CIMA Strategic Case Study Introductory Pack (Pixlwizz)

CIMA

Strategic Case Study

Introductory Pack (Pixlwizz)

© HTFT Partnership – Pixlwizz Introductory Pack 2

Contents

Chapter 1: Introduction to SCS and Pixlwizz ............................................................................................ 3

The CIMA Professional Qualification ............................................................................................................. 3

The Strategic Case Study Syllabus: ‘I can statements’ .................................................................................. 5

HTFT Partnership’s Strategic Case Study course ........................................................................................... 6

Pixlwizz : Getting into your role .................................................................................................................... 7

Getting into your Strategic Case Study ....................................................................................................... 10

Tips for strong answers ............................................................................................................................... 12

Strategic Case Study and Marking ............................................................................................................... 13

What the exam looks like on screen ........................................................................................................... 16

Example Section: ......................................................................................................................................... 17

Example Section: Suggested Solution ......................................................................................................... 19

Task 1: Evaluate Digital Strategy ................................................................................................................. 23

Task 1: Suggested Solution .......................................................................................................................... 24

Task 2: Influencing the Government ........................................................................................................... 27

Task 2: Suggested Solution .......................................................................................................................... 29

Disclaimer

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Chapter 1: Introduction to SCS and Pixlwizz

The CIMA Professional Qualification

The Role of the Management Accountant

CIMA recognises that the role of the management accountant is changing. Management accountants need

to update their knowledge constantly. While SCS is the last professional examination to be taken it does not

mean that learning stops after qualifying:


“The Case Study Examination — demonstrating the aptitude and the attitude “

▪ Develop business strategy

▪ Evaluate business ecosystem and business environment

▪ Recommend financing strategies

▪ Evaluate and mitigate risk

▪ Recommend and maintain a sound control environment


The Strategic Case Study Syllabus: ‘I can statements’

The Strategic Level Case Study is focused on 5 core activities that management accountants must be able to

perform. Each activity is linked to a number of assessment outcomes – achieving the outcomes shows

capability in performing the core activity.

In the SCS examination, each sub-task (question requirement) will be linked to one of the 5 core activities

and an associated assessment outcome. Whilst you will not be advised which core activity is being tested in

the exam, all core activities will be tested at some stage throughout the examination.


HTFT Partnership’s Strategic Case Study course


Pixlwizz : Getting into your role

Extracts from Pixlwizz pre-seen


© CIMA 2021


© CIMA 2021


Getting into your Strategic Case Study

The Strategic Case Study is a 3-hour computer-based assessment based on a pre-seen case study.

For those sitting the November 2021 or February 2022 exam this case study will be based on Pixlwizz, a video

game developer.

Westland is a developed that has an active and well-regulated stock exchange. Pixlwizz is quoted and reports

in Westland $ (W$) while Westland overall requires compliance with IFRS.

Each variant of case study exam has a central theme. What theme you will face in the exam is unknown,

however we have suggested some examples of potential themes below.

Possibly, Pixlwizz could face a variety of developments:

Launch of a new game Purchase of gaming company Launch of related hardware


Further examples of potential exam themes could be:

• Upgrading security systems at Pixlwizz’s servers

• Launch of new levels for Pixlwizz’s popular games

• More in-game purchase options

• IT failure / hacking into personal data stored and used by Pixlwizz

• Sale of game related merchandise

Each theme is then used to examine a range of topics from the E3, P3 and F3 strategic level syllabi.

Your exam will contain 3 Sections each split into a number of sub-tasks covering a range of topics.

For example, if your theme was “Launch of a new game”, the topic areas that you could be tested on could

include:

• Explain the purpose of strategy (E3)

• Discussing drivers of change (E3)

• Discuss how to generate and develop

options (E3)

• Evaluate options (E3)

• Evaluate risks (P3)

• Analyse risks associated with formulating

strategy (P3)

• Analyse cyber risks (E3)

• Advise on strategic financial objectives (F3)

• Evaluate the capital structure of a firm (F3)

• Evaluate financial risks (F3)

Each exam has 3 Section worth 1/3 of the total marks. Each task then has 2 or 3 sections or sub-tasks. Each

Section is usually a ‘mix-up’ i.e. E3 sub-task with a P3 sub-task or E3 sub-task with an F3 sub-task. You must

answer each sub-task well to give yourself the best chance of a pass - all sub-tasks, and therefore all 100

marks are compulsory.

You will be told the weightings of the sub-tasks to indicate the level of detail and length of your answer.

Our advice in revising for this exam is that you need to:

1. Understand ‘Sections’, the marking guides and the exam technique including timings

2. Then revise each topic in a task by task manner (the following chapters are therefore task driven)


Tips for strong answers

Using structure and layout to maximise your marks

Main answer headings should be bold and underlined

To ensure you answer precisely what is being asked, your main answer heading should be based directly

on the requirement in the question.

For example, the Finance Director asks you to: “Discuss revenue generating options for Pixlwizz’s

proposed new release of the Jakob Plunge game”.

Your main header title for your answer should reflect all parts of the requirement: e.g.

Discussion of revenue generating options for Pixlwizz’s new release of Jakob Plunge

Use sub-headings in italics

To answer the task, frame your key points using subheadings. These should be precise and clear and in

italics. For example, your first subheading could be:

Game price

The above format is MARKER FRIENDLY!

Further Tips- discussion

• Avoid single sentences / bullet points

• Tackle knowledge gaps NOW – think particularly how long ago you took E3, P3 and F3

• Always relate your answers to the pre-seen (and avoid generic answers)

• Include any NEW information and any numbers given in the un-seen

• Answer all parts of the task (Rule of And)

Answer all tasks in a way which fully reflects the mark percentage weightings given.


Strategic Case Study and Marking

Each variant of the SCS has 3 Sections. You will have 60 minutes to answer each Section.

The example below is taken from CIMA’s 2019 SCS specimen paper:


Using the weighting to decide how much to write

Each Section is 60 minutes in duration.

As we have three Sections in total, we can assume each Section will be worth 33 marks on average.

For example, in the previous SCS specimen paper example, our topics for Section 1 are:

• P3 Evaluate and mitigate risk (55%)

• F3 Recommend financing strategies (45%)

In Section 1, the first sub-task must therefore be worth 18 marks (55% of 33 marks). We would expect you

to spend approximately 33 minutes (55% of 60 minutes) on this sub-task, writing approximately 9

paragraphs in total (you should aim for one point in paragraph format for every two marks available).

The second sub-task of Section 1 must therefore be worth 15 marks (45% of 33 marks) for which you would

have approximately 27 minutes (45% of 60 minutes) to answer the question and would be expected to

write approximately 7 or 8 paragraphs in total.

By contrast in Section 3, our topics are:

• P3 Recommend and maintain a sound control environment (60%)

• F3 Evaluate and mitigate risk (20%)

• E3 Develop a business strategy (20%)

We still have 60 minutes, but this time we can expect the first sub-task to be worth 20 marks (60% of 33

marks) and therefore 10 paragraphs in total over approximately 36 minutes (60% of 60 minutes).

The second and third sub-tasks must be worth 7 marks each (20% of 33 marks) and therefore should be just

4 paragraphs in length. For these two sub-tasks, you will have approximately 12 minutes (20% of 60

minutes) to write your answer.

CIMA have added these percentage weightings to the SCS exam for 2019 syllabus onwards, so it is

important that we factor them in for our approach to this style of exam.


How marks to be awarded are decided

Each sub-task is allocated a marking scheme. This marking scheme provides markers with a guide to a number

of key traits within the sub-task and how those traits will be marked.

The scheme for sub-task (a) from the previous specimen paper example is:

The traits here are the need to classify the risks and then assessing the impact and likelihood of those risks.

Marks are awarded on 4 levels (0 to 3).

The marker marks the task in three stages:

1. The whole answer for the sub-task is read.

2. For each trait in the marking scheme, the level descriptor that best fits the answer will be

determined.

3. A mark within that level will be selected. If the answer convincingly meets the descriptor for that

level, a mark in the higher end of the range will be awarded, however if the answer only just meets

the descriptor, a mark in the lower end of the range will be awarded.

However, the mark allocation is always based on the marker’s professional judgement. This means that a

well written and presented script is always preferable. Whilst the recommended descriptors in the marking

scheme will help you understand what is expected to score high marks; we recommend not being overly

concerned about the marking scheme itself.


What the exam looks like on screen


Sub-task Core activity Assessment outcome Syllabus area

(a) E Recommend and maintain a sound

internal control environment

1 I can apply internal audit resources P3 C3

(b) D Evaluate and mitigate risk 2. I can identify ethical dilemmas and

recommend suitable responses

P3 B2

(c) B Evaluating business ecosystem and

business environment

3 . I can recommend appropriate

responses to changes in the business

ecosystem

E3 B1

Example Section:

You receive the following email:

From: Maria Tektonidou, Chief Finance Officer

To: Senior Manager

Subject: Pixlwizz controls around data

Hi

As you know, Pixlwizz has been having a few problems with its’ HR staff. Firstly, there were a

significant number of staff leaving, followed by an adverse external audit report (see the management

letter extract below). The potential un-authorised access to employee data is concerning but it

appears there was no lasting impact. I am therefore considering keeping the loss of the solid-state

drive confidential so as not to make this a concern for our staff.

Firstly, please advise whether it is appropriate for Pixlwizz’s internal audit department to allocate

resources to investigate the problems identified by the external auditor. I would also like you to

identify and explain key controls that Pixlwizz can introduce to enhance the management and

maintenance of the software files and the data held within them going forward.

[sub-task (a) = 45%]

Secondly, please evaluate the ethical dilemma of not informing Pixlwizz employees of the data loss

and recommend suitable responses.

[sub-task (b) = 20%]

Thirdly, given that Pixlwizz was not prepared for the sudden resignation of so many HR staff please

explain changes in the business ecosystem that may cause staff to leave Pixlwizz and recommend

appropriate responses to the changes.

[sub-task (c) = 35%]

Thanks


Maria

AO: P3 C3, P3, B2, E3 B1

The management letter referred to can be found by clicking on the Reference Materials button.

Extract of the management letter submitted to the Pixlwizz board from JuddMan, the external

auditor.

Observation

A sudden increase in the resignation s within the HR department in Pixlwizz’s Head Office in Westland

required the recruitment of additional staff. There was a lack of background checks on these

employees as recruitment was carried out under some time pressure so that the HR function in

Pixlwizz could continue to function. Furthermore, there was a lack of staff training on data protection

regulations.

Investigation of file transfer records showed personal details of over 500 Pixlwizz staff being copied

onto a solid state hard drive to send from Pixlwizz’s Head Office to the Northland office. Access codes

to Pixlwizz’s HR servers were also transferred onto this drive. This was contrary to Pixlwizz’s data

protection policy. The error was only located when the drive was found in a diner outside of Pixlwizz’s

offices (the HR employee having forget to take it with them after finishing lunch). Fortunately, the

drive did have the Pixlwizz logo on it and the diner owner kindly sent it back to the internal audit

department in Pixlwizz. Our enquires on potential security breaches prompted Pixlwizz’s chief internal

auditor to inform us of the drive retrieval.

Impact

Pixlwizz cannot guarantee that there hasn’t been unauthorised disclosure of employee details.

Although while appearing honest the diner owner could have copied the details.

Similarly, information about employees including their passwords, addresses, names, and dates of

birth may have been disclosed if other drives were mislaid.

The security of staff personal information has been compromised. This is likely to have breached

Westland’s data protection regulations and may result in hefty fines, compensation being awarded to

affected staff and a significant impact to Pixlwizz’s reputation.

Recommendation

Pixlwizz must immediately warn staff that the security of their personal data may have been

compromised and advise them of the steps that they can take to protect themselves. This will include

having to re-set passwords as well as review their personal data on Pixlwizz’s servers.

Pixlwizz must immediately implement a training programme for all HR staff on the requirements of

GDPR and the proper transfer of sensitive passenger data.

Pixlwizz must also liaise with the Data Protection Commissioner in Westland to confirm the extent of

any breach and accept payment of any fines resulting.


Example Section: Suggested Solution

Whether it is appropriate for Pixlwizz’s internal audit department to investigate the problems

identified by the external auditor and identify/explain the key controls that Pixlwizz can introduce.

Internal audit investigation

Use of internal audit

Instigating an internal audit investigation would send a strong message from the Board to all employees

that Pixlwizz take user privacy and data protection extremely seriously, and that any allegations of this

information being compromised will be investigated and dealt with appropriately. The internal audit

could discover very little of value, however, comfort that our processes have been reviewed could be

sufficient justification for the investigation. Our internal audit department are, however, likely to

discover areas for improvement and can help us identify key controls that should be implemented to

ensure that we are doing all we can to protect our user’s privacy and enhance our data protection.

Change to internal audit workplan

Requesting the Pixlwizz internal audit department to investigate the problems identified by the external

auditor could create a distraction from the internal audit workplan. The board has the right to decide on

the internal auditor’s priorities and to redirect resources as it sees fit. The head of Pixlwizz’s internal

audit department should therefore liaise with the board to establish where this request sits within the

priorities. It is, however, important that the internal audit department are able to respond quickly to any

changes requested by the board.

Integrity of internal audit

Pixlwizz’s internal audit staff will be used to conducting ad-hoc investigations and will have the versatility

and expertise to conduct any investigation that is set for them by the board. The internal audit

department will be trusted to report to the board in confidence so that any issues discovered can be

addressed, with little risk of any adverse findings being leaked to regulators, the press or any other third

parties.

Controls

Individual staff accounts and background checks

Pixlwizz should ensure that they fully investigate the background of any new employee through

background checks and references to ensure that there is no reason why employees cannot be trusted

with the sensitive data on Pixlwizz servers. Pixlwizz should provide each HR employee with an individual,

password protected, account which has restricted access to data. The restricted access should reflect the

HR person’s role, for example limiting access to certain groups of employees and then only allowing

changes to data like addresses or salary levels with appropriate authorisation from a senior manager.

Data access – administrative errors

The reason new HR employees are being given inappropriate access to Pixlwizz systems must also be

investigated. There should be procedures in place to ensure that all employees are only provided with


access to IT systems critical to their jobs. Although there was some time pressure to provide access, this

does not mean that basic procedures cannot be followed. I recommend that Afifi Al-Akiti liaise with the

internal audit department to determine how this failure occurred and implement additional controls as

necessary to ensure it does not occur again.

Integrity of data

Assuming that Pixlwizz is willing to be open about the possibility that data may be may have been copied,

amended, and used illegally, the 500 staff must be contacted and asked to confirm that their data is

correct and at least change their passwords. In making this request we must be careful not to suggest

data has been copied or amended but stress the need to ensure data integrity in the future. Additional

guidance on strong passwords can be given. Pixlwizz’s email system can also be configured to send out

password update reminders at regular intervals.

Data file security

Data files within Pixlwizz should be accessible to HR staff who require access but should not be

downloadable or exportable. This will help protect the data held within the files. Personnel files should

also be encrypted so that they cannot be opened by anybody who does not possess the encryption key

and the encryption key should be kept secure on a separate server with no direct access to the backup

data. By increasing the data file security, it will help make it difficult for staff or others such as hackers to

abuse the data within the files by downloading personal details or any other confidential information

and possibly selling this to third parties.

Evaluation of the ethical dilemma of not informing Pixlwizz employees of the data loss with

recommendation of suitable responses.

Ignoring the external auditor’s concerns would put Pixlwizz in direct conflict with a number of the

fundamental ethical principles.

Integrity

Integrity requires Pixlwizz to be straightforward and honest. Our employees expect Pixlwizz to protect

their data and to treat their data with respect to ensure that it is not abused by anyone. This includes our

staff who could abuse their position of trust to use it for their own gain. By not acting upon the auditor’s

concerns we would breach integrity as we would not be being straightforward and honest with our

employees, betraying the trust they have placed upon us.

Confidentiality

By permitting unauthorised security staff to gain access to employees personal data, it means

confidential data has been accessed. Confidentiality is an important element of the agreement between

the employees and Pixlwizz that has now been breached. Pixlwizz must take immediate steps to

safeguard the employees from any further breaches of data and should also warn employees that there

is a possibility that their confidential information may be misused as a direct result of this breach.

Employees must be advised on what actions they should take to minimise any risk.


Professional behaviour

This is also a breach of the principle of professional behaviour, which requires Pixlwizz to comply with all

relevant laws and regulations. Most countries including Westland have very strict laws and regulations

concerning the protection of personal data held by companies. Pixlwizz is clearly in breach of these rules

and management should check whether it has further legal obligations that we must follow to rectify the

issue.

Responses

Pixlwizz must inform staff of the potential data breach. Not to do so would be a further betrayal of trust

for staff. Pixlwizz has the core value of attracting talented people; not providing this information will

breach the trust we have with our valuable employees.

The Data Protection Commissioner must be informed of the loss. Although there appears to be no

impact on third parties, if there is problem in the future then lack of reporting will reflect badly on

Pixlwizz and may result in increased penalties.

Explanation of changes in the business ecosystem that may cause staff to leave Pixlwizz and

recommendations of appropriate responses to changes.

Comparative wage rates

HR staff in Pixlwizz, like all staff, will be monitoring their wages and overall employment package against

similar jobs in other companies. Wage information is fairly easy to obtain by looking at job adverts on the

Internet. Small differences may be ignored but significant ones will start to prompt staff to apply for jobs

at other companies.

Pixlwizz’s response here is straightforward. Wage levels in the industry and other companies must be

monitored and staff wages amended as required to ensure staff do not leave – well at least not too many

at once. This action is carried out for our software developers but apparently not for other departments

like HR.

Trade cycle

The trade cycle in Westland will also be a factor in determining movement of staff. In recession jobs are

less plentiful and so staff tend to remain in their current job. However, during expansion, more jobs will

be created, and wages increase to either retain staff or attract staff to new jobs. It is possible Westland’s

economy is entering an expansion phase and HR staff are in demand in other industries. Pixlwizz staff

therefore leave to take advantage of higher wages there.

Again, Pixlwizz need to monitor the overall trade cycle in Westland with focus on the categories of staff

that are in demand. Pre-emptive wage increases may be necessary to prevent any grade or department

of staff leaving.

Terms and conditions of employment


Over time, expected terms and conditions of employment will change. For example, companies start

offering non-cash benefits like more holidays or time off for charity work. As these standards become the

norm, other companies will need to consider what additional benefits to include in their employment

packages. It is possible Pixlwizz did not update HR staff contracts with appropriate non-cash benefits –

potentially holiday days each year.

A board member in Pixlwizz’s such as Maria Tektonidou with the assistance of the HR department need

to monitor other companies like Prantain to ensure our terms and conditions of employment are at least

similar if not better than Prantain for all departments.

Technological change

Technological change can affect employment. For example, better internet connections and the ability of

some staff to work from any location with appropriate IT equipment, mean many office-based staff do

not need to be in “the office”. The same can be true of HR staff where this drawing up job specifications

or investigating employment law for example. Pixlwizz HR may have left for these better working

conditions.

Pixlwizz need to keep up to date with technology to determine how it can change jobs and whether this

can be implemented within Pixlwizz.

Social factors

Various factors in society can make different work locations more attractive – or not. For example, if

more people start working from home and their neighbours start to notice the benefits of this (no

commuting, more family time etc.) then they may also start to look for WFH jobs. Within Pixlwizz, HR

staff may have identified these benefits and applied for different jobs that allow working from home.

Pixlwizz need to conduct exit interviews to find out why the HR staff left and then try and address those

reasons in future job specifications, whilst trying to retain current staff.



(a) A Develop Business Strategy 1 I can evaluate strategic options E3 F2

Task 1: Evaluate Digital Strategy



To: Senior Manager

Subject: Proposal to produce Jakob Plunge themed clothing

Hi

Ilana Shamir has identified an interesting idea to promote the use of Pixlwizz’s games, while at the

same time raising more revenue for Pixlwizz in the medium term. Please see her notes below.

I have a meeting with Ilana later today to discuss this further. Please evaluate this strategic option,

recommending whether or not Pixlwizz should consider investing in this clothing range. Use the SAF

framework in your memo.


Many thanks

Maria

E3 F2

The notes referred to can be found by clicking the Reference Material button.

Reference Material

Proposed Investment by Ilana Shamir, Chief Executive Officer

As you know, Pixlwizz’s games are popular with gamers, with the Jakob Plunge game currently

accounting for 19% of our total revenue. While Pixlwizz does obtain income from game purchases and

in-game purchases, there are other possible methods of generating income. For example, many of our

gamers like the role playing element of Jakob Plunge and may even secretly want to be that character,

or other characters from the game. Why not let them do this in the real world by making Jakob Plunge

clothing available to them? The gamers can then be Jakob whilst playing, or simply wear the clothing

normally to show they like the game. The clothes will obviously have to be high quality to match the

high quality gaming experience we provide.

Obviously merchandising is not new – look at the range of merchandise available for the Mario

franchise. I do feel this is a significant income stream that Pixlwizz is missing out on.


Task 1: Suggested Solution

Evaluation of the strategic option with a recommendation on whether or not Pixlwizz should consider

producing a range of Jakob Plunge themed clothing.

SAF strategy model

Strategic options such as whether Pixlwizz should produce a range of clothing accessories based on the

Jakob Plunge video games can be reviewed and evaluated by using the SAF strategy model. Ilana’s

proposal does appear to meet Pixlwizz’s values partly in terms of innovation; surprising gamers (albeit

not in terms of the game itself but interesting accessories, but before we make the decision to invest we

must ensure that the suggestion is suitable for its purpose, will be acceptable to stakeholders and will be

feasible given the resources that we have available. This is necessary in order to ensure that the strategy

will be successful.

Suitability – strategic fit

Suitability evaluates whether Ilana’s strategic proposal of creating a range of clothing accessories to

complement the existing activities of Pixlwizz ,and whether this proposal fits with our strategic position

in terms of both our internal and external environment. Ilana’s proposal fits to an extent with Pixlwizz’s

vision of being the ‘the best game developer in the real and virtual worlds’. Provision of a clothing range

does help show Pixlwizz as being the best developer in the real world as we will be allowing our

customer to pretend they are characters from the Jakob Plunge game.

Suitability – brand and shareholders

Although full project costing will be needed, a positive return on investment will also be required to

meet the requirements of our shareholders. The clothing range will enhance the brand name of Pixlwizz

and help achieve one of our core values of “exciting gamers”. At the same time it will hopefully increase

profits and therefore dividends. Other revenue sources may be possible in the future like issuing new

clothing ranges to coincide with future releases of Jakob Plunge.

Suitability - viable

Ilanas’s strategic proposal of the clothing range also needs to be evaluated to assess the viability of the

idea to ensure that the proposed strategy is a suitable response to observed environmental trends. Our

clothing range must be durable and last the life of each release of Jakob Plunge. This implies clothes

cannot be made from inferior or cheap fabric. In fact we will expect the clothing of be of high quality to

match the quality expected from Pixlwizz’s games.

Acceptability – overview of stakeholders

Acceptability determines whether the strategic proposal will be acceptable to our key stakeholders in

terms of returns and risk. For example, will the returns from the new clothing range outweigh any

associated risk and therefore make this an acceptable strategic option for our stakeholders. Pixlwizz has

a diverse range of stakeholders ranging from our employees to our shareholders to our games

purchasers to our finance providers to the public. Each stakeholder group must be considered relative to


their power as this determines the level of influence that they can exert over whether the clothing range

will be acceptable.

Acceptability – finance providers

Pixlwizz currently has W$453m of borrowings but W$1,298m available cash. This implies at least some

development work can be carried out in-house (we need to have sufficient cash for ongoing working

capital requirements – the main one being paying wages). Some additional loan may be required but

there is insufficient information to determine this yet.

We should therefore perform a range of analyses such as cost/benefit, NPV, economic value added and

ROCE to ensure that the expected returns from the clothing range outweigh cost and will also provide a

rate of return deemed acceptable by our finance providers.

Feasibility – finance

If borrowing is required, the following information becomes relevant. Pixlwizz currently has W$1,298 in

cash which is unlikely to be sufficient! Our gearing is 34.8% (debt/equity) indicating some potential for

additional debt. Interest cover is 65 indicating significant potential to pay additional interest charges. We

do lack tangible assets at only W$384m which are less than current borrowings of W$453m indicating

assets cannot be used for security of any new loan.

Feasibility – design and manufacturing the clothes

Feasibility considers whether Pixlwizz have the resources and capability to build and design and

manufacture the clothing range. Firstly, the clothes will need to be designed ensuring that they are of

the appropriate high quality and are easily identified as being representative of characters in the Jakob

Plunge game. External assistance will be necessary here as clothing design is outside the skill set of

Pixlwizz. A full costing will then be necessary to determine development costs employing clothing

design consultants.

Clothing manufacture is also not a skillset within Pixlwizz. Manufacture will need to be outsourced after

obtaining appropriate quotes from a number of suppliers. The design consultant may be able to assist us

here.

Marketing and distribution

Pixlwizz will need to consider how to market the new clothes. In-game purchase will be one option –

characters in Jakob Plunge can be programmed to suggest players may want to look like them! Other

channels to market will be Pixlwizz’s website as well as intermediaries like Amazon and e-bay. Research

will be needed on each channel along with the associated costs.

Finally distribution will need to be organised – again not a skill-set in Pixlwizz – well at least not in terms

of cloths. Outsourcing will be an option given the time and cost of employing staff, obtaining suitable

warehouse space, and negotiating contracts with courier companies.

Recommendation


It is recommended that PixIwizz continues to investigate the manufacture of a clothing range. However,

it is recommended that more information is obtained on both the feasibility designing and

manufacturing the clothes along with an NPV or similar to evaluate potential returns. This is a significant

project and not one that can be decided upon by a brief memo! I recommend Ilana presents an initial

paper summarising the proposal at the next board meeting moving then to a full feasibility study.



(a) A Develop business strategy 1 I can recommend strategic decisions

(digital and otherwise)

E3 B3

Task 2: Influencing the Government



To: Senior Manager

Subject: Influencing the Government

Hi

Afifi Al-Akiti has drawn my attention to a confidential paper from the Westland Government regarding

the video gaming industry. Please see her report below.

Please can you evaluate the government’s proposal and recommend how Pixlwizz can look to

influence the decision of the Government as it is not in our interests for this proposal to be

implemented. Include an evaluation of any relevant ethical issues.


Thanks

Maria

E3 B3

The report referred to can be found by clicking on the Reference Materials button.

Reference Material

Future video gaming legislation by Westland Government

Afifi Al-Akiti, Chief Operating Officer

I have just seen a confidential paper from the Westland Government regarding the video gaming

industry.

The main issue is the recommended age of use of a game. Currently, video games have a

recommended minimum age to play – the PEGI or Pan European Game Information. A PEGI 7 game is

deemed suitable for years 7 and above for example. The government of Westland is becoming

increasingly concerned about the amount of violence and bad language in games and wants to re-

evaluate the PEGI system (which has remained the same since launch in 2003). For example, Cratchy

Swans is currently a PEGI 7 but is likely to be re-evaluated to 12+ due to the violence and bad

language. This will limit sales of this game and potentially Jakob Plunge when new releases are

available (characters are scheduled to become more violent).


I know this is an election year and the government wants to show vote-winning policies but the effect

on the video gaming industry has not been consider. Politicians! Who would have them? Definitely not

to be trusted.


Task 2: Suggested Solution

Evaluation of the government’s proposal to change video game age requirements with a

recommendation of how Pixlwizz can look to influence the decision of the Government including an

evaluation of any relevant ethical issues.

Benefits of the government’s proposal

There appears to be limited benefits to the government’s proposal to change the age ratings of games

sold in Westland. The PEGI system has been in existence since 2003 and it can be argued that current

video games are significantly more realistic than offerings in 2003. The level of graphic detail

automatically implies more violence (small punch in 2003 may produce a few red pixels on a cheek – now

a bruise is shown in significant detail). In that sense the government is correct to revise video game

ratings.

Impact on Pixlwizz

The proposal will, however, have a significant detrimental effect on Pixlwizz’s business, especially on the

sale of video games and then follow on sales of upgrades and character enhances in in-game sales.

Whilst there may be limited benefit in parents knowing how violent a game really is, there is still nothing

stopping purchase of any game for any age of child – or online monitoring of who is playing. The

legislation may appear a vote winner, but it is unenforceable.

Influence – Emphasise the benefits of maintaining the current system

One possible way to influence the decision of the Westland government is to emphasise the benefit, and

the need to maintain the current PEGI system. Not only does this provide a known standard for video

games; it is widely used in many countries. Westland in effect opting out will not stop sales of games

worldwide – and in fact citizens of Westland can simply purchase the game from other countries. Or as

noted above, parents will simply ignore the system and purchase games anyway.

Influence – Explain the negatives of the change

Changing the PEGI system is likely to result in some confusion for parents. For example, if a PEGI 7 now

becomes a 12+ does that mean that the game has been changed making it less suitable for younger

players (the answer is of course “no”). If the content has not changed then why change the age rating?

There may also be knock on issues of fewer games being bought resulting in less employment in

Westland. While the overall effect may be small, being the cause of job losses in an election year will not

be good publicity.

Influence – Lobbying of government

Pixlwizz can attempt to stop the legislation by lobbying the government. This will involve Pixlwizz

providing information to members of the government on reasons why they should not implement the

video game legislation. Pixlwizz could also potentially provide press releases explaining why we agree

that the law change provides some additional clarity to the PEGI system, but the overall effect will be

minimal if parents simply ignore the new age ratings. We will need to ensure that our proposals do not


antagonise the Government in case any other legislation is considered like mandatory identification of

the age of video game players before a game can be played.

Ethical issue – Self-interest threat

By Pixlwizz lobbying not to have the law implemented, it may be seen that we are doing this due to their

own self-interest. Pixlwizz will lose revenue from fewer game purchases as well as in-game purchases as

noted above. If Pixlwizz complain about the legislation, people may assume the reason for Pixlwizz’s

lobbying is simply to protect our revenue and business and not due to our concern of the lack of benefits

this legislation will provide Westland’s children.

Ethical issue – Professional conduct

There is also the ethical issue of whether Pixlwizz, or any company, should try and influence the

decisions of government. Pixlwizz’s vision is to be the world’s best game developer in the real and virtual

worlds; presumably this will mean limiting interference in government policy as interfering can be seen

as unethical. This issue, however, is whether it is professional for Pixlwizz to protest and attempt to stop

legislation coming into place especially when there is such a large self-interest threat.

Conclusion

In conclusion, in my opinion, we should appeal the government’s proposal to age ratings on video games.

Pixlwizz must, however, be very careful that we are not biased in our argument and that we do not allow

our self-interest to come into play. We should simply make the government aware of the benefits of

continuing with the current easily understandable PEGI system compared to confusion if this is changed.

We can then work with the government to suggest other ways in which they can address their concerns,

for example, by being clearer on game packaging or online information prior to download. For example,

providing example game play so purchasers can decide for themselves on the potential level of violence

and bad language.

Documents

CIMA Strategic Case Study Introductory Pack (Pixlwizz)