GBCCasereport.docx

GBCCasereport.docx

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GBCCasereport

CIMA英国皇家特许管理会计师公会（CharteredInstituteofManagementAccountants）T.4008204080E.gbc.china@Web.

[ReportforJot]

[ThisreportispreparedbyTeam:

Philosophy

FormJinanUniversity]

Teammember:

Teamleader:

LumanYu

Teammember1:

PeidanHong

Teammember2:

ChengPeng

Teammember3:

WenweiLin

Content

1.IntroductionofJot

2.VisionandmissionofJot

3.PESTAnalysisofJot

4.SWOTAnalysisofJot

5.M.E.Porter’s5ForcesAnalysisofJot

6.Discussionofissues

7.Ethicalissues

Appendix

Appendix1:

ConcreteSWOTAnalysis

2.

3.

4.

5.

6.

1.IntroductionofJot

Establishedin1998inEuropebyacouple,Jotisatoycompanywhichdesignsandsellstoystoretailersglobally.Facedwithsomeissues,ithastomakedecisionsandsolvethem.

Jothasmadeafive-yearplanbasedonapre-settargettoexpanditsmarket,andseveralproposalsaremadetoreduceoperatingcosts,whichaimsathelpingitmeettheplan.Moreover,withthehopeofgettinglistedinLondonStockExchange,Jothastochoosethebestoneamongthreewaystoachieveit.Additionally,JotneedstoconsiderthebestwaytoinvestinHY,oneofitsoutsourcedmanufacturers.ItalsohastodealwiththeproblemoftheacquisitionofHHSGroup,oneofwhosesubsidiaryisJot’soutsourcedmanufacturers,aswellastheproblemsoftheoperationchangeandtheresignationofitsmarketingdirector.

2.VisionandmissionofJot

Vision:

becomeoneoftheleadersoftheworldtoycompanies.

Mission:

makeeverychildplayandstudyinthesafeandhealthyenvironment.

Financialcontrol

Permeantfinancialadvantage

Client

Lastingsatisfaction

Progress

Influenceandprocess,serviceefficiencyand

Communityandqualityenvironment

givethechildcareforeverymanageall

ahappyandsafechildlikecaringassets

Childhoodforourowneffectively

children

Staffandlearning

Createagoodatmosphere

3.PESTAnalysis:

Political

ØStressingsafety,andpayingattentiontoquality.EuropeanUnion（EU）lawrequiresthatalltoyswhicharetobesoldinanyEUcountrymustcarrythe“CE”marking.

ØFacedwithfavorablepoliticalenvironment.CreatedastablepoliticalenvironmentintoyindustrybyOccident.

ØOccidenthasarelativeperfectlegalsystem,whichisbeneficialtoprotectthelegitimateinterestsofthetoyindustry.

Economic

ØEuropeandAmericaregioneconomyisinrecession,pendingeconomicrecovery.

ØHavingbroadtheEuropeanandAmericanmarketandahugepotentialmarketinAsia,JotistrytoexpandtheRussianandtheAsiantargetmarket.

ØWiththedeepeningofeconomicglobalization,internationaltradegetsalong-termdevelopment,whichmeansgreatsignificancetotoyindustry.

ØChina’sstrongeconomicgrowthattractedmanytoymanufacturers’eyes,whileglobalwagecostsarealsoontheincrease.

Social

ØCorporatesocialresponsibilities（CSR）becomemoreandmoreimportanttotoyindustry.

ØAslifeandculturallevelenhancement,toysbecomemorepopular,particularlyelectrictoysandintelligencetoys.

Technological

ØWiththecoreoftheproducttechnologyisthekeyfactorofoccupationofthemarket.Manytoycompanieshavepaidmoreattentiontothedesignandresearch&developmentofthenewproduct.

ØWiththerapiddevelopmentoftheinternet,ITsystemprovidesaconvenientmarketingchanneltotoycompany.

ØInnovationcultureandcreativeabilitybecomeessentialfactorstotoycompanydevelopment.

4.SWOTAnalysis

Strengths

Weakness

Opportunity

Threat

FinancialControl

●Financialstrength

●Thefinancial

revenueincreasesyearbyyear

●Debtcapacity

●Highfinancial

costcollection

system

●Peopleare

Willingtoinvest

●Costpressure

●Alargenumberofcapitaldemand

Client

●Make

outstanding

achievementsinchildren'selectronictoysaspects

●Thecustomerissatisfiedwith

innovativeproducts

●CustomersarenotfamiliarwiththebrandInadditiontotheEuropeanmarket

●Salesintheseasonimbalance

●Relyonfair

●ExpandtheAsianmarket

●Market

Competitionisintense

●Customer

preferenceschangefast

Processes

●Perfect

production

applicationsystem

●Sound

outsourcing

system

●NotasoundITsystem

●Inventory

management

●Expandthe

salessystem

●Nocore

electronic

LearningandGrowth

●Company

executives

havedeep

qualifications

●Organization

culture

●Seniorstaff

changes

●Incentivesystem

●Culturalchangeaction

●Notraining

mechanism

5.M.E.Porter’s5ForcesAnalysis

M.E.Porter’s5Forces

Weight

Analysis

Competitors

High

Largenumberofcompetitorsofvarioussizeswhichdesignandselltoystoretailersglobally.

Entrants

Low

Thecompanyisamultinationalcooperation,soitwillnotbeeasyfortheentrantstobecomesuchalargescale.

Suppliers

Medium

Factorsloweringtheforce:

20off-shoreoutsourcedmanufacturingcompanies,thereareacompetitionamongthem.

Repeatbusiness,whichmeansJotanditsoutsourcedmanufacturershaveagoodrelationship.

OutsourcedmanufacturersbasedinChina:

wagerateincrease,somecompanystartedtoconsidernear-shoring.

Factorsincreasingtheforce:

theoutsourcedmanufacturersalsomanufactureforothertoycompanies,sotheydon’tdependonJot’sorder.

“Applivation-specificintegratedcircuitscomponents”:

jothavenoagreementswiththeproducers,butoutsourcedmanufacturershaveon-goingsupplycontracts,whichmeansJothavetorelyonitsoutsourcedmanufacturers.

Licensedtoys:

10%ofsales,Jothavetonegotiatewiththelicensors.

Buyers

High

Factorsincreasingtheforce

Jotdependonordersgeneratedfrombuyersattendingtoyfairs.

ManylargetoyretailersacrossEurope:

Jotisverydependentonthem.

Sevenlargeretailershaveover68%ofjot’ssale

Factorsloweringtheforce

Stillhave350othercustomers.

Substitutes

Therearealotofillegalcopiesofthedesign.

6.Discussionofissues

6.1IssuesOfInvestmentInHY:

vThecompanyHY'soverallevaluation:

Advantages

ØHYpossessover100ITspecialistsandaround500supportivestaff.

ØFocusingonthedesignandresearch&development,whichmakeHYlauncheditslatestversionofvideogamecalled“TheSuperSpaceWarrior”.

ØHYenjoysasubstantialmarketshareinmanyAsianmarketssuchasJapan,Korea,Malaysia,Singapore,TaiwanandHongKong,inadditiontothetraditionalEuropean&NorthAmericanmarkets,andgetslistedrecently.

ØHYwillhaveofferingandfinancing,whichprovidesJotwiththeprivateopportunity.

ØHavingnewproductcoretechnology,HYoperatesasJot’sstrategicpartners.

Disadvantages

ØInthelastfinancialyear,HYhasanunauditedlossofC$1.03millionwhileitsstockpricehasbeenpummeled.

ØFacedwithmoreandmoresimilarcompetitors,HY’scompetitivepressureisincreasingsteadily.

vThecompanyJot'sneedsandfinancingability:

Jot'sneeds

ØJotneedstoinvolveinthedevelopmentof“TheSuperSpaceWarrior”,participateonHY’stechnicalandresearchtoimproveJot’sproductquality.

ØJotneedstoachievecompetitiveedgesovertherivalsforabiggermarketshareintheAsianmarkets.

ØJotisplanningtoconvertatleast21%ofHYsharessothatitcaninfluenceandparticipateinHY’smarketingdevelopmentandpolicy.

Financingability

ØJothasthreebankloanstotalling€1,600,000.

ØJothastotalassets€5,378,000andcurrentassets€4,628,000intheyearended31December2011（Unaudited）.

ØJothasrevenue€9,866,000andgrossmargin31.9%in2011（Unaudited）.

ØJottrytofinancingthroughgettinglisted.

vInvestmentearningsoutput:

Returnoninvestment

ØExtendingvolumegrowthinAsia.

ØImproveproducts’qualitythroughHY’scoretechnologyandresearch.

ØStrengthenstrategicpartnershipwithHY.

ØThisinvestmentwillprovideJotwithanadditional10%aftertaxcashprofitineachofthecomingyears.

vinvestmentriskevaluation:

RiskweightevaluationofHY

RiskFactors

Weight（0~1）

IncomeLossRisk

0.3

DefaultRisk

0.2

MarketRisk

0.5

InflationRisk

0.3

PolicyRisk

0.1

CorporateManagementRisk

0.4

IndustryRisk

0.3

Sum

2.1

Average

0.3

conclusion

ØBecausetherisksubjectiveweightshows0.3<0.5,it’sworthinvestingHY.

vConclusionandinvestmentpriorities:

Conclusion

ØAbovevalueevaluationofinvestmentshowsthatJotshouldinvestandholdatleast21%HYshares.

Investmentpriorities

SeverA

Jotone-timebuysHY21%shares,thatis,1137500unitscommonshare.

Jotneedtospend:

1137500（units）times0.12（C$/units）equalsC$136500.

SeverB

Phasestobuy:

Atfirst,Jotbuys1/2times1137500（units）equals568750（units）.Jotcanget568750（units）commonshareand284375sharepurchasewarrant,whichisequalto284375（units）commonshare.ThistimeJotneedtospend568750（units）times0.12（C$/units）equalsC$68250.

ThenJotuses284375sharepurchasewarranttoexchange284375（units）commonshare,whichJotneedtospendC$59718.8.ThistimeJotneedtospendtotalC$127968.8.

Compare

SeverBissuperiortoSeverA.

6.2SaleOfJot

Firstly，gettinglistinLondonStockExchangeisnecessary.Asthecompanyisgrowingbiggerandbigger,andseekinganewexpandinginAsianmarketrecently,itwillneedmoremoneytooperatethisstrategy.Also,theIPOofJotcanhelpittoupgradeitsownfinancialsystem.ThedisclosurerequirementscanhelptheJottoimproveitsinternalcontrol.Theymaysacrificepartoftheirownership,buttheycanstillcontrolthecompany.Andthisisthebestwaytofi