The Cfo
, 26 February 2019



The purpose of this article is to preview and summarise the 5 scenarios the teams entering the 2019 edition of The CFO (and The CFO Junior) Case Study Competitions will have to solve; written to guide the identification of the Knowledge areas that should inform the analysis of each scenario as well as how the marking grid will be applied. The 5 scenarios are the same in both competitions - but the level of detail, interconnectedness, and complexity are markedly different!

For 'The CFO Case Study Competition', the applicable knowledge base is integrated and multi-disciplinary – drawing mainly from, but not limited to: International Business, Strategic Management, Risk Management, Cost and Management Accounting, Financial Accounting and Reporting, Financial Management, Operations Management, Project Management, Industrial Relations and Human Resources Management. In the case of The CFO Junior, the applicable knowledge base is also integrated and multi-disciplinary – but drawing mainly from 4 key subjects in the High School curriculum: Accounting, Business Studies, Economics and Mathematics.

As the mission of the competition is to bring real-life business challenges into the classroom, we have painstakingly designed each issue to ensure any report that fails to apply the relevant knowledge base (or theories) will not do as well. If a requisite knowledge area has not yet been covered at your University or High school, teams will be expected to do some internet research (Google) on it! Please avoid reproducing the theory; rather apply it in your analysis, to identify (and help the Board to solve) the main problem(s). This is extremely important, as our goal is to assess the extent to which the classroom knowledge you have gained can be meaningfully applied to solve some of the most challenging and intricate real-world global business scenarios you will most likely face upon your graduation!


The VOLKSWAGEN AG case, Researched, Designed and Developed (R&DD) by The CharterQuest Institute South Africa, is based on a real-world leading multinational business within the global automobile industry. It simulates the strategic decisions its Group CFO and Board faced (or potentially faces). Just like in the 2016 MCOM PLC, 2017 AMANGO PLC and 2018 AB INBEV case studies, VOLKSWAGEN AG known internationally as the Volkswagen Group (VW group) is faced with a complex interplay of strategic threats, weaknesses and opportunities, some of which are embedded with serious ethical dilemmas -involving compelling individuals and powerful stakeholders -that create a context for significant organisational change.

With headquarters in Wolfsburg (Germany) and global operations, the group designs, manufactures and distributes passenger and commercial vehicles, motorcycles, engines, and turbomachinery and offers related services including financing, leasing and fleet management. It publicly traded, with primary listing on the Frankfurt Stock Exchange and a secondary listing on the Luxembourg Stock Exchange. It has been traded in the United States via American depositary receipts since 1988.

Much of the group’s current strategy is defined by one catastrophic incident it faced 3 years ago. On September 18, 2015, the U.S. Environmental Protection Agency (EPA) publicly announced in a “Notice of Violation”, that irregularities in relation to nitrogen oxide (NOx) and carbon dioxide (CO2) emissions had been discovered in tests conducted on diesel engines of some its car units in the USA. Regulators in multiple countries began to investigate the group and the value of its stock price fell by a third in the days immediately after the news. VW group admitted to these irregularities, the Group CEO, Martin Winterkorn resigned and a new CEO, Matthias Mueller, formerly head of Porsche, was appointed to stabilize the company and prepare it for a new future (TOGETHER – Strategy 2025). To date, over €27 billion has been spent on refit and recall campaigns as well as court settlements. The scandal has come to be named "Dieselgate’’, but often referred to as the ‘diesel issue’ in the company’s official publications, including its Annual Reports. This scandal amongst others, has continued to define the ever-growing international consensus around the future of fuel and diesel combustion engine cars.

As Winston Churchill once put it, ‘’never let a good crisis go to waste:’’ Following some sweeping changes that began in the aftermath of the diesel scandal, it bounced back -and in 2016, the VW group was once again the world's largest automaker by sales, overtaking Toyota and retaining this title since then.  Against the background of the above diesel scandal, and faced with multiple laws phasing-out the production of traditional fuel and diesel engine cars, in some countries, as early as 2030; the group responded with an ambitious Strategy 2025, the core of which is a future in electric cars (e-mobility). Given this future, its RoadMap E, acknowledges that it cannot remain the world’s number 1, unless it successfully overcomes the first mover advantage and the global leadership Tesla has already mounted in that space. Today, standing between it and that future, are 5 intricately-connected strategic issues, some embedded with serious ethical dilemmas. Taken together, these issues create a context for fast-tracking the significant organisational changes that began with the ‘’diesel issue’’, for which a new CEO (Dr. Hebert Diess) has just been appointed; replacing Mr. Matthias Müller, whose superb leadership was instrumental in its aftermath, and until recently!

The board has asked your team to identify and define the main problem(s); or, sub-questions within each scenario, prioritise -and evaluate each scenario (including any ethical dilemmas –where applicable), and offer strategic advice. 

The 5 Scenarios include:


In terms of recent sweeping changes announced by the supervisory board, the group’s multi-brand empire has been bundled into 6 divisions comprising its 12 key brands: (1) the 'volume' segment will include its namesake VW brand, Czech division – Skoda, Spanish unit – Seat, and ‘’VW commercial vehicles;’’ (2) the 'premium' segment will hold Audi at its core, and (3) 'super-premium' will include sports car brands: Porsche, Bentley, Bugatti and Lamborghini. VW AG will furthermore, (4) carve out a trucks and buses division that includes the MAN and Scania heavy-truck brands; (5) MAN Turbo and Renk units would be put into a further division, whilst; (6) China will be singled out as a division (comprising all 12 brands). Whilst the supervisory board is settled on this, a fierce debate has ensued within the management board regarding the best long-term competitive and global decentralisation strategy around these 3 segments, as well as the related cost optimisation of the resulting strategy.

This scenario has 3 main subproblems (questions) (2 in the case of the CFO Junior) your Board Report must address, deciphering and solving these will require that:

The CFO aspirants apply Relevant Costs & Benefits; Strategic Financial Management (including Net Present Value); Risk Management, Strategic Management (including Doing Business in West Africa); Ethics and Corporate Social Responsibility; and that: The CFO Junior aspirants must apply Accounting (Time Value of Money, Professionalism and Ethics); Business Studies; Mathematics; and Economics.


The board is currently contemplating the strategic sourcing of cobalt from key international suppliers, including mining giants such as Glencore, in the Democratic Republic of Congo (DRC), which holds 60% of the world’s reserves. Against a background of failed talks with the major mining companies to secure supplies, the group, according to local reports, has resorted to using its local Rwanda offices, to access cobalt. Reports claim that the VW group is doing so by buying from artisanal mining operators who ‘siphon’ this out of the DRC.

This scenario has 1 main problem your Board Report must address, deciphering and solving this will require that:

  • The CFO aspirants apply Supply Chain Management, Value Chain Analysis, International Business Law,  as we all Strategic Management (including Doing Business in West Africa); Ethics and Corporate Social Responsibility; and that:
  • The CFO Junior aspirants must apply Economics (scarcity and choice, demand and supply), as well as Business Studies (Professionalism and Ethics).


As more and more countries publish new laws to completely eliminate traditional and combustion engine cars, some as early as 2030, the group’s first fixed 5-year Panasonic contract for the supply of electric vehicle batteries (EVBs), a key component for the manufacturing of electric cars (ECs) is coming to an end. The group had dismally failed to anticipate the pace of the EC trend and diverted away from its e-mobility strategy, until the ‘’diesel issue’’ forced a reconsideration: ‘don’t let a good crisis go to waste.’’ By this time however, Tesla Motors had taken the lead, by investing in a Gigafactory in Nevada (USA) through a Joint Venture (JV) with the group’s hitherto, only supplier, Panasonic.

This scenario has 2 main subproblems (questions) your Board Report must address, deciphering and solving these will require that:

  • The CFO aspirants apply Supply Chain Management, Procurement Management, Risk Management, Strategic Cost and Management Accounting; and that:
  • The CFO Junior aspirants must apply Accounting (Time Value of Money), Economics (exchange rates) as well as Business Studies.


In line with its new strategy, the group is assessing the profitability of each of its 3 new segments (volume, premium and super premium) based on its 1st quarter results and published forecasts for the current financial year, with a view to make one or several product portfolio rationalisation-related decisions.

This scenario has 2 main subproblems (questions) your Board Report must address, deciphering and solving these will require that:

  • The CFO aspirants apply Financial Accounting & Reporting, Cost and Management Accounting as well as Strategic Management; and that:
  • The CFO Junior aspirants must apply Accounting (fixed and variable costs, variance analysis), Economics (demand and supply), Mathematics, as well as Business Studies.


Following the 2015 signing of the Paris Agreement on the reduction of green-house gas emissions, the next wave of legislation to tighten emission standards for car engines kicks in 8 months, failing to comply exposes the group to fines as high as €600 million per annum.

This scenario has 3 main subproblems (questions) your Board Report must address, deciphering and solving these will require that:

  • The CFO aspirants apply Strategic Financial Management (including net present value and real option analysis), Corporate Social Responsibility, Corporate Finance, Capital Project Evaluation as well as Strategic Management (including Business Ethics and Corporate Social Responsibility); and that:
  • The CFO Junior aspirants must apply Accounting (Time Value of Money) as well as Business Studies.


As per the marking grid provided in the case study pack, teams must consult the case study resources section of our website to appreciate the requirements. The pertinent questions you must address include:

  • Strategic analysis - Did we properly identify and define the main problems (and sub-problems) in each scenario, prioritise or rank the scenarios, with a clear justification that is informed by our SWOT, impact and urgency analysis? Did we provide appropriate board focus on the most critical issues?
  • Strategic choice - Did we identify all the strategic choices and options, and carefully considered the impact on the business?
  • Strategic implementation- Did we thoughtfully consider the implementation challenges of each recommendation?
  • Finance & technical -Did we do all the calculations, informed by the theory underlying the data?
  • Diversity, business & entrepreneurial- Did we relate our calculations and qualitative data in such a manner that the business can adequately exploit any growth opportunities (revenue and/or cost control), or guard against any strategic threats?
  • Ethics and people- Did we identify and adequately justify any embedded ethical dilemmas, as well as behavioural and relationship issues? Did we produce compelling recommendations for these?
  • Presentation - Did we present our work very professionally and in line with the format/example provided?
  • Innovation and integration – Did we identify new and novel ways of solving any of the issues; not implied by the case itself? Were we able to spot clear interconnections between some of the scenarios and creatively exploited those?
  • Decisiveness and Leadership – Did we provide a very solid basis for our recommendations, with clear actions to mitigate any undesired effects -including the relevant accountabilities and timelines?

Now, this is not just a Case Study, but an Integrated Case Study at its best:

Real-life global business leadership challenges, wrapped in complicated and high impact business scenarios, with often varied and ambiguous data, calling for prompt, responsible and well justified actions that instill the mind-set and courage to act decisively in crisis and under uncertainty.

Leaders must be skilled at decision-making, especially under time-pressured circumstances, which is what our integrated case methodology and The CFO Case Study Competition seeks to inculcate in our CFOs and Business Leaders of tomorrow!

We hope you find these guidelines useful.

Best wishes to your team!

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