Term Paper
Section A
Question 1 (70% of exam marks)
The scenario is intended to be realistic and the date is 28 November 2012, though assumptions of strategy and acquisition intent are fictitious.
Scenario
You have recently joined the Strategy Department at Koninklijke Ahold NV, the Dutch retailing group. The company has “strong local consumer brands in Europe and the United States” and states in the 2011 annual report that it has “embarked on a new strategy to build upon our success, and significantly grow our company.”
Over the last 5 years sales Ahold’s growth has been relatively modest, averaging around 5% per year. The Director of Strategy tells you. “We need to improve our growth rate and we have been tasked by the Board to identify possible targets which might be worth considering as an acquisition. I have most of the department looking at major companies in our field and initially we need to do a preliminary appraisal of possible targets so we can narrow them down to a manageable number. I want you to look at the Finnish company Kesko Corporation which is ranked 91 in the Global Powers of Retailing Report, 2012, (we are ranked at 25). We seem to be at least 3 times bigger than them, so acquisition might be something well within our capabilities.
Our Management Accountant has already provided some basic data which you can use. This includes a summary of Kesko’s recent financial reports, together with some of our own ratios which we are using in all similar investigations for consistency. You can of course add to this if you wish, but don’t spend time trying to reconcile these summaries with the original data - we are more interested in the general trends so that we can judge whether to go forward with more detailed investigations.
(Question 1 continued on next page)
I want your analysis of Kesko to focus particularly on their performance and financial stability, to see if they have the potential to make a positive contribution to our
Question 1 (70% of exam marks)
The scenario is intended to be realistic and the date is 28 November 2012, though assumptions of strategy and acquisition intent are fictitious.
Scenario
You have recently joined the Strategy Department at Koninklijke Ahold NV, the Dutch retailing group. The company has “strong local consumer brands in Europe and the United States” and states in the 2011 annual report that it has “embarked on a new strategy to build upon our success, and significantly grow our company.”
Over the last 5 years sales Ahold’s growth has been relatively modest, averaging around 5% per year. The Director of Strategy tells you. “We need to improve our growth rate and we have been tasked by the Board to identify possible targets which might be worth considering as an acquisition. I have most of the department looking at major companies in our field and initially we need to do a preliminary appraisal of possible targets so we can narrow them down to a manageable number. I want you to look at the Finnish company Kesko Corporation which is ranked 91 in the Global Powers of Retailing Report, 2012, (we are ranked at 25). We seem to be at least 3 times bigger than them, so acquisition might be something well within our capabilities.
Our Management Accountant has already provided some basic data which you can use. This includes a summary of Kesko’s recent financial reports, together with some of our own ratios which we are using in all similar investigations for consistency. You can of course add to this if you wish, but don’t spend time trying to reconcile these summaries with the original data - we are more interested in the general trends so that we can judge whether to go forward with more detailed investigations.
(Question 1 continued on next page)
I want your analysis of Kesko to focus particularly on their performance and financial stability, to see if they have the potential to make a positive contribution to our