CTA Strategic Planning & Business Model Assessment 2 — Questions and Answers
Question 1: A 'value chain analysis' in turnaround planning is used to:
- List all creditors in order of priority
- Identify where the company creates or destroys value across its operations, revealing restructuring opportunities (Correct answer)
- Calculate the liquidation value of equipment
- Determine the sequence of bankruptcy court filings
Correct answer: Identify where the company creates or destroys value across its operations, revealing restructuring opportunities
Value chain analysis pinpoints which operational activities generate competitive advantage and which destroy value, guiding decisions on what to fix, outsource, or eliminate.
Question 2: Which business model change is most commonly recommended when a turnaround company has high fixed costs and declining revenue?
- Increase advertising spend to recover volume
- Convert fixed costs to variable costs by outsourcing non-core activities (Correct answer)
- Add new product lines to increase complexity
- Expand into new geographic markets immediately
Correct answer: Convert fixed costs to variable costs by outsourcing non-core activities
Shifting from fixed to variable costs reduces the breakeven point, giving the company more resilience against revenue volatility during the recovery period.
Question 3: In a turnaround, a 'platform business' strategy refers to:
- Moving all operations to a single technology platform
- Identifying a core product or service that multiple adjacent revenues can be built around (Correct answer)
- Using a standard accounting software platform
- Filing all court documents electronically
Correct answer: Identifying a core product or service that multiple adjacent revenues can be built around
A platform strategy concentrates resources on a defensible core that can generate multiple revenue streams, creating value density rather than spreading resources thinly.
Question 4: What is a 'business interruption assessment' in a turnaround plan?
- A legal document filed with the bankruptcy court
- An analysis of which operations will be disrupted during restructuring and a plan to minimize customer and revenue impact (Correct answer)
- A formal complaint filed against a competitor
- An IRS audit of business income during the distress period
Correct answer: An analysis of which operations will be disrupted during restructuring and a plan to minimize customer and revenue impact
A business interruption assessment identifies restructuring activities that could damage customer relationships or operational continuity, allowing management to proactively mitigate those risks.
Question 5: Which strategic planning tool helps quantify the specific revenue or cost improvement needed to achieve financial viability in a turnaround?
- Gantt chart
- Break-even analysis identifying the minimum performance required to cover all obligations (Correct answer)
- Org chart redesign
- Balanced scorecard for long-term KPI tracking
Correct answer: Break-even analysis identifying the minimum performance required to cover all obligations
Break-even analysis establishes the minimum revenue level required to cover fixed and variable costs, creating a concrete financial target for the turnaround team.
Question 6: In a turnaround strategic plan, 'quick wins' are important because:
- They are the most financially significant changes
- They build organizational credibility and stakeholder confidence early in the process (Correct answer)
- They require the least management attention
- They always have the highest ROI of any actions taken
Correct answer: They build organizational credibility and stakeholder confidence early in the process
Early visible wins demonstrate momentum and management competence, which is critical for maintaining employee morale and stakeholder support during a lengthy restructuring.
CTA Strategic Planning & Business Model Assessment 2
A 'value chain analysis' in turnaround planning is used to: