You are Hoi Lui, a management consultant leading a small team which has been commissioned to prepare a consultancy report for the Data Communications Services (DCS) Company directors to help them plan for the next three years.

DCS Company has two product areas. The largest area is the manufacture of data communications components which it mainly sells to original equipment manufacturers (OEM). The other smaller and less developed area is based on supply and support contracts for specialist IT management network systems, mainly to domestic medium-sized enterprises. You are a qualified accountant and your colleagues are Danny Leman, a company researcher, and Freddie Lithium who is a part-qualified finance professional. You and your team have collected and analysed the following information about DCS Company to help you prepare the consultancy report.

– Exhibit 1: A report on DCS Company’s organisational overview, the external environment and the business model sourced and prepared by Danny Leman, your colleague

– Exhibit 2: A transcript from interview which was held between you and Java Peraya, the CEO of DCS Company.

– Exhibit 3: Summary of financial and business performance of DCS Company extracted from the Integrated Report (2012–2015) presented to you by the finance director of DCS Company

– Exhibit 4: The October board report, a recent board meeting notes which include strategic choices facing DCS Company – presented to you by the marketing manager of DCS Company

– Exhibit 5: An evaluation of alternative future strategies being considered by the DCS Company board, prepared and presented to you by your colleague, Freddie Lithium

– Exhibit 6: Minutes from the focus group meeting you held with middle management of DCS Company

Following your findings you are now starting to prepare the consultancy report and associated tasks for DCS Company.

The case requirements are included in the tasks shown below:

Question 2a:

In the October board report, the executive directors refer to a number of factors affecting DCS Company and the need to choose one of two alternative strategic options. You now need to do the following:

Required:
(a) Draft a section of the report to identify and briefly discuss THREE main risks which DCS Company currently faces and plot them on a heat map, recommending appropriate strategies to manage those risks using an appropriate risk management framework. (6 marks)

Professional Skills marks are available for demonstrating commercial acumen in identifying and locating the risks appropriately. (2 marks)