GBC2013_Case_report.doc

本文档系作者精心整理编辑，实用价值高。CIMA Global Business Challenge 2013 CIMA 2013商业精英国际挑战赛 Report for Jot This report is prepared by Team: PhilosophyForm Jinan University Team member:Team leader: Luman YuTeam member 1: Peidan HongTeam member 2: Cheng PengTeam member 3: Wenwei LinCIMA 英国皇家特许管理会计师公会 (Chartered Institute of Management Accountants) T. 400 820 4080 E. Web. 本文档系作者精心整理编辑，如有需要，可查看作者文库其他文档。Content1. Introduction of Jot2. Vision and mission of Jot3. PEST Analysis of Jot4. SWOT Analysis of Jot5. M.E. Porters 5 Forces Analysis of Jot6. Discussion of issues7. Ethical issuesAppendixAppendix1: Concrete SWOT Analysis .6.1. Introduction of JotEstablished in 1998 in Europe by a couple, Jot is a toy company which designs and sells toys to retailers globally. Faced with some issues, it has to make decisions and solve them. Jot has made a five-year plan based on a pre-set target to expand its market, and several proposals are made to reduce operating costs, which aims at helping it meet the plan. Moreover, with the hope of getting listed in London Stock Exchange, Jot has to choose the best one among three ways to achieve it. Additionally, Jot needs to consider the best way to invest in HY, one of its outsourced manufacturers. It also has to deal with the problem of the acquisition of HHS Group, one of whose subsidiary is Jots outsourced manufacturers, as well as the problems of the operation change and the resignation of its marketing director.2. Vision and mission of JotVision: become one of the leaders of the world toy companies.Mission: make every child play and study in the safe and healthy environment. Financial control Permeant financial advantage Client Lasting satisfaction Progress Influence and process,service efficiency and Community and quality environment give the child care for every manage all a happy and safe child like caring assets Childhood for our own effectively children Staff and learning Create a good atmosphere3. PEST Analysis:Political Stressing safety, and paying attention to quality. European Union (EU) law requires that all toys which are to be sold in any EU country must carry the “CE” marking. Faced with favorable political environment. Created a stable political environment in toy industry by Occident. Occident has a relative perfect legal system, which is beneficial to protect the legitimate interests of the toy industry. Economic Europe and America region economy is in recession, pending economic recovery. Having broad the European and American market and a huge potential market in Asia, Jot is try to expand the Russian and the Asian target market. With the deepening of economic globalization, international trade gets a long-term development, which means great significance to toy industry. Chinas strong economic growth attracted many toy manufacturerseyes, while global wage costs are also on the increase.Social Corporate social responsibilities (CSR) become more and more important to toy industry. As life and cultural level enhancement, toys become more popular, particularly electric toys and intelligence toys.Technological With the core of the product technology is the key factor of occupation of the market. Many toy companies have paid more attention to the design and research & development of the new product. With the rapid development of the internet, IT system provides a convenient marketing channel to toy company. Innovation culture and creative ability become essential factors to toy company development.4. SWOT AnalysisStrengthsWeaknessOpportunityThreatFinancial Controll Financial strengthl The financial revenue increases year by yearl Debt capacityl High financial cost collection systeml People are Willing to investl Cost pressurel A large number of capital demandClientl Makeoutstanding achievements in childrens electronic toys aspectsl The customer is satisfied with innovative productsl Customers are not familiar with the brand In addition to the European marketl Sales in the season imbalancel Rely on fairl Expand the Asian marketl MarketCompetition is intensel Customerpreferences change fastProcessesl Perfect productionapplication systeml Sound outsourcing systeml Not a sound IT systeml Inventory managementl Expand the sales systeml No core electronicLearning and Growthl Company executiveshave deepqualificationsl Organization culturel Senior staff changesl Incentive systeml Cultural change actionl No trainingmechanism5. M.E. Porters 5 Forces AnalysisM.E. Porters 5 ForcesWeightAnalysisCompetitors HighLarge number of competitors of various sizes which design and sell toys to retailers globally.EntrantsLowThe company is a multinational cooperation, so it will not be easy for the entrants to become such a large scale. SuppliersMediumFactors lowering the force: 20 off-shore outsourced manufacturing companies, there are a competition among them. Repeat business, which means Jot and its outsourced manufacturers have a good relationship. Outsourced manufacturers based in China: wage rate increase, some company started to consider near-shoring. Factors increasing the force: the outsourced manufacturers also manufacture for other toy companies, so they dont depend on Jots order.“Applivation-specific integrated circuits components” : jot have no agreements with the producers , but outsourced manufacturers have on-going supply contracts, which means Jot have to rely on its outsourced manufacturers. Licensed toys : 10% of sales, Jot have to negotiate with the licensors.BuyersHighFactors increasing the forceJot depend on orders generated from buyers attending toy fairs.Many large toy retailers across Europe : Jot is very dependent on them. Seven large retailers have over 68% of jots saleFactors lowering the forceStill have 350 other customers. SubstitutesThere are a lot of illegal copies of the design.6. Discussion of issues6.1 Issues Of Investment In HY:The company HYs overall evaluationThe company Jots needs and financing abilityInvestment earnings outputinvestment risk evaluationvalue evaluation of investmentv The company HYs overall evaluation:Advantages HY possess over 100 IT specialists and around 500 supportive staff. Focusing on the design and research & development, which make HY launched its latest version of video game called “The Super Space Warrior”. HY enjoys a substantial market share in many Asian markets such as Japan, Korea, Malaysia, Singapore, Taiwan and Hong Kong, in addition to the traditional European & North American markets, and gets listed recently. HY will have offering and financing, which provides Jot with the private opportunity. Having new product core technology, HY operates as Jots strategic partners.Disadvantages In the last financial year, HY has an unaudited loss of C$ 1.03 million while its stock price has been pummeled. Faced with more and more similar competitors, HYs competitive pressure is increasing steadily.v The company Jots needs and financing ability:Jots needs Jot needs to involve in the development of “The Super Space Warrior”, participate on HYs technical and research to improve Jots product quality. Jot needs to achieve competitive edges over the rivals for a bigger market share in the Asian markets. Jot is planning to convert at least 21% of HY shares so that it can influence and participate in HYs marketing development and policy.Financing ability Jot has three bank loans totalling 1,600,000. Jot has total assets 5,378,000 and current assets 4,628,000 in the year ended 31 December 2011 (Unaudited). Jot has revenue 9,866,000 and gross margin 31.9% in 2011 (Unaudited). Jot try to financing through getting listed.v Investment earnings output:Return on investment Extending volume growth in Asia. Improve products quality through HYs core technology and research. Strengthen strategic partnership with HY. This investment will provide Jot with an additional 10% after tax cash profit in each of the coming years.v investment risk evaluation:Risk weight evaluation of HYRisk FactorsWeight(01)Income Loss Risk0.3Default Risk0.2Market Risk0.5Inflation Risk0.3Policy Risk0.1Corporate Management Risk0.4Industry Risk0.3Sum2.1Average0.3conclusion Because the risk subjective weight shows 0.30.5, its worth investing HY.v Conclusion and investment priorities:Conclusion Above value evaluation of investment shows that Jot should invest and hold at least 21% HY shares.Investment prioritiesSever AJot one-time buys HY 21% shares, that is, 1137500 units common share.Jot need to spend: 1137500 (units) times 0.12 (C$/units) equals C$136500.Sever BPhases to buy: At first, Jot buys 1/2 times 1137500 (units) equals 568750 (units). Jot can get 568750 (units) common share and 284375 share purchase warrant, which is equal to 284375 (units) common share. This time Jot need to spend 568750 (units) times 0.12 (C$/units) equals C$68250.Then Jot uses 284375 share purchase warrant to exchange 284375 (units) common share, which Jot need to spend C$59718.8. This time Jot need to spend total C$127968.8.CompareSever B is superior to Sever A.6.2 Sale Of Jot Firstly，getting list in London Stock Exchange is necessary. As the company is growing bigger and bigger, and seeking a new expanding in Asian market recently, it will need more money to operate this strategy. Also, the IPO of Jot can help it to upgrade its own financial system. The disclosure requirements can help the Jot to improve its internal control. They may sacrifice part of their ownership, but they can still control the company. And this is the best way to finance Jot with the shortest time and lowest cost. Now the question is how to choose among the ACA capital, the SS Finance and the issuing of preferred shares or commercial bonds. The ACA capital offers Jot a 5% 2m loan for 3 years(until 2015) . The future value should be 2.26mllion. So each year Jot have to amortize 753,500 . In the meanwhile, Jot has three bank loan two of which have to be repay in 2014 and 2015, each of 500,000. This will greatly influence the Jots cash flow, which may also greatly affect the Jots share price if listed in LSE. On the other hand, the SS Finance, offer a 15% 1.5million loan for 5 years to 2017. The future value will be 3million, and annual amortization should be 600,00. This reduces the annual cost . So the SS Finance project may be a good choice.6.3 Acquisition of HHS group Jot would like to expand its sales in Asian market, and the Chinese market should be one of its target places. HHS group is based in China, and is one of Jots main outsourced manufacturers. The acquisition is good for not only Jots expanding but also good for lowering its cost of outsourcing. However, the HHS group reset the price after Jot has accept its offer. According to HHS groups financial statement, the total equity is nearly 1million. So the former acquisition price of 1 million is reasonable. In the meanwhile, HHS group has given Jot an offer, and Jot has already given HHS an acceptance, though verbally, according to the Contract Law, theres a contract. It should be illegal that HHS canceled the contract. As a result, Jot should ask for arbitration. 7. Ethical issues7.1 Human resource managementThe human source management is very essential to an expanding company. However, Jot has not set up the HR department. So, my first advice is to hire a human resources management expert to handle with all these human resource problems. Then, Lets come to the solution of some specific problems.7.2 Operation changeJimmy Kasavan is an experienced senior manager of Production Department. Though he is not very serious about the company discipline, he is a good team player and welcome by his fellow workers. Obviously he is a great manager, but does not get along well with Michael, his reporting supervisor. Besides, It goes without saying that dismissing him will have a bad effect on the development of the company. Now Jot is trying to meet the five-year plan, whose implementation is inseparable with the efforts of all staff. So it is necessary to keep the core cohesion. Combined with the above information, I suggest that Jimmy should not be fired and Jon should harmonic the association between Jimmy and Michael.7.3 Jots marketing director resignedAs for the problem of the resignation of the marketing director, Sonja Rosik, its essential for Jot to recruit a new competent person to fill the position. Jot should not ask Boris Hepp to take on the responsibilities of both Sales and Marketing Director for a long time, which was what he had did before he only played the role of Sales Director to concentrate on capturing sales in new markets. Now that its acknowledged that Boris cant be best employed if he held the above two role, Jot might as well find a person to fill the position of marketing director. And before its accomplished, its necessary that Jot make proper salary compensation to Boris appease him.7.4 Incentive systemAs Tani thinks, employees should not be given full responsibilities in preparing the budget, which may cause problems to arise. However, part of the power to prepare it should be given to them; that is to say, Jot should seek advice from them before making decisions. Employees, who are familiar with their work, have a good understanding of the operating of the company to some extent and they can help Jot set a budget. Since Jot is planning to expand its market and it will need a large cost, a well-planned budget which is made after considering many peoples suggestions will undoubtedly benefit the company a lot. Moreover, if employees are allowed to make suggestions for the decision of the company, its likely that they will feel they are valued and devote themselves to their work.As for the reward to employees, Jot shouldnt use a single performance indicator; that is to say, their annual return based on their investment and revenue. What Jot should do is establish multiple performance indicators, which will help employees pay attention to varieties of aspects of their work. Apart from that, Jot ought to evaluate different departments performance by different standards, not just by the annual return of 15%. The work of a department differs from that of the other one and the difficulties of its achieving its goals do. As a consequence, its quite necessary to make different standards of the evaluation of their performance, which ensures equity. Incentive subject Choice (director) Organization goal individual needValue orientation value achievements year-end comparison Reward content capability and award and withEvaluation criterion quality evaluation reward communicationCode of conduct career planning distribution Incentive object Choice Appendix 1Concrete SWOT Analysis StrengthsWeaknessOpportunityThreatFinancial controll Financial strength1. Asset liability ratio is reasonable2. Reasonable arrangement of cash flow3. Have good creditl The financial revenue increasesyear by yearBy the end of 2010 sales revenueexceeded 8 million and the company had achievedsubstantial sales revenue growth each year.l Debt capacity1. The bank it would not be able to provide any additionallong-term finance.2. Jot has an overdraft facility of 1,500,000l High financial Cost collection systemThe ventureCapitalist would offer jot the lo