Competition experience

Recently represented my school in a business case competition, was held in one of the universities in New Zealand. I was required to analyse the situation of a company based on several articles and extracts from its annual report, then subsequently provide recommendations to improve on their business operations. I had the chance to compete with many seasoned competitors, and this was definitely an eye-opener for a freshman like me.

The best experience for me however, was the opportunity to present in front of the management team of the company that I was analysing. My team was lucky to have had the CEOs of all the companies as our panel of judges in all 3 rounds we participated in. The idea of having to analyse a business in 5 hours, something that the CEOs had done for the past 20 years, was indeed scary but I relished the challenge at the same time.

In one particular round, the CEO of a certain listed logistics company was particularly defensive about his business. A quick analysis showed that the cash conversion cycle was low and that a huge portion of its current assets lay in accounts receivables. In such a climate, bad debt expenses are likely to increase substantially and the company could face a cash flow problem. Although operating cash flow was positive for now, the company could soon run into some cash flow problems, especially if it kept up with the acquisition strategy.

The problem with our team was our candidness in providing a solution. We decided to come forth with the problems that the company faced, and the CEO started to become defensive about it, claiming that gearing was still low for them, and that they could continue acquiring. Which leads you to think, is gearing up really the best way to obtain cash? It seemed to us that he was fairly unreceptive to comments. In the end, the university which claimed that the company was doing well and only suggested fine-tuning the business won that round. What about us? No kudos for guessing what happened. We came in last for that round.

We paid the heavy price for that; our subsequent performances were pretty good, eventually missing out on the finals by a single point. Lesson? sometimes, do look at the other party you are addressing, and be careful with what you say. The CEO obviously did not enjoy having somebody talk about his business in a negative way, and did not seem to accept that viewpoint. We subsequently changed our strategy to something more pleasing for the CEOs and came out fairly well, winning one round and coming in 2nd in the other, although our better performance might not necessarily be attributed to "bootlicking".

Ultimately, the experience of presenting in front of the CEOs was definitely very enjoyable, and their approach to looking at businesses taught me a lot about how to analyse business models and the real-life issues that companies face. I would definitely be able to impart this knowledge to investing in future.

Anyhow, happy Valentine's Day to all out there.:)