“We informed the stock exchange that our reserves had been downgraded and our share price has taken a solid hit. We need to work towards making sure that this is never repeated.The Board is actively considering some changes that we hope will improve our forecasting system. I am not convinced that the suggestions will work. Frankly, if we could predict the future with certainty then I would have us stop looking for oil and start selling forecasts.I would like you to work through the proposals that have been put forward and to recommend on their adoption, with changes if you think it necessary. The issues that we are most seriously considering are:A suggestion that Big Data could be used to monitor oil prices. Do you think this would be a sensible way to proceed?A suggestion that we should update our reserves information on the company website in real time. Do you think that would be an effective communication strategy?Finally, we have considered a number of issues surrounding the motivation and inspiration of our geologists. Two quite distinct schemes have been proposed. Firstly, some Board members believe that our geologists should be rewarded in relation to the accuracy of their forecasts. Bonuses will be paid on the basis of correct initial evaluation of wells. The bonus will increase if a well that was initially identified as commercially viable goes into production and will decrease if a well that was classified as viable is reclassified as unproductive.Secondly, other members of the Board believe that there should be a greater degree of accountability on the part of geologists. The incorrect classification of a well’s potential could be treated as a disciplinary matter. Please provide a detailed analysis of EACH of those suggestions.”

You received a telephone call at home early in the morning, asking you to check your emails. The following email was waiting for you:From: William Seaton, Director of Finance To: Finance ManagerSubject: Public relations crisisHi,This email arrived from the Head of our Middle East office just now. They are a few hours ahead of us, so he rang me at home to make sure that I had seen his message.We have a few hours before the news article will be published, so I need to make the best use of that time in order to limit the damage to Slide. Your priority is to protect our reputation because I have already woken up the engineers and geologists and they are going to deal with the actual oil spillage.I am not thinking too clearly, so I need you to provide some initial thoughts on the following:Should we use our business relationship with Business News to have them withdraw the story? We are a major advertiser and we spend millions with them every month. What are the advantages and disadvantages?Should we respond with the facts as we know them? All we know for certain is that there have been reports of oil contamination in an area that has countless oil facilities nearby, and so we could deny all responsibility, at least until our experts have had the chance to get there and to investigate.If we do decide to make a public announcement then we will need to have a plan in place. We need to assemble a team to deal with the press. How should we structure our media response team?What are the key factors that the Board should consider when communicating with the press? Explain why the factors that you have identified are important.I realise that it is still very early, but I need your thoughts very quickly.Thanks WilliamThe email referred to above can be found by clicking on the Reference Materials button.

From: Jan Archibald, Group Chief Financial Officer, Fouce Oil To: William Seaton, Director of FinanceSubject: Sale of oil fieldsDear William,As you know, the Board of Fouce Oil is keen that you should operate in an autonomous manner. However, we believe that it is our duty to ask you to reconsider a key issue in Slide’s approach to doing business.Over the years you have been very successful indeed in finding significant oil fields and bringing those to production. We have been gratified to observe your efforts in doing so and we believe that all shareholders have benefitted from the wealth that you have created.The Board of Fouce Oil believes that the time has come for Slide to stop giving the fruits of its labour away to other companies. We believe that Slide should retain any successful oil wells and start to earn revenues from the sale of the oil itself rather than the sale of the oil wells. We believe that the stock market would respond favourably to such a development, to the mutual benefit of all.Best Wishes Jan

The Director of Finance, William Seaton, has invited you into his office.“This will come as a bit of a shock, but the Board has decided that it would be in our best interests to relocate our Head Office from Kayland to the Middle East. We have interests there, including a regional office, already. We know that the oil industry is welcome and there are several governments which are very open to such foreign direct investment from the West.Nothing has been decided for certain, but there are compelling tax advantages to us relocating. We would also be subject to slightly less restrictive legal requirements. We can retain our listing on the Kayland stock exchange, albeit as a foreign company.Things are very much under consideration at the moment, so please don’t tell anybody about this conversation.I want to check that I have thought of everything at the strategic level before we make an irreversible decision to move. I need you to write me a report on the following:What are the strategic implications of moving our Head Office from Europe to the MiddleEast?What are the strategic risks that might arise and how might we deal with them?I need to have your thoughts soon because the Board is holding a special meeting this afternoon.”

Daily GazetteDraft story for commentThe singer, the forester and the tax adviser

From: Abdhulla Al- Waihabi, Regional Manager – Middle East – Slide To: William Seaton, Director of FinanceSubject: Press articleHi William,I have just had a telephone call from a journalist at Business News to ask for a comment on a story that it plans to run. As you know, we purchased oil wells in the AZ40 field last year in order to bring them back to full production. We got the wells for a good price because the previous owner was struggling to maintain oil pressure and it appeared that the recoverable reserves in that field were close to exhaustion. Our experts worked out a plan to drill a hole and pump water into the well to force more oil to the surface. That is a standard industry technique. Our geologists are the best in the industry and so we are better than most at bringing wells back on stream.It now appears that we are being blamed for an environmental catastrophe. Our pumping station is only one kilometre from the sea and there are reports of oil coming to the surface along the coast close to where we are operating. We have only just started operations and there are fears that we have ruptured a rock formation with our high pressure pumping.I have ordered an immediate halt to all pumping activity, but the oil could continue to bubble up for years. The coastal area has some important coral reefs and there are fishermen who depend on shellfish that can be found there.I told the journalist that she would have to wait for a response from Slide’s Board. Business News is a European newspaper, so any comment from you will carry more weight anyway.I am sorry to be the bearer of such bad news. Abdhulla

Six months have passed since you first heard of the possibility that Slide might relocate its Head Office to the Middle East.You have been called into William Seaton, the Director of Finance’s office:“After lots of deliberation, the Board has reached a final decision on the Head Office move. It has been decided that we will relocate to the Middle East.I need you to draft a report on the following matters:First of all, we need a strategy for the choice of country to which we are going to relocate. I need you to think about the strategic decisions that will have to be taken so that we obtain the best possible value from the relocation.Secondly, we have to think about the change management issues with respect to Slide’s senior managers. We have a good team of senior managers and Board members and we wish to see them relocate with the company. I need your thoughts on this.Thirdly, there will be significant change issues for the other staff members. We cannot justify moving all of them to the Middle East, but we will be relying on them to ensure an orderly transition from the current Head Office to the new one. They will be busy for several months, then most will be made redundant. The rest will be offered new jobs with Slide because we will need a scaled down administrative presence in Kayland. Again, I need your suggestions for this.Finally, we need to put together a transition team to deal with the many administrative issues that the move will create. I need you to suggest a clear job description for the transition team that explains the main operational tasks required, so that the directors can be left free to focus on the strategic management.”

Press clipping from today’s Financial News:

Memorandum of Understanding between Fouce Oil and Slide