BSBMGT616 Develop and Implement Strategic Plans Assessment Task 2-Case Study

Instructions for Students:

In this assessment, you are required to complete an analysis of the organisation’s environment to develop an understanding of potential competitors and allies and the associated risks and benefits.

Assessment Requirement:

Complete a Value Chain Analysis, PEST and SWOT for your organisation, plus analysis of the potential competitors and allies supplied in the case study. You are also required to review competitors/allies to MacVille, as described in the case study. For the provided case study,

you are required to complete the following for your organisation:

1. PEST analysis (including a review of legislation impacting on MacVille).

2. SWOT analysis (including an evaluation of the value-chain).

3. Identify and describe existing and potential competitors/allies, then summarise the strengths and weaknesses of each. Once you have developed these materials, you need to meet with your supervisor (your assessor) to discuss and confirm the analysis you have completed, together with the summary of potential co-operative venture allies. Take notes in the meeting with your supervisor and make any changes as suggested by them, before submitting your final version. You must provide:

● A completed set of analysis (PEST and SWOT).

● A review of existing and potential competitors and allies.

● A review of potential allies and a statement of their alignment with organisational values and tender requirements.

● Summary notes from the meeting with your supervisor. Your assessor will be looking for:

● Evidence that you have analysed and identified the needs of the case study, and reflected these in the reviews and summary notes you have developed.

Case study

Having completed MacVille’s review of the vision, mission and values, you should then consider the environmental factors that could impact on MacVille’s goals and objectives. To help you with this assessment, you are provided with an industry consultant’s report that contains a recent and comprehensive review of the industry and general operating environment.

Industry consultant’s report

You have noted the following points from the report:

● New commercial espresso machines are being developed that use 30% less energy to run, with an innovative and more efficient heat exchanger.

● Planned changes in trade where all tariffs on imported goods, including espresso coffee machines, will be removed in line with the Government’s free trade policy.

● The development of the home consumer market for consumer espresso machines is experiencing high growth.

● The lifestyle trend towards eating out more frequently as the population ages and becomes more affluent.

● The prediction of a steady population growth rate for Australia from 22 million in 2010 to 36 million in 2050.

● The prediction of a strengthening Australian dollar against all our major trading partners over the next few years is also a concern.

● The prediction of higher-than-expected growth in the economy, as a result of a resources boom.

● The strong possibility of a carbon tax being introduced on all energy intensive products used in a commercial enterprise. Senior manager’s meeting At a meeting with the CEO and other senior managers, the following points were noted in regard to the operations of MacVille. In response to your question about how effectively MacVille adds value to its products and services, the following responses were agreed by all.

● Inbound logistics is a problem, due to the lack of experienced personnel in importation and customs operations. The lack of solutions from Human Resources Management has meant that delivery timelines are sometimes delayed because the proper procedure was not followed.

● The operations of MacVille is an area of strong value-add, with the state of the art Management Information System (MIS) forming part of MacVille’s infrastructure. The MIS has allowed for sound corporate/strategic planning, along with strong internal controls in accounting and finance.

● Outbound logistics is an area that could be improved. Currently, MacVille relies on a three year contract with a delivery firm to deliver its goods to customers. Sometimes there is a delay in getting the appropriate vehicle to deliver the espresso coffee machines, which is causing some issues with customers. The contract delivery firm seems to be struggling to deliver the promised quality with their fast expansion.

● All managers agreed that marketing and sales is a strong point for MacVille. The marketing communications and promotions mix seems to be working well, particularly with the social marketing that MacVille has introduced in the past year. Technology developments are helping MacVille to reduce costs, yet expand the message via internet marketing activities.

● Service is another strong point for MacVille, which enjoys a good reputation in this field. The installation, after-sales service, complaints handling and training all get top marks from our customers. Some of MacVille’s procurement policy has helped in this regard, with MacVille outsourcing work where it cannot meet customer demand. The policy of putting the customer first and guaranteeing service calls within 24 hours has been a key reason for the increased sales.

In a brainstorming session with the CEO and Senior Managers, the following points were noted. When asking about the potential for opportunities, threats and competitors, the consensus was:

● Moving into the new Sydney market, where the bulk of espresso machines are sold each year, and from which a major (but ineffective) competitor has withdrawn.

● Other opportunities could be found in strategic alliances with coffee bean suppliers, where market penetration could easily be achieved and costs of advertising and service could be shared.

● There was also concern about the raising Australian dollar having a severe longterm impact on tourism, which was a major category buyer of espresso machines. Raising interest rates that are predicted for the coming years could impact negatively on the disposable income of coffee-drinking patrons.

● The concerns of the group were centered on a global corporation Nufix Inc. shifting from instant coffee into the espresso bean and machine market. The resources they would have at their disposal in marketing, finance and human resources could be a serious threat to MacVille’s plans. However, they would still struggle to gain a foothold in a market that already has strong supplier/buyer allegiances, with most stretching over many years. Global players like Nufix Inc. have difficulty being adaptable to the needs of niche market buyers.

● Another competitor of note was BeanEx, a large coffee bean supplier that had recently started importing espresso machines for their customers. There was talk of them selling the espresso machines as wholesalers. They certainly had easy access to markets with their coffee bean trade, but they had no established service arm to help wholesale clients maintain the machines that they purchased.

● MacVille has been keen to pursue strategic alliances as part of its strategy to achieve its objectives. It called for tenders from interested parties, who were asked to complete a tender application form that provided information relating to the tender requirements. Some notes have been included by senior managers who assessed some of the information.

Tender submissions

Three submissions are attached to this case study.

Business name – Home Espresso Trades

Description of business (include vision, etc.) – Selling consumer home espresso machines to the home market, only in Sydney, and incorporating other digital home entertainment products.

Description of joint venture – Shared space in four trade shows per year.

Venture: Strengths and weaknesses – Strength: covers the consumer market for espresso machines (that compliments the commercial espresso machines) to make a full range offer to clients. Weakness: in working with a strategic partner who is not solely focused on the hospitality industry

Venture: Risks

1. Partner not fulfilling their financial commitment.

2. Association with a non-industry partner may have a negative effect on our customer base.

3. Partner access to MacVille’s trade secrets.

Venture: Cost-benefit analysis – Costs of the shows is $2,500 each. Four shows costing $10,000, selling 10 machines per show at $500. Profit for each would see a profit of $10,000 for the year and a breakeven after two shows.

Venture: Financials

Home Espresso Traders

Statement of Financial Position

as at 31 December 201X

Assets

Current Assets

cash at bank 10,000

accounts receivable 15,000

stock 8,000

prepaid expenses 2,500

Total current assets 35,500

Non current assets

Buildings 0

Less accumulated depreciation 0

Equipment 356,000

less acccumulated depreciation (24,998)

Goodwill 10,000

Total non current assets 341,002

Total assets 376,502

Represented by

Liabilities

Accounts Payable 25,000

Long term loan 251,500

Total liabilities 276,500

Owners Equity

Initial Capital 2

current earnings 100,000

Total Owners Equity 100,002

Venture Trend analysis

2014 – $1.0m 2015 – $1.3m 2016 – $1.5m 2017 – $1.6m 2018 – $1.6m

Able to provide access to due diligence materials?

● Copies of other strategic alliance agreements? YES x NO ¨

● Statement of Financial Position from last tax return? YES x NO ¨

● Full personal contact details of all directors? YESxNO¨

● Supporting data for trends and cost benefit analysis? YES x NO ¨

Business name – Ambrosia Coffee Roast

Description of business (include vision, etc) – Sell all grades of coffee bean to supermarkets and hospitality outlets around Australia.

Description of joint venture – Share in the cost of outdoor advertising for cafes and restaurants, with shared branding of umbrellas and barriers.

Venture: Strengths and weaknesses – Supplier is committed to the coffee bean industry, with some sharing of the client base. Product image is not quality but more commodity-based. Venture: Risks

1. Risks with poor brand association.

2. Long-term commitment in signage

Venture: Cost-benefit analysis – 50 cafes per year, at $200 per cafe cost for each partner. 50 machines sold at $500 profit is $15,000 profit return for the year. Breakeven after 20 cafes.

Venture: Financials – Not available.

Venture: Trend analysis – Sales

$2,850,000 $2,900,000 $2,950,000 $3,000,000 $3,050,000 $3,100,000 $3,150,000 $3,200,000 $3,250,000 $3,300,000 $3,350,000 2013 2014 2015 2016 2017 2018 2019 Sales Year Ambrosia Coffee Roast

2014 – $3.2m 2015 – $3.0m 2016 – $2.9m 2017 – $3.0m 2018 – $3.3m

Able to provide access to due diligence materials?

● Copies of other strategic alliance agreements? YES x NO ¨

● Statement of Financial Position from last tax return? YES ¨NO x

● Full personal contact details of all directors? YES ¨ NO x

● Supporting data for trends, and cost benefit analysis? YES x NO ¨

Business name – Java Estate

Description of business (include vision, etc) – To sell quality Arabica roasted coffee beans to all states of Australia. Description of joint venture – Java Estate provides MacVille espresso machines to client for no-charge. Java Estate pays MacVille cost price for the delivery and installation of the machine, and then pays the remainder of the purchase price on a 12 month repayment program.

Venture: Strengths and weaknesses – Australia wide partner – 100% committed to hospitality and coffee bean market. Other coffee bean suppliers may not recommend MacVille machines with this strong strategic alliance.

Venture: Risks– Concern over the amount of money outstanding.

Venture: Cost-benefit analysis – Potentially 200 machines installed in the first year. Interest costs $40,000 p.a. profit $100,000. Break-even after 80 machines sold.

Java Estate

Statement of Financial Position

as at 31 December 201X

ASSETS

Current Assets

Cash at bank 78,000

Accounts Receivable 123,000

Stock 100,000

Prepaid expenses 12,000

Total Current Assets 313,000

Non Current Assets

Buildings 240,000

Less Accumulated depreciation (123,000)

Equipment 230,000

Less Accumulated depreciation (78,000)

Goodwill 39,500

Total Non Current Assets 308,500

Total Assets 621,500

Represented by

LIABILITIES

Accounts Payable 25,500

Long term loan 151,000

Total Liabilities 176,500

OWNERS EQUITY

Initial Capital 100,000

Current earnings 345,000

Total Owners Equity 445,000

Venture: Trend analysis – Sales

Able to provide access to due diligence materials?

● Copies of other strategic alliance agreements? YES x NO¨

● Statement of Financial Position from last tax return? YES x NO¨

● Full personal contact details of all directors? YES x NO¨

● Supporting data for trends and cost benefit analysis? YES x NO¨

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 2013 2014 2015 2016 2017 2018 2019

 

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