The document discusses a case study presentation for Abcoat Private Limited. It analyzes strategic issues facing the company and proposes solutions. Specifically: - Abcoat is considering closing one of its three regional warehouses to cut costs as sales of industrial clothing have declined. - Options discussed include stocking sportswear at one warehouse and industrial clothing at the other two, or closing the smallest warehouse which has high staffing levels. - The meeting did not make a final decision, but a working group will further analyze the options of closure and present a plan at a future meeting.

1. Faculty of Business & Information Systems
Master of Science in Logistics Management
GL008_Logistics Strategy
Group Presentation
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1. Zhang Peng_1001748078
2. Mati Ur Rehman_ 1001748258
3. Mohammad Nazmuzzaman Hye_1001748700
Case Study Presentation
ABCOAT PRIVATE LIMITED

2. Agenda
1. Introduction
2. Executive Summary
3. Critical Analysis and Strategic Views
4. Problems and Solutions
5. Conclusion and Recommendation
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3. Introduction
 The board of directors, top management and strategic managers and non-
managerial staff are responsible for taking logistics decisions. One of the
major responsibilities of logistics decision makers is monitor organizational
performance and regularly review performance results.
 In the given case study, we will see that senior manager of Abcoat private ltd.
Are highly concerned about the performance of the organization and as a
result, they have come up with some strategic plan to improve the scenarios.
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4. Executive Summary
The concept underlying the case study is about corporate strategy and logistics strategy
decision making.
 Problem 1: where the sportswear should be stocked?
 Problem 2: finding cost savings solutions to stop the organization’s decline.
 Problem 3: which warehouse to close down?
 Problem 4: how to reduce apprehension among the employee?
 Problem 5: which one is the best warehouse for operations?
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5. Critical Analysis and Strategic Views
Paragraph-1 , sentence-3 – (key ideas : competitive advantages ,short supply chain)
“The head office is situated in a major city with three regional warehouses situated at
strategic points in the country close to large industrial areas.”
Due to the presence at a strategic point close to the largely industrial area , Abcoat is enjoying
some competitive advantages , like
 Knowing customer more closely.
 Short supply chain – no intermediaries
 Low transport cost
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6. Critical Analysis and Strategic Views
Paragraph-2 – (key ideas : related concentric diversification)
“Due to changes in the market a decision has been taken to diversity into protective
sportswear such as wetsuits.”
 It proves that Abcoat is a market-led company and respond to changes in market.
 This is a clear indication of corporate growth strategy in the form of diversification.
 This diversification strategy takes Abcoat private ltd. Beyond the current product and market.
 There is two types of diversification- (1) related (concentric) diversification and, (2) unrelated
(conglomerate) diversification. Abcoat has chosen related (concentric) diversification because
they are still within the capabilities and value network of the organization.
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Diversification Strategy Taken by Abcoat
Related (Concentric)
Industrial Clothing , Protective Sportswear

7. Critical Analysis and Strategic Views
Rationale for diversification strategy is taken by Abcoat Pvt. Ltd.
 This will create economic of scope for Abcoat by applying the organization’s existing
resources or capabilities to new markets and products
 Underutilized resources or competencies can be used through new activity.
 Abcoat’s market power will be increased. Abcoat will be able to cross-subsidise one
business form the surplus earned by another.
 Spreading risk across a range of business, that is if one part of the business is in trouble, the
whole business is not pulled down.
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8. Critical Analysis and Strategic Views
Paragraph-3- key ideas : (organizational routines and process, distinctive organizational
capabilities )
“The majority of industrial clothing sales came from direct orders whereas the sportswear
would be sold to retail outlets. This represents a significant change in the type of market
and would require changes in working patterns requiring an addition to the sales force.”
 Sales of industrial clothing from direct orders are the regular, predictable, and sequential
patterns of work activities performed by organizational members of Abcoat.
 Whereas sale of sports wears to retail outlets is not a regular patterns of work activities for
the existing organizational member of Abcoat.
 Due to diversification Abcoat is in need of some distinctive organizational capabilities which
can be used in verity of ways.
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9. Critical Analysis and Strategic Views
Paragraph-4- Key Ideas : (Decision Making Approach)
“The warehouse supervisors were called to a meeting to discuss where the sportswear
should be stocked. The office managers associated with each warehouse were also at the
meeting.”
 Senior Management of Abcoat are in a process of developing alternatives and they have
invited all the Warehouse supervisors along office manager in a meeting to develop
alternative options to solve where to stock sportswear.
 This is a clear evident from the case that Abcoat Management has taken two-steps
approach to come out with the best possible solutions.
 Step 1: planning  developing alternatives
 Step 2: Analysing  evaluation of alternatives
 Step 3: decision making  selecting best alternative
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10. Critical Analysis and Strategic Views
Paragraph-5- (Key Ideas - Corporate Strategic Directions)
“The sales of industrial clothing had declined and the retention of three regional
warehouses was no longer viable. The meeting would need to consider if one of the
warehouses should be closed. Alternatively should the industrial clothing be stocked at two
of the warehouses and the third warehouse used for the sportswear.”
What Are the Possible Corporate Strategic Directions?
 Organizational Growth - Moving the organization ahead.
 Organizational Stability - Keeping the organization where it is.
 Organizational Renewal -Reversing the organization’s decline.
What is the Corporate Strategic Direction of Abcoat?
Refer to Next Slides
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11. Critical Analysis and Strategic Views
Corporate Strategic Directions of Abcoat
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12. Critical Analysis and Strategic Views
Paragraph-6 , Sentence-2 –(Key Ideas - Organizational Stability)
“However, the senior management at the meeting was anxious to find a cost saving solution
and therefore favoured the closure of one warehouse.”
 Senior management of Abcoat company understand that the size of the market is declining,
reducing the size of the business through closing capacity is a good option to maintains its
current activities and business operations.
 This is a clear evident of the intention of Senior Management that they wants to apply the
Stability Strategy for short run.
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13. Critical Analysis and Strategic Views
Paragraph-9 , sentence-1 -(key ideas : decision by authority rule)
“The meeting did not at any final decision and the senior manager chairing the meeting that
Laura Kim should form a working group to consider the possible closure and to table a plan
at a meeting to be arranged in the future suggested it.”
 The authority figure who will makes the decisions for the group is the senior management of
Abcoat. Worthiness and credibility of the decision depends on this group.
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14. Problems and Solutions
Problem -1 : where the sportswear should be stocked?
Solution: sportswear can be stocked in warehouse-2
Assumptions and logic underlying the solutions:
 Warehouse-2 has the largest covered area of 2,100 square meters.
 Total number of staffs is 21 (1-office manager , 1-supervisor ,14-store personnel, 3-staffs
and 2 van driver).
 Staffs are considered as supporting staff not part of core activity.
 The majority of industrial clothing sales are from direct orders , so the probability of
overstocking in the warehouse -2 is very low.
 The sales of industrial clothing had declined , and there is huge possibility of underutilized
resources and competencies at warehoue-2
 So it make sense to use these under utilized resources and competencies by diversification
in new activity.
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15. Problems and Solutions
Problem -2: Finding a cost savings solutions to stop an organization’s decline?
Solution: Closure of one Warehouse Activity
Assumptions and Logic Underlying the Solutions
 There are two (2) possible cost saving solutions: (1) Downsizing (2) Closing a Capacity
 Downsizing: Abcoat can reduce the number of employees on the operating payroll by using the
following techniques
 So It make sense that Downsizing is not a good options for Abcoat.
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• Simply terminate the employment of a certain
number of people.
This will increase the anxiety and the overall work
environment will be affected which can prolonged
the declining situation. Ex. Strike , lock-out etc.
• Providing incentives to take early retirement
and transfer to subsidiary companies
Abcoat needs to be pay huge amount of cash in
upfront , which will create huge pressure of
Liquidity.

16. Problems and Solutions
Problem -2: Finding a cost savings solutions to stop an organization’s decline?
Solution: Closure of one Warehouse Activity
Assumptions and Logic Underlying the Solutions
 Closing a Capacity: Abcoat can close one of the expensive facility and maintains its current
activities and business operations by considering the following cost saving strategy:
1. Re-deployment of resources. This will reduce hiring cost and tension among the employees.
2. Abcoat can freeze all types of OT
3. Abcoat can cut down the allowance by increasing the condition of allowance (e.g. Defective
Rate reduction say from 95% to 98%)
4. Outsource Non-core Activity (e.g. Security Guards, Drivers , staffs etc.)
 So, it makes sense that Closing a capacity is good options for Abcoat because this will lead to a
significant cost savings.
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17. Problems and Solutions
Problem -3 : which warehouse to close down?
Solution: closure of warehouse-1
Assumptions and logic underlying the solutions
 Warehouse-1 is the smallest with a cover area of 1,000 square meters.
 Total number of staff is 14 (1-office manager , 1-supervisor ,8-store personnel, 2-staffs and 2 van
driver)
 Significant matter in staffing in warehouse-1 is that, in spite of having smallest capacity it requires
2 drivers. The possible reason is delivery cycle time form warehouse to customer. The possible
reason could be a huge distance between warehouse and customer which makes the cycle time
longer. It proves that location wise, warehouse-1 is not a suitable for operations.
 Again, the number of store personnel is high (8 person) in companions to other warehouse which
means the total staff cost is higher in comparison to other warehouse activity which makes the
facility expensive. It is wise to closedown the expensive facility to attain stability.
 The structure of warehouse-1 is old and require maintenance. So it make sense to closedown
warehouse-1 to avoid any expenses required in maintenance which will help to save cost.
 Further cashflow can be generated by disposing the old and unused machineries of warehouse-1
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18. Problems and Solutions
Problem -4 : how to reduce apprehension among the employee?
Solution: retention of employment
Assumptions and logic underlying the solutions (continuation of previous slides)
 3 steps Lewin's Change Management Model can be applied to reduce anxiety:
 Step-1 Unfreeze: Developing a compelling message for Abcoat employee, showing why the existing way of
doing business cannot continue. Also, senior management can break down the existing status quo. This will
help the organization to accept that change is necessary and building up a new way of operating will be
easier.
 Step-2 Change: Senior management of Abcoat’s needs to make sure that the employee understands how
the change will benefit them and employees are taking it proactively.
 Step-3 Refreeze: In this stage senior management needs to make sure employees are getting proper help
people and the organization internalize or institutionalize the changes. This means making sure that the
changes are used all the time, and that they are incorporated into everyday business. With a new sense of
stability, Abcoat employees will feel confident and comfortable with the new ways of working.
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19. Problems and Solutions
Problem -4 : how to reduce apprehension among the employee?
Solution: retention of employment
Assumptions and logic underlying the solutions
 As per paragraph 6 , sentence-1, members of the meeting form the warehouse argued strongly
for the retention of employment.
 As per paragraph 15 and 16 , there will be vacancies for additional sales personnel and
administrative staff. Which means that Abcoat still needs resources with word processing and it
knowledge. Knowledge of sales office work will be treated as advantages.
 Abcoat private limited is a medium sized company with around 300 employee. Let’s assume that
as a medium size company they are capable of using ERP in their operations and as a result most
of the employees have word processing and it knowledge. So the additional resources from ware
houses-1 can be utilized and redeployed as a sales personnel and administrative staffs. This will
reduce the hiring cost and the anxiety among the staffs.
 Again as per paragraph 7 , the distance between each of the warehouse and between the
warehouse and head office were too great to allow redeployment of any lower paid staffs. So,
low paid employee like staff and van driver can be downsizing which will not create any anxiety
as well as no pressure in cash flow because of their low amount of salary.
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20. Problems and Solutions
Problem -5 : Which one is the best Warehouse for Operations?
Solution: Warehouse-2 is the best Warehouse for Operations
Assumptions and Logic Underlying the Solutions
 Rationale for Selection of Warehouse-2
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Warehouse-1 Warehouse-2 Warehouse-3
=> Smallest floor space
=> Structures are old and need
Maintenance.
=> Expensive capacity due to
additional staffs.
=> Location is not Suitable
=> Highest Floor Space
=> It is in good condition thereby not requiring
any form of maintenance soon.
=> Additional Storage Capacity as because of
declining demand for Industrial clothing
=> Due to the larger capacity, it will enable the
employment of additional sales personnel
together with administrative staff.
=> Big number of Manpower to support
additional Work.
The third warehouse is determined with
1500 square meters of space and in good
repair.
However, there is significant nature in the
shortage of the staff. This is mainly
evident in the availability of only 6 stores
personnel which is the lowest when
compared to the other warehouses.
=> The availability of only 1 van driver is also
depicted to be a limiting factor to support
with the operations of the sportswear.
Not Suitable for Warehouse
Operations
Suitable for both Sportswear and Industrial
which means best warehouse for Operations.
Not Suitable for Sports ware Operations.

21. Conclusion and Recommendation
• To gain competitive advantages, the corporate strategy taken by Abcoat Pvt. Ltd. Is renewal
strategy through retrenchment.
• This will improve the sales volume of the company and will create positive changes in the
performance.
• Again, to improve the current corporate decline Abcoat can take the decision shutting down
one of the expensive capacity. This strategic move will comes up with significant cost savings
which will help Abcoat to shift from corporate decline to organizational stability.
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