Paper Details & Case Study Summary: Fletcher Brenton (FB)
Subject: Business (Business Strategy)
Syllabus Code: 9609
Examination Series: October/November 2024
Paper Code: 9609/43 (Paper 4 Business Strategy)
Duration: 1 hour 15 minutes (75 mins / 4500 secs)
Total Marks: 40 marks (Q1: 20 marks, Q2: 20 marks)
Case Summary: Fletcher Brenton (FB) is an independent Swiss luxury watchmaker founded in 1860, currently owned and managed by sole shareholder and CEO Stefan Fletcher. FB's long-standing accounting and finance strategy is based on two strict rules: never to use long-term borrowing and to pay high dividends ($5.0m per year) to Stefan. In 2018, FB spent $4.95m from cash reserves to purchase and renovate an adjacent workshop. By 2022, despite revenue recovering to $59.0m in 2019, sales fell to $24.1m, resulting in a loss of $(0.1)m, a critical cash reduction to $0.8m, an Acid Test ratio of 0.41:1, and inventory rising to $16.2m. With Stefan announcing his retirement in 2025 and no family successor available, FB faces significant strategic uncertainty alongside technological shifts in sports watches, exchange rate volatility (Swiss Franc), and market competition. The Board of Directors is evaluating scenario planning against alternative strategic models to navigate leadership succession and business strategy.