i structure of the report

8/7/2019 I Structure of the Report

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I STRUCTURE OF THE REPORT

1. Prioritisation

The first section of the report will concern itself with the scenario. It willprioritise according to a scale of impact matrix and provide

recommendations.

2. Strategic Analysis

The second section of the report will conduct a strategic analysis to see if

problems not mentioned in the scenario can come to light. It will develop,

discuss and provide recommendations for these problems.

3. Appendices

The final section of the report will contain detailed graphs and tables that

have informed our judgements throughout the report. Regular reference

will be made to them throughout the report,


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as each vehicle is given a clean bill of health then it can be driven by a union

driver and deliveries can recommence using that particular vehicle only.

The work to rule would cost CeeCee ,913 in lost sales and 1 ,749

[see appendix] in lost profit assuming that the strike would las t ten weeks.1.2 Recommendations

We want to suggest a hierarchy of recommendations listed in order of priority.

1. CeeCee must investigate why distribution to their stores is not taking

precedence over EITs contract with the multinational corporation. egal

advice should be sought to see if compensation and or precedence over the

multinational corporation can be obtained from EIT.

. If a guarantee of distribution cannot be obtained we recommend that CeeCee

takes steps to arrange distribution to their stores via another carrier for the

time that will be affected by the work to rule strike. This may affect their

integrated inventory, production and logistics system.

3. CeeCee should conduct an impact analysis on the possibility of insourcing

distributional operations. As CeeCee grows larger, this may be a way to cut

costs and ensure a quicker lead time from factory to sto re though it may

reduce distributional flexibility.

4. If there is no way to ensure delivery to stores, and the strike lasts longer that

weeks, steps should be taken to ensure 1 % of stores get % of stock,

rather than % of stores getting 1 % of stock. Having stores completely

empty of stock could damage CeeCees reputation as a premium brand.

2. CHIL LABOUR ACCUSATIO S2.1 Sit ation

The local Asian agent has informed CeeCee that a substantial number of the


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Asian suppliers have been using child labour. It has not been made public and

the agent thinks it is not an important issue as newspapers have grown bored of

the story

2.2 Recommendations

Our recommendations are based on the premise that child labour is unethical

and that businesses should behave ethically regardless of business

consequences. We know that CeeCee takes its CSR responsibilities seriously

and will provide a comprehensive response to these accusations to ensure that

unethical acts are minimised. These accusations should therefore be made

public. However, a rapid improvement of the working conditions of the Asian

employees coupled with a strong PR campaign could mitigate backlash and turn

this misfortuneinto a marketing coup.

In addition to the ethical reasons for not employing child labour, we find there is

clear business sense in reducing or eliminating the amount of unethical labour.

ong-term effects of positive Consumer Perceived Ethicality (CPE) means a

willingness to pay higher prices for clothing. This is important for CeeCee if it

desires to remain premium brand amongst high street clothing retailers.

2.2.1 Short-term recommendations

1. Investigate and assess 'the damage:

y How many suppliers are concerned?

y How many children?

y What was the salary that they were given?

. Send Jeroen de Joost, Head of Environmental Impact and Manager in

the CSR department to Asia to assess the working conditions of main

suppliers. Require detailed report from de Joost on what went wrong

and how suppliers can be monitored to avoid such issues in the fu ture.


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3. End contracts with suppliers that breached rules or where working

conditions were especially bad. 4. Review and enforce monitoring and auditing systems to make sure

suppliers adhere to the CeeCee Code of Conduct. The agent needs tobe briefed on the importance of this issue to ensure he informs CeeCee

of supplier malpractice in the future . Make CeeCees actions to ensure better auditing practices to stop child

labour public in a CSR report with an accompanying press release. 2.2.2 Long term actions

1. Currently regular auditing is only performed on production processes.CeeCee should begin a comprehensive programme to regularly audit

labour and conditions at existing suppliers.

.We need to make sure that it is in the suppliers best interests to not

use child labour. A system of punitive financial instruments must be

implemented to ensure that suppliers that use child labour are

disciplined.We believe this should take the form of the suppliers

involved funding the childrens education.

3. I.T. Fail re3.1 Sit ation

At the end of 9, CeeCee invested 1 million in a new online sales

system. The system wasdesigned and developed by an outsourced ITcompany (ProveIT) with support from seconded staff from CeeCees own ITdepartment.

iane Innes has discovered that when customers had attempted but failed to

pay for orderedgoods the system still processed the order. This issue went onfor three months before detection. iane thinks that , orders have been


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4.2 Recommendations

The Net Present Value (NPV) of profits from starting a jewellery range is

positive and very high (7.937. ) . Additionally, the Internal Rate of Return

on Investment even after taking into account the foregone profits from lost

sales of other products is excellent at 3 %. Given the very high margin and

recession resistance of jewellery products and a high NPV, our opinion is that

CeeCee should proceed in developing a jewellery range .The strategic significance of this development is that increases the benefit

advantage for its customers, through offering better quality, more fashionable

jewellery than retail jewellery shops. Additionally, offering matching jewellery

to outfits differentiates CeeCee from its main rivals by offering a one -stop-

shop shopping experience.

5.Cele rity Mar eting

5.1 Sit ation

Juliette espere wants to initiate a contract with Kool, a well known and

popular European singer of rock music. She thinks CeeCee is doing well on

the back of good quality products and service but it could do much better with

a more visible marketing presence. Carla is not impressed, she thinks word of

mouth is all that counts.

Kools agent proposed a choice of payment methods: 1. ixed payment of , for photo-shoot with bonus of 1 , if sales

reach million.. Photo-shoot for free and paid on royalty basis earning % of all incremental


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sales revenue.If the probability that incremental sales reach million is only 1 %, the first

payment method would be the 9 % more likely to be the cheaper one for

CeeCee. Both payments are equally costly at the breakeven sale value of

1, , .5.2 Recommendations

From our calculations, it seems if CeeCee were to choose a payment method

for Kool, it would be far wiser to pay her a fixed payment of , rathe r

than a royalty. Every scenario, excluding incremental sales of million would

render this option cheaper. However, all things being equal, we would not recommend using Kool.

According to Juliette's calculations the promotion would only have a 1 %

chance of increasing sales by million, this represents an incremental sales

increase of only % in overall sales. However, the return on investment is very

high. Even if proceeds exceed , , and payment to cool is ,

insures a return of twenty times the marketing investment. Taking profitmargins into account still insures a return on investment of 6 %. Another angle to consider is the possible unintended consequences of

changing the organisations marketing strategy. These consequences could

include:

y Kools career could sour, or she could become involved in a scandal. This

could damage CeeCees brandy Kool may not connect to CeeCees core market, they might become

disaffected and sales may in fact decrease

y Powerful marketing messages may decrease the efficacy and extent of word

of mouth marketing as CeeCee may become seen as more of a mainstream,

mass market brand.


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Becauseof thepossibleunintendedconsequenceswerecommended that

Juliette Lesperreconduct a full impact report beforegoingahead withan

endorsement campaign.

III S EGI N YSIS

Amarantushasperformeda Porters eneric Analysisanda SWOTanalysis to

understandCeeCeesstrategicpositioning and formulaterecommendations to

strengthenCeeCeescompetitiveadvantageover itsrivals.

1. SW l i


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2. P G i S l i

y CeeCee ispursuinga Differentiationand a Benefit Leadership Strategy. We

believe it is important that CeeCeecontinueson thispathdespite the

anticipatedcomingyearsofsloweconomicgrowthas theglobal market

recovers, duringwhich valueretailerswill increase theirshare in themarket.

Engaging ina pricewarwouldbereactionaryandcounterproductive. It is

important that CeeCeemaintain itscompetitiveadvantageof fashionable

clothesofhigherqualityandanenjoyableshoppingexperience. With this in

mind, weadvocateexpansion intoa jewelleryrange.

y The target scopeofCeeCee isa Broad-Coverage Strategyofferingaseriesof

relatedproducts todifferent groupsofconsumers children, young, menand

women). Thisstrategy isappropriateasresearchhasshown that pursuinga

focusstrategy inahighlycompetitiveandrapidevolvingmarket isrisky.


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retailers and differentiate itself from its high street competitors with more

fashionable clothes.

Mar et e elopment (New Markets, Current Products)

y Commercial rents are down worldwide. CeeCee has prospered during the

recession and has a good cash flow. It is well placed to capture the uptick in

new regions, as it is in a position to buy up exclusive shopping areas.

y ecision to open shops beyond Europe will be even more profitable given

decreased consumption spending in Europe and growing middle -class in fast

developing countries like Brazil, India and China.

Di ersi ication (New Markets, New Products)y CeeCee has slightly modified its target market and products as it now

provides a range of home furnishings and has switched from focusing solely

on clothing.2.1 Recommendations

We believe that CeeCee could maximise its penetration by better segmenting

its customers. Currently the CCIP ensures costs are controlled in the fast

fashion process. Better customer segmentation could identify consumer

trends and feed into design and production, increasing revenue and

decreasing stock write-downs.

We have sketched out how loyalty cards in store and online could fulfil this

role. This could be used to create a personalised shopping fingerprint for thecustomer. This fingerprint could be compared to other customers with a heavy

overlap. Non-overlapping products could be recommended to both customers.We believe that developing products beyond clothing is crucial to offering a

unique shopping experience to CeeCee s customers and give them a wide

array of choice to put together great outfits. Also because of the high margin


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on accessories it is very profitable for CeeCee to keep selling these products.

Expanding into selling a jewellery range is in our opinion a great strategic

move because jewellery is still very close to CeeCees core business area and

has a very high margin. But it is also our opinion that new jewellery products

should be spend at the expense of home furnishing products rather than

clothing. Home furnishing products take more space and their sales have

decreased by 1 % during recession but clothes by only %.


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Ta le 3: Expansion into Jewellery Range

End of year

Cashflow

Cash

flowtaking

into

accountforgone

profits

DiscountFactor

12%

discountrate

Present

Value

Present

Value

taking intoaccount

forgoneprofits

0 Initial outlay -6720 -6720 1.000 -6720 -6720

1 1024 735.52 0.893 914.286 656.71429

2 7584 6333.92 0.797 6045.918 5049.3622

3 7584 6333.92 0.712 5398.141 4508.3591

4 7584 6333.92 0.636 4819.769 4025.3207

5 11104 735.52 0.567 6300.708 417.3538

Present value of cashflows 23478.822 14657.11

Less initial outlay -6720 -6720

Net present value 30198.822 7937.11Internal Rate ofReturn 32%

Ta le 4: Payment Method or Cele rity Endorsement

Incremental Sales

Payment

Method 1

Payment

Method 2

50 000 + 150

000 ifincremental

sales reach 2m

5% ofincremental

sales

1,000,000 50,000 50,000

1,200,000 50,000 60,000

1,400,000 50,000 70,000

1,600,000 50,000 80,000

1,800,000 50,000 90,000

2,000,000 200,000 100,000


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i structure of the report

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