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1、CIMA Global Business Challenge 2014CIMA 2014 商业国际精英挑战赛THE CASE CONCERNINGCERTAIN ISSUESFACINGMERBATTYThe report is prepared by Team: AMIC5From: Huazhong University of Science and Technology, School of Management Team memberTeam leader: Zou Qi 邹琦Team member 1: Shao Mingxia 邵明夏Team member 2: Liu Chen
2、刘琛Team member 3: Wang Liran 王丽然Content 1 Introduction 2 Terms of reference 3 Identification and prioritization of issues 4 Discussion of issues 5 Ethical issues 6 Recommendations 7 Conclusions Appendix 1 SWOT analysis 2 PEST Analysis3 Porters Five Forces Analysis4 Mendelows Matrix5 Ansoff Matrix6 Fi
3、nancial Performance Indicators7 Forecasted Cash Available For Investment at 31 Dec 20138 Cash FlowDifferencebetween Two Hull Suppliers9 The Breakeven Sales Volume of Racing Boat Proposal1. Introduction Established in northern Europe 33 years ago, Merbatty now is a world renowned builder of luxury bo
4、ats which became listed in November 2012. It has enjoyed rapid growth in sales for the last 12 years and has recently reached a global market share of around 8%.Confronted with the increasingly competitive market, Merbatty is supposed to deal with several issues which would hinder its current operat
5、ions and the planned expansion. A number of problems and incidents need consideration and analysis in order to achieve Merbattys five-year plan. 2. Terms of ReferenceThe report is designed to prioritize, analyze and evaluate the issues facing the board of Merbatty. Detailed recommendation is made wh
6、ere appropriate.3. Identification and prioritization of issuesPriorityIssueStrategic W1AcceptabilityW2ImpendingW3TotalPriority150.450.440.24.81230.430.450.23.43330.420.420.22.46440.420.430.234520.440.420.22.85640.440.450.24.22IssueStrategicAcceptabilityImpending15 points: most critical to the planne
7、d sales growth5 points: easy to make an acceptable decision with only limited risks4 points: the new facility will be operational early in 201423 points: important to reduce staff turnover and maintain brand reputation3 points: improvements are expected by employees and clients5 points: the accident
8、 already happened33 points: aimed at enhancing brand recognition2 points: challenges the current risk-averse profile of Merbatty2 points: the proposal still needs consideration and it lacks a definite time limit 44 points: aimed at increasing market share and sales revenue2 points: this proposal is
9、risky and it challenges the conventional practice3 points: needs to be negotiated within a short period52 points: a limited impact on the 5-year plan4 points: sensible explanation is expected by JKL2 points: a lack of a definite time limit64 points: important to customer satisfaction and brand reput
10、ation4 points: sincere apology and explanation are highly expected5 points: the hull is originally due in exactly one month.Priority 1Issue 1 New design supplier for SuraniaThe third boat building facility located in a Middle East country named Surania is assumed to be operational early in 2014. Mer
11、batty has to decide between two potential interior design companies, both of which are willing to cooperate and have their strengths and weaknesses.Priority 2Issue 6 Late delivery of a hull from TopcrestTopcrest, the sole hull supplier for Merbatty, has recently won a new major client with a lucrati
12、ve, thus causing a late delivery of a hull. Although Topcrest has offered to compensate Merbatty, the procurement director Paul is furious and has proposed to pay an extra 50K to source the hull from another supplier who can deliver it on 15 January 2014.Priority 3Issue 2 Accident at workRecently on
13、e of Merbattys employees arrived for work high on drugs and made his way on to a hull promptly falling off and breaking his leg. This reveals that Merbatty has neglected it health and safety record ever since it established.Priority 4Issue 4 Employ sales staff as oppose to agentsStephan believes tha
14、t their agents are loyal, efficient and well-motivated with great contacts. However, Marie holds the oppositeview that employed sales staff fully devoted to selling to their core markets is what they need.Priority 5Issue 5 Conflict between the Chairman and JKLJKL holds 28% of Merbattys issued shares
15、 after Merbatty became listed. Simone, the investment director of JKL, recently had a chat with Jesper where Jesper said he would persuade the chairman, his father, to approve the racing boat proposal. Andreas, the financial director, was out on one of his many charitable visits when Simone visited
16、him. Therefore, Simone thought the chairman viewed Merbatty as his personal property to do with as he wished and that the charitable work in 2012 was a bit costly.Priority 6Issue 3 Build and race a speedboat in a competitionJesper wants to build and race a speedboat in the competition which Merbatty
17、 already sponsor. He is assured that this step will raise global profile of Merbatty and increase sales of the P-3000. However Alberto is dismayed by this risky and expensive proposal.4. Analyses and evaluationSWOT analysis (Appendix 1), PEST analysis(Appendix 2), Porters five forces analysis ( Appe
18、ndix 3 ),and other analyses are performed to lay a foundation for the analyses and get a better understanding of Merbatty as well as the luxury boat industry.4.1 New design supplier for SuraniaAlthough Merbatty has witnessed health growth over the last decade, the heavy reliance on the supplier alon
19、g with huge conversion cost poses a great threat to its sustainable development. It has to find another corporation to undertake the interior design service for boats built in Surania due to Aqua Designs refusal. A comparison of the two options is shown below. SupplierFactor Cooper DesignsArabian In
20、teriorsDistance200 miles from the facilityClose to Merbattys building facilityHistoryA long historyFour yearsHonorBest modern design awardBest Arabian design awardTechniqueCAD systemsExtranet service allow customers to view the design and interact with designersCAD systemsStaffSkilled staffLocal but
21、 well educated and trained staffCapacityAbundant (spare capacity for boats built in other facilities)EnoughPrice100K per boat (mid-sized)90K per boatInterior featureModern and traditionalArabian flavoredAdvantageA long historyReputation of high qualityworld-wide spare capacityLocal contacts and rela
22、tionshipsLimitless funds for expansionStrong cooperation intentionProposal A Cooper DesignsAdvantageu It may relieve Merbattys heavy reliance on its original partner Aqua Design since Cooper Designs has spare capacity to design all of the Merbatty boats wherever they might be built. u Cooper Designs
23、 can offer traditional and modern designs of high quality that are more acceptable to international customers. Stefan anticipates that before 2017 approximately 50% of the Surania facility capacity will be sold to customers in Middle East region. The remaining capacity will still target other market
24、s. u The extranet service enables more interactions between customers and designers, thus improving customer satisfaction.Disadvantageu Its likely that Cooper may not regard Merbatty as a key client since Cooper is a renowned multinational designer and has numerous clients. If so, the cooperation be
25、tween them may not be so strong and the bargaining power of Merbatty wont be high.u Cooper may not provide customers in Middle East with perfect design work due to a lack of Arabian flavoured design experience.Proposal B Arabian InteriorsAdvantageu Arabian Interiors is financed by a wealthy and well
26、-connected Sheik and the Sheik owner has a strong intention to maintain long-term and win-win cooperation with Merbatty. The great local contacts will make it easier for Merbatty to fulfil its market penetration and enhance its brand image in the Middle East. Merbatty is likely to secure more sales
27、in this region and achieve its planned growth. u Arabian flavored design will be rather acceptable and popular among local people. Disadvantageu The relatively short history of Arabian Interiors may be a weak point because international customers may usually prefer a well-known designer. 4.2 Late de
28、livery of a hull from TopcrestThis problem is an urgent one and should be solved instantly. Otherwise, it will possibly hinder the cooperation with Topcrest and its hull supply in the long term. On top of that, the late delivery may possibly bring about inconvenience to the customer and have a damag
29、ing effect on Merbattys reputation and brand image.At the moment, there are two possible solutions open to the Merbatty board:1. Continue to cooperate with Topcrest and accept its compensations;2. Refuse the proposal from Topcrest and source the hull from another supplier that Paul has contacted.If
30、Topcrests offer is accepted, the delivery time would be half a month longer than that of the other supplier. From the financial perspective, the cash flow difference between two hull suppliers is as follows:Payment for idle time88,464Discount on boat price25,000Ex-gratia payment30,000Extra cost50,00
31、0Total differences generated193,464(For interpretations see appendix 8)In addition, more factors need to be taken into consideration. Below is an analysis about the competitive edges of these two solutions.A comparison of competitive edgeChoosing TopcrestChoosing the unknown supplierAdvantagesl Long
32、-term cooperation with Merbattyl World-class hull supplier with high quality and great reputationl Sincere apology with financial compensationsl Earlier delivery time, less idle time, and correspondingly less labor costs;l Preserving the rights to sue Topcrest for its breach of contractDisadvantages
33、l Late delivery causing customer dissatisfaction and damage to Merbattys reputation;l More idle time bringing about more labor costsl No guarantee for the quality of the hull;l Breaking the relationship with Topcrest may result in a hull supply crisis in the futureBesides, there are several options
34、that may contribute to the settlement of this problem.1. If Merbatty has signed a legal contract with Topcrest, it can seek legal counsel to force Topcrest to finish the construction of the hull on schedule.2. Continue to cooperate with Topcrest but refuses the compensatory terms provided by Topcres
35、t, and request compensations out of Merbattys own interests. In the long run, heavy reliance on the sole supplier not only weakens the negotiation power of Merbatty currently but also poses a threat to its future development. Therefore, to prevent the similar crisis from occurring again, Merbatty is
36、 expected to select more than one supplier which is professional in its field for each of its key components.Moreover, Merbatty should sign valid contracts to regulate mutual behaviors and avoid the latent conflicts with its suppliers. Particularly, Merbatty should pay attention to clause regarding
37、the penalty of violations. If the infringement of legal rights occurs, legally binding procedures are definitely essential.4.3 Accident at workThe labor laws in both European Union and the USA have demonstrated the importance of guaranteeing the staffs safety at work. Though it is an individual case
38、 and Paulo should be most responsible for it, Paulos drug abuse and injury at work has sounded the alarm to Merbatty, which reflects its poor management of employees health and safety. Moreover, it exposes the problem that Merbatty has not put adequate emphasis on the cultivation of its staffs sense
39、 of responsibility. Personal relationship has been an inevitable issue in corporate governess. As an executive director, Jesper does not take Paulos drug taking habit seriously, which is culpable. In the short term, the habit may not interfere with work; however, it is a potential threat to employee
40、s like Paulo and the whole company since it may incur bad publicity and lower staff morale.4.4 Employ sales staff as oppose to agentsAs the sales director, Stefan not only values his own relations with those agents but also cares about the sales revenue of Merbatty. He is reluctant to replace agents
41、 with sales staff for fear that the sales will suffer due to a lack of experience and contacts. He also mentioned that employed staff may sometimes slack off. But as long as they are well-motivated, it wont be a big problem. Furthermore, there are companies that establish many sales offices to secur
42、e sales such as Ferretti and Lazzara. At last, the termination of some agents contracts will clearly have a negative impact on Merbattys brand image.However, the HR director Marie maintains that the majority of boats they sell are smaller and cheaper ones, for which the sales agents are to blame. Th
43、is doesnt make sense. In 2012, the sales volume of a kind of small boat for example Z-1 was around 3 times as many as that of the largest kind of boat namely P-3000. This gap is quite common in a company simply because more people can afford the smaller and cheaper ones. Its worth noting that the tw
44、o new large models introduced in 2012 namely P-3000 and C-34 both saw a sharp increase, from zero to ten and eleven respectively. This may somehow demonstrate that the current agents are working hard to selling to the core market. The analysis below takes the factors concerning customer, product, ma
45、rket and company into account. running own sales officesPossible benefitsu collect customers feedbacks to gain a better understanding of their needs and help Merbatty make improvements u provide better pre-sale service and after-sale service to customersu enhance brand image since staff are familiar
46、 with corporate missionu Better control over the salesstaff and the distribution channelu A sense of belonging of the staff may improve staff moraleu anticipated lower costs than commissions paid to agentsPossible drawbacksu he increasingly competitive market may not allow new staff to get enough tr
47、aining and time to accumulate experience and contacts u insufficient sales management skills within Merbattyu huge initial investment for instance renting and equipment u not easy to recruit enough experienced sales staffkeeping the current agentsPossible benefitsu established reputation and great contacts in the industryu efficient to exploit agents to sell to geographically scattered marketsPossible drawbacksu commission paid to agents are quite high which reduces profit u limited eff