YEX MARINE
SBL SPECIMEN 2 –VALID FOR SEPTEMBER 2023 PRE-SEEN
1/13
(1) Prepare a report to the board which:
• Advises on the financial and non-financial benefits and drawbacks of each of the
investment projects; and
• Recommends, with reasons, which, if any, should be chosen
REPORT
TO: BOD
FROM: Tranart Consultants
SUBJECT: Two investment projects
DATE: September 20X3
This report advises on the financial and non-financial benefits and drawbacks of each of the investment
projects; and recommends, with reasons, which should be chosen
DINGHIES
PROS
Simple design
Dinghies have simple design and fewer technology, hence it requires less expertise and will be easy to
manufacture.
Less competition
ll competitors are smaller than Yex Marine. Yex Marine is planning to sell dinghies at $ 4000, as compared
to the average industry selling price of $ 5,000. This will enable Yex marine to penetrate the market and
grab quick market share.
Earlier payback
The payback is 3.5 years which is earlier than luxury yachts. This means you will be able to recover your
initial investment much faster.
Less investment
The initial investment is $ 4m which is lower than luxury yachts. You will have surplus funds of $ 6m which
can be used to fund other investment options which may come in future.
CONS
No experience
Dinghies is a new product for Yex marine. It does not have any prior experience of selling dinghies. Hence
it’s a new market for Yex Marine.
Low profit margins
2/13
The gross profit margin and operating profit margin is quite low as compared to luxury yachts. If this
option is selected, then you will not be able to meet the profit criteria of 45% and 20% set by you for next
5 years.
Lower NPV
The NPV of $ 5.5m is lower than the NPV of luxury yachts which means it will add less value to shareholder
wealth.
LUXURY YACHTS
PROS
Expertise
You have been manufacturing and selling yachts since last twenty years and is amongst the top three
companies in Neoland. You have the expertise yachting industry and loyal customer base hence you will
not face difficulties to market the new luxury yachts.
Global market
Luxury yachts have a global market. This will be a good opportunity for Yex Marine to expand and enter
global markets and will help in increasing revenues and geographical diversification.
Higher profit margin
The gross profit margin and operating profit margin is quite higher as compared to dinghies. If this option
is selected, then you will be able to meet the profit criteria of 45% and 20% set by you for next 5 years.
Higher NPV
The NPV of $ 7m is much higher than the NPV of dinghies which means this option will add more value to
shareholder wealth.
CONS
Customization
Yexmarine’s cruising yachts are made in standard molds, with limited additional optional featuresbuliding
available to customers. You are not known for offering luxury and comforts to your yachts. Hence building
yachts on an individual customized basis and reflecting the owner’s tastes might be challenging for you.
Global competitors
You will face competition from foreign manufacturers including some which are larger than Yex Marine.
Since you do not have any international experience, this may cause problems.
3/13
Recommendation
IF YOU PLAN TO RECOMMEND LUXURY YACHTS
Both options have its pros and cons. In my view, I recommend LUXURY YACHTS option on the following
grounds:
- It has a higher NPV than sailing dinghies, which means higher profitability and shareholder wealth
- It will help you achieve you improve your future GP and operating profit margins of 45% and 20%
which is your long term wish as well
- It will enable you to enter global market in future hence higher revenue and global diversification
IF YOU PLAN TO RECOMMEND DINGHIES
Both options have its pros and cons. In my view, I recommend DINGHIES option on the following grounds:
- It is a simple product and will help you with product diversification
- It has lower investment and leaves you a surplus of $6m which you can use to invest in some other
strategic options and earn more NPV.
- You will have strong competitive position as all manufacturers are smaller than you
Best regards
Tranart Consultants
4/13
(2A) Write a letter replying to the chief executive of Yexmarine which assesses his
proposal to establish a strategy committee.
LETTER
September 20X3
Tony Bursham
CEO Yex Marine
Coast Road
Hameldon, Neoland
Dear Tony
Subject: Strategy Committee
This letter assesses your proposal to establish a strategy committee.
It definitely makes sense to create a strategy committee as a board sub-committee as you will be facing
a number of major strategic decisions on products and markets, over the next few years.
The following will be the advantages of establishing a separate strategy committee:
1- More specialized
Having a separate committee leads to specialization as directors with relevant experience are
nominated. If you nominate directors with strategic planning experience, then Yex Marine will be
benefit from ther expertise as it is facing tough competition from Janrom and Kelaby.
2- More focused
Having a separate committee means that they will be able to focus more on the specific roles and
mandate of the committee. As you have clearly mentioned the terms of reference of the Strategy
Committee, it will help the committee to focus on the work expected from the Strategy
Committee.
3- More time
Having a separate committee means that the committee can spend more time as compared to Full
Board. I completely agree with your view that the separate Strategy Committee will be able to
spend enough time considering strategy, given the dynamic nature of your markets and the need
to anticipate, rather than lag behind, your competitors.
5/13
4- Frees up board time
Generally full board has limited time in which they have to discuss a lot of matters. Due to this
they will not be able to focus more on any one specific item. A separate Strategic Committee will
present strategic options to the board approval; hence Board’s time will be freed up to deal with
other matters of the company; such as planned relocation to Lympool and production efficiencies.
5- Higher shareholder confidence
Normally sub committees are run by independent NEDs. As you plan to list Yex Marine in future,
it will add to the confidence of the external shareholders.
However, I noticed some problems with your proposal:
Frequency of meeting
I think the terms of reference should clearly specify the minimum frequency of meeting of the committee.
It is not a good idea to keep it vague or open ended. The committee can meet more often but a minimum
frequency of meeting should be clearly mentioned in the document.
No NEDs in the Committee
Currently you have 3 NEDs on your board. However, I noticed that there is no NED nominated for the
Strategic Committee. NEDs bring wider external experience and independence.
No Finance Director in the Committee
The finance director is not part of the committee. All strategies have financial impacts and it is important
that the finance director is there so that accurate financial analysis can be done for various strategic
options.
Please feel free to contact me if you require discussion.
Best regards
Tranart Consultants
6/13
(2B) Prepare briefing notes for the board which advise how employee dissatisfaction may
impact upon each stage of the organisational change process
(most difficult question of this exam, pls attempt in last)
BRIEFING NOTES
TO: BOD
FROM: Tranart Consultants
SUBJECT: Impact of Employee Dissatisfaction
DATE: September 20X3
This briefing note advise how employee dissatisfaction may impact upon each stage of the organizational
change process.
UNFREEZE
Unfreeze phase deals with proper communication with the employees before the change is implemented.
It helps them to understand the reasons for the change and they will be able to share their feedbacks.
If this is not done properly, then employees will not be aware of the reasons for the change. They will feel
neglected and will not buy-in into the proposed changes. If the employees do not agree with the proposed
changes, then they may not participate properly which could jeopardize the success of the planned
changes.
As you can see from the employee survey results, employees feels that there is a general lack of
communication between senior management and staff and they believe that there will not be proper
consultation or the board doesn’t want to know their views and will ignore all their concerns.
MOVE
Move phase deals with the implementation / execution phase. Detailed planning is done, teams are made
and tasks are allocated to the concerned teams. Proper training is provided to the team so that they can
execute the project.
If this is not done properly, then the team will not know what they are supposed to do. They will not
participate in the implementation activities. They might not be willing to give extra time which may be
required. Hence this will adversely affect the implementation phase and could delay the project
significantly.
As you can see from the employee survey results, some employees have concerns that they will not be
rewarded for the overtime they will do. Also some employees have concerns that they may not get proper
training on the new roles.
REFREEZE
Refreeze phase deals with ensuring that employees follow the new processes and do not revert back to
the previous ones. It requires strict monitoring and rewarding employees for their hard work. Also it
requires dealing with employees who are resisting and trying to return to the previous processes.
7/13
If employees are demotivated, they will not adopt to the new changes and will try to revert back to the
previous one. This could also result in high turnover which will adversely affect the changes as high level
of retention is vital factor for this project.
As you can see from the employee survey results, some employees have concerns that Yex Marine will
lose more senior employees or employees with specialist skills who can most easily find jobs with
competitors, and they are concerned about how difficult it will be to replace these staff
Best Regards
Tony Bursham – CEO
8/13
(3A) Prepare a report for the chief executive which:
• Evaluates the adequacy of the risk mitigating activities for each risk; and
• Recommends any further mitigating activities which may be required
REPORT
TO: CEO
FROM: Tranart Consultants
SUBJECT: Two Risks
DATE: September 20X3
This report evaluates the assessment made of each risk and its potential impacts, evaluates the adequacy
of the risk mitigating activities for each risk; and recommends any further mitigating activities which may
be required
Risk # 1: Flooding risk
Risk level
The operations director has mentioned this is a non serios risk. I completely disagree with this. Flooding
is a SERIOUS risk as you are located in a coastal city. Infact, it is forecasted that flooding in Lympool will
become more frequent and severe with global warming.
Risk mitigating activities
The risk mitigation activities mentioned by the operations director are correct but I think the list is not
complete. Additional mitigation actions should be included as follows:
Flood proof infrastructure
Student to draft two lines
Contingency plans
Student to draft two lines
Emergency / safety plans and procedures
Student to draft two lines
Staff trainings and mock drills
Student to draft two lines
9/13
Flood committee
Student to draft two lines
JUST SELECT 2 POINTS FROM THE ABOVE LIST
Risk # 2: Product obsolescence risk
Risk mitigating activities
The risk mitigation activities mentioned by the operations director are correct but I think the list is not
complete. Additional mitigation actions should be included as follows:
Comparison at internal level
Student to draft two lines
Invest on research and innovation
Student to draft two lines
Customer surveys and feedbacks
Student to draft two lines
Product diversification
Student to draft two lines
Market diversification
Student to draft two lines
JUST SELECT 2 POINTS FROM THE ABOVE LIST
Risk # 3: Data Security
Risk mitigating activities
The risk mitigation activities mentioned by the operations director are correct but I think the list is not
complete. Additional mitigation actions should be included as follows:
Password to change regularly
Student to draft two lines
One time password (OTP)
Student to draft two lines
10/13
Access to authorized staff only
Student to draft two lines
System logs / audit trails
Student to draft two lines
Regular IT security audit
Student to draft two lines
Segregation of duty
Student to draft two lines
Data encryption
Student to draft two lines
Staff training
Student to draft two lines
JUST SELECT 2 POINTS FROM THE ABOVE LIST
Risk # 3: Reputational risk
Risk mitigating activities
The risk mitigation activities mentioned by the operations director are correct but I think the list is not
complete. Additional mitigation actions should be included as follows:
Customer feedbacks and surveys
Student to draft two lines
Complaints monitoring
Student to draft two lines
Involve in CSR activities
Student to draft two lines
JUST SELECT 2 POINTS FROM THE ABOVE LIST
Best regards
Tranart Consultants
11/13
(3B) Prepare briefing notes for the board which assess the benefits that using e-
marketing methods can provide for Yexmarine.
BRIEFING NOTES
TO: BOD
FROM: Tranart Consultants
SUBJECT: E-Marketing
DATE: September 20X3
This briefing notes assess the potential benefits that using the services offered by the advertising agency
could provide for Yexmarine.
Globalization
Demand for cruising yachts has increased over the last few years. New buyers have entered the market
due to extensive social media coverage of the annual Neoland regatt. This shows that the people are using
social media and in case YM does E-marketing, it will help YM to grow internationally and acquire global
customers.
Market leader
There is still limited use of E-marketing across the Neoland leisure boat industry. If YM focus on E-
marketing, it will be a good opportunity to become market leader as other competitors are not focusing
on E-marketing
Modern approach
YM products and our marketing approach are old-fashioned and you are lagging in third place behind your
main competitors. E-marketing is a modern approach and will help YM improve your marketing and
increase our market share
Younger generation customers
Most of YM customers are over 50 years of age. You have limited younger generation customers. If YM
use E-marketing, you will be able to attract younger generation and hence your customer base will
increase.
CRM
YM scored higher than its competitors in the care you give to customers, your after-sales service and the
repair work. Your customer satisfaction % is improving since last 4 years. You can further enhance your
customer service by using E-marketing and other tools such as CRM.
Customer feedbacks
Through E-marketing, YM will be able to gather customer feedbacks and surveys more easily. This will
help you in innovation and reduce product obsolescence risk and reputation risk.
12/13
Data analytics
TM have great amount of customer data collected over last several years. However its not being utilized
properly. Using big data and data analytical tools will help YM to analyze the data and design effective
and personalized marketing campaigns for customer.
Lower cost
E-marketing is relatively cheaper than traditional or physical marketing. The operating profit margin has
been declining over last few years. If YM adopts E-marketing it will help reduce is marketing cost and
improve its profitability.
Customer reviews
Since YM has excellent customer reviews regarding care and after sales service, YM can put customer
comments on various social media sites. This will help in attracting more customers.
Best Regards
Tranart Consultants
13/13
