Case study support 3: developing a fuller answer
This is the third in a short series of three articles written for students who are preparing for case study exams. It is based on the authors’ experience in setting and marking CIMA case studies. These articles will be valuable to candidates who are preparing for each of the three levels of the CIMA Professional Qualification.
Note: These articles take examples from the pre-seen materials and question tutorials for all three levels of the CIMA qualification to illustrate the points made so a familiarity with these would be helpful. With that in mind, it is recommended that candidates read these articles in conjunction with the other resources that are available to them, including materials that are level specific.
Study planner additional resources: Operational question tutorial material Management question tutorial material / Gateway question tutorial material Strategic question tutorial material For further resources and variants visit the study planner and view a relevant exam session.
How much do you need to write?
Length of answer is not necessarily an indicator of quality. In general, very short answers lack content and make too few relevant points to score well, although some candidates are excellent communicators who can answer tasks in clear and concise language and can score well without producing long answers. Equally, very long answers that ramble and fail to address the requirement tend to score badly because they lack relevant content.
During the exam, candidates should not be unduly concerned about the length of their answers. They should instead focus on ensuring that all parts of the task requirements are addressed.
Developing and retaining skills
Some skills can only be mastered through practice and then require practice to maintain them. For example, a candidate preparing for a driving test would never consider preparing by reading and re-reading a study text on driving and then getting behind the wheel of a car for the first time when actually sitting the test. It is very much the same with learning to pass case study exams.
The most effective way to prepare for a case study exam is to attempt past papers by typing out full answers (preferably under timed conditions) and then reviewing those answers with a view to reflecting on whether the answers seem good enough to pass. It is very tempting to revise by reading past cases and their suggested answers, but making a serious attempt to produce a full answer yourself is the only way to identify problems such as being unable to write very much or producing answers that do not relate to the task.
Writing a practice answer is time consuming, but it is the best way to prepare for the exam. By assessing your practice answer against the suggested answers and marking guide, you can identify areas for revision or additional practice. There is, of course, no reason to attempt a whole paper at a single sitting. It would be enough to attempt a single section at a time.
CIMA’s examiners write suggested answers that are expected to represent what a “good” candidate would be able to produce in response to the tasks in the time available. There is no suggestion that these answers are perfect or that alternative approaches would be deemed unacceptable. Examiners will generally use the most orthodox approach, but that need not prevent candidates from exploring alternatives.
The approach that would make most sense would be for candidates to attempt a section from a past paper and then compare their answers to the examiners’ suggested answer for that section. It is very unlikely that a candidate will produce an identical answer to the examiners’ and so the next step is to ask whether there are any lessons to be learned from a comparison. The most important thing is not to overreact or misinterpret differences in approach. For example, the question tutorial Operational Case Study includes the following requirement:
“I would be grateful if you would prepare a report explaining … the type of digital sources that are available and the data that we could obtain from both internal and external sources in order to produce a forecast of member numbers for each of the new gyms.”
This sub-task is worth 48% of a section to which 45 minutes has been allocated. In other words, the examiner expects candidates to spend a maximum of just under 22 minutes on this sub-task, with 12 marks being available. It is clearly unlikely that candidates would be able to explore every possible source of data in their answers.
The suggested answer provides a range of potential digital data sources that are clearly logical and certainly do answer the task requirements. The examiner has recommended the use of Census data to determine the number of potential members who might live within travelling distance of gyms. That is sensible, but suppose a candidate’s practice answer suggested data sources that indicated the number of people who work close to gyms instead? Clearly, such an answer could be justified by pointing out that gym users may stop at their gym on the way to or from work or at lunchtime. In that case, candidates should be confident that their answer is correct and should be worth some credit.
That does not mean that any answer would be rewarded. For example, it is perfectly possible that some candidates would have suggested using competitors’ membership lists to identify potential gym users, which is illogical because such data would not be made available.
Expanding on an answer
It is often easy to write a very short answer that covers a few key points. The real challenge is in developing those arguments to score as many marks as possible in the time available. Reading the task requirements closely can often help.
For example, the question tutorial Management Case Study includes the following: “The software will cost us D$500 million. How should we decide whether to fund that investment using debt or equity?”
The sub-task is worth 50% of a 45-minute section, so the examiner allowed roughly 22 minutes and roughly 12 marks.
The previous article in this series recommended that candidates set out plans for their answers. That helps to clarify thinking, but it also forces the candidate to consider ways in which the sub-task might be addressed. For a 12-mark answer, it might be possible to identify, say, four issues. A candidate who aims to write about four topics only has to score three marks for each in order to obtain full marks.
In this case, a starting point would be to view debt and equity as two potential topics for discussion. Each has generic advantages and disadvantages that could be discussed, although it would be much better to relate the arguments to the scenario.
Taking debt as a starting point:
- Grainger has large profits before tax, so the company would be able to benefit from the tax relief associated with debt.
- Grainger’s present financial position is heavily based on equity, with very little debt. It should be relatively easy to obtain debt finance.
- The asset that is being purchased is software that would not be ideal security for a loan, but it could be argued that Grainger has lots of PPE that could be pledged as security instead.
These points were identified by thinking “what would happen if Grainger borrowed D$500 million to purchase computer software?” Writing a few sentences relating to each of the above could potentially score a fair mark, before even starting to discuss equity.
Do take care to answer the whole task requirement. The examiner specifically asked for a discussion of debt v equity, so it would be preferable to add a further set of points that could be discussed with respect to equity.
Notice that the key is to relate the sub-task back to the scenario. The arguments would have been very different if Grainger had heavy borrowings, say, or was raising funds to buy a city-centre office block.
The ability to think about requirements and identify points for discussion is very much a skill that can be developed through practice. That is why it can be dangerous to read a past paper and look straight at the examiners’ suggested solution. Learning how to relate someone else’s answer to a task is not directly relevant to developing the ability to prepare an answer.
In an ideal world, it would be possible to seek feedback from attempts at tasks. Colleagues at work may be willing to review attempts and give an honest evaluation of the points. Exchanging answers with fellow candidates can also create opportunities for discussion.
The role of study materials
Reading and revising study materials is absolutely vital. Understanding the theory that frames and informs accounting decisions is the starting point. But candidates must then learn to adapt that understanding to inform arguments about the specific scenarios that are being examined in the case study. That is true at Operational Level and becomes increasingly important for Management and again for Strategic.
For example, the question tutorial Strategic Case Study includes the requirement: “Please recommend, with reasons, the approach that we should take to valuing Benton Farm Management.”
This is worth 35% of a 60-minute section, so the examiner allowed 21 minutes and 12 marks.
When attempting this requirement, you should take care to identify one or more factors that might be relevant to valuing Benton and then explain why that approach would be relevant. That might sound obvious, but candidates are often tempted to offer irrelevant arguments for the sake of padding out their answers. For example, Benton Farm Management is an unquoted company, so the candidates who write about checking its share price are wasting time. Also, the company is presently 100% owned by its founder, who has total control over dividend payments, so a dividend-based model would also be potentially irrelevant.
In this case, it might make most sense to focus on expected future earnings from the company, bearing in mind that those earnings will have to be considered both from Fizz’s point of view, in order to establish the most that Fizz should be prepared to pay, and from the founder’s point of view, in order to determine the least that she is likely to accept.
Having decided on this model (or any relevant alternative selected from the array of models covered in the study materials), the next step is to justify that selection.
The preceding answer could be planned out as follows: 1. Earnings basis, allowing for the fact that Benton’s future earnings can be estimated.
- It might then be possible to identify a software company whose price earning ratio could be used to set a relevant multiple.
- This is a negotiation.
- Estimates should establish the most that Fizz should be prepared to pay.
- Fizz should aim to be credible, or the founder will not take the offer seriously.
- Any estimates obtained from the founder or any counter offers that she makes may be biased.
- Benton should be valued in terms of its value to Fizz, which may differ from its value on the open market.
There could be scope for stating assumptions, provided they do not amount to a rewriting of the requirement. For example, the case does not provide every possible fact about Benton that could be relevant. Candidates who offered the possibility that the company could own valuable tangible assets such as an office building could justify a valuation that took account of asset values.
Padding and brain dumps
This article started by discussing the need to develop answers that made sufficient relevant and correct points to stand a chance of passing. That should not be confused with the idea that long answers will always score well.
Many candidates lose credibility by finding a key word in the requirement and then writing everything that they know from the study materials on that word. For example, tasks about valuing businesses are sometimes answered with a detailed description of every valuation model that the candidate can think of, regardless of its relevance to the task. Markers refer to such answers as “brain dumps” because they seem to contain everything that the candidate knows about a topic, whether or not it answers the task.
At the other extreme, some candidates expand their answers by copying material from the pre-seen and unseen and making very little attempt to address the requirement. Active use of the materials provided in the case is welcomed because it can demonstrate understanding and commercial awareness, and it will earn marks where relevant, but padding answers through simply copying content will not earn credit.
Getting into the mindset of a finance professional
In a role simulation exam, it is critical that the candidate inhabits the role and the scenario in order to perform as well as possible. Applying technical knowledge and skills gained to the scenario together with the professional or “soft” skills that are critical for success in the workplace will enable candidates to demonstrate that they have achieved the core activities set out in the blueprint and can apply these in the context of the business, providing the best responses to the tasks.
These professional or soft skills are useful in any professional setting and include skills such as:
- Awareness of the digital ecosystem
- Professional scepticism
- Provide leadership
- Professional judgement
- Ethics and professionalism
These skills are not tested directly (and marks are not specifically allocated to them), but they should be drawn upon when developing an answer plan. Applying these skills will support you in responding to a task and aid you in producing an answer that is relevant, provides the best solution for the simulated organisation and the issues it is facing and, consequently, achieves the highest marks available (that is, meeting the level 3 descriptors in the marking guides).
Questions need not necessarily – and likely will not – refer to a specific mindset skill in order to make it relevant. For example, a question might summarise a subordinate’s explanation for a disappointing performance. A good candidate might apply professional scepticism in evaluating the validity of the explanation. If the question asks for a recommended response then the candidate might consider the leadership issues associated with alternatives. In some circumstances a reprimand might be in order and in others it might be preferable to offer support and encouragement.
Mindset and soft skills can be developed through practice. Reflecting on personal experiences at work, reading the business news and even attempting past case study exams are all ways to develop an understanding of what might work in any given set of circumstances.
Stick to the point
CIMA’s case study requirements do not look like traditional exam papers.
While candidates must pay attention to how they are communicating and use the right kind of language for the person they are communicating with, care must be taken not to include non-mark earning material such as long introductory or concluding paragraphs, excessive formatting or extraneous greetings or chat. These do demonstrate immersion in the scenario but must be balanced against spending the time working on mark earning points.
To sum up …
CIMA’s case study exams require the ability to identify the issues in a business problem and to develop a response that meets the requirements that have been set in a credible manner. This returns to the theme of employability because a finance professional would be expected to respond to a superior’s request in a manner that was sufficiently detailed to provide an adequate explanation of what was required.
The best way to develop the skills required to make the most of questions is to write out full answers to questions. Draft answers should be reviewed with a view to reflecting on whether they have answered the question correctly and whether an answer could be improved.
We hope you have found these articles useful. Keep an eye on the study planner for more support. Good luck with your study and the exam.