Leothayre CIMA SCS Preseen -May – August 2025

The Strategic Case Study (SCS) exam requires students to analyse a company, understand its strategic position, and respond to challenges based on the information provided in the pre-seen material. The pre-seen provides a foundation, while the exam introduces new (un-seen) information that builds upon it.

Leothayre, a quoted company in Wexland, operates in the small satellite industry, specialising in low Earth orbit (LEO) satellites. The company’s business model focuses on designing, manufacturing, and launching small satellites for various applications.

Leothayre: Company Overview

Operations and Business Model

Leothayre was founded in 2004 and listed on the Wexlandian stock exchange in 2017. It provides a complete satellite service, from design to launch coordination and mission support. The company does not operate its own launch vehicles but works with third-party providers to deploy satellites into orbit.

Key offerings:

• Satellite design and manufacturing – Specialises in CubeSat configurations (3U, 6U, 12U) that can be adapted for different client needs.
• Launch coordination – Works with external launch providers to ensure satellites reach their intended orbits.
• Ground stations – Provides mission control services to track and communicate with satellites post-launch.

Leothayre has successfully launched 64 satellites, with several orders awaiting fulfilment. The company is recognised for its on-time project completion and mission success rates.

Financial Performance

• Revenue (2025): W$1,782 million (increase from W$1,683 million in 2024)
• Profit (2025): W$175 million
• Operating costs: W$1,126 million (down from W$1,155 million in 2024)
• Debt levels: Borrowings increased to W$4,500 million (from W$3,500 million)
• Retained earnings: W$3,690 million

Competitive Landscape

Leothayre operates in a highly competitive market. Orbalinc, a direct competitor, has been in business longer and shows stronger financials:

• Revenue (2025): W$2,566 million
• Profit (2025): W$335 million
• Borrowings (2025): W$5,000 million
• Retained earnings: W$4,240 million

Leothayre has a smaller market share but is recognised for its technical expertise and reliability.

The Small Satellite Industry

Industry Trends

• The demand for small satellites is increasing, driven by advancements in AI, IoT, and Earth observation technologies.
• Governments and private firms invest in satellite networks for communications, navigation, and climate monitoring.
• Regulatory changes related to space debris and sustainability influence satellite design and disposal policies.

Key Industry Players and Technologies

• SpaceX’s Starlink – A mega-constellation of small satellites providing global internet coverage.
• Rocket Lab – Specialises in launching small satellites at a lower cost.
• Planet Labs – Uses LEO satellites for Earth imaging and environmental monitoring.

Regulatory and Ethical Considerations

• Space debris management: Over 35,000 objects (>10cm) are in Earth’s orbit, creating collision risks.
• Environmental impact: Rocket launches release greenhouse gases into the upper atmosphere.
• Government involvement: Wexland signed the “Space Junk Charter”, encouraging responsible space usage.

Leothayre’s Strategic Position and Risks

Principal Risks Identified

1. Regulatory Uncertainty – Space industry regulations are evolving, affecting launch approvals and satellite disposal requirements.
2. Supplier Dependence – Delays in component deliveries could disrupt mission timelines.
3. Client Concentration Risk – A small number of clients generate most of the revenue. Losing one could impact financial stability.
4. Economic and Currency Risks – Fluctuating exchange rates impact costs and revenue conversions to W$.
5. Technological Disruptions – AI and automation in satellite services could create new competitors or business opportunities.

Strategic Options Available

• Investing in AI-powered satellite analytics to enhance service offerings.
• Expanding ground station infrastructure to support satellite operations globally.
• Partnering with launch providers to secure dedicated launch slots and reduce dependency risks.
• Exploring financing options to support expansion while managing high debt levels.

How the Exam Will Test These Areas

The exam will introduce new scenarios that build upon this pre-seen information, requiring candidates to apply strategic thinking to business challenges. These challenges align with key assessment outcomes.

1. Business Strategy Development

• How should Leothayre respond to market changes?
• What are the potential opportunities in AI-driven analytics?
• Should Leothayre expand into new services, such as satellite-based data solutions?

2. Business Ecosystem and Environment

• How should Leothayre respond to a new space regulation?
• What strategic tools (SWOT, PESTEL) can be used to assess a competitor’s market entry?
• What KPIs should Leothayre use to measure its financial and operational success?

3. Financing Strategies

• Should Leothayre finance expansion through equity or debt?
• How should the company adjust its dividend policy?
• How does its financial position compare to competitors?

4. Risk Management

• What internal controls should Leothayre implement to manage supplier risks?
• How can the company mitigate risks related to space debris regulations?
• How should Leothayre protect against cyber threats in satellite communications?

5. Corporate Governance and Control

• What governance measures should be in place to ensure financial transparency?
• How should Leothayre respond to an ethical dilemma involving environmental impact?
• What actions should be taken if a major compliance failure is identified?

‘I can’ Statements and Their Relevance in the SCS Exam

The Strategic Case Study (SCS) exam builds upon the pre-seen information while introducing unseen scenarios to test candidates on key competencies. The following sections provide a detailed breakdown of the relevant competencies along with potential examining scenarios students might encounter.

Evaluating Strategic Options

Understanding Strategic Options

Strategic options refer to alternative courses of action that a company can take to achieve long-term success. For Leothayre, these options revolve around:

1. Business Strategy Development

• How should Leothayre respond to market changes?
• What are the potential opportunities in AI-driven analytics?
• Should Leothayre expand into new services, such as satellite-based data solutions?

2. Business Ecosystem and Environment

• How should Leothayre respond to a new space regulation?
• What strategic tools (SWOT, PESTEL) can be used to assess a competitor’s market entry?
• What KPIs should Leothayre use to measure its financial and operational success?

3. Financing Strategies

• Should Leothayre finance expansion through equity or debt?
• How should the company adjust its dividend policy?
• How does its financial position compare to competitors?

4. Risk Management

• What internal controls should Leothayre implement to manage supplier risks?
• How can the company mitigate risks related to space debris regulations?
• How should Leothayre protect against cyber threats in satellite communications?

5. Corporate Governance and Control

• What governance measures should be in place to ensure financial transparency?
• How should Leothayre respond to an ethical dilemma involving environmental impact?
• What actions should be taken if a major compliance failure is identified?

Key Strategic Considerations

• Competitor Landscape: Orbalinc has higher revenue and profits, but Leothayre has technical expertise and reputation.
• Customer Needs: Demand for faster satellite deployment and high-frequency data analytics is increasing.
• Regulatory Environment: Wexland’s government is tightening space debris regulations, affecting satellite design.
• Technological Advancements: AI-driven analytics and automation could improve satellite communication and performance monitoring.

Possible Examining Scenarios

Scenario 1: Leothayre is considering expanding its services into data analytics using AI-powered satellites. Should it invest in AI-driven analytics or focus on hardware innovations?

Scenario 2: A potential merger opportunity arises with a launch provider. How should Leothayre assess the financial and strategic feasibility of this deal?

Scenario 3: A new competitor disrupts the industry with low-cost launch services. How should Leothayre respond to maintain market share?

Managing Risks

Understanding Risk Management

Leothayre operates in a highly technical and fast-evolving industry, making risk assessment and mitigation critical. Risk management involves:

• Identifying potential threats to the company’s operations, finances, and strategy.
• Assessing their impact and likelihood.
• Implementing mitigation strategies to reduce risk exposure.

Key Risks for Leothayre

1. Regulatory Uncertainty – Evolving space laws may increase compliance costs.
2. Supply Chain Disruptions – Delays in component sourcing can affect project deadlines.
3. Cybersecurity Threats – Data breaches or satellite hacking pose operational and reputational risks.
4. Client Concentration Risk – Losing a key client could significantly impact revenues.
5. Macroeconomic Factors – Exchange rate fluctuations affect international transactions.

Risk Mitigation Strategies

• Regulatory Risk: Proactively engage with government bodies and align operations with best practices.
• Supply Chain Risk: Diversify suppliers and invest in in-house manufacturing capabilities.
• Cybersecurity Risk: Implement robust encryption and security protocols for satellite communications.
• Client Concentration Risk: Expand client base and develop long-term contracts with existing clients.

Possible Examining Scenarios

Scenario 1: New data protection laws require satellite companies to upgrade cybersecurity measures. What steps should Leothayre take to comply?

Scenario 2: A key supplier faces financial distress, threatening Leothayre’s production schedule. How should the company manage supply chain risk?

Scenario 3: A major currency fluctuation increases Leothayre’s operational costs. What financial instruments can be used to mitigate exchange rate risk?

Financial and Valuation Analysis

Understanding Financial Performance

Leothayre’s financial health determines its ability to invest in expansion, sustain operations, and compete effectively. Financial analysis includes:

• Profitability Analysis – Evaluating revenue growth, operating margins, and return on investment.
• Liquidity and Solvency – Assessing debt levels and cash flow sustainability.
• Valuation Models – Applying financial models to acquisitions, investments, and company valuation.

Key Financial Highlights

Revenue Growth (2024–2025): W$1,683M → W$1,782M (+5.9%)

Operating Profit: W$528M → W$656M

Debt Level: W$3,500M → W$4,500M (high leverage)

Competitor Comparison: Orbalinc’s revenue (W$2,566M) and profitability (W$335M) exceed Leothayre’s.

Valuation Methods for Examining Investment Decisions

1. Discounted Cash Flow (DCF) – Estimating future cash flows to determine present value.
2. Price-to-Earnings (P/E) Ratio – Comparing market valuation relative to earnings.
3. Net Present Value (NPV) – Evaluating financial feasibility of potential acquisitions.

Possible Examining Scenarios

Scenario 1: Leothayre is considering an acquisition of a technology firm. What valuation model should be used to assess the deal?

Scenario 2: A sharp increase in borrowing costs affects financial stability. How should Leothayre adjust its financing strategy?

Scenario 3: The company must decide between paying higher dividends or reinvesting profits in expansion. What factors should be considered?

Ethics and Governance

Understanding Corporate Governance

Strong corporate governance ensures accountability, ethical conduct, and transparency. Leothayre’s governance structure includes:

• Board of Directors with executive and non-executive members.
• Audit, Risk, and Remuneration Committees overseeing financial and strategic decisions.
• Internal Controls to monitor compliance and risk management.

Key Ethical and Governance Considerations

1. Space Debris Management – Balancing profitability with sustainable satellite disposal practices.
2. Transparency in Financial Reporting – Ensuring accurate disclosures to shareholders.
3. Board Independence – Preventing conflicts of interest in decision-making.
4. Diversity and Inclusion – Aligning leadership with ethical workplace standards.
5. Data Privacy & Security – Protecting satellite communications and customer data.

Regulatory Compliance and Ethical Responsibilities

• Wexland’s “Space Junk Charter” encourages satellite companies to adopt responsible debris management policies.
• Ethical dilemmas may arise between cost-saving measures and environmental responsibilities.
• The role of non-executive directors is crucial in ensuring independent oversight.

Possible Examining Scenarios

Scenario 1: Leothayre’s satellites contribute to rising space debris. Should the company adopt a costly, eco-friendly disposal method?

Scenario 2: A whistleblower raises concerns about financial misreporting in a major project. How should the board respond?

Scenario 3: A data breach exposes sensitive client information. What ethical and governance responsibilities does Leothayre have?

Real-Life Applications: Connecting Leothayre’s Case to the Real World

The Strategic Case Study (SCS) exam is designed to reflect real-world business challenges, requiring candidates to apply their strategic, financial, and risk management knowledge in a professional setting. This section connects Leothayre’s pre-seen context with actual industry trends and corporate strategies to deepen students’ understanding and enhance their application skills in the exam.

1. Strategic Expansion in the Space Industry

Real-Life Example: SpaceX’s Starlink vs. Amazon’s Project Kuiper

• Starlink (owned by SpaceX) has launched thousands of LEO satellites to provide global internet coverage.
• Amazon’s Project Kuiper aims to compete with Starlink by launching 3,236 satellites for broadband services.
• The key strategic decision: Invest in satellite deployment or partner with existing networks?

Connection to Leothayre:

Leothayre could explore similar strategic options, such as:

• Building a satellite constellation for communication services.
• Partnering with telecommunications providers to expand data applications.
• Offering satellite analytics as a service rather than focusing solely on manufacturing.

Possible Exam Scenario:

Leothayre is approached by a tech giant for a joint venture in space-based internet services. Should the company invest in its own network or form a partnership?

2. Managing Supply Chain Risks in Aerospace

Real-Life Example: Boeing’s 737 MAX Supply Chain Crisis

• Boeing faced severe supply chain disruptions due to over-reliance on a few key suppliers for aircraft components.
• The issue led to production delays, increased costs, and reputational damage.
• Companies in aerospace and satellite manufacturing must have diverse supplier networks to mitigate risk.

Connection to Leothayre:

Leothayre depends on specialised satellite components, making supply chain risk a major concern. To address this, the company could:

• Develop in-house manufacturing capabilities for critical satellite components.
• Diversify its supplier base to avoid dependency on a single vendor.
• Implement risk-sharing contracts with suppliers to ensure on-time delivery.

Possible Exam Scenario:

A key supplier for Leothayre goes bankrupt, causing delays in satellite production. How should the company respond to mitigate operational risks?

3. Financial and Valuation Challenges in High-Tech Industries

Real-Life Example: Tesla’s High Debt Strategy vs. Apple’s Cash Reserves

• Tesla operates with high debt levels, constantly reinvesting in innovation, expansion, and production capacity.
• Apple, in contrast, maintains large cash reserves, funding innovation without excessive borrowing.
• The trade-off: Growth vs. financial stability.

Connection to Leothayre:

Leothayre’s high debt (W$4,500M) suggests an aggressive growth strategy, while Orbalinc’s stronger profitability may indicate a more conservative approach.

• Should Leothayre focus on reducing debt or reinvesting in expansion?
• Would equity financing be a better option than additional borrowing?

Possible Exam Scenario:

Leothayre’s interest payments are increasing, impacting profitability. Should the company prioritise paying down debt or investing in a new satellite production facility?

4. Ethical and Governance Challenges in Space Exploration

Real-Life Example: Space Junk and Corporate Responsibility

• The European Space Agency (ESA) estimates that over 36,500 debris objects (>10cm) are in Earth’s orbit, increasing the risk of collisions.
• Governments and space agencies are pushing for “sustainable space operations”, requiring companies to design satellites that can deorbit safely after use.
• Companies like OneWeb and Rocket Lab have committed to reducing space debris through sustainable disposal strategies.

Connection to Leothayre:

Leothayre operates in a field where environmental responsibility is gaining attention.

• Should the company adopt sustainable satellite disposal policies, even if they increase costs?
• Will compliance with sustainability initiatives provide a competitive advantage?

Possible Exam Scenario:

Wexland’s government introduces mandatory space debris mitigation regulations. How should Leothayre integrate these changes into its business strategy?

5. Cybersecurity and Satellite Hacking Risks

Real-Life Example: Cyber Threats to Satellite Networks

• In 2022, a major satellite operator was hacked, disrupting communication services worldwide.
• The attack raised concerns about the vulnerability of space-based systems.
• Governments and corporations are now investing heavily in encryption and cybersecurity for satellites.

Connection to Leothayre:

Leothayre provides satellite communication services, making it vulnerable to cyber threats.

• Should the company invest in stronger cybersecurity measures, despite the cost?
• How can cyber risk insurance help mitigate potential damages?

Possible Exam Scenario:

A cyberattack compromises Leothayre’s ground station operations, threatening data security. What response plan should be implemented?

Final Thoughts: Preparing for Success in the SCS Exam

The Strategic Case Study (SCS) exam is not just about recalling facts—it’s about thinking like a senior business professional, making strategic recommendations, and justifying your decisions based on evidence. The pre-seen material gives you a foundation, but the unseen exam scenarios will challenge you to apply your knowledge dynamically.

Key Takeaways for Exam Success

Understand the Industry – The small satellite sector is evolving rapidly, with technological advancements, increasing competition, and regulatory pressures. Your ability to connect Leothayre’s business model to real-world industry insights will set you apart.

• Think Strategically – Whether it’s evaluating growth opportunities, managing financial risks, or responding to ethical dilemmas, always consider both short-term and long-term impacts.
• Use a Structured Approach – Apply strategic frameworks (PESTEL, SWOT, Porter’s Five Forces) and financial models (DCF, NPV) where relevant. Clear, well-structured answers with justifications will score higher.
• Be Ready to Adapt – The unseen information will introduce new challenges, so stay flexible. Show that you can analyse fresh data and make informed decisions under pressure.
• Balance Commercial and Ethical Considerations – In today’s business environment, profitability alone is not enough. Consider corporate responsibility, sustainability, and regulatory compliance in your responses.

Final Advice: Approach the Exam with Confidence!

• Engage deeply with the pre-seen material – Treat Leothayre as if you were working for the company.
• Practice scenario-based thinking – Ask yourself, “What if a competitor cuts prices?” or “What if a major client cancels their contract?”
• Be concise but impactful – You don’t have unlimited time in the exam, so structure your responses efficiently.
• Stay calm and think logically – Examiners reward well-reasoned, professional recommendations, not rushed decisions.

Your Future as a Strategic Finance Professional

The SCS exam is designed to mirror real-world strategic decision-making. Passing this exam demonstrates that you can think like a senior financial leader, evaluating risks, making high-stakes decisions, and steering a business toward success.

So go into the exam with confidence, apply your knowledge practically and strategically, and showcase your ability to navigate complex business challenges like a true professional.

Best of luck! You’ve got this!