8/12/2019 Executive Summary SA

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8/12/2019 Executive Summary SA

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Executive Summary

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The Ambers

Overv iewThe global toy industry is highly fragmented and fiercely competitive. Jot is anindependent successful toy brand which designs and markets toys for kids of various agegroups. At present, it faces a number of financial, strategic and ethical issues that haveto be cautiously dealt with. These issues have been prioritized, analysed and evaluated.

Faul t in new f ly ing sp acesh ip toy Scenario: A hazardous technical fault reported in a newly launched flying spaceship

toy is the most pressing issue being faced by Jot. Potential Impacts: It poses an immediate threat to the brand name of Jot. Since

this is the peak-sales season, the far reaching reputational impact can result insignificant decline in sales. Moreover, this issue can lead to serious legal implications.

Recommendations: Jot must recall the 1200 units in market with complete refund tothe consumers. It must launch a free warrantee campaign, deliver letters of apologyand a complimentary toy to them for restoring customer confidence. Remaining 4800units should be repaired, repackaged and launched back in the market, incurring aloss of 67200 as customer acquisition cost. It must seek compensation from thecertification agency. Also, Jot should implement a robust NPIP mechanism.

Late delivery o f Chr is tmas produc t Scenario: Gull, a manufacturer, has announced only 3 days before the delivery date

that it can deliver only 75 % units of a product on time. This issue calls for animmediate attention for precluding the losses.

Potential Impacts: Though the immediate revenue loss would not be very significantbut subsequent decline in sales due to customer diversion and poor brand positioningcan be substantial. Breach of contracts with the retailers would lead to loss ofcredibility and hence lesser orders in future.

Recommendations: Jot must communicate the current supply problem to its retailers.Based on our estimation of sales for the next 40 days, Jot should distribute the 1800units on a pro-rata basis in the ratio 4:1 to the large (1440 units) and small retailers(360 units). Discount (10%) must be offered on late-delivered units, thus, incurring aloss of 630. Suitable compensation must be sought from Gull.

Near-shor ing to Voldan ia Scenario: Owing to recent developments such as high distribution costs and inflating

labour rates in China, Jot has been considering the proposal of near-shoring a part ofits manufacturing to Voldania.

Potential Impacts: Near-shoring at Voldania would lead to a 13.5% reduction in thecost per unit by the end of fifth year of production, owing to significantly lowerdistribution cost. The gradual shift to Voldania would also increase operating profit by0.6 % than the forecasted level.

Additionally, it also offers key strategic and operational advantages. Proximity to themanufacturer would help Jot establish trust, foster long-term relationships and allowbetter alignment of organizations due to cultural similarities. Bringing Jo ts manufacturing closer to the end market for toys would help Jot develop a more flexible

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Executive Summary

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and just-in-time supply chain. Similar time zones would promote better coordination. Recommendations: The demand of bribe by the Voldanian bureaucrat is highly

unethical and reflects potency for further demands in future. Hence, only when thedemand recedes, should Jot shift to Voldania. In case of failure of mitigation of thebribe issue, it should must consider near-shoring to other eastern European countries

such as Poland, Hungary or Czech Republic instead of Voldania.

Lau n ch o f n ew ran g e o f t o y s Scenario: There has been a paradigm shift towards electronic toys and computer

assisted learning. Hence, Jot is considering the proposal of entry into 9-11 year oldsegment with launch of new range of products. Due to lack of urgency anduncertainty, this proposal has been ranked last.

SAF Analysis: This business diversification would be a completely new workingspace for Jot and thus involves in-depth planning and analysis. It should reallocate afraction of its R&D resources towards smart device applications. A comprehensivemarket sizing and cost analysis indicates breakeven within 2 years and increase in

operating profit by nearly 11.8% by 2016. Recommendations: This proposal must be accepted by Jot. The recommended plan

of action comprises of connecting with the users and shaping the product as per theirlikeability as well as strategizing a step wise marketing plan. Establishing itself in thesmart phone application market would provide Jot with a platform to diversify intosophisticated products and spread out globally.

Ethical Issu esFor a business, ethics must come first. The demand of 25,000 by the Voldanian bureauc rat is highly unethical and Jot must

not succumb to such unfair business practices. The presence of a faulty product in the market is a grave ethical concern and it is

imperative that Jot recalls these faulty units back. Hasty launch of flying spaceship could have possibly led to neglecting the safety

checks and hence the technical fault in the product. Jot should ensure stricter safetychecks for future.

Jot must not violate any IPR regulations while entering into a new product segment.

Corporate Socia l Responsib i l i ty Jot should step into the CSR arena by launching special toys for blind children and

donating toys to orphanages on Christmas.

Secondary Issues Debt factoring has been recommended to generate immediate cash-in-hand. It could

also consider invoice discounting. Jot needs to review its IT infrastructure; Implement a pay per use model. Jot should establish online/offline CRM units for better demand speculation and brand

positioning. Jot should step into e-commerce by partnering with existing online retailers.