CIMA Global Business Challenge 2013 The CIMA Global Business Challenge is an international business competition for undergraduates around the world, designed to bring out the best in the young business leaders of tomorrow. Here is our team - Alpha team's presentation deck for Global final round in 2013.

1. JOT toy company
αlpha Consultants
1st November, 2012
CIMA Global Business Challenge 2013

2. Outline
 Overview
 Prioritisation of 4 issues
 Main issues:
 Analysis
 Recommendation
 Conclusion
 Summary of 4 issues
 Long-term implications

3. α consultants
Overview Prioritise Analysis Conclusion
 Innovation &
quality
 Profitability
 Customer
satisfaction
 Ethics
Decision guidelines
Situation
 Seasonality
 Dependence on big retailers
 Weak relationship with manufacturers
 Burnt-out Designers
 Low liquidity
Problems
 Flying
spaceship
 Late delivery
Proposal
 Near-shoring
proposal
 New smartphone
game
Issues

4. α consultants
1st November, 2012
Overview Prioritise Analysis Conclusion
0.8
2
0.4
2
1.2
0.9
0.6
0.6
0.6
1.5
0.9
0.9
Near-shoring
proposal
Spaceship fault
Smartphone
game proposal
Late delivery
Multi-criteria Decision Matrix
Urgency (40%) Financial Impact (30%) Reputation (30%)
3.5
1.9
4.4
2.6
Total
1
2
3
4

5. Issue1 Flying Spaceship fault
Overview Prioritise Analysis Conclusion

6. α consultants
Overview of the problem
Retailers End customers
JOT
warehouses 1200
units
1600
units
3200
units
12
reported
incidents
Design
fault
Fix or
Write-off
completely?
Protect Jot’s
reputation?

7. α consultants
Recommendation: Recall & Fix
 Less cost
 Fixable fault
 Toys are well-received
 Minimize impact on
retailers’ business
Write-off Fix & compensate
€192,000 €76,800
 Quality
 Profitability
 Customer satisfaction
 Ethics
Decision guidelines
Ethics?
•Only implement if the fix is
safe
•Publicly announce the recall

8. α consultants
Recommendation
Train new designers
Use team approaches
in design process
DesignTeam
Review and apply
stricter testing
procedure
Product Safety
Reverse Logistics
Customer service
Recall procedure
Long-term
Instruction for returns
Fix: change packaging + add warning
Compensate customers:
Retrofitted toy
Free voucher for other toys
Remedy
Publicly announce the recall
Apologize for the error
PR management

9. Issue2 Late Delivery of Christmas toys
Overview Prioritise Analysis Conclusion

10. α consultants
Overview of the problem
Total forecast sales Order from Gull
On-time delivery Late delivery
600
1800
Fulfill these
missing
orders?
Allocate
available
products?

11. α consultants
(3) Small
retailers
first
BigDis Small
(1) Big
retailers
first
Big Dis Small
Allocation - Alternatives
3rd Nov: 1800 available toys
Impractical
delivery
15th Dec: Remaining 600 toys
Big retailers Small retailers DistributorsBig Small
(2) Equal
distribution
Dis Small
Big Big
Dis Small
Dis

12. α consultants
(1) Big
retailers
first
Big Dis Small
Allocation - Recommendation
3rd Nov: 1800 available toys 15th Dec: Remaining 600 toys
1. Time pressure
 More likely to reach stores before Christmas
 Reduce possibility of cancelled orders
2. Liquidity
3. Larger geographic reach
4. Insignificant impact on big retailers
(3) Small
retailers
first
BigDis Small
 Customer satisfaction
 Profitability
 Ethics
Decision guidelines

13. α consultants
Recommendation
Review supplier evaluation criteria
Back order lists
Share production schedules
Contract  Partnership
Manufacturers
Secure compensation
Discontinue future
cooperation
Contract with Gull
Long-term
1800 available units
Fulfill for small retailers
Remainder Big retailers
600 late units  Big retailers
Allocation
Find suppliers
Send apology to & confirm real
demand from retailers
Fulfill missing orders

14. Issue3 Near-shoring proposal in Voldania
Should Jot approve this proposal?
Financial Operational Strategic
Overview Prioritise Analysis Conclusion

15. α consultants
Financial advantages
0
500,000
1,000,000
1,500,000
2,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Cost projection
China Voldania
Save 8.8%
total cost
over 5 years
Manufacturing
Contract
No initial
costs

16. α consultants
Operational advantages
 Most sales are in Europe
 Reduce lead time
 More responsive
 More manufacturers
 Lower supplier power
 Use of machinery
 Consistent quality
 Productivity

17. α consultants
Strategic expansion
Ethics?
 Refuse Bribery
 CSR in host countries
Quality
Profitability
Customer
satisfaction
Ethics
Decision guidelines

18. α consultants
Recommendation
 Anti-corruption legal framework
 Capable manufacturers & suppliers
Voldania  Accept only if there is:
Near shoring  Accept

19. Smartphone Game for ages 9-11Issue 4
Should Jot approve this proposal?
Suitability AcceptabilityFeasibility
Overview Prioritise Analysis Conclusion

20. α consultants
DISCUSSION - Suitability
 Market situation
 Smartphone trend:
Stronger among
teenagers (12-16)
 unsuitable target
 Low entry barriers
 Red ocean market
(Researches from Ofcom 2011, Kidsay 2012, NDP Group 2012)
 Internal Strengths

21. α consultants
DISCUSSION - Feasibility
 Financial Feasibility  People and Skills
€30,000?
Development cost
Transaction fee
Marketing expense
Jot’s designers
Outsource
to independent app
coders or firms
Alana
Lotz’s
estimation
€100,000
(Cheshire 2011)

22. α consultants
DISCUSSION - Acceptability
 High Risk  Questionable Return
Worstall 2013
Forbes
“The average app makes
$9000 throughout
its lifetime”
 Reaction of stakeholders
Diversification
New market
New product
Market
Development
Market
Penetration
Product
Development
Ansoff Matrix
Internal staffs?
 NO guarantee of profits
 Unknown area for Jot
Parents & children?

23. α consultants
Geographic
expansion
Recommendation
Focus on
physical toy
innovation
Suitable?
• Unsupportive market demand
• Highly competitive market
• Not match Jot’s strengths
Acceptable?
• High risk: Unknown realm
• Uncertain return
•  Unlikely to be accepted
Feasible?
• High expected cost
• Need to outsource
Reject
Mobile games
 physical toys
Innovation &
quality
Profitability
Customer
satisfaction
Ethics
Decision guidelines

24. α consultants
Overview Prioritise Analysis Conclusion
Flying
Spaceship
1
Late
delivery
2
Fix the
toys
Prioritise
small
retailers
Near-
shoring
Accept
with
conditions
3
Smart
phone
application
Reject
Ethical considerations
4
Design &
testing
Recall
procedure
Issues Decision Long-term improvement
Product
development
Expansion of
manufacturing base
Manufacturers selection
& relationship
Code of conduct
Goals
 Innovation &
quality
 Profitability
 Customer
satisfaction
 Ethics
CSR
Geographic
expansion

25. α consultants
Long term improvement
Expansion of
manufacturing base
Partnership with retailers
and manufacturers
Toy design
 Exceed safety standards
 Motivate and retain
designers
 Alleviate seasonality
Testing phase
Supply chain
 Reduce dependence on
big retailers
 Enhance relationship with
manufacturers
 Improve liquidity
Design team:
 Training
 Teamwork and
supports
Licensed
toys
Overall situation
Conclusion

26. Supplementary Slides
References
-----
Flying spaceship toy
Similar toy recall incidents
Voldania vs. China
Smartphone – market data
Supply Chain

27. α consultants
References
 Chesire, T. 2011, ‘How Rovio made Angry Bird a winner?’, Wired UK, March 7, viewed 28
March 2013, <http://www.wired.co.uk/magazine/archive/2011/04/features/how-rovio-
made-angry-birds-a-winner?page=all>
 CIMA 2010, ‘The Bribery Act and what it means for CIMA members and businesses
worldwide’, CIMA, viewed 29 March 2013
 Euromonitor 2012, ‘Toys and Games: Trends, Developments and Prospects’, Euromonitor
International, February, viewed 4 April 2013, GMID Database.
 Kidsay 2012, ‘Trend Tracker’, Kidsay Research, February, viewed 28 March 2013,
<http://www.kidsay.com/smpl/2012_FebMarch_Smpl.pdf>.
 NDP Group 2013, ‘2012 lacklustre toy sales linked to lack of new product launches’, NDP
Group, January 22, viewed 23 February 2013,
<https://www.npdgroup.fr/wps/portal/npd/fr/actu/communiques-de-presse/2012-
lacklustre-toy-sales-linked-to-lack-of-new-product-launches/>.
 Ofcom 2011, ‘Children and parents: media use and attitudes report’, Ofcom Media
Literacy Research, October 25, viewed 25 March 2013,
<http://stakeholders.ofcom.org.uk/market-data-research/media-literacy-pubs>
 Worstall, T. 2013, ‘The Average Apple App Download Makes 17.5 cents’, Forbes LLC,
January 8, viewed 25 March 2013
<http://www.forbes.com/sites/timworstall/2013/01/08/the-average-apple-app-
download-makes-17-5-cents>

28. α consultants
Flying spaceship toys - Workings
 Option 1: Recall and write off completely (with refund for
customers)
 Option 2: Fix 4,800 units, recall and compensate for 1,200
faulty units
Inventory write-off expense €24 x 6,000 €144,000
Cash expense refunds €40 x 1,200 €48,000
Total cost €192,000 (exc. recall
cost)
Replace 1,200 sold units €24 x 1,200 €28,800
Amendment expense €10 x 4,800 €48,000 (inc. distribution
cost)
Total cost €76,800 (exc. recall cost)
Jot Retailers
Selling Price € 40.00 € 84.00
Costs € 24.00 € 40.00
Margin € 16.00 € 44.00

29. α consultants
Similar toy recall incidents
Easy-bake Oven
$25, Hasbro, Inc.
•Trap & burn hazard
•Recall 1 million units
•Offer fixed toys
Range Rider Toy Cars $200
Bluestem Brands
•Overheated Battery
•Recall 4,700 units
•Refund to customers

30. α consultants
Voldania vs. China - Workings
China Year 1 Year 2 Year 3 Year 4 Year 5
Units 60,000 100,000 140,000 180,000 220,000
Labour rate per hour 1.750 1.960 2.195 2.459 2.754
Labour hour per unit 0.6 0.6 0.6 0.6 0.6
Total Labour cost 63,000 117,600 184,397 265,531 363,483
Machine cost per unit 1.4 1.4 1.4 1.4 1.4
Total machine cost 84,000 140,000 196,000 252,000 308,000
Distribution rate / unit 3.000 3.180 3.371 3.573 3.787
Total distribution cost 180,000 318,000 471,912 643,149 833,235
Total cost 327,000 575,600 852,309 1,160,680 1,504,718 4,420,307
Voldania Year 1 Year 2 Year 3 Year 4 Year 5
Units 60,000 100,000 140,000 180,000 220,000
Labour rate per hour 5.000 5.100 5.202 5.306 5.412
Labour hour per unit 0.45 0.45 0.45 0.45 0.45
Total Labour cost 135,000 229,500 327,726 429,789 535,804
Machine cost per unit 1.96 1.96 1.96 1.96 1.96
Total machine cost 117,600 196,000 274,400 352,800 431,200
Total distribution cost 72,000 127,200 188,765 257,259 333,294
Total cost 324,600 552,700 790,891 1,039,849 1,300,298 4,008,337
Bureaucracy cost 25,000
4,033,337

31. α consultants
Smartphone ownership among children
(ReproducedfromOfcom2011)

32. α consultants
JOT
design team
Suppliers
JOT
warehouses
Manufacturers
Distributors Small retailers
Big retailers
End customers
Supply chain