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9609 · 6.2.2

Corporate planning and implementation — practice questions

Practice and worked examples for 9609 Corporate planning and implementation. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Strategy: enter Germany within 18 months (market development). Propose two SMART objectives and one implementation barrier.

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SMART 1: Achieve 50 franchised stores in Germany by Q4 Year 2 (Specific, Measurable, Time-bound).

SMART 2: Reach €20 m revenue in Germany with break-even by Month 20 (Measurable, Relevant to finance).

Barrier: Cultural/localisation — German consumers may differ from UK promotion (3.3.5) and product tastes; need local market research (3.2) and German-speaking management — risk of slow rollout if underestimated.

Worked example 2

EcoPack Ltd aims to reduce its carbon footprint by 20% in 3 years as part of its corporate social responsibility strategy. A key part of the plan is to replace its old delivery fleet. The new fleet costs $1,200,000. The new fleet is expected to reduce annual fuel and maintenance costs from $450,000 to $150,000. As part of the corporate planning process, the finance director wants to know the payback period for this investment. Calculate the payback period.

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Step 1: Calculate the annual cost saving. This is the difference between the old costs and the new costs.

  • Old annual cost = 450,000450,000
  • New annual cost = 150,000150,000
  • Annual saving = 450,000−450,000 - 150,000 = 300,000300,000

Step 2: State the formula for the payback period. Payback Period (in years) = Initial Investment / Annual Net Cash Flow (or Saving)

Step 3: Calculate the payback period.

  • Initial Investment = 1,200,0001,200,000
  • Annual Saving = 300,000300,000
  • Payback Period = 1,200,000/1,200,000 / 300,000

Answer: Payback Period = 4 years

Analysis for Corporate Plan: A 4-year payback period means the investment will take 4 years to pay for itself through cost savings. This information is crucial for the board to decide if the investment is financially viable and how it fits within the long-term financial plan, especially since the strategic objective has a 3-year timeline. They may need to consider other non-financial benefits (like brand image) or find ways to finance it.

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