JOT Case - CIMA 2013 - Gold Diggers

THE CIMA 2013
GLOBAL BUSINESS CHALLENGE GBC
JUNE 2013
ISSUES AND
RECOMMENDATIONS
TEAM: GOLD DIGGERS
HONG GAM TRAN – 1-L3T4OF
QUOC BAO NGUYEN – 1-L3T4MN
THANH VAN TRINH – 1-L3T4PB
THI THUC UYEN DO – 1-L3T4NJ
JAMES COOK UNIVERSITY
BRISBANE

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EXECUTIVE SUMMARY
The toy market has never been so dynamic and competitive.
Jot is an independent toy company started in 1998 by Jon and TaniGrun. With the
development and popularity of Jot products in Europe countries, Jot decided to
outsource all of its manufacturing to China. So far, Jot has a reasonably steady growth
in sales with 16% in year ended 2010 and 18% in year ended 2011. However, Jot is
currently unable to provide any additional long-term finance and is now facing with
problems in other areas as well.
The aim of this report is to prioritize the current issues that Jot has to deal with. All the
issues are considered from a financial, strategic and operational viewpoint. The report
provides the board with professional advices, recommendations and solutions.
This report is provided with a brief introduction, indicated the purpose, scope,
methodology and limitation of the report. Following the introduction and the overview of
the company is the list of prioritized issues and the solutions as shown below:
1. The first issue is the late delivery of Christmas where only 75% of orders can
be delivered on time. It is suggested that Jot shall share out the 75% the product
delivered on 4th
November 2012 to all distributors and retailers.
2. The second issue is the fault in new flying spaceship toy with 12 reported
incidents. It is recommended that Jot should recall the product to repair it to act
ethically. This can help Jot avoid the cost of losing customers and also, it can be a
chance for Jot to build a better brand image.
3. The third issue is the near-shoring proposal – To choose or not to choose
Voldania? The solution provided suggested that Jot accept the proposal – making
Voldania a replacement to the current out-sourced manufacturer - China. However, Jot
shall reject the personal donation of €25,000 for Grot since this bribery is a criminal
action has greatly negative effects on the company’s reputation and may incur heavy
penalties for Jot in Voldania.

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4. The forth issue is the launch of new range of toys for 9-11 age group. Alana
convinced that this proposal is very promising since it brings Jot into a whole new
market. It is recommended that Jot accept the proposal but with careful considerations
and operations.
Out of these 4 issues, the first two are considered most important and urgent –
Jot needs to act immediately.
Finally, the report is concluded with an overall comment from the consultancy group and
suggested directions for long term activities which Jot should take into consideration.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY .............................................................................................................i
TABLE OF CONTENTS............................................................................................................. iii
TABLE OF FIGURES..................................................................................................................v
1.0 INTRODUCTION............................................................................................................. 1
1.1 Purpose ....................................................................................................................... 1
1.2 Scope .......................................................................................................................... 1
1.3 Methodology ................................................................................................................ 1
1.4 Limitation ..................................................................................................................... 1
2.0 OVERVIEW OF THE COMPANY .................................................................................... 2
3.0 ISSUES AND RECOMMENDATIONS............................................................................. 3
3.1 Late delivery of Christmas product............................................................................... 4
3.1.1 Impact........................................................................................................................ 4
3.1.2 Potential solutions...................................................................................................... 5
3.1.3 Recommendations ..................................................................................................... 5
3.2 Fault in new flying spaceship toy.................................................................................. 5
3.2.1 Impact................................................................................................................... 5
3.2.2 Potential solutions................................................................................................. 6
3.2.3 Ethical dilemma .................................................................................................... 7
3.2.4 Recommendations................................................................................................ 8
3.3 Near-shoring proposal in Voldania.................................................................................... 8
3.3.1 Issue analysis ............................................................................................................ 8
3.3.2 Ethical dilemma.......................................................................................................... 9
3.3.3 Recommendations ..................................................................................................... 9
3.4 Launch of new range of toys for 9 -11 age group.............................................................10
3.4.1 A brief situation analysis............................................................................................10
3.4.2 Potential Solutions ....................................................................................................12
3.4.3 Recommendations ....................................................................................................13
4.0 CONCLUSION ...............................................................................................................15
5.0 REFERENCES ...................................................................................................................16
6.0 APPENDIX.....................................................................................................................17

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6.1 Financial analysis .......................................................................................................17
6.2 PEST analysis ............................................................................................................18
6.3 SWOT analysis ...........................................................................................................19
6.4 Covey’s time management matrix...............................................................................20

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TABLE OF FIGURES
Figure 1: Total app market revenue and average revenue per paid app 2011 – 2012.. 11
Table 1: Total recall and fixing costs of faulty products................................................... 6
Table 2: Costs of production in China and Voldania ....................................................... 9
Table 3: Financial ratios of Jot ...................................................................................... 17

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1.0 INTRODUCTION
1.1 Purpose
The purpose of this report is to provide the overview of Jot – a toy brand and to collect,
integrate and generate a set of facts and discussions about key issues faced by Jot.
The report will prioritise, analyse and give recommendations on each of the issues in
detail to enhance the company’s tactical and strategic performance.
1.2 Scope
This report mainly gathers information from “case study material” and “scenario”. The
report is also based on secondary information from the other sources, especially the
internet. Financial data is analysed through a set of formulas and calculations.
1.3 Methodology
The report does not cover every of the areas within Jot’s business such as marketing,
accounting, human resource management and so on. Instead, it focuses on particular
issues which are identified in the scenario, including solving two problems and critiquing
two proposals.
This report is intended for the board of directors of Jot. Any personnel under that level
are not considered.
1.4 Limitation
A lack of primary data is a limitation of this report.

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2.0 OVERVIEW OF THE COMPANY
The Jot Company is an independent toy company started in 1998 by Jon and TaniGrun.
Over five-year period, the annual sales increased to 2 million. With the development
and popularity of Jot products in Europe countries, Jot decided to outsource all of its
manufacturing to China to get more competitive advantages.
Jot has a small scale of 34 products targeting at two main age groups: 3-5 and 5-8
years old. Most of Jot products are designed with simple sound and movement or
simple software programs like educational learning, maths and reading skills…
Jot’s production goes through two main stages. Jot in-house design team develops a
new product and after that, the operations team contracts an outsourced manufacturer
for mass production.
Jot is reported to have a considerable sales revenue growth each year, with 16% in
year ended 2010 and 18% in year ended 2011 respectively. Additionally, profit margin
increased from 5.41% in 2010 to 5.58% in 2011. This can mean a safe financial position
for Jot. However, currently, Jot is unable to provide any additional long-term finance
partly because it has to pay a bank loan of €500,000 in January 2014 and it already
overdrew €960,000.
An analysis of Jot in terms of finance, PEST and SWOT is provided in Appendix.

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3.0 ISSUES AND RECOMMENDATIONS
Based on “Time management matrix” (Appendix 6.4), the four issues are categorised as
below:
The delivery of Christmas product should be addressed in the first place as the delivery
is just three days ahead and therefore needs immediate monitoring. Additionally, the
late delivery has a direct impact on the fulfillment of customer’s demand - which is a
core business activity. More importantly, Christmas is the peak season when a majority
of sales and the profit is generated, the late delivery of Christmas product will affect the
company’s profitability and financial position - given that profitability is the most critical
to any business. On the other hand, Jot has to take into account the problem of faulty
product as soon as possible. Jot has to minimise hazards for its vulnerable consumers.
Jot must take an action to actively solve the problem in accordance with toy safety law.
Besides, product with flaws will create a bad image for the brand. Jot stands a chance
of losing customers of not only new spaceship toy but also of other existing and future
products.
The other two issues are considered important as they are related to production
strategy and market expansion, which are essential to the long-term development of
any business. However, the company is not under time pressure to solve those issues.
It suggests that Jot should consider near-shoring in Voldania before assessing the
proposal of launching new range of product. The first reason is because at the moment,
Jot is in financial hardship and a cost-involved activity is too risky. The near-shoring
decision can be an opportunity to reduce the cost of production. Another point is that
Important, Urgent
Late delivery of
Christmas product
Fault in new flying
spaceship toy
Important, not Urgent
Near-shoring proposal
in Voldania
New launch of range of
toys for 9 - 11 age group

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information about near-shoring practices is already collected but the plan is just a brief
based on personal estimate. Therefore, it takes more time to research on the proposal.
3.1 Late delivery of Christmas product
Gull, one of the Jot’s outsourced manufactures in China cannot deliver the 2400 units
which are supposed to arrive on 4 November 2012. However, Gull can only provide
75% of the order on time and the other 25% will be delivered on 15 December.
It is certain that pre-Christmas is high sales season in the year for toy market. In 2011,
51 % of the annual sales of Jot are derived from this period. Therefore, this order plays
an important role for the sale revenue of Jot. In other words, the late delivery this time
may not meet all the demand of the customers including toy retailers and distributors all
around the world, especially the Europe market. Jot does not want to create any
opportunity for its competitors in this highly profitable season.
3.1.1 Impact
That Gull misses the delivery deadline may lead to many negative impacts on Jot
company development now and in the future.
Firstly, because of the high demand of customers in this season, it is the great
opportunity for Jot to maximise revenue from the sale of its product in the year.
However, Jot cannot provide enough products to its customer in time means the
company’s revenue and profit will go down due to the big loss of sales. In addition, there
are a great number of toy companies struggling outside to be the toy providers in the
competitive market. It is easily for them to take the place of Jot.
Secondly, Jot reputation start to decrease in its stakeholders’ mind. In most of
companies and organisations, reputation or goodwill is the greatest asset that they want
to maintain and develop. This lateness will make the company suddenly drop their
reputation in the market.

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3.1.2 Potential solutions
Option 1: Send all 75% of the order to only Jot’s major customers to maintain the good
relationship with this group
Option 2: Share out 75% of the order to all Jot’s customers to ensure equality
3.1.3 Recommendations
The company should conduct the option 2 which is sharing out 75% the product
delivered on 4th
November 2012 to all distributors and retailers for two reasons:
First, Christmas is peak season in the year, so every distributor or retailer needs to
satisfy the customer’s huge demand. In this season, the revenue and profit is planned to
boost not only Jot or important customers but all types of Jot’s wholesaler and retailer.
Next, only 75% of the whole product range will be delivered before 15 December while
the second part of the order will be delivered on 15 December, 10 days prior to
Christmas. Therefore, the 75% can be purchased before 15 December and the rest can
be purchased after that. If all the 75% is purchased before that date, Jot’s major
customers and other independent retailers can hold orders for end customers till 15
December. It is still not too late for people to buy Christmas presents for their children.
In the longer-term, Jot should proceed to get the compensation by Gull because Gull
breaks the contract rules and requirements. Besides, it is recommended that Jot should
not use Gull again as an outsourced manufacture in China.
3.2 Fault in new flying spaceship toy
3.2.1 Impact
Financial impact
Facing the fault in new flying spaceship toy issue which can damage the reputation of
the company, Jot needs to fix this issue as soon as possible. This is considered as the
prior mission of the company. Obviously, it will cost Jot a big amount of money. The
table below shows the costs of the recall of faulty products as well as the cost of fixing
them.

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Units € €
Total cost of units in inventory 3,200 x 20.6 = 65,920
Total cost of units in initial order 6,000 x 24 = 144,000
Total improvement cost 9,2000 x 10 = 104,000
Total costs 313,920
Table 1: Total recall and fixing costs of faulty products
€313,920 will be covered by the net profit for the year ended 2011 and one part of
retained earnings in 2010. In this case, another issue may be raised which is the ability
to pay debts of Jot will be influenced.
Reputational impact
Jot suffers brand image deterioration as a result of faulty flying spaceship toy. The
situation even gets worse as the flaw insulation comes from design but not
manufacturing. In other words, the company is solely responsible for this issue.
Customers may lose trust in the brand, which in turn affects a variety of areas,
especially sales and customer relationship management
3.2.2 Potential solutions
Option 1: Ignore complaints and try to quickly sell product in stock to save money as
much as possible.
Option 2: Recall the product and provide replacement vouchers with equal value for the
customer and write the product off.
Option 3: Recall the product to fix it and give it back to the customer.
Option 1 seems to breach the ethical standards as well as laws. Though Jot can save
some amount of money by not recalling the product, the reputation will be severely
damaged. Option 2 and 3 can save the brand image. If Jot undertakes option 2, Jot has
to pay for recall and offset process without making any financial improvement. Jot
€
Production Cost 24
Avergage Distribution Cost 3.4
Manufactured Cost 20.6
Improvement Cost 10

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should keep in mind that the new flying spaceship toy has gained popularity. By
recalling and repairing the product, Jot can save the product and enhance its image as
a trustworthy and responsible company.
3.2.3 Ethical dilemma
The toy industry is prone to ethical dilemma as children are particularly vulnerable as
consumers (Paine 1996; Mazis et al 1992). Any activity of toy industry from product
features to advertising should be ethical and comply with the law. In this particular case,
Jot is facing ethical dilemma. If Jot wants to minimise the damage of the faulty product,
it may ignore the complaints and not disclose information about the possible hazards to
the customers so as to prevent negative media. However, Jot may endanger the
children’s and this also breaks the toy safety rules.In addition, Jot can also disclose
wrong information as to who made the mistake. Jot may blame on its outsourced
manufacturers. Once again, this will affect the reputation of the manufacturer in a
negative way.
To solve this ethical dilemma, five principles are applied as below:
Integrity Jot needs to uphold integrity by telling the truth about the product
defect. Jot should admit that the fault is from Jot itself
Objectivity Firstly, Jot needs to understand the end customer view. Their
expectations must be high when buying a €84 toy.
Secondly, as the fault is not from manufacturing side. Jot has to think
of their disadvantages when blaming it for the defect.
Professional
competence
and due care
The brand will be asked to solve the hazard problem under legislation.
Also, it is a duty of toy company to protect the safety of children under
EU safety regulation.
Confidentiality Jot may be required to disclose information as it is an essential part of
recall process
Professional
behaviour
Jot is a well-known brand and should be responsible for its mistake.
Ignoring complaints or disclosing wrong information is unprofessional.
(CIMA, 2010)

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It suggests that Jot should recall the product to repair it to act ethically. Sonja Rosk will
be appointed to control the recall process as well as manage feedback from customers
while Michael Werner will be responsible for repairing process by providing exact
financial data and checking the process regularly. More importantly, by fixing the
product, Jot still stands a good chance of saving the product and maintaining the
company image. This will not only contribute to Jot’s short-term strategy but also long-
term development as customer relationship management is a very important part of
business.
3.3 Near-shoring proposal in Voldania
3.3.1 Issue analysis
Recall that Jot had very risky debts ratios which penetrated more than 80% out of total
capital of the company. Moreover, Jot must pay large amount of administrative
expenses which was equivalent 65% of Gross Profit in 2011. Besides, distribution costs
were also a problem that Jot needs to consider which penetrated nearly 17.54% of the
gross profit. (Refer to Appendix 6.1). Therefore, due to high administrative expenses
and distribution costs, they caused the company to generate less profit while based on
the long list of orders the company has enough ability to gain more. Thus, in order to
resolve two issues, Jot needs to have another solution which is move its production
from China to Voldania.
Costs Year 1 Year 2 Year 3 Year 4 Year 5
€ € € € €
Labour Cost (per hour) 1.75 1.96 2.20 2.46 2.75
Labour Cost (per unit) 1.05 1.18 1.32 1.48 1.65
Machinery Cost (per unit) 1.40 1.40 1.40 1.40 1.40
Distribution Cost (per unit) 3.00 3.18 3.37 3.57 3.79
Total Cost (per unit) 5.45 5.76 6.09 6.45 6.84
China

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Table 2: Costs of production in China and Voldania
According to Table 3, if Jot moves its production from China to Voldania, it will save
approximately €550,487 in 5-year period. The company may use this saving not only to
compensate the lost amount for fixing faulty products but also to pay interests and from
that the company will progressively less depend on creditors.
3.3.2 Ethical dilemma
The second ethical problem is that Jot should give Grot €25,000 as a personal donation
to smooth the application in Voldania bureaucracy or not. Due to the difficulties in
financial situation, that Jot outsources part of its manufacturing to Voldania needs to be
implemented as soon as possible. However, Grot, an official of Voldania government
requires a personal donation of €25,000to ensure that there is no delay in legal
procedures. This is considered as bribery and under no circumstances, will Jot act
unethically to achieve its business goals.
It is recommended that Jot should reject the personal donation of €25,000 for Grot
because this bribery is a criminal action which not only has greatly negative effects on
the company reputation but also maybe incur heavy penalties for Jot in Voldania.
Costs Year 1 Year 2 Year 3 Year 4 Year 5
€ € € € €
Labour Cost (per hour) 5 5.10 5.20 5.31 5.41
Labour Cost (per unit) 2.25 2.30 2.34 2.39 2.44
Machinery Cost (per unit) 1.96 1.96 1.96 1.96 1.96
Distribution Cost (per unit) 1.20 1.20 1.20 1.20 1.20
Total Cost (per unit) 5.41 5.46 5.50 5.55 5.60
Voldania
Year 1 Year 2 Year 3 Year 4 Year 5
Production in units 60,000 100,000 140,000 180,000 220,000
Savings (€) 2,400 30,100 82,183 162,091 273,714
Total Save in 5 years (€) 550,487

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It is suggested that Tani can contact with Voldania government again and find the
opportunity to talk with other people in the investment division. To convince Voldania
government to accept and quickly conduct all the administrative formalities, Jot can
send a detailed plan which shows what the company can contribute to the development
of Voldania in the future like donating to the environmental funding or popularise
Voldania image in the world market.
However, the movement of production to Voldania is a core concern. Hence, Tani and
all the assistant should move on this plan as soon as possible.
3.4 Launch of new range of toys for 9 -11 age group
3.4.1 A brief situation analysis
Toy trends
Being proactive is always better than reactive. As Alana Lotz is proposing to launch a
new range of toys for 9 -11 age group, it is highly suggested to do research in the toy
trends. Knowing what customers want and need - Alana, as well as the management
team - may finalise their decision.
According to Toy Industry Association’s (TIA) expert – Adrienne Appell: “Toymakers
continue to innovate at the speed of light to keep up with trends in other areas – from
pop culture to technology – because they know that kids want to be a part of the mix
and mimic what's happening in the world around them”. The top six trends for toys in
2012 include:
 Generation app: Products that work with an app or smart devices and products
that are based upon an app or web property but have no digital tie-in.
 Glowing wild: Toys that rely on a glow component to drive the play experience
and toys that are equally enjoyable in the light of day as they are in the dark
 Little learners: Infant to pre-school toys and games that educate and challenge
and educational toys targeted to children of all ages.
 Many ways to play: toys that combine multiple-play patterns and customizable
toys

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 Save N’ Splurge: “The Big Ask” / impressive toys and collectibles / expanded
lines
 Young maestros: Toys for young kids that teach music basics and toys for older
kids that let them emulate their favorite pop stars.
From the TIA’s experts’ predictions and evaluations, we can see a huge potential in
Alana Lotz’s proposal. Already being an emerging trend identified since 2011,
“generation app” is also expected to be an on-going trend for the next coming years.
“Generation app” and “Little learners” trends indicate using technology to enhance
classic play patterns, as well as creating traditional toys that interact with popular mobile
devices, while fulfilling educational purposes. Jot can “take advantage” of the mobile
app as a complimentary product to the new physical toys for age group 9 - 11.
Toys that are designed to associate with mobile apps and online platforms are
becoming more popular. In the case of which Alana’s proposal is approved, Jot can
open up a new chapter in designing high-tech toys. On the downside, there are also a
big number of risks that Jot has to face when entering a whole new market.
Smartphone apps market
Figure 1: Total app market revenue and average revenue per paid app 2011 – 2012

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Despite the global slowdown of the economy, demand for paid mobile applications
keeps on growing. The main driver is still the non-stop raising number of smartphone
users. The majority of paid apps are being dominated by 5 app stores: Apple App Store,
Google Play, BlackBerry App World, Nokia Ovi Store and Windows Phone Store. The
growing demand indirectly boosted the growth of apps market. In the end, there are too
many apps available that exceed the demand. As a result, the average revenue of paid
apps in 2012 is 27% - which is lower than in 2011. There are significant differences in
the average revenue earned per application between the top 5 app stores. However, the
trend remains the same for all platforms.
On the bright side, the market for paid application downloads has reached US$ 8 billion
in 2012 in the top 5 app platforms. This represents an increase of 27% compared to
2011 figures. There is no easy money, but with an advantage of low starting cost,
developers with a good vision can still earn millions of dollars. Therefore, investing in
the app market can still be profitable. Only “how” – is the question needed to be
answered.
3.4.2 Potential Solutions
Option 1: Develop the new range of toys for the 9 – 11 age group without the
smart phone application
Advantages Disadvantages
+Experiences in producing toys
+Avoiding risks and costs of entering a
brand new market
-Limited to one field of making toys
-Missing the potentials of a very
promising market of smartphone apps
Option 2: Develop the smart phone application as a start; then develop a new
range of toys for the 9 – 11 age group
+Expand Jot’s product range
+Opportunities in new market
+Too little knowledge about the
smartphone apps market
+Costs of hiring new IT experts to

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+Developing high-tech toys
+Build stronger relationships with the
customers
develop the apps
+Costs of research and development for
the new market and product
+Risks of failing in the smartphone app
market
Option 3: Develop the new range of toys for 9 – 11 age group; then develop a
smart phone application as an associated app
+Expand Jot’s product range
+New market potential
+Developing high-tech toys beyond
traditional range of toys
+Building stronger customer relationship
+Having more time for research on new
market
+Better knowledge of the new market
and products
+Better decision making
+Costs of hiring Apps developers
+Costs of research and development on
products and apps
+Risks of failing in the smartphone app
market
+Risks of losing customers due to
smartphone app failure
It is suggested that Jon Grun accept Alana’s proposal, but with modifications and
consideration. Instead of starting with the app, Jot shall start with developing the
physical toys for the targeted age group of 9 – 11. After that, a new range of toys for this
age group can be develop and innovated. In addition, a specific product can be sent out
first to “test” the market. After receiving positive feedbacks from the targeted market, Jot
can confidently develop the full range of products.

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Only from here, when the success of the new range of products are seen and
measured, Jot can consider moving on to the mobile app market. This step must be
done with careful and critical market research and product development. Mobile apps
market brings about a lot of potentials. In details, the app is expected to be developed in
a way that compliments the physical products. This way, the app does not stand alone
but associate with the products already loved by customers. The success from the
mobile app can in turn give a halo effect on other product ranges of Jot, as well as the
brand name itself. In the end, Jot can have the best of both worlds.

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4.0 CONCLUSION
Over a period of 15 years, Jot toy Company established in 1998 has achieved many
successes in the global toy market. The increase in number of international markets, toy
retailers and distributors as well as the development of new product every year prove
that Jot has a strong position in the industry, especially in Europe countries.
However, recently Jot has faced many internal and external problems like fault in
electronic toys, late delivery in seasonal sale period, finding a new manufacturer in
Europe region and widening the target market. Owing to the financial ability, it’s
impossible for Jot to solve all the issue at the same time. Therefore, the company needs
to analyse the urgency of each problem to decide which one should be considered first
as well as finding out the best solution among a variety of available options. Besides the
short-term issues, Jot also should develop a long-term plan to compete well with
potential and new competitors in the market like doing market research to clearly
understand the customer taste or looking for more near-shoring manufacturing.
Another worth discussion is that Jot Company has to take interested in the ethic and
social responsibility in every aspect of operation so that the company can continue to
build strong reputation, enhance brand image in the customer mind and have a
sustainable development in the long-term future.

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5.0 REFERENCES
Adriene Apell. (febuary 13, 2012). 2012 TOY TRENDS UNVEILED BY INDUSTRY
EXPERTS AT AMERICAN INTERNATIONAL TOY FAIR. In Toy Association.
Retrieved May 15, 2013, from
http://www.toyassociation.org/PressRoom2/News/2012News/2012_Toy_Trends_
Unve.aspx#.UZiM_7WLDHQ
CIMA CODE OF ETHICS. (2010).Retrieved May 2013, from CIMA Global:
http://www.cimaglobal.com/Documents/Professional%20ethics%20docs/annex%
20FINAL.pdf
In N.C. Smith and J. Quelch (eds.), Ethics in Marketing. New York: Primis Custom
Publishing (McGraw Hill): 672-686.
Paine, L.S. (1996). ‘Children as consumers: the ethics of children’s television
advertising’.
Statistics and facts on the toy industry. (n.d.). Retrieved May 2013, from Statista:
http://www.statista.com/topics/1108/toy-industry/
TIE. (2011). 2010 Facs and Figures: Toy industries of Europe (TIE). Brussels. Retrieved
May 2013, from
http://www.tietoy.org/spip.php?action=acceder_document&arg=374&cle=404349
d9413b3778b618fb5c6eb48fb1c715b498&file=pdf%2Ftie_facts_and_figures_201
0_-_final-3.pdf
Toy makers. (n.d.). Retrieved May 2013, from Wikinvest:
http://www.wikinvest.com/industry/Toy_Makers
Vincenzo Serricchio. (January 22, 2013). In 2012 Smartphone Users Spent US$ 8
billion for Paid Apps in the Top 5 App Platforms. In Research2Guidance.
Retrieved May 15, 2013, from http://www.research2guidance.com/in-2012-
smartphone-users-spent-us-8-billion-for-paid-apps-in-the-top-5-app-platforms/.

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6.0 APPENDIX
6.1 Financial analysis
Table 3: Financial ratios of Jot
Based on the table above, the profitability ratios of Jot are quite stable. The gross profit
margin ratio in 2011 was lower than in 2010 due to higher cost of sales. The reasons
were because labour rates in China were expected to increase by 12% each year
together with distribution costs also went up by 6% per annum. Thus, it cost Jot more
money to produce one product. In addition, although liquidity ratios of Jot also
decreased in 2011 in comparison with 2010 but it did not affect too much to the liquidity
of Jot. Because in 2011, Jot acquired more funds from €790,000 to €960,000 and trade
payables went up from €1,238,000 to €1,781,000 in the same period. As a result, it
slightly pulled down the liquidity of Jot. Consequently, larger amount of borrowings led
Jot to the dangerous zone when its total debts penetrated 84.38% and 82.67% out of its
total capital in 2010 and 2011 respectively. In general, the company’s overall financial
performance was positive and it had a sign to grow up excluding debt ratios. The higher
those ratios are, the more risky the company is.
2011 2010
Profitability Ratios
Gross Profit Margin (%) 31.90 32.92
Net Profit Margin (%) 2.49 2.21
Return on Capital Employed (%) 9.72 8.09
Liquidity Ratios
Current Ratio 1.63 1.74
Quick Ratio 1.44 1.52
Gearing Ratios
Debt Ratio 0.83 0.84
Debt to Capital Ratio (%) 82.67 84.38

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6.2 PEST analysis
 Political
 Complaints from customers about new flying spaceship toy
 Product safety is strictly required according to European Union (EU) law
 The infringement of Intellectual Property Rights (IPR’s) and the threat of copied
products in the global market
Economic
 Jot has three bank loaning accounting for €1,600,00
 Seasonal sale periods: the biggest number of annual sales is in quarters 3 and 4
 Rise in outsourced manufacture’s cost due to the increase in wage rate in China
Social
 Difficulties in predicting the product trend and sale volumes of new products after
launching as well as controlling the inventory value.
 Corporate social responsibility report will be published next year
Technological
 Some IT systems need to be upgraded to solve problems about data analysis
 Practice the intelligent and sustainable supply chain
 Faults on electronic toy

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6.3 SWOT analysis
Strengths Weaknesses
 Growth in revenue and profit margin
 Unique, innovative, “fun to play with”
product design
 New product development every six months
 Good brand image
 Committed and experienced management
team
 Good supplier-customer relationship with
outsourced manufacturers.
 Licensed products are potentially highly
profitable.
 Poor total quality management
 Lack of varieties of products
 Dependent on sales to large retailers -
yet having little influences over them
 Little knowledge in smartphone app
 Poor cash-flow management
 Reached the overdraft limit
 Ineffective IT system
 CSR has not been published
Opportunities Threats
 Huge sales potentials found in toy fairs
 Near-shoring opportunities
 Improved cash-flow management
 Promising market segment of children from
9 to 11 years of age
 Expanding the brand into a whole new field /
Entering a new market
 IT solutions for better communication and
decision making
 Building a better brand image by publishing
CSR.
 Highly seasonal industry
 Increasing cost (labour, machine,
materials…)
 Poor-quality products made by
outsourced manufacturers
 Cannot delegate the responsibility on EU
safety regulations
 Decrease in net profit due to costs of
discontinued operation
 Smartphone application is a highly
competitive market

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6.4 Covey’s time management matrix
Source: http://michaelhyatt.com/is-that-task-important-or-merely-urgent.html

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