Thursday, 26 January 2012

Strategic Issue vs Strategic Alternatives

Students often loose track of what the main issue is. Many people often read the case and right away write down each of the strategic alternatives as the strategic issues, which is not wrong in itself as each of the strategic alternatives is a strategic issue in a way but these are not the main issue that the company is facing. All of these strategic issues have something in common, and once you identify it, you will know what the main strategic issue is.

Examples of Strategic Alternatives:
  • Diversify into health food products
  • Expand into Europe
  • Offer a new brand
  • Introduce a new service
The main Strategic Issue may be to 'increase market share and profitability' and these strategic alternatives are the potential alternatives that are available for consideration in order to increase market share and profitability and hence address the main strategic issue.

You can look at it as the Strategic Issue representing the problem at hand, with the strategic alternatives representing the possible solutions.

In the 2012 CMA Case Exam, identify the Main Strategic Issue and then provide 4 Strategic Alternatives. It is important to list the Strategic Alternatives in priority order, starting with the most significant alternative.

Monday, 23 January 2012

Essential Components of a Situational Analysis

The Situational Analysis is the single most important component of the 2012 CMA Case Exam. If you get this wrong and don't complete a proper and complete situational analysis, your entire case report will be based on incomplete or erroneous information. The analysis of the strategic alternatives as well as the recommendations are both based on the situational analysis - you will need to integrate the pros, cons and recommendations to the situational analysis. If you get it wrong, your integration, pros, cons and recommendations will all be poor.

The following are the essential components that make up a good situational analysis:

List in point form, and under the appropriate headings, every single Strength, Weakness, Opportunity and Threat that you can identify in the 2012 CMA Case Exam Additional Information and Backgrounder. A preliminary SWOT has already been provided so there is no need to repeat points that were already included in the provided SWOT, but make sure to add a comment stating that this SWOT analysis is in addition to the one already provided.

Make sure you understand the difference between Strengths, Weaknesses, Opportunities and Threats:
  • Strengths are internal (i.e. Experienced management, established brand, good reputation)
  • Weaknesses are internal (i.e. High Employee turnover, poor morale, declining sales)
  • Opportunities are external and relate to the industry as a whole (i.e. Strong economy, increasing incomes within the relevant demographic group, weakening competitors, bigger market)
  • Threats are external and relate to the industry as a whole (i.e. Increasing competition, poor economy, changing consumer tastes)
Internal Analysis
  • Briefly discuss the Strengths and Weaknesses that were identified in the SWOT and what this means to the company.
  • Stakeholder Preferences - Identify every single stakeholder and their respective preferences. List them in order of importance.
  • Constraints - Identify all relevant constraints. Two main types of constraints: Financial - i.e. maintain a certain Debt to Equity ratio, meet specified bank covenants. Non-financial - i.e. limited production capacity, limited shipping capacity
  • Goals - i.e. sales levels to achieve, market share to capture
  • Uncertainties - i.e. unstable economy, weather
  • Risks - i.e. potential key employee resignations, strikes
  • Mission and/or Vision Statement - If it is implied, put it into a proper Mission Statement format. If it is stated - don't just copy it into your report, be should to critique it.
  • Internal Financial Analysis - Do not spend too much time on this. It is easy to get lost in calculating dozes of ratios and discussing them but you will be loosing precious time and gaining minimal marks for such a thorough analysis – focus only on financial analysis that will help with the main issues. Do a thorough financial analysis on the backgrounder and use these result to help you decide which ratios/areas to focus on once you get the 2012 CMA Case Exam Additional Information.
  • Financing Available - Identify the financing available - list the amounts, conditions and sources of such financing (i.e. $2,000,000 through a line of credit at 2%, or $500,000 Bank Loan for capital projects)
External Analysis
  • Briefly discuss the Opportunities and Threats that were identified in the SWOT and what this means to the company.
  • Identify both the Key Success Factors (KSF) and the Key Risk Factors (KRF)
  • Industry Assessment - provide a brief assessment of the Industry and what this means to the company (i.e. Industry financial performance trends, key competitors, potential replacement products, changing trends)

Friday, 20 January 2012

Key to Effective Reading & Planning - CMA Case Exam

Reading the report is time consuming and often by the time you are done, you remember very little and are faced with a report full of endless highlights and side notations which are overwhelming. You end up sifting through the whole case again and again each time you are looking for relevant information relating to alternatives, swot, recommendations, etc. Often key facts that you marked in the case are forgotten and never even make it to the body of the report.

Try using the following steps - I have tutored numerous students using this approach and their feedback was unanimous - they were amazed at just how much time was saved and at how much more complete their report was.
  1. Read the CMA Case Exam Additional Information very quickly once to get the overall idea of what you are dealing with
  2. Open SecureExam and in the Word portion type up the complete outline with every single heading that you will need (i.e. Introduction, Strengths, Constraints, KSF, KRF, Financing Available, Strategic Alternatives, pros, cons, etc.) - do it in the proper order and do not miss any headings
  3. Read the CMA Case Exam Additional Information for the second time but this time, do it thoroughly and as you identify each and every piece of information that is relevant to the case report (pros, cons, constraints, mission, stakeholder preferences, alternatives, strengths, threats, etc.) enter it right away under the appropriate heading - do this as you are reading the CMA Case Exam Additional Information, do not wait to enter this info into the report until after you finished reading as you will likely forget to include key facts.
This way by the time you are done going over the CMA Case Exam Additional Information for the second time, you will already have a large portion of the case exam already complete - sections like constraints, stakeholder preferences, SWOT, Pros and Cons will already be filled out in SecureExam in the headings that you have created earlier. Doing this also reduces the chance that you miss or forget information. See - you just earned marks and you didn't even have to start calculating or analyzing anything yet!

Image: graur razvan ionut /

Monday, 16 January 2012

Top 8 Easily Avoidable Mistakes - CMA Case Exam

Very often marks are lost due to silly mistakes. In the CMA Case Exam every mark counts so I compiled a few reminders to help you avoid losing marks on the top 8 easily avoidable mistakes:
  1. Don’t  skip over any area - cover each area to grab marks in as many places as possible by using an outline. To avoid forgetting a section of the case report, the moment the exam starts, type out an outline with ALL the relevant headings (Constraints, KSF, KRF, Key Stakeholder Preferences, Financing Available, etc.) into SecureExam. Now all you need to worry about is filling the headings with content and you will have on-screen prompts for all that you need to complete. 
  2. State all of your assumptions - and I mean ALL of them. When in doubt, state your assumption. I recommend that for every appendix you include a section titled 'assumptions', that will be your reminder and will prompt you to list and state your assumptions.
  3. Avoid being biased - After writing out all the pros and cons, review them to make sure that you do not have any alternatives where there is a big discrepancy between the number of pros and cons (i.e. 8 pros and 2 cons). If you find that you do have an unbalanced analysis, go back to your situational analysis and to the info on the alternative and review to either identify additional cons or pros or verify that you included appropriate ones and remove if necessary to ensure that the final product has a balance between pros and cons.
  4. Address the right audience - write the report to the right audience. You are not writing it to your CMA moderator or to the CMA marker. The case will specify who you are  writing as and who to (usually your audience is the board of directors but not always)
  5. Check your appendix references - include references to the right appendices in the body of your report. Do not make the mistake of directing the marker to the wrong appendix.
  6. Do not waste time on that you will not use in the case - you will not get any marks for appendices that were never used/referenced within the body of your report.
  7. If you identify an issue, make sure to resolve it -  in addressing any of the issues, don’t just say that the issue “needs to be resolved” or “further investigated” 
  8. Use proper names for management in the report - do not use first or last names only, do not misspell names and remember to capitalize properly. i.e. Do not refer to ‘John Zerga’ as ‘john’ or ‘zerga’ or 'Zorga', rather use proper naming such as 'Mr. Zerga' or 'John Zerga'
Do you have any other examples of silly mistakes that can be easily avoided?

Image: ningmilo /

Friday, 13 January 2012

Timeline Pitfalls to Avoid - 2012 CMA Case Exam

One of the biggest concerns while writing the 2012 CMA Case Exam is the four hour time limit. Everyone could get an AE if they had the weekend to do the case exam but you are limited to 4 hours during which you need to read the case, analyze the information, compute ratios, alternatives, constraints, financing limitations, and pro-forma as well as compose a solid case report to display it all. A lot of students get caught up in certain case aspects and spend a disproportional amount of time on it (disproportional to the amount of marks that can be obtained in that section).

I have observed that most students spend a lot of time doing the situational analysis as well as the quantitative analysis. While both are important, spending 3 hours on an NPV calculation leaves little time to the rest of the report, and there is a limit on how many marks you can get for the perfect NPV. The key is for the effort and time to be appropriate and balanced. To achieve this, I recommend using the following timeline that allows for an adequate and appropriate amount of time on each category.

Suggested timeline that worked for me and others:
  1. Reading Additional Info & Situational Analysis (SWOT, constraints, Ratios, etc.) – 75 minutes
  2. Identification and Analysis of Strategic alternatives (Pros, Cons, NPV, etc.) – 75 minutes (no more than 45 out of these 75 minutes should be spent on calculations for alternatives)
  3. Strategic recommendations – 30 minutes
  4. Operational issues – 20 minutes
  5. Implementation plan – 20 minutes
  6. Intro/conclusion/cover page/executive summary/overall review – 20 minutes
Let me know if you have specific questions about the timeline. I plan on posting in more detail about each of these case sections in the future.

Image: Arvind Balaraman /

Friday, 6 January 2012

About Me

Hello CMA Case Exam writers! 

I am a Certified Management Accountant (CMA) that went through the SLP program several years ago. Having gone through the program myself and by talking with various other CMAs and CMA students I have compiled various strategic tips that helped me and others pass the CMA SLP program successfully. I will be posting and sharing my tips and suggestions as well as answering your questions on how to approach writing the CMA Case Exam and hope that it will help you pass the program.

While completing the program myself it always amazed me that students had nowhere to go to online where they could ask questions about case writing strategy and bounce ideas off of each other or better yet, off of someone who has been there and knows the ins and outs of how to write the exam successfully. This blog is not for discussing the details of individual cases, rather it is about case writing strategy geared towards helping students pass the CMA Case Exam. 

Please note that my posts and my comments on this blog are simply based on my own views and experiences.

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