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JOT toy company
αlpha Consultants
1st November, 2012
CIMA Global Business Challenge 2013
Outline
 Overview
 Prioritisation of 4 issues
 Main issues:
 Analysis
 Recommendation
 Conclusion
 Summary of 4 iss...
α consultants
Overview Prioritise Analysis Conclusion
 Innovation &
quality
 Profitability
 Customer
satisfaction
 Eth...
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-...
Issue1 Flying Spaceship fault
Overview Prioritise Analysis Conclusion
α consultants
Overview of the problem
Retailers End customers
JOT
warehouses 1200
units
1600
units
3200
units
12
reported
...
α consultants
Recommendation: Recall & Fix
 Less cost
 Fixable fault
 Toys are well-received
 Minimize impact on
retai...
α consultants
Recommendation
Train new designers
Use team approaches
in design process
DesignTeam
Review and apply
stri...
Issue2 Late Delivery of Christmas toys
Overview Prioritise Analysis Conclusion
α consultants
Overview of the problem
Total forecast sales Order from Gull
On-time delivery Late delivery
600
1800
Fulfill...
α consultants
(3) Small
retailers
first
BigDis Small
(1) Big
retailers
first
Big Dis Small
Allocation - Alternatives
3rd N...
α consultants
(1) Big
retailers
first
Big Dis Small
Allocation - Recommendation
3rd Nov: 1800 available toys 15th Dec: Rem...
α consultants
Recommendation
Review supplier evaluation criteria
Back order lists
Share production schedules
Contract ...
Issue3 Near-shoring proposal in Voldania
Should Jot approve this proposal?
Financial Operational Strategic
Overview Priori...
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 project...
α consultants
Operational advantages
 Most sales are in Europe
 Reduce lead time
 More responsive
 More manufacturers
...
α consultants
Strategic expansion
Ethics?
 Refuse Bribery
 CSR in host countries
Quality
Profitability
Customer
satis...
α consultants
Recommendation
 Anti-corruption legal framework
 Capable manufacturers & suppliers
Voldania  Accept only ...
Smartphone Game for ages 9-11Issue 4
Should Jot approve this proposal?
Suitability AcceptabilityFeasibility
Overview Prior...
α consultants
DISCUSSION - Suitability
 Market situation
 Smartphone trend:
Stronger among
teenagers (12-16)
 unsuitabl...
α consultants
DISCUSSION - Feasibility
 Financial Feasibility  People and Skills
€30,000?
Development cost
Transaction f...
α consultants
DISCUSSION - Acceptability
 High Risk  Questionable Return
Worstall 2013
Forbes
“The average app makes
$90...
α consultants
Geographic
expansion
Recommendation
Focus on
physical toy
innovation
Suitable?
• Unsupportive market demand
...
α consultants
Overview Prioritise Analysis Conclusion
Flying
Spaceship
1
Late
delivery
2
Fix the
toys
Prioritise
small
ret...
α consultants
Long term improvement
Expansion of
manufacturing base
Partnership with retailers
and manufacturers
Toy desig...
Supplementary Slides
References
-----
Flying spaceship toy
Similar toy recall incidents
Voldania vs. China
Smartphone...
α consultants
References
 Chesire, T. 2011, ‘How Rovio made Angry Bird a winner?’, Wired UK, March 7, viewed 28
March 201...
α consultants
Flying spaceship toys - Workings
 Option 1: Recall and write off completely (with refund for
customers)
 O...
α consultants
Similar toy recall incidents
Easy-bake Oven
$25, Hasbro, Inc.
•Trap & burn hazard
•Recall 1 million units
•O...
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 ...
α consultants
Smartphone ownership among children
(ReproducedfromOfcom2011)
α consultants
JOT
design team
Suppliers
JOT
warehouses
Manufacturers
Distributors Small retailers
Big retailers
End custom...
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CIMA GBC 2013 - Alpha's presentation

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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.

Published in: Business
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CIMA GBC 2013 - Alpha's presentation

  1. 1. JOT toy company αlpha Consultants 1st November, 2012 CIMA Global Business Challenge 2013
  2. 2. Outline  Overview  Prioritisation of 4 issues  Main issues:  Analysis  Recommendation  Conclusion  Summary of 4 issues  Long-term implications
  3. 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. 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. 5. Issue1 Flying Spaceship fault Overview Prioritise Analysis Conclusion
  6. 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. 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. 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. 9. Issue2 Late Delivery of Christmas toys Overview Prioritise Analysis Conclusion
  10. 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. 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. 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. 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. 14. Issue3 Near-shoring proposal in Voldania Should Jot approve this proposal? Financial Operational Strategic Overview Prioritise Analysis Conclusion
  15. 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. 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. 17. α consultants Strategic expansion Ethics?  Refuse Bribery  CSR in host countries Quality Profitability Customer satisfaction Ethics Decision guidelines
  18. 18. α consultants Recommendation  Anti-corruption legal framework  Capable manufacturers & suppliers Voldania  Accept only if there is: Near shoring  Accept
  19. 19. Smartphone Game for ages 9-11Issue 4 Should Jot approve this proposal? Suitability AcceptabilityFeasibility Overview Prioritise Analysis Conclusion
  20. 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. 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. 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. 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. 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. 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. 26. Supplementary Slides References ----- Flying spaceship toy Similar toy recall incidents Voldania vs. China Smartphone – market data Supply Chain
  27. 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. 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. 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. 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. 31. α consultants Smartphone ownership among children (ReproducedfromOfcom2011)
  32. 32. α consultants JOT design team Suppliers JOT warehouses Manufacturers Distributors Small retailers Big retailers End customers Supply chain

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