AMN430 Assessment 2 (S2-2022)
INTERNATIONAL OPERATIONS PLAN
Assessment Due Date Objectives Weight Category
1. Case-Study Week 13, Thursday @ 23.59 PM 2,3,4 60% This item of assessment serves a summative purpose.
Assessment Item 2: Operations Plan
This assessment targets the students’ knowledge of logistic concepts, terminology, functions and procedures and the ability to formulate solutions to logistic problems. Place yourself in the role of a newly hired operations manager for an international company where your job is to assess the business objectives and create a comprehensive operations-plan with key focus on logistic/SCM for your CEO. I.e., what you recommend doing and why, including comprehensive revenue-cost-profit outcome calculations.
Case Study Topic: TBA week 7
Coverage and Duration: 2,500 words (+/- 10%) excluding a 1-page mandatory Executive
Summary, table of contents and supportive appendices (max
40 pages). Diagrams, pictures, and graphs, should be in the
body of the text (these are not included in the word count).
Group or Individual: Individual assessment
Optional or Compulsory: Compulsory
Learning outcomes: AoL 2, 3, 4: KS 1.2; HO 2.2; PC 3.1.
Format: Written report using size 12 pt. Times New Roman font with 1.5 line spacing, 1-inch margins. APA Referencing required.
Instructions:
• Read and analyse the provided case study at least 3-5 times.
• Complete all the mandatory appendices below. These provide you with an overall, necessary, and foundational context-knowledge. It is further a tool to create an operations-plan with focus on logistic-systems. It also covers associated models (risk assessment, tactical procurement plan), and instructions (mapping the input- and the output side of the value-chain) so that you have an in-depth understanding of what the different solutions results in. Remember to also complete all the spreadsheets (excel) at this stage.
• Compile your insight based on the findings from your appendix-based research and start drafting the report. Present realistic recommendations on what you (being the operations manager) should do to create and manage the overall situation and its challenges (including at least one key topic from each of the topics listed below). Create a checklist so that you do not forget to address all the objectives.
• Remember to support your recommendations and arguments with additional sources as needed (quality information from e.g., the textbook, lectures, tutorials, academic journals, industry reports, business news sources, corporate- and watch-dog websites, ranking institutes). Remember to include the financial outcomes (the excel workbooks) in your rationale.
Example of space allocation: once you have completed your foundational research you can start compiling your insight and commence drafting your report. How you structure it is individual but remember it must read as a professional business report. You do not need to restate the case. Suggestion: (500 words) target country geography and specific logistics challenges, target country market conditions, location of customer clusters, suitable means of transportation in target country. Then, write your recommendations to meet the case objectives (500 words); justification of the recommendations (1000 words); performance (logistical and financial) outcomes and results of your recommendations (500 words). Use support from all your appendices.
• When you are finalizing your report, take screen-prints of your Excel sheets and include it in your appendices. If you now feel ready to submit your report, it is time to write the Executive Summary (always written last), include it in your report, and then submit the complete report to BlackBoard. Space allocation example: once you have completed your foundational research, you can begin compiling your insights and writing your report. It is up to you how you structure it, but keep in mind that it must read like a professional business report. It is not necessary to restate the case. Suggestion: (500 words) (500 words) target country geography and logistics challenges, target country market conditions, customer cluster location, and suitable modes of transportation in target country Then, write your recommendations to meet the case objectives (500 words); justify your recommendations (1000 words); and the outcomes (logistical and financial) of your recommendations (500 words). Use all of your appendices to your advantage.
• When you’re finished with your report, print screen-prints of your Excel sheets and include them as appendices. If you are now ready to submit your report, write the Executive Summary (which should always be written last), include it in your report, and then submit the entire report to BlackBoard.
Note: the grading procedure is discretionary and considers for example the quality of the report; how professional it is; content covered and its value contribution for the client and the reader (i.e., your 2x bosses from the case-study). See also the grading criteria.
An assessment submitted after the applicable due date will not be marked and will receive a grade of 0%. If special circumstances prevent you from meeting the assessment due date, you can apply for an extension. If you do not have, or are not granted an approved extension, you should submit the work you have completed by the due date. Such submission will be marked against the assessment criteria and enable the student to potentially receive partial grades.
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APPENDICES A-N (foundational research) to complete:
Appendix A ‘Maps of the Target Region(s)’
The MENA region
How to complete: Research (for example but not limited to) distances (km) of the overall region. E.g., N-S, E-W, and distance in kilometres and travel-time between the major cities.
The Target (Host) Market
How to complete: Research (for example but not limited to) distances (km) of all key locations. E.g., N-S, E-W, and capitol to each border, distance in kilometres and travel-time from the location choice of your HQ/main warehouse(s) to minimum five of your key customer clusters.
Appendix B ‘Macro Environment Analysis’
How to complete: Complete a macro-environment analysis of the target (Host) country, to build a solid understanding and description of the target (Host) country. You could use either the PESTELID framework or the CAGE model to assess the Host Market for this purpose. For example, describe the country in general, its geography and climate, the transportation options, market conditions, its legal and political systems, national safety issues etc. Use e.g., the WorldFactBook for core data.
Do not forget to write a summary paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix C ‘Industry Analysis’
How to complete: use the Porters Five-Forces framework to assess the industry conditions to enter this industry.
Do not forget to write a summary paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix D ‘Corruption Index’
How to complete: Research (for example but not limited to) the above index and write your interpretation of the target country’s performance, challenges, and contextual consequences from this perspective.
Do not forget to write a summary paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix E ‘Ease of doing Business Index’
How to complete: Research (for example but not limited to) the above index and write your interpretation of the target country’s performance, challenges, and contextual consequences from this perspective.
Do not forget to write a summary paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix F ‘Logistics Performance Index’
How to complete: Research (for example but not limited to) the above index and write your interpretation of the target country’s performance, challenges, and contextual consequences from this perspective.
Do not forget to write a summary paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix G ‘Risk Assessment’ (RA)
How to complete: research, assess, and describe the Top-5 potential risks for this venture. Then place [drag-and-drop] the numbered stars (labelled 1-5) to the applicable grid-position. That is, locate each star regarding the probability of an event to occur and the level of severity (consequence) for the company should it occur. Finally, describe and recommend how to mitigate each of these risks.
Short-term (ST) = 6 months Medium-term (MT) = 12-24 months Long-term (LT) = 24 months
R. # Time
frame Risk description: Recommended Mitigation:
1
2
3
4
5
Appendix H ‘Tactical Procurement Plan’ (TPP)
How to use TPP (i.e., the Kraljic) Model: Once you selected your market entry mode into the host-nation marketplace, decide what properties each of your three core input categories (the fruit/berries; milk/cream/sugar; packaging material) display. For instance, whether packaging have a high/low importance in combination of high/low complexity. Map these input categories into correct quadrant [drag-and-drop] and assess the impact in your logistic plan (report).
Do not forget to write a summary paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix ‘I’ ‘Customer Description and Cluster Locations’
How to complete: Research the number of target customers that exists in this country. Checkpoint: who are your customers? How many customers do you need to reach your revenue targets? Remember to be specific regarding customer categories. You should only research the specified category. Then, plot them on a map to ‘see’ where your clusters are. I.e., in which cities/areas do most customers (not end-users) reside? Then measure the distance from your main HQ/Warehouse/Distribution center to each of these customer clusters (i.e., by road (km and time); train, sea, air cargo).
Do not forget to write a COMPREHENSIVE paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix J ‘Logistic Network and Locations’
How to complete: given your overall business needs (number of customers to service, inventory etc.), what type of warehouses do you need (inventory aspects)? How many warehouses do you need (locations)? What category of warehousing do you need (technical aspects)?
Do not forget to write a COMPREHENSIVE paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix K ‘Description of Transportation modes’
How to complete: Use all the information from the other indexes and describe what type of transportation mix you need ensure your logistic objectives. Remember that you will always need more than one transportation mode or type.
Do not forget to write a COMPREHENSIVE paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix L ‘Description of your Value-Chain’
How to complete: Briefly describe (two-three paragraphs) each of the value-chain steps/components. That is, how they apply in this case (i.e., your structure). Cover how you intend to design, operate, and manage each of them. Remember to cover both capacity (input and production) and capability (output to serve your market). Be specific as they are NOT the same thing.
Do not forget to write a COMPREHENSIVE paragraph of this section that address what it means in this case e.g., what it translates to for your business decisions.
Appendix M ‘Warehouse size and design’
How to complete: Calculate how many m3 each warehouse needs to store (use the inventory data from your Excel sheet to decide your maximum storage capacity). The number of pallets makes up the total volume, but you also need to consider space for people and forklifts etc. to move around in the warehouse (plus office space, receiving space when offloading trucks at loading docks, space for preparing orders, change rooms, and relax/lunchroom. This appendix should include the above calculations and a drawing of your facility with measurements.
AMN430 Assessment 2 (S2-2022)
INTERNATIONAL OPERATIONS PLAN
“SALVADORBET” is a spin-off venture (fictitious) from “El Sin Rival,” an existing ice-cream company from El Salvador. The head quarter and main production facility of SALVADORBET is in San Salvador, from which they operate in medium scale throughout Central America. They currently license the right to produce 150 metric tons of El Sin Rival’s premium ice-cream (a sorbet) per annum in their production plant which currently are underutilized due to the many societal, political, and market challenges in that region. The sorbet comes in different flavours mostly unique to El Salvador. SALVADORBET has recently expanded their business to the U.S on behalf of El Sin Rival and taken the role to be their licensed international partner.
Using E412 Guar Gum highlights the freshness of the original El Sin Rival dessert range.
https://www.latimes.com/food/story/2019-09-14/el-salvador-sorbet-el-sin-rival
While this business model has been financially successful, they lack necessary skills to embrace further international opportunities. At large, they lack understanding of logistics, the nature of international business and operative management skills. After hiring a new CEO, a former executive at Yum! Brands, Mrs Tina. She has 15 years of IB experience in the FMCG marketplace. Mrs Tina used her network to raise necessary funds ($40mn) towards SALVADORBET ’s international expansion. Once the first IB-expansion step is completed (e.g., ensured successful operations in the first target country) she plans to undertake an IPO and list SALVADORBET on the Sydney Stock-Exchange.
The first week at work, she re-organized SALVADORBET and upgraded the Top Management Team (TMT) with a few specialists through a geocentric HR approach and announced her expansion plans. This is where you enter the picture as the newly hired International Operations Manager (IOM).
From the raised funds, the CEO and CMO decides that AUD $28 million is allocated towards the first expansion phase outside the ‘Americas’. The new TMT have decided to enter six countries in the MENA region in the next four years. The target countries are Egypt, Tunisia, Jordan, Morocco, Algeria, and Saudi-Arabia in that order.
Relocating to Alexandria as an expatriate for three years, your task is to set up SALVADORBET ’s regional HQ, recommend the best capacity approach and implement it, create all needed operational capabilities to successfully operate in the first-priority MENA country. You further need to plan and design all other operations in Egypt so that it enables a later expansion into the five other MENA countries. For example, erect a robust supply-chain, high-quality operations, a logistics system covering the Egyptian needs, securing production volumes (at Home or in the Host Market), and design, build, and implement sales and distribution capability. Make sure you therefore address the input side, the transformation, and the output side of the value-chain in detail. Once the Egyptian operations are productive it must be scalable to successfully enable sales and distribution into the other five target markets. You therefore need to ensure the capability to meet the business metrics: to supply 225 metric tons of sorbet per MENA-market and reach the expected revenue of £480 – 520 million EGP the second fiscal year (FY2). Your potential funds (part of the described funds) in local currency are Egyptian Pounds (EGP) £355 million.
The above capacity is equivalent to 1,800,000 servings of sorbet (approximately). The strategy is to sell directly to the ultra-premium segment (i.e., high-quality upper-end restaurants located in luxury hotels). These will be your customers. The patrons to these restaurants will in turn be their customers. This approach is expected to generate an annual EBIT (operating profit) of $14-16 million AUD for SALVADORBET (representing a net profit target of $10-12 million AUD). Remember to convert monetary components or outcomes measured in EGP to AUD (and vice-versa) at the provided exchange rates. Expect that similar projections, performance, quotas, and outcomes etc. applies in the other target markets as well. The approximate wholesale price is projected to be $20-24 AUD per serving (SKU) at a recommended retail price (RRP) of $40-44 (approximately) per serving.
Conducted market research displays a strong market potential for SALVADORBET’s products in the MENA region indicating a sales spread for the three products of 30%, 10% and 60% (for the Jocote, Tamarind, and Arrayan sorbets respectively) at RRP range £540-560 EGP. While the end-user always is a consumer (B2C) your business transactions always occur in a B2B format (business with the retailers, i.e., your customers). Success in this industry is dependent on logistics excellence, strong customer and supplier relationships, and amazing customer service. To compete with these luxury-niche products, there is a discussion among the TMT of how to best enter the Egyptian market to enable future scalability. They have discussed the following entry modes:
Alt. A: To acquire and convert a Saudi-Arabian sorbet company based in Medina with similar production capacity as the Salvadorian operation. Produce will then be shipped to the Host Market (costs include Host market labour but excludes local (Saudi) labour costs).
Alt. B: Set up a Wholly Owned Subsidiary (WoS) including a purpose-built sorbet production plant somewhere in Egypt with five times the current maximum capacity of the Salvadorian plant (costs include labour).
Alt. C: To enter a Joint-Venture (JV) with a larger ice-cream company located in Casa Blanca and produce the specialty sorbet in their existing production plant and then ship FGI to Egypt (costs exclude labour).
Alt. D: Expand the Salvadorian operations (production capacity) by 300% and export FGI (by sea) to your selected HQ site in Egypt (costs exclude labour).
When considering these common entry mode options as potential avenues that each could be a viable choice (or not), you must first briefly explain what the benefits and issues might be (table format) with each of the four entry-modes in this context (a distinct requirement from your CEO). Select and assess three of the alternatives and compare the financial outcomes of each. Once these tasks are completed, make your capacity decision (i.e., decide which one alternative you finally recommend as the preferred entry-mode) and subsequently make all capability decisions for your selected entry mode to meet your international business expansion objectives. Your job is therefore to make specific, detailed, and justified decisions based on -among other things- the ‘Income Statement’ and the ‘Strategic Profit Model’ outcomes, the risk- and procurement analysis etc. You must also draw and explain a comprehensive and detailed model of your recommended value-chain (covering all components thereof) as well as all the required foundation IB research as described in the appendices list.
Assume your HR needs are 63 FTE in the Host Market (monthly salary £13,500 per FTE + twenty-five per cent social costs) to get your MENA expansion operative in the first Host Market (apart from costs listed in the spreadsheets, these FTEs might be part of your budget). Assume that your team (the staff) jointly have the correct job skills and language capabilities (English, French, and Arabic) so that they as a team are capable to perform the different organizational functions and tasks as you decide. Yet, you need to decide in which warehouse, DC, cross-docking facility etc they should work in. Further, these location decisions must be based on your customers locations.
Additional operating information is provided in the provided excel-spreadsheets. Remember, your decisions should not rest upon costs or profit outcomes alone.
Good Luck with your assignment and your new job!
