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Celebrations and Memories Ltd (Cml) Case Exam Mark Assessment Guide Essay Sample

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Celebrations and Memories Ltd (Cml) Case Exam Mark Assessment Guide Essay Sample

Markers must mark each of the attributes and competencies globally. Judgment must be used in assessing the competencies exhibited in the candidate’s response and assigning a mark for each competency. Guidelines for weighting the various attributes are indicated throughout the assessment guide. Note: In addressing any of the issues, indicating that the issue “needs to be resolved” or “further investigated” is not credited for analyzing and resolving the issue. F1. STRATEGIC MANAGEMENT

In assessing F1, attribute b) should be given the greatest weight. a) Situational Analysis:
The situational analysis is appropriate for the strategic alternatives and business issues being addressed (good quality, depth, breadth, and make sense). It includes internal and external scans, a financial assessment of the company’s current state, and other relevant qualitative information not provided in the high level SWOT in the Backgrounder (e.g. strategic goals, stakeholder preferences, constraints, other SWOT points, KSFs/competitive advantages, and ratios). AE = Good quality – makes sense, includes the main relevant qualitative points, and provides a financial assessment; ME = Acceptable quality – includes relevant qualitative data and a financial assessment; may contain some minor errors (e.g. some irrelevant data are included, some relevant data are excluded, some relevant data are categorized incorrectly); BE = The quality of the situational analysis is not appropriate; NA = No attempt to scan the environment or analyze the current situation. CMA Canada 1

b) Strategic Aspects of Analysis and Integration:
The analysis of the strategic alternatives is reasonable and integration is demonstrated to a reasonable degree. Examples of integrative thinking include the following (among others): • Considering the cause and effect relationship between SWOT items and strategic alternatives. • Considering the implications of one issue or alternative on another. • Indicating how the recommended strategy takes advantage of strengths and opportunities while mitigating weaknesses and avoiding threats. AE = Appropriate analysis of at least three strategic alternatives and reasonable integration (more than 10 clear and distinct integrative points); ME = Acceptable analysis of at least two strategic alternatives and acceptable integration (7-10 clear and distinct integrative points); BE = Unacceptable analysis and/or unacceptable integration;

NA = Does not attempt to analyze any of the strategic alternatives. c) Implementation Plan:
The recommended implementation plan

• Identifies tasks, provides realistic timelines for completing these tasks, matches the tasks to the appropriate individuals, and considers the resources required (what, who, when, resources); • Aligns the organization’s resources and success factors to accomplish the recommended strategy; • Resolves problems without causing others (e.g. addresses the minor issues, overcomes cons of recommended strategies); and • Considers organizational implications, e.g. change management, organizational structure, morale, the role of functions such as distribution, IT, accounting, sales, purchasing, etc. AE = Good implementation plan;

ME = Reasonable implementation plan;
BE = Implementation plan is not reasonable;
NA = No attempt to provide an implementation plan.
CMA Canada 2
F2. RISK MANAGEMENT AND GOVERNANCE
In assessing F2, attribute a) should be given the greatest weight. a) Internal and External Risks:
Risks are identified and appropriately used in the analysis of strategic alternatives, or resolved in the implementation plan (e.g. recommend procedures for sharing, transferring, and/or reducing risk). Risks include (but are not limited to) the following: • Internal risks such as depending primarily on a single card supplier, inventory obsolescence, and inadequate controls over cash and inventory. • Risks associated with strategic alternatives such as increasing operating costs in Alberta, high risk of theft of DVDs. • External risks such as decreasing availability of labour, stagnating construction of secondary malls, declining number of tobacco users. AE = Three internal and two external risks are identified and used/resolved in the analysis of more than two strategic alternatives; ME = Two internal risks and one external risk are identified and used/resolved; BE = One risk is identified, but not used or resolved;

NA = No attempt to address risks.
b) Compliance and Governance:
Compliance with regulatory guidelines and other governance issues are identified and appropriately considered and resolved (e.g. remittance of payroll deductions for children of store managers, compliance with GAAP). AE = One or more compliance/governance issue is identified and used/resolved; ME = One compliance/governance issue is identified and analyzed, but use/resolution is not reasonable (e.g. analysis/resolution has errors); BE = One compliance/governance issue is identified, but not analyzed, used, or resolved; NA = No attempt to address compliance/governance issues.

CMA Canada 3
F3. PERFORMANCE MANAGEMENT
In assessing F3, attribute a) should be given the greatest weight. a) Quantitative Analysis of Strategic Alternatives and Current Value Proposition: The quantitative analysis of the strategic alternatives and current value proposition demonstrates a reasonable understanding of relevant performance management concepts and tools. Appropriate concepts and tools are chosen and applied appropriately (e.g. free of serious errors, reasonable quality). The following are some relevant performance management concepts and tools that should be applied in the quantitative analyses of the strategic alternatives or the financial assessment: 1. Profitability and decision analyses: Relevant revenues, costs, profit margins, cash flows, and/or net income are appropriately calculated and interpreted. 2. Uncertainty/sensitivity analysis: The effects of uncertainty are considered in the profitability analyses. Examples include calculating or discussing the impact of various potential revenue levels on product line profit margins, and applying the probabilities of successfully negotiating postal outlet and lottery booth contracts.

3. Analyses of the value proposition and markets: Profitability of the various provincial markets or product lines is analyzed. AE = Profitability and/or decision analysis is applied appropriately in the analysis of at least three strategic alternatives and at least one other relevant performance management concept or tool is applied appropriately in the quantitative analyses; ME = Profitability and/or decision analysis is applied appropriately in the analysis of at least two strategic alternatives, OR at least two relevant performance management concepts or tools are applied appropriately in the quantitative analyses. BE = Performance management concepts and tools are applied appropriately in the analysis of fewer than two of the strategic alternatives and/or the financial assessment; NA = No attempt to apply performance management concepts or tools in the quantitative analyses. CMA Canada 4

b) Qualitative Analysis of Strategic Alternatives and Implementation/Minor Issues: The qualitative analysis of the strategic alternatives, implementation issues, and minor issues demonstrates a reasonable understanding of relevant performance management concepts and tools. The analysis is reasonable and free of serious errors. Some relevant concepts and tools are as follows: 1. Cost management – labour costs, distribution costs, etc. 2. Revenue management and pricing – customer relationship management, marketing, branding, target customers/segments/markets, discount pricing, etc. 3. Operations management – training, capacity, store layout, inventory management, distribution, supply chain management, etc.).

4. Information systems and information technology – tracking inventory, batch processing of sales reports from stores to head office versus real time, manual entry on cash registers, etc. AE = Four or more relevant performance management concepts and tools are applied appropriately in the qualitative analyses; ME = Two to three relevant performance management concepts or tools are applied appropriately in the qualitative analyses; BE = Performance management concepts and tools are not applied appropriately in the qualitative analyses; NA = No attempt to apply performance management concepts and tools in the qualitative analyses. F4. PERFORMANCE MEASUREMENT

a) Performance Measurement:
Appropriate issues related to performance measurement of CML and its employees are described and assessed (e.g. motivation, incentives, performance evaluation, targets, etc.). These issues are assessed in terms of alignment with organizational goals and/or related behavioural implications. Application of these concepts and tools is reasonable and free of serious errors. AE = Two relevant performance measurement issues are identified and appropriately used or resolved; ME = One relevant performance measurement issue is identified and appropriately used or resolved; BE = A performance measurement issue is identified, but it is not relevant or there are major problems in the analysis; NA = No attempt to address performance measurement issues.

CMA Canada 5
F5. FINANCIAL MANAGEMENT
In assessing F5, attributes a) and b) should be given the greatest weight, unless the candidate provides a pro forma for c), which can pull up the overall assessment for F5. a) Capital Budgeting:
Capital projects are evaluated using appropriate capital budgeting methods (e.g. net present value, internal rate of return). Capital budgeting methods used for the warehouse and store expansion alternatives include the following components: 1. capital costs, other one-time cash outflows, residual value; 2. annual operating cash inflows and outflows;

3. present value factor at the 9% hurdle rate;
4. after-tax cash flows; and
5. calculation of CCA tax shields.
AE = Applies appropriate capital budgeting methods in the analyses of both the warehouse and store expansion alternatives, and the analyses include the correct components; ME = Applies appropriate capital budgeting method in the analysis of either the warehouse or store expansion alternative, and the analysis includes the correct components (there may be some relatively minor weaknesses in the application); BE = Application of capital budgeting concepts and tools contains major weaknesses or errors (e.g. using incorrect discount rate, omits a capital cost); NA = No attempt to apply a capital budgeting concept or tool. b) Financing Available and Required:

The analyses of the strategic alternatives, implementation issues, and minor issues include consideration and/or appropriate calculation of the following: 1. Financing available from various sources (e.g. $750,000 mortgage for the warehouse, increase in line of credit to $1 million, increase in cash from operations, etc.). 2. Financing required for the strategic alternatives and other financial needs (e.g. requirements for the purchase/lease of capital assets, other initial costs, payments to Durand, operating costs. etc.). 3. Aggregate financing required to implement the recommended strategies and changes (e.g. preparing a financial forecast or pro forma cash flow statement). CMA Canada 6

AE = A reasonable attempt is made to determine and compare the financing available from various sources and the financing required for all of the recommendations and operational requirements (e.g. payment of shareholder loan); ME = A reasonable attempt is made to determine and compare the financing available from various sources and the financing required for all of the recommendations; BE = Only the financing available or the financing required is calculated or discussed; NA = No attempt is made to calculate or discuss financing available or required. c) Lease versus Buy and Other Financial Management Concepts: The options of leasing versus buying the equipment for the warehouse alternative are analyzed and/or financial management concepts other than capital budgeting and financing are considered/addressed appropriately in the analysis of the strategic alternatives and business issues (e.g. preparation of a pro forma income statement or balance sheet, taxation, cash flow, working capital management, etc.).

AE = The lease/buy decision for the warehouse alternative is appropriately analyzed, and one relevant other financial management concept or tool is appropriately considered/applied; ME = The lease/buy decision for the warehouse alternative is appropriately analyzed, or one relevant other financial management concept or tool is appropriately considered/applied; BE = The lease/buy decision is not analyzed, and no relevant other financial management concept or tool is appropriately considered/applied; NA = No attempt to consider/apply lease/buy or other financial management concepts or tools. CMA Canada 7

F6. FINANCIAL REPORTING
In assessing F6, none of the attributes stand out as being more important than the others. Judgment should be used in assigning an assessment. a) Financial Analysis:
Appropriate methods of financial analysis are applied appropriately in evaluating performance and risk (current financial assessment, effects of recommendations on ratios, etc.). Appropriate methods of financial analysis include ratio and trend analysis, comparative analysis, and so on. Appropriate application includes correct calculation and interpretation. AE = Five relevant ratios (including earnings per share) for two years and/or other relevant financial analysis concepts/tools are applied appropriately; ME = Three to four ratios for two years and/or other relevant financial analysis concepts/tools are applied appropriately; BE = Financial analysis concepts or tools are not applied appropriately; NA = No attempt to apply a financial analysis concept or tool. b) Earnings Per Share Target:

The earnings per share (or equivalent net income) is calculated assuming the implementation of at least one strategic alternative and compared to the target of $6.25. AE = The expected earnings per share is calculated appropriately for the recommended strategies, and compared to the target of $6.25; ME = An adequate attempt is made to calculate the expected earnings per share for at least one strategic alternative and is compared to the target of $6.25; BE = The expected earnings per share is not appropriately calculated and/or the earnings per share target is not considered; NA = No attempt to consider the earnings per share target.

c) Other Financial Reporting Concepts and Tools:
Accounting policies are reviewed and recommendations are made to ensure that the financial statements comply with GAAP (e.g. accounting for prepaids, amortization, inventory, current portion of shareholder loans, leases, etc.). AE = Four accounting policies are considered and appropriate recommendations are made; ME = One to three accounting policies are considered and appropriate recommendations are made; BE = Accounting policies are considered but the recommendations are not appropriate; NA = No attempt to consider/apply other financial reporting concepts or tools. CMA Canada 8

E1. PROBLEM SOLVING AND DECISION MAKING APPLICATION OF A SYSTEMATIC APPROACH a) Executes the Systematic Approach Appropriately:
The issues and alternatives are prioritized reasonably (e.g. the most important issues/alternatives are addressed first and in the greatest depth), and the analyses of the issues and alternatives are of appropriate depth and breadth, balanced (pros/cons, quantitative/qualitative), objective/free of bias, and consider more than one perspective/global view (e.g. mission, goals, stakeholder preferences; effects of alternatives on stores, sales, customers, other functions). [Otherwise, the quality of analysis is assessed in the functional competencies.] For this case, the most important issues are as follows:

1. Strategic alternatives:
• Expand product line – collectible plates and/or DVDs
• Expand by opening new stores in B.C., Alberta, and/or Ontario • Build a warehouse and internally distribute giftware and tobacco products in Ontario and Quebec 2. Other important issues requiring attention:

• Financing (requirements and sources, lease versus buy equipment, etc.) • Implementation (space for collectible plates display, increased security for DVDs, etc.) • Inventory management (practices re obsolete inventory, frequency and timing of inventory counts, risk of theft, etc.) • Ethical, compliance, and accounting concerns pertaining to the three store managers who hire their children (payroll deductions, recording as maintenance, etc.) • Need for an audit and financial reporting concerns (prepaids, inventory valuation, amortization, monthly reporting, etc.) • Information technology and control concerns (manual cash registers, perpetual inventory systems, etc.) • Ethical concerns pertaining to purchasing agent’s relationship with particular giftware supplier • Employee incentives and staff turnover

• Product mix (discontinue some product lines, expand some product lines, etc.) CMA Canada 9
AE = Reasonable prioritization, and the analyses are of reasonable depth and breadth, balanced, objective/free of bias, and consider more than one perspective/global view (management and functional); ME = Reasonable prioritization, and the analyses are of acceptable breadth, reasonably balanced, relatively objective, consider at least one perspective; and may have limited depth and/or some bias; BE = Inappropriate prioritization, unacceptable depth and breadth, inappropriate balance, and/or not objective. NA = No issues analyzed.

E2. LEADERSHIP (judgment/influence)
a) Quality of Recommendations:
Recommendations, conclusions, and solutions for the strategic alternatives and minor issues are logical, feasible, realistic, consistent, supported, and presented in a convincing manner. For the recommendations to be convincing, the response should demonstrate the following: 1. 9% after-tax return is achieved for recommended capital investments (stores and warehouse); 2. $6.25 earnings per share will be achieved by 2010;

3. $30,000 per month cash flow for repayment of shareholder loan is feasible (e.g. show in a financial/cash forecast); 4. An audit is necessary to increase the line of credit at the bank. AE = All of the above;

ME = Some minor problems with recommendations/conclusions/solutions (e.g. the achievement of only two of the targets are demonstrated); BE = Serious problems with recommendations/conclusions/solutions and/or they are not convincing; NA = No recommendations, conclusions or solutions made.

CMA Canada 10
E3. PROFESSIONALISM AND ETHICAL BEHAVIOUR
In assessing E3, none of the attributes stand out as being more important than the others. Judgment should be used in assigning an assessment. a) Conflict of Interest and Ethical Behaviour:
Existing and potential internal or external ethical, environmental, and security issues and conflicts of interest are recognized and addressed (e.g. relationship between purchasing agent and sales rep., selling tobacco products, selling lottery tickets, reporting wages as repairs and maintenance, etc.). AE = Two existing or potential ethical/environmental/security/conflict of interest issue are recognized and used/resolved; ME = One of these issues is recognized and reasonably used/resolved; BE = One or more of these issues is recognized but not used/resolved; NA = None of these issues is recognized or addressed.

b) Professional Tone and Tact:
The report reflects appropriate business tone and tact, and addresses the right audience (tact is used in any criticism of management’s policies, desires, and goals). AE = Tone and tact are appropriate, and the right audience is addressed; ME = Tone or tact is appropriate, and the right audience is addressed; BE = Tone and tact are not appropriate, or the right audience is not addressed; NA = A response is not attempted.

CMA Canada 11
E4. COMMUNICATION
a) Format, Organization, Flow, Language:
1. The format and organization of the report are appropriate: i) The following components of appropriate format are present: cover page, executive summary, introduction, body of the report, conclusion, and appendices. ii) The executive summary (ES) is brief, concise, and summarizes the strategic alternatives, recommendations, and significant other issues that the recipients can act on. iii) The introduction provides the purpose and scope of the report. iv) The conclusion brings together the findings and draws the report to a close. v) The appendices contain appropriate content (e.g. SWOT, quantitative analysis). vi) The content of the report is organized appropriately for a business report (e.g. uses headings and subheadings, is appropriately sequenced, uses lists effectively). 2. The language used in the narrative is without a distracting number of deviations from business norms, jargon, or unexplained abbreviations, and has few errors in spelling, grammar, sentence structure, and punctuation.

3. The qualitative and quantitative content is expressed clearly, logically and coherently, and flows well. Repetition is used in an effective manner and is not excessive. 4. References, labels and audit trails are provided where appropriate (the response is easy to follow). AE = All components are present and of appropriate quality, the content is organized appropriately, few problems with language use and content expression, and the response is easy to follow and flows well; ME = One or two components are missing or are not appropriate, some minor errors/problems with organization are evident, some problems with language use and content expression, but they are not distracting and the response is easy to follow; BE = More than two components are missing or are not appropriate, some major errors/problems with organization, language use and content expression are evident, and the response is difficult to follow; NA = A response is not attempted.

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