PREPARING TO WRITE CMA CASE

PREPARING THE REPORT

The purpose of the Case Examination is demonstrate that candidates of the CMA
designation are able to analyze the strategic problems faced by a wide variety of
organizations (potentially in private or public companies in service or manufacturing,
public sector or non-profit) and to develop specific, action-oriented recommendations for
solutions. The analysis must present a strategic overview of the company, identifying
and prioritizing the issues of strategic significance, including those of an operational
nature. The report must address the issues and provide the firm with a useful guide to
action.
The case study consists of two documents: the Backgrounder (distributed on the CMA
Canada website 48 hours before the examination) and the Additional Information
(distributed at the beginning of the examination). The extent of the recommendations
that are possible is determined by the information provided within these two documents.
Each case is an integrative test providing an opportunity for candidates to apply the the
accounting and management knowledge gained though university studies in a realistic
business situation. The written reports are evaluated according to the candidates'
abilities to apply that knowledge and to develop and communicate coherent, integrated
reports.
For the various cases, each candidate must perform the following tasks:
1 . Analysis. The candidate must analyze the case in a structured manner in order to
arrive at a coherent and insightful view of the firm's strategic problems and solutions
that are consistent with the internal and external environments within which the firm
is operating, and to provide an implementation plan that will result in the successful
achievement of the strategy.
2. Report Writing. The candidate must organize its findings in a written report that
effectively communicates those findings to the reader adhering to physical format
requirements and making appropriate use of language.
Under the time restrictions of the Case Examination, these two tasks must be kept in
mind and often performed at the same time.

ANALYSIS

Objective
The objective of the case analysis is to arrive at a coherent and insightful view of the
firm's strategically significant problems and of the best solutions to them. The report
should be useful to members of management, and the directors, who may be presumed
to be familiar already with the facts of the case. The analysis should go beyond the

elements that these individuals can see easily because they are familiar with the firm to
aspects that they may not be able to see because they lack expertise or are too close to
the situation.
Candidates must not only familiarize themselves with the facts but also rearrange them
for better understanding, apply strategic concepts and operational theories as outlined
in the CMA Syllabus and covered in university studies, and determine those situations
in which certain concepts should not be applied. For example, although becoming
IS09000 registered might be a good recommendation for a company that wishes to
compete internationally on the basis of quality, it would be less relevant for a small,
family-owned business with a local market focus.
Although it is not the primary focus of the Case examination, management accountants
would be expected to analyze situations from both a qualitative as well as a quantitative
perspective. The most useful quantitative exhibits include a brief financial assessment
of the current situation (as part of the situation analysis), quantitative calculations for the
various strategic and sometimes even business issues, if sufficient data is provided in
the case to perform such analysis, and a consolidated assessment incorporating the
recommendations (often referred to as pro forma financial statements). These should
be highlighted in summary fashion in a small table in the body of the report.
Symptoms and Causes
In performing the case analysis, candidates should keep in mind that symptoms are
distinct from causes, implications and significance. Symptoms, that is, things that are
going wrong or right, are obvious and can be determined from a cursory reading of the
case. Through analysis, concepts and theories are used to draw conclusions about
aspects that are not as obvious, such as causes, implications, and significance.
For example, the fact that profit margins have decreased in the past year, may be
stated among the case facts, or illustrated within the exhibits provided. Therefore, it is
likely that the firm and its directors are aware of these obvious problems (symptoms).
The objective of the analysis is to discover why these conditions exist (causes) or to
determine what further important problems could occur if these symptoms are not
corrected (implications and strategic significance). For example, in a recent case, the
case stated that the firm was facing increased international competition. Performing
additional financial analysis uncovered that the declining profit margins were the result
of declining prices yet costs remained under control. Therefore, in this case, it was a
reasonable assumption to state that the declining margins were likely being caused by
the firm's attempt to maintain its market share in the face of increased competition by
reducing prices (causes). If the margins cannot be restored, through some
recommended action (e.g., focusing on less price sensitive customers that value quality
over price; reducing costs; ignoring margins and focusing on volume to increase profits,
etc.), some corporate objectives (ability to invest in research and development) will not
be achieved and other significant problems should be anticipated as well (company will
no longer be at the cutting edge of technology, their core competency).

Identification of causes will provide targets for solutions and allow candidates to
formulate recommendations.

Topics for Analysis

The topics for analysis will include most of those dealt with in the traditional strategic
audit. These topics relate to two areas: the external environment of the firm and the
internal environment of the firm itself. A different approach is needed for each area.
The External Environment
Candidates should identify threats and opportunities posed in the organization's general
environment by technological developments, demographic changes, regulatory and
legal structures, and economic forces. In addition, candidates should assess threats
and opportunities in the industrial environment in which the company operates as
identified in either the Backgrounder or Additional Information (e.g. market share, or
market share relative to the largest competitor, the life-cycle stage of the industry or
product-market, and the company's leverage over suppliers or buyers.) In addition,
candidates should consider the critical success factors in the industry as well as any
sustainable competitive advantages enjoyed by major competitors.
All the necessary information is contained in the Backgrounder and there is no credit
given for performing additional external research. If the case appears to contain
inconsistencies or insufficient information, candidates should state their assumptions
and proceed with the analysis, making sure that the assumptions are not unreasonable.
Judgment is required when using strategic analysis tools and in how much time to
devote to this aspect of the response. Porter's 5, PESTEL, STEEP, etc., can be applied
to ensure that a broad cross-section of opportunities and threats in the environment
have been uncovered. The body of the report should contain the major points that will
be used to evaluate the strategic alternatives or presented as an exhibit.
The Internal Environment (The Firm Itself)
Candidates should look at the firm's current strategic posture and consider some or all
of the following:

What are the mission, goals, objectives and policies of the company, either explicitly
stated or implied by the firm's recent decisions?

What are the strategic goals/preferences of the owners/shareholders/senior

management?

Is the mission clear?

Are the goals, objectives, and policies congruent with one another or are there
conflicts?

What is the firm's current strategy?

What formula, if any, underlies the success of the company to date (key success
factors; core competencies?

Candidates should consider that the organization's historical mission or mandate may
be obsolete or in need of revision, given the current external environment. In addition,
candidates should identify the industry key success factors, of which there are usually
three or four to be found somewhere within the case facts.
It is appropriate to conduct an analysis of the firm's strengths and weaknesses whether
they be financial, operational, marketing, research and development, human resources
management, information systems, and planning and control. One of the objectives of
this internal analysis is to identify those strengths and weaknesses that give the
company a competitive advantage, or that put it at a competitive disadvantage, within its
industry. The other objective of the internal assessment is to use this information in the
evaluation of the strategic alternatives in order to find a set of recommendations that will
prove to be a good strategic fit for the firm.
Selection and Evaluation of Alternatives
Having determined the causes of the organization's problems, candidates should
identify the strategic alternatives facing the firm. The strategic alternatives are usually
found within the Additional Information of the case, but are not always clearly laid out. A
good strategy will provide guidance on who the firm's customers should be (target
market), what, where they will compete (geographic market), products or services they
should offer, or how they will compete (quality, state of art, low cost, customer service,
etc). The choices found in the case usually revolve around these questions. For
instance, the question of whether the company should focus on retail or wholesale will
answer the target market question; whether the company should open a plant in Europe
will address the geographic market; whether a new product or service should be added
or a division sold will address the product/service question; whether to build a new R&D
facility might address how the company can compete. The choices are a unique as
each case but they all revolve around these various strategic questions.
It is important that each alternative or option identified in the case is evaluated in
isolation rather than attempting to cover every permutation and combination of
alternatives, and then the strategic recommendation will be drawn from one or more of
the alternatives. For example, if the case is asking the consultant to recommend
whether to focus on the retail or also venture into the wholesale market and whether or
not to build a plant in Europe, the alternatives should be laid out in a manner similar to
the following simplified illustration:
Alternative 1: Focus on Retail Only versus Wholesale and Retail
Advantages
Disadvantages
Quantitative Support (if applicable, as included in the case are some
details that provide opportunities for quantitative analysis; ensure such
analyses allow comparisons between alternatives)

Alternative 2: Build a Plant in Europe

Advantages
Disadvantages
Quantitative Support (if applicable)

The advantages and disadvantages should draw heavily from the analysis of the
internal and external environments as explained in the previous section. This
demonstrates integrative skills and results in sound recommendations with convincing
arguments. A decision among the alternatives should then be made. For example,
using the above example, the recommendation might be made to continue to focus on
retail business and build a plant in Europe. The reasons (advantages) do not have to
be repeated (that unnecesary repetition) but if there are any compelling disadvantages
associated with the recommended alternative, it should be addressed immediately or
before the end of the report.
A less effective approach is as follows:
Alternative 1: Focus on Retail and Build a New Plant in Europe
Alternative 2: Focus on Wholesale and Don't Build a New Plant in Europe
This less effective approach results in repetitive arguments (which wastes valuable
examination time) and it is very difficult to capture all of the combinations effectively.
The analysis should be followed by a recommendation section which should contain a
succinct list of actions to be taken to address the priority issues. The best
recommendations are those that each solve several problems or address several key
issues or risks, and such actions should be highlighted in this section of the report.
Since the company requires suggestions for immediate action, candidates should avoid
recommending further study or investigation of the issues. However, if the need for
further investigation is genuinely critical, candidates should be specific about the
information that is required, the sort of investigation necessary to obtain it, and the
effect the information may have on the course of action recommended eventually.
Once a strategic direction is recommended, the report must go on to explain how the
strategy should be implemented and the business and operational issues arising from
this new direction should be addressed, along with any additional weaknesses identified
at the outset of the report., with reference to the way in which each issue supports the
strategy and mission. A pro forma financial statement that incorporates the effect of all
of the recommendations is a very useful tool that will make the recommendation more
convincing .

WRITTEN COMMUNICATION SKILLS

(A) Format
1. Layout
a. Executive Summary: The first page of the report, the executive summary, is
the last document to be written as it should represent the 'report in short'. An
effective executive summary should capture the essence of the report-the
current situation (major strengths, weaknesses, opportunities and threats),
the recommended strategy as well as recommendations pertaining to major
business issues. For the purposes of the Case examination, this can be
achieved in less than one page and should be on a page(s) separate from the
balance of the report. The title, Executive Summary, should be clearly visible.
Candidates should draw on the primary information contained in the
introduction, discussion, conclusions, and recommendations in order to create
the executive summary. Consequently, although the summary must appear
at the beginning of the report, it must be constructed after the remainder of
the report has been written.
A sample executive summary follows.

EXECUTIVE SUMMARY
INTRODUCTION

Royal Safety Equipment Ltd. is a Canadian company

experiencing increasing competition from the United
States, placing downward pressure on prices. As a
result, RRL's profit margins are declining and the
company's ability to continue to invest in R&D, one
of the company's key success factors, is being
threatened.

ISSUES

The senior management of RSEL disagree as to

whether the company should continue to grow sales
by competing on the basis of price, or whether they
should increase prices and compete on the basis of
innovation and quality.
The company is in the process of developing a
premium product line, that has large profit potential
but requires significant investment in the final phases
of development amd marketing.
The employees are considering joining a union due
to the fear that the company will build a new plant in
Asia.
Decision making is top-down in this organization and
... (etc.)
The days outstanding of accounts receivable is
higher than it has ever been ... (etc.)

RECOMMENDATIONS
1.
Focus on the IS09000 customers that value quality and
reliability over price and begin to increase prices.
2.
Continue development and introduction of the new product
line.
3.
Finance the investment by converting short term debt to
longer term debt.
4.
etc.
b. Table of Contents:
The Table of Contents should indicate clearly the relationships among
divisions and subdivisions, and should be case specific as in the example
that follows.
TABLE OF CONTENTS (first-level heading)
Executive Summary
I. INTRODUCTION (second-level heading)
II. SITUATION ANALYSIS
A Internal Analysis of Royal Safety Equipment Ltd.
B. External Analysis of RSE Ltd.
C. Financial Assessment of RSE Ltd.
Ill. STRATEGIC ANALYSIS
A Option 1: Build Plant in Asia (third-level heading)
B. Option 2: Increase Prices
C. Option 3: Introduce New Product Line

IV. STRATEGIC RECOMMENDATIONS FOR RSE LTD.

V. IMPLEMENTATION PLAN & BUSINESS
RECOMMENDATIONS
VI. CONCLUSION
Exhibits
c. Introduction: The introduction can be one short paragraph and should
outline the purpose and scope of the report as follows:

I. Introduction
In this report I will analyze the internal and external environment in which
RSE operates, identify the major issues and strategic alternatives,
evaluate the advantages and disadvantages of the various options,
supported by quantitative analysis. We will;then make a
recommendation regarding the future strategic direction of RSEL and
outline an implementation plan to address the actions that should be
taken to ensure the successful attainment of the strategy.
d. Analysis: This section contains the majority of the report and consists of
various types of analysis. All effective report formats contain the following
elements:

Environmental Analysis;
Strategic Analysis;
Strategic Recommendation;
Implementation and Business Issue Analysis

e. Conclusion: Like the introduction, the conclusion can be one short paragraph
and should bring closure to the report by repeating the recommendation and
summarizing the positive results that will be enjoyed if the recommendations
are implemented.
f.

Exhibits: Appendices and exhibits provide the reader with essential, detailed
information that could not be placed in the report proper. For example, a
detailed SWOT (strengths, weaknesses, opportunities, threats), or detailed
quantitative analyses.

Each appendix or exhibit must adhere to the following criteria:

be an essential support to the developing argument;

be mentioned in the text of the report;
if they are quantitative in nature, the summarized results should be found within
the analysis section of the report
be numbered and appropriately labeled with a title that accurately describes the
contents.

2. Organization
a. Headings, Subheadings and Bulleted Lists
Headings are a report writer's main aid to ensure easy readability. Headings
and subheadings help the reader follow the argument and understand the
organizational pattern. A good heading is both brief and specific.
The relative importance of each heading should be made clear. A usable,
standard format is as follows (as illustrated in the table of contents above):

first-level headings written in capital letters throughout and centred on

the page;
second-level headings capitalized throughout but placed at the left
margin of the page;
third-level headings written with only the first letter of each word
capitalized; and
fourth- and fifth-level headings indented five spaces.

Strategic alternatives as well as exhibits should be labelled with a descriptive

title rather than simply using a number. It is not helpful to the reader of the
report to be told that "I recommend Alternative 1", which will require flipping
back through the report to find out which alternative that was. Similarly, a
label of "Exhibit 1" will require the reader to decipher the content of the
exhibit to determine its purpose. The title should clearly convey the contents
of what follows.

b. Bullets, Lists and other techniques

Along with sub-headings such as "Advantages" and "Disadvantages", bulleted
points in full sentences assist the reader to understanding whether the point
supports or refutes an alternative being discussed as well as distinguishing
each unique point. In addition, boldface, underlining and line spacing can be
used to make headings stand out.

(B) Language and Style

1. Professional Tone and Tact
The response is expected to reflect a business tone, as opposed to a colloquial
style. In addition, the response should not contain any tactless comments such as
insulting or negative characterizations of the shareholders or senior management.
Certainly, constructive criticism offered in a tactful way is quite acceptable. Tact is
really an issue of taste and all aspects of a response should demonstrate good
taste.

2. Grammar, Spelling, Sentence Structure, Punctuation

Some allowances are made given that this examination is written under strict time
contraints, and committing a few spelling/grammar/sentence structure/puntuation
mistakes is understandable under the circumstances. However, the report should
exhibit correct English or French usage and demonstrate a concise, clear, and
professional style of writing.
Avoid excessive use of point form, which can make the message being conveyed
difficult to understand rather than making the point easier to follow, which is the
intent of point form. For instance, stating "declining financial position" as a
weakness does not help the reader understand what aspects are declining and why
that is a problem. Stating "location" as a strength does not explain what it is about
the location that makes it a strength. Overly brief bullet points within the strategic
analysis should also be avoided.

3. Clear and Concise Expression, Logical and Coherent Flow

Clarity in expression means that the reader can understand the point or logic behind
the point being made. A concise reports avoid unnecessary repetition. Some
suggestions are found earlier in this document on how to avoid repetition which will
in turn increase the amount of time available to have more depth to the report. A
report that has a logical and coherent flow is one that is easy for the reader to follow
and each step or conclusion follows logically from a previous step or analysis. If
recommendations are made for issues that have not yet been discussed, it can
confuse the reader. 'Theory dumping' should be avoided as it is evidence of a
response that is not concise. The readers of the report are only interested in theory
as it pertains to their situation and must be applied specifically to the case to be of

value. References to exhibits or other sources of information in making an argument

also help the clarity and flow of a report.

4. Audit Trail
In a quantitative exhibit or when quantitative analysis is performed within the body of
the text, clearly labelling what a number represents in terms of what it is and how it
was calculated, and the assumptions used when performing the analysis helps the
reader follow the analysis and lends credibility to the ultimate recommendation. For
instance stating that "Revenues = $60 million" can be enhanced by showing how the
number is calculated (e.g., $5.00 unit price x 1,000,000 units x 12 months= $60
million annual revenues).

Conclusion
The following is an effective method of approaching a complex case, such as those
found in the Case Exam, in a strategic manner:

Evaluate whether there is a current stated or implied mission and if so attempt to

briefly articulate the mission statement.

Perform a situation analysis by looking both inside the organization for strengths and
weaknesses, and outside the organization for opportunities and threats (beyond the
specific opportunities in the case to the general environment, such as market place,
competition, economic factors, political factors, etc.) This analysis can be in point
form in an exhibit with the major elements explained in the body of the report. It
should be noted that the situation analysis is incomplete without an evaluation of the
current financial situation.

Identify the various strategic alternatives facing the organization. Do not try to
combine alternatives but analyze strategic choices separately.

Evaluate the advantages and disadvantages of each strategic choice using case
facts and specific references to the situation analysis performed in the previous step.
The goal is to find a strategy that provides the best fit for the organization,
considering the internal capabilities and limitations as well as the external
environment in which the firm competes. It should be noted that this analysis is
incomplete without some quantitative analysis in addition to the qualitative analysis.

Make a clear recommendation regarding which alternative or set of alternative

choices should be pursued.

Revisit the mission to see if it requires revision in light of the internal and external
environments and/or the recommended changes to the strategic direction of the
company, and should be specific enough to be a useful to guide future strategic as
well as business decisions.

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Discuss the operational issues and problems that must be addressed to help support
the successful achievement of the new strategy. Provide clear recommendations as
well as a detailed action plan that will help management move forward with the
recommendations. For instance, if a recommendation is made to build a plant in
Europe, then the implementation plan should address how the company can obtain
financing. Any outstanding weaknesses mentioned in the case and identified in the
situation analysis, yet unrelated to the new strategy should also be resolved. Brief,
case-specific reasons should be given for business recommendations. Avoid being
overly theoretical or spending too much time on any one specific business issue.

Following these steps and using an appropriate business report format as described in
detail above (table of contents, executive summary, introduction, body,
recommendations, implementation plan, conclusion, and exhibits, appropriate language
and style) would enhance the effectiveness of responses to the Case Examination.
For each of the five higher-order skills being tested, specific characteristics of a strong
response versus a weak response are presented in the Marking Guide. To further
demonstrate the above mentioned steps, be sure to study prior cases, general markers'
comments on overall performance, sample acceptable attempt and unacceptable
attempt responses as well as the accompanying marker's comments on the strengths
and weaknesses of these specific responses, all of which are provided as part of the
preparation materials.
Rather than provide a complete, full-scale model solution that would be impossible to
achieve during a four-hour examination, the sample successful attempt, which is an
actual report from a passing candidate, while not perfect, demonstrates what can
realistically be achieved during the available examination writing time.

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