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Question 4a

Introduction
Nehby Company (Nehby) is a family business which owns and operates eight restaurants in Caputo, the capital city of the country of Ceeland. Caputo is located in the south of the country.

Nehby has been in business for the last 35 years. During that time the company has created some of Caputo’s most iconic and best loved restaurants. The theme of their success is renovating and restoring historic buildings, transforming each one into a beautiful and original restaurant.

The original founder, Graeme Nehby, is also the chief executive officer (CEO) of the business. Graeme has a strong personality and his views have tended to dominate the direction of the business to date. Graeme’s three sons have all joined the family business and together with Graeme form the board of Nehby.

Figure 1 below shows the current reporting structure and ownership of the business.

Figure 1

Figure 1

The Nehby board is considering the future strategic direction and investment plans for the business. The sons have suggested that Nehby should pursue a strategy of product diversification and enter the hotel industry. They have identified a new business opportunity, in the north of Ceeland, to renovate and restore a historic building, formerly a bank, and turn it into a hotel, which will be operated by Nehby. However, Graeme believes that the business should continue with its current business model of converting historic and iconic buildings in the capital city into restaurants and wants Nebhy to open another new restaurant in Caputo.

Graeme and his three sons want to seek advice and guidance about the opportunities available to them. They have commissioned you, as an independent self-employed management consultant, to provide them with information and analysis to support their future expansion plans and advise them about their choice of strategic direction.

You have collected and analysed the following information, exhibits (1–6), to help with your task.

Exhibit 1: Article, on the success of Nehby’s restaurants, published in the Caputo Post newspaper.

Exhibit 2: A transcript of the views of each member of the Nehby board on company performance to date and the future strategic direction of the business.

Exhibit 3: Information on the two investment plans, prepared by John Nehby.

Exhibit 4: Article on the hospitality industry in Ceeland.

Exhibit 5: Nehby Company financial and management accounting information – extracts for the year ended March 20X0.

Exhibit 6: A transcript of an interview shown on ‘Talking Stock’, a Ceeland television programme which looks at business topics.

Question 4a:

The popular television programme ‘Talking Stock’ has just broadcast an episode which includes an interview with a venture capitalist. You have advised the board of Nehby to watch the episode with a view to understanding the need for improvements in the information currently presented in the management accounts and the additional information which will need to be provided in the future. You are then going to deliver a presentation to the board regarding their current management accounting information.

Required: 
Prepare a presentation with an appropriate number of slides and accompanying notes to support your findings covering the following items:

(a) Identification of the weaknesses of the current management accounting information in supporting decision making for the restaurant business. (6 marks)