Conclusions - The General Approach

You can use this format for any R2 & R3

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The importance of conclusions and recommendations become even more significant if you are using this as a basis for your Executive Summary. If you do not understand what is needed to generate a good conclusion and recommendation section within a requirement, you will fail these boxes in the real exam. You will also fail the relevant boxes on the Executive Summary if you are just doing a copy and paste into your ES without any editing. We suggest all students edit their C&R within the ES section if you are relying on copy and paste.

The first step though, are your conclusions good enough? If you fail any of your conclusion boxes, you have failed one of the most straight forward boxes on the key. Requirements are harder (see below), but for Conclusions the Examiner tells you exactly what to conclude on within the Requirement in Exhibit 15. If you cannot pull out the key points from the Exhibit, our table below will mean you will pass the conclusion boxes.

IF YOU ARE VIEWING THIS ON A MOBILE PHONE, THE TABLES ARE EASIER TO READ IF YOU TURN IT LANDSCAPE.

Bespoke Project

Recommendation

When to use it

Negotiate contract with CLIENT to improve KEY TERM

ONLY do negotiate once else you are wasting your time! Do not fall into negotiate price, negotiate payment schedule etc.

Review impact of bespoke project on seasonal cash flow especially if there is a delay around the year end

IMPORTANT as cash out will impact seasonality

Review production capacity and disruption to ensure other work won’t be impacted

Important if states it will be included within the normal production

Appoint project manager with experience of similar projects to minimise chance of delays

You may as well include this always as likely to give you the “Other Commercial Rec” point if it is not in the range examiner has put

Perform due diligence on potential client

ALWAYS – Put this down as contract likely to be large

Ensure sufficient number of carpet fitters with the correct skills to ensure high quality

Important for the business image / we would include always

 

PP Carpet

Recommendation

When to use it

Negotiate pricing and terms with [Albert] OR Research other PP suppliers to replace Albert

Suggest as a possibility as an alternative to manufacturing

 

Negotiate pricing of tufting machine

We would include this, but it may not be a main bullet but should be given as other commercial recommendation

Review production impact of PP manufacturing and installation of machinery

Always likely to be a suitable recommendation as it will have an impact on current set up

Review storage requirements for PP raw materials and finished goods especially in September when inventory levels are high

Always comment as more items will need to be stored

Review impact of investment on cash flow and working capital especially at the year-end due to seasonality

Always include cash

Obtain feedback of own produced PP from retails as soon as possible before mass producing

Potential additional commercial rec.

Perform Due Diligence on PP YARN SUPPLIER [Iplik]

Always do this

Negotiate pricing with PP YARN SUPPLIER

Likely recommendation

Consider strategy to manage exposure to exchange rate risk

Likely especially if dealing with Iplik

 

PP Carpet being linked into Circular Economy (AS ABOVE BUT ALSO CONSIDER THESE ADDITIONAL)

Recommendation

When to use it

Perform market research on demand for sustainable PP

Likely to be a good recommendation but make sure it works with the scenario. Don’t just say “market research” if it cannot relate to the scenario

DISRUPTION TO PRODUCTION IS LIKELY TO BE A BIGGER ISSUE WITH PP SO MAKE SURE YOU USE THE POINT ABOVE

ALWAYS

IMPACT ON CASH FLOW LIKELY TO BE GREATER WITH CIRCULAR PP AS ITS MORE INITIAL COSTS

ALWAYS

Establish end of life carpet recycling process, liaising with retailers / recycling companies

Always likely

 

Buying Group Opportunity

Recommendation

When to use it

Negotiate contract with [BBG] especially NAME A TERM e.g. rebate / credit terms etc.

ALWAYS – highly likely to be on the key

Perform financial due diligence on [BBG] and ensure correct strategic fit and suitable for WWL’s image

ALWAYS as WWL will be owed money from buying group

Review impact of BBG on future cash flows and working capital requirements in September 2023 due to seasonality

ALWAYS as selling to a buying group (retailers) will increase seasonality

Review capacity / production and storage requirements

Always likely as it will need more carpets to be produced

Consider treatment of rebate within the management accounts and on director performance bonus

Always

 

Changes to supplier contracts / new supplier

Recommendation

When to use it

Negotiate contract with SUPPLIER to improve discount rate, minimum sales value, payment terms / other specific points from Exam Paper

ONLY do negotiate once else you are wasting your time! Ideally choose the one of two things you are really interested in negotiating, but the blanket approach should work too!

Perform DD on SUPPLIER to ensure financial stability and commercial / strategic objectives are aligned

 

Always

Review impact of AGREEMENT on relationship with other suppliers / discuss with other suppliers

Only if not replacing Eaton / Albert or Mistral

Consider lead and shipping times and impact on production of switching to [Iplik] OVERSEAS SUPPLIER

Always if alternative is overseas supplier

 

Producing carpet for Buying Group own label

Recommendation

When to use it

Negotiate contract with buying group especially KEY TERM

ONLY do negotiate once else you are wasting your time! Ideally choose the one of two things you are really interested in negotiating.

Perform DD on Buying Group ensure financial stability and commercial / strategic objectives are aligned

 

Always

Review impact of AGREEMENT on relationship with other retailers / discuss with other retailers

Likely as WWL will be supplying other retailers with a product existing retailers will not have access to

Consider impact on

  • Logistics / supply chain
  • Cash flow and seasonality (short term forecasts)

ALWAYS – it will definitely impact the cash flow of the business especially if there is large sales to Buying Group’s retailers near the year end

 

 

 


Recommedations

Please ensure you practice using a mock exam should you wish to use this list in the real exam

You must ensure the recommendations you decide to use are relevant to the scenario set. We are aware of tutor firms stating that “Recommendations are a lottery, so write as many as you can think to give you as much chance as possible”. We STRONGLY disagree! We know that markers try their very best to make your recommendation fit the points on the key as we have been ICAEW Case Study markers ourselves! We also know that the key is built around broad points such a negotiation with the other party, more information (due diligence, market research, model inputs), issues facing the business e.g. cash flow constraints, staff shortages and relationships with suppliers, customers, staff etc.

Additionally, we see a number of students who create a number of recommendations which are too similar. For instance:

  • Negotiate the contract price
  • Negotiate the payment terms
  • Negotiate the minimum purchase quantities

In this situation, you would only get one mark for the Negotiate the contract point.

Equally, we find some students’ recommendations are too vague and it is difficult to give the mark, for instance:

  • Review the assumptions (without saying which one or why)
  • Review staffing levels (without saying why this will resolve the issue)
  • Review training needs (without saying what this will improve)

Therefore, the key is to gain a range of different points, with sufficient detail to obtain the marks available.

However, we have attempted to cover a range of points, most likely to assist you, BUT PLEASE USE THIS AS A PROMPT IF YOU ARE STRUGGLING AND NOT AS YOUR ANSWER!

Pigging

Recommendation

When to use it

Negotiate contract with PRC to improve proposed CREDIT TERMS / PRICE

Pick one and ONLY do negotiate once else you are wasting your time!

 

Carry out due diligence on PRC

If there is more than just PRC then do DD once by adding “….and XYZ Ltd”

Review assumptions to ensure accuracy, for instance checking cost per litre / recovery rates

 

Most cases BUT tailor this to something that is highly sensitive or where there could be bias e.g. numbers from PRC

Review impact of pigging on production schedules and capacity, especially if training is required

 

This is a little more “generic” so a bit weaker than the other recommendations – make sure training is relevant

Consider impact of pigging on the staff training manual and amend accordingly once the decision is confirmed

Probably relevant but this is a weaker recommendation

Review cash flow requirements relating to the initial investment

ONLY IF THERE IS A DECLINING BANK BALANCE AND PIGGING COSTS A LOT!

 

 

 

 

Gateway assessment / new product development 

The nature of this scenario makes it difficult to be able to make a long list of possible recommendations. A lot of the points could be very specific to the information given on the day of the exam.

Recommendation

When to use it

Review key assumptions to ensure accurate, such as expected volume of sales in XXX Product

Most cases this is likely

Perform additional market research on expected demand for XXX product, including likelihood of existing DGS customers switching to the new product

Take care to tailor this correctly to the information in the Exam Paper. If its NDF that’s being reassessed at Gateway 4, you need to really be careful on how you word market research e.g. state “…for NDF for years 3 to 5.

Review impact of new product on production schedules, wastage and other KPIs

More products = more production runs = more wastage so expect this is a good rec on all NEW products

Discuss new product with existing client base in order to increase support for launch

New product only, not really relevant with NDF.

 

Digital marketing / DTC Online

Recommendation

When to use it

Perform due diligence on POM

Most cases where POM is the suggested online marketing partner

Consider alternative suppliers of digital marketing

Use in most cases but especially if it looks like there are any issues with POM e.g. ethical reports of Bot use

Perform market research to support the traffic , click through conversion rates

This is really the recommendation that supports assumptions to do with all the website side

Confirm assumption relating to delivery costs

DTC has a large impact on delivery / distribution and whilst we are again confirming assumptions, we believe this is sufficiently different to previous recommendation

Consider impact on existing clients and discuss proposals with the key customers

Most cases as DGS becomes a competitor

Negotiate key terms with POM, for instance the initial website development costs and monthly fee

This is probably relevant in most cases to put into your recs

 

Commission scheme

This is extremely difficult to set recommendations without the scenario so please make sure you tailor these to the exam

Wider business issue

When to use it

Discuss any amendments to the existing scheme with the sales team before they are implemented

Most cases where there are proposed new schemes or adjustments

Review reason for the decline in CLIENTS / AVE. REV. either as a whole company or individual sales person

You must tailor this

Consider whether new scheme proposed gives sufficient weighting on profitability rather than just revenue

Very specific if new schemes are mentioned.

Consider ability of sales team to offer discounts and incorporate lower discounts into the scheme rules

Potentially reasonably but again watch the scenario.

 





There are likely to be other recommendations available in all of the scenarios and especially ones that are generated from the exam paper itself and the issues being raised by the examiner. If you have other recommendations are you wish us to review them, please email us at [email protected] and we will give you our 


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