IBSAP Presentation
- 1. SPJIMR Klicka härför att ändra format på bakgrundstexten IBSAP- Group 7 Nivå två • Nivå tre • Nivå fyra • Nivå fem Company- 2-3 (Hoelderlinstrasse) Group – 7 Midhu Ragunathan, Jaikishan Gianani, Dexter Socorro Vaz, Himanshu Sharma, Shreesh Soni 1 Copyright Universum 2010 1 Copyright Universum 2010
- 2. Content 1 1 Company’s Strategy 2 Marketing Strategy 3 Production 4 Purchase 5 Finance 6 Going Concern 7 Key Takeways 2
- 3. 1 In the long run become an innovation driven company and get 40% of our profits from Carti (an innovative product). Market leaders in the Innovation category. Alesa will be phased out and Carti and Bordo will be continued. Bordo will soon become the cash cow while Carti will continue to remain the star. Goals There is a shift of power from the West to East and hence focus will gradually be shifted from West to the East over the four quarters. Growth will happen mainly in India and China. Our goals are three fold: 1) Profitability, 2) Market Share and 3) Sustainability. 3
- 4. 1 Period Milestone/Goal 1st Period Increase penetration of Carti into all the markets by increasing Communication and Product Policy. Milestones-Period by Period 2nd Period Phasing out of Alesa starts. Production to be transferred to Bordo. The positioning of Borto to change from Innovation to functional. 3rd Period Focus shift from West to East. More promotions, greater selling and increasing market share in China and India 4th Period 40% profits from innovation products achieved across all four countries 4
- 5. 1 •Strong presence in growing markets like India and China. •Economies of two major markets:- •Sizeable base for existing product Germany and US in decline. called Bordo. •Profitability affected by high •Successful introduction of new exchange rates. innovative product called Carti. •High fixed costs. SWOT Analysis •Demand for two major products of the company:- Bordo and Carti •Stiff competition from other to increase in all four countries. players in the emerging markets. •Economy of China and India is •Further economic slowdown up beat. The growth in these possible in US and Germany, regions will drive the growth of which could further reduce the the company. demand. 5
- 6. 1 Star Question Mark Carti BCG Matrix Cow Dog Alesa Bordo 6
- 7. Marketing & SalesStrategy 2 Klicka här för att ändra format på bakgrundstexten Nivå två • Nivå tre • Nivå fyra • Nivå fem 7 Copyright Universum 2010 7 Copyright Universum 2010
- 8. 2 Our Strategy Alesa Bordo Carti Product Policy - Reduce - Maintain expenses - Increase expenses to expenses to increase demand reduce demand Communication - Reduce - Increase expenses - Increase expenses Policy expenses Pricing Policy - Reduce price - Maintain price - Maintain price Economic - Negative impact - Negative impact in - Negative impact in Condition in Germany, US Germany, US but positive in Germany, US but positive in but positive in China and India China and India China and India Product lifecycle - Degeneration. - Product in growth phase, - Product in growth phase, So demand will hence demand will increase hence demand will increase reduce 8
- 9. 2 SellingExpenses for each product Product Policy Communication Policy for Alesa Communication Policy for Bordo Alesa Bordo Carti Germany U.S.A. China India Germany U.S.A. China India 900,000 300,000 700,000 800,000 250,000 700,000 600,000 600,000 500,000 200,000 500,000 400,000 150,000 400,000 300,000 300,000 100,000 200,000 200,000 50,000 100,000 100,000 0 0 Period 0 Period 1 Period 2 Period 3 Period 4 0 Period 0 Period 1 Period 2 Period 3 Period 4 Period 0 Period 1 Period 2 Period 3 Period 4 Communication Policy for Carti Germany U.S.A. China India 250,000 Expenses for product policy and communication policy as 200,000 per the strategy 150,000 100,000 50,000 0 Period 0 Period 1 Period 2 Period 3 Period 4 9
- 10. 2 Demand Forecasting andActual Sales Forecasted New Orders Actual Sales 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 0 1 2 3 4 0 1 2 3 4 0 1 2 3 4 Alesa Bordo Carti High Demand forecasting error due to adoption of incorrect model & Low order fulfillment for Period 3 10
- 11. 2 Sales Branch Expenses Sales Branch Expense Germany U.S.A. China India 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Period 0 Period 1 Period 2 Period 3 Period 4 Typo in putting values for decision for period 3 for India 11
- 12. 2 Pricing Policy forProducts Prices of Alesa Price of Bordo Germany U.S.A. China India Germany U.S.A. China India 155 220 218 150 216 214 145 212 210 140 208 206 135 204 202 130 200 Period 0 Period 1 Period 2 Period 3 Period 4 Period 0 Period 1 Period 2 Period 3 Period 4 Prices of Carti Germany U.S.A. China India Decrease the price in period 4 for all the 280 products due to error 275 270 Competitors focused on Bordo and Carti, so we shifted our focus to Alesa 265 260 255 Period 0 Period 1 Period 2 Period 3 Period 4 12
- 13. 2 Countrywise market share Market Share of Alesa Market Share of Bordo Germany U.S.A. China India Germany U.S.A. China India 45.00 40.00 40.00 35.00 35.00 30.00 30.00 25.00 25.00 20.00 20.00 15.00 15.00 10.00 10.00 5.00 5.00 0.00 0.00 Period 0 Period 1 Period 2 Period 3 Period 4 Period 0 Period 1 Period 2 Period 3 Period 4 Market Share of Carti Germany U.S.A. China India Expenses on 70.00 60.00 communication and 50.00 product policy increased 40.00 by almost 75% for India 30.00 20.00 10.00 0.00 Period 0 Period 1 Period 2 Period 3 Period 4 13
- 14. 2 MarketLeader in 9 out of 12 segments in period 4 Company wise Market Share for Alesa Company Wise Market Share for Bordo Blue Chip BRUSS Hoelderlinstrasse SuperNova Blue Chip BRUSS Hoelderlinstrasse SuperNova 45% 30% 40% 25% 35% 30% 20% 25% 15% 20% 15% 10% 10% 5% 5% 0% 0% Germany U.S.A. China India Germany U.S.A. China India Company wise market share for Carti Market leader in all segments for Alesa Blue Chip BRUSS Hoelderlinstrasse SuperNova Market leader in three segments for 35% Bordo 30% 25% 20% Market leader in two segemetnts for 15% Carti 10% 5% 0% Germany U.S.A. China India 14
- 15. Production University Report 3 15 15 Copyright Universum 2011 Copyright Universum 2008
- 16. Production Decisions 3 Period 1 Period 2 Alesa - 53863 Alesa - 0 Bordo - 126857 Bordo – 94,393 Carti – 4723 Carti – 72,837 TQM – 200,000 Euros TQM – 220,000 Euros Production tech – 500,000 Production tech – 550,000 Training – 115,000 Training – 115,000 Period 3 Period 4 Alesa - 52000 Alesa - 50000 Bordo - 142000 Bordo - 50000 Carti – 0 Carti – 0 TQM – 200,000 Euros TQM – 160,000 Euros Production tech – 400,000 Production tech – 400,000 Training – 95,000 Training – 115,000 Notices served to 120 employees in quarter 3 Will be recalled in Year 2, quarter 1 16
- 17. Purchase University Report 4 17 17 Copyright Universum 2010 Copyright Universum 2011
- 18. 4 PurchaseDecisions : Period 1 As per strategy •No production of Alesa; enough stock •Exhaust raw material required for Alesa during period 2 and outsource Alesa for the coming periods Orders to be made Aurit Bekat Calot Dimut Order of Raw Materials(Unit s) 0 328071 374742 36380 Alesa Bordo Carti Order of Bought in Goods(Units) 17000 0 0
- 19. 4 Purchase Decisions : Period 1 • Things were revised in the morning by the production team. • It planned to exhaust the raw materials for Alesa in Period 1 itself in order to utilize the idle capacity. • Decisions for Period 2 were changed keeping in mind that there was vacation coming up during Period 3 • Hence Actual decisions taken Aurit Bekat Calot Dimut Order of Raw Materials(Units) 0 267670 350867 67847 Alesa Bordo Carti Order of Bought in Goods(units) 0 0 0
- 20. 4 Purchase Decisions : Period 2 Decision Making Criterion: Completely outsource Alesa, no ordering of Aurit to be done Demand of Alesa in Period 2 is met by the inventory of Alesa 40,000 units of Alesa outsourced to meet demand in Period 3 Decisions taken Aurit Bekat Calot Dimut Order of Raw Materials(Units) 0 480,663 512513 67847 Alesa Bordo Carti Order of Bought in Goods(units) 40,000 0 0
- 21. 4 Purchase Decisions : Period 3 Situation The competitors were entering into Bordo and Carti. So we decided to enter into Alesa market once again to gain market share and hence thought of producing Alesa Blunder Done in Period 3 order Order of 512513 for Calot was a mistake. Half the order was actually required for production in Period 3 Hence Decisions taken Aurit Bekat Calot Dimut Urgent orders of raw materials 141,039 0 39,080 0 Aurit Bekat Calot Dimut Orders of raw materials 90,000 0 0 0
- 22. 4 Purchase Decisions : Period 4 No raw materials ordered, as sufficient inventory was there to meet the production demand of Period 4. Since business is a going concern, we ordered the finished goods through outsourcing, as their payment is done of delivery only, thereby reducing the cash burden on Period 4. Hence Decisions taken Aurit Bekat Calot Dimut Orders of raw materials 0 0 0 0 Alesa Bordo Carti Orders of bought-in goods 25,000 20,000 20,000
- 23. Finance University Report 5 23 23 Copyright Universum 2011 Copyright Universum 2010
- 24. 5 Total Revenues Revenues Revenue Share of each product 40.00 37.99 Alesa Bordo Carti 34.39 35.00 31.75 31.45 100% 30.00 24.30 80% 25.00 20.00 60% 15.00 40% 10.00 20% 5.00 0.00 0% Period 0 Period 1 Period 2 Period 3 Period 4 Period 0 Period 1 Period 2 Period 3 Period 4 •Revenues are growing year on year (except period 3) •Followed our strategy till period 3 and then focus on Alesa instead of Carti due to high competition 24
- 25. 5 Total Profits and D / E Ratio Total Profit / Loss D / E Ratio 2.00 160% 147% 1.22 140% 128% 1.00 0.55 119% 120% 107% 107% 0.00 100% Period 0 Period 1 Period 2 -0.25 Period 3 Period 4 -1.00 80% -2.00 60% -2.14 40% -3.00 20% -4.00 0% -4.17 Period 0 Period 1 Period 2 Period 3 Period 4 -5.00 •In Period 3, profits are low because of the revenue sales lost and excess inventory of raw material •In period 4, factoring done to retire loans of 9 mn euros, incurring extra cost of 0.7 mn euros and high inventory of Carti 25
- 26. Going Concern University Report 6 26 26 Copyright Universum 2011 Copyright Universum 2010
- 27. 6 Going Concern •Market leaderposition restored in period 4 in 9 segments •Cash Reserve of 9 mn. •Short term debt to be taken as factoring has been done in this period. •Outsource the products if enough capacity is not there •Hold the market leader position in the Alesa •Improve the market position for Carti. 27
- 28. Key Learnings University Report 6 28 28 Copyright Universum 2011 Copyright Universum 2010
- 29. 7 Key Takeaways •Small mistakemake big difference •Integrating the various functions of the business •Product costing helps in taking pricing policy decision •Demand forecast accuracy should be measured •Trade off •Raw Material v/s Finished Good •Make v/s Buy finished goods •Effect of communication policy, product policy, economic variables on demand •Maintain D / E ratio below threshold limit 29