Exercise 5: Risk identification

Assumption- based planning- Lego Case

1. Four major planning assumptions for the China expansion project:

a. The addition of 10 new stores every month.

This should carry further risk analysis as the governmental approvals can be delayed so the plan is not
feasible.

b. They have assumed that the stores will be open 365 days which is unlikely based on bank holidays,
religious holidays, etc.

c. Using the latest technology to differentiate is an ambitious assumption as it is costly and being
number one in the technological trends is not always the best thing to do.

d. The assumption that the children’s population will increase in China by 2032. We are currently in 2021
and the company plans to expand in order to meet the demand of 2032 which is subjective into change.

2. Propose next steps for the finalization of the risk identification process for the China expansion
project in due course of the preparation of the Operating budget for 2021.

The Chief Financial Officer (CFO) is accountable for the proper financial translation of a formulated
strategy, down to the agreed accountability levels per the strategy execution plan. Thus, it will be
needed to check if the above assumptions are the ones which will bring the maximum profit for the
company.