Practice exam 1

Waddenlijn BV operates ferry services between the mainland and two Wadden islands, with seven diesel-powered ships. The company carries 1.8 million passengers a year, mostly tourists in the summer season, and lorries with goods for the islands. The island council has granted a concession until 2035.

In the strategic plan of 2020 the board chose more departures and a faster timetable. Meanwhile the environment has changed. The cabinet wants all ferries on the Wadden Sea to sail without exhaust gases by 2035, and the law for this is before parliament. The price of batteries for ships has almost halved in the past five years, so electric ferries look feasible for the first time. The island population is ageing and the company finds it harder and harder to find crew: young islanders move to the mainland. Heavy autumn storms occur more often according to the KNMI (the Dutch weather institute), so the company has to cancel more and more departures. The diesel price fluctuates strongly and squeezes the margin.

In 2021 a deckhand, without instruction from the board, started sunset cruises together with a local oyster farmer. These cruises, including an oyster tasting, now account for 20% of revenue. The director calls this 'a lucky coincidence'.

The director now wants a scenario analysis for 2035. He chooses as two key drivers 'stricter exhaust-gas rules' and 'faster subsidies for electric ships'. Afterwards he wants to calculate the probability of each scenario and pick the most likely one to base his plan on.

Bakkerij Korenbloem (Cornflower Bakery) is an industrial bakery in Brabant that supplies fresh and part-baked bread to Dutch supermarkets under the private labels of the retail chains. The product is almost identical to that of the other industrial bakeries: white, wholemeal and multigrain, in the same packaging.

The buyers are concentrated. Four supermarket chains together buy 80% of Korenbloem's volume and the largest two set up a joint purchasing organisation at the beginning of this year. The contracts run for one year and at the tender the buyers mainly compare the price per loaf. One chain is considering opening its own bakery, because the oven with slicing line 'only' costs 25 million euros. At the moment the chain already bakes bake-off rolls in the shop.

There are six industrial bakeries in the Netherlands. Together they run at about 65% of capacity, and because the ovens cannot simply be used for other purposes, they prefer to keep producing. New entrants must invest almost 25 million euros and need a sales guarantee from the chains. Foreign bakeries are hardly a threat, because transport of fresh bread is expensive.

Korenbloem buys wheat from two large grain traders. The supply of specialist artisan bakers is also growing, but they serve a different public at a different price.

At the shareholders' meeting the new director says: 'We will become the cost leader. We will lower our price per loaf below that of every competitor. Then we will no longer suffer from the five forces and profit will follow automatically.'

Brewery De Zeeuwse Knoop in Middelburg was founded in 1998 and has forty employees. The company brews eight regular speciality beers and a limited edition every season. The brewery is located in a protected harbour building from the 1920s, which also houses its own tasting room. Revenue comes from the tasting room, from the hospitality sector and from three supermarket chains.

The core of the company is master brewer Femke de Wit. For 25 years she has maintained the brewery's own yeast culture and she decides by feel, smell and taste how every seasonal beer is adjusted. Her way of working is written down nowhere; colleagues say they cannot brew her beers exactly, not even with the same recipe. A large competitor had a beer made last year that is very similar in style to the flagship, but according to customers in blind tastings it still tastes different.

Sales are vulnerable. The brewery has one salesperson, who maintains the contacts with the supermarkets, and almost no marketing. Many store managers say they only discover the seasonal beers after weeks, so that a large part ends up in the clearance sale. The financial administration is in order, as is compliance with the excise and hygiene rules.

The share of alcohol-free beer in the market is growing. After a tip from a supplier, the brewery brewed an alcohol-free beer once last year; this was not repeated. In addition, since 2015 it has run two trial brews every quarter. A customer panel tastes and assesses them, and the best result goes into production at scale. In this way two of the eight regular beers came about. The director says: "We have dynamic capabilities, because we are flexible."

Stroomlijn Fietsen from Zwolle designs and sells electric city bicycles through 140 independent bicycle shops in the Netherlands. The company has a market share of fourteen percent in this segment. Unlike most competitors, Stroomlijn does not have the aluminium frames made by a supplier, but in its own factory. Two earlier attempts to buy in frames fell apart: the quotation round took months each time, and when one party delivered frames with deviating weld seams, it took seven months before agreement was reached on the compensation and the defects were repaired.

The board announces two plans. The first plan is the takeover of Fietsfabriek Veluwe, a Dutch competitor that also sells electric city bicycles, with sixty-two dealers. This would raise the combined market share from fourteen to twenty-three percent. The Authority for Consumers and Markets (ACM) has let it be known that it will look at the plan critically. The second plan is the sale of the existing city bicycles through a web shop in Germany, where Stroomlijn has no customers yet.

The bicycle market is seasonal: well over sixty percent of revenue falls between March and August. The chief executive therefore says in an interview: "We will also make fitness equipment. That spreads our risk and makes us less vulnerable in winter." For fitness equipment Stroomlijn has no designers of its own and no dealer network. A shareholder responds that he would rather spread his risk himself.

Greenline is a Dutch maker of electric cargo bikes, based in Utrecht. The company has 140 employees and revenue of 38 million euros. More than 70 percent of revenue comes from the Netherlands. Through dealers Greenline also exports to Belgium and Denmark. The bike is sold unchanged; only the manual is translated.

The management now wants to go to Germany. The market is about three times as large as the Dutch one and many cities give subsidies for electric cargo bikes, for the time being until 2028. A German competitor, Fahrwerk GmbH from Berlin, is growing fast and wants to enter the Netherlands next year. Greenline expects German customers to buy mainly from a nearby dealer who also does repairs. Germany has its own inspection requirements for child seats and brakes. A German supplier is also willing to deliver large batches of motors and batteries, cheaper than the Taiwanese supplier Greenline works with now. In addition, the EU is discussing higher import duties on parts from Asia, and a number of Asian countries threaten countermeasures.

Greenline has three options.

1. Take over the small, family-owned Rheinrad GmbH from Cologne (45 employees, 60 dealers, own workshop).
2. Form an alliance with Velocenter, a German retail chain with 120 stores that wants to sell and service Greenline bikes exclusively.
3. Build a German sales office and its own dealer network yourself.

Marketing manager Fatma believes Greenline's own culture, informal and fast, is the company's greatest asset. She fears that culture will dilute in an acquisition.

Noordlicht Windparken operates wind farms in the North Sea and near the Wadden Sea. The company has 400 employees and was founded in 2015 by engineer Mirjam de Wit. She developed floating turbines that can stand in deep water without expensive foundations. As a result, existing fixed wind farms and gas plants in the region become less attractive: a number of energy companies have already announced closures.

For a new farm near the Wadden Sea many parties are involved. The Vogelwacht Wadden is a small organisation without its own budget, but with 20,000 followers on social media who share every incident immediately. The grid operator can postpone the connection of the farm by months, but has so far not been involved. The municipality wants jobs and grants the permit, and the investors want a stable return.

In its annual report Noordlicht writes that biodiversity is a core value. In practice the company only investigates bird mortality when the law requires it. The farm managers receive a bonus on the number of megawatt hours generated per year. Farm manager Rob Jansen therefore reports bird casualties only at the annual audit, while the board assumes that everything is in order.