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Value Chain

grocery chain: How many checkouts did the old system provide in a shift

1. A grocery chain is considering the installation of a set of four self-checkout lanes. The new self-checkout lane setup will replace two old cashier lanes that were staffed by a cashier and bagger on each lane. They work 8-hour shifts. For the new self-checkout system, one cashier staffs all four self-checkouts (answering ques

Creating Value...

Michael Porter proposed a tool, the value chain, for identifying ways to create more value. According to the value chain model, every company is a combination of activities that are performed to design, produce, market, deliver, and support their products. Identify the types of activities that would create value within the organ

You are now the Managerial Accountant for Krunchy Kreme

You are now the Managerial Accountant for Krunchy Kreme, a specialty doughnuts chain that specializes in, you guessed it, Crunchy Doughnuts. You have the option of preparing a static or flexible budget for the year. In your first year, what type of budget would help the business the most, and why? After five years of being in

Scanning the Environment: Grocery Store Chain Marketing

Scanning the Environment 1. Environmental Scanning and Industry Analysis 2. Internal Scanning and Organizational Analysis 3. Why do an External Analysis? You are a marketing executive at a grocery store chain and have been asked by your supervisor to evaluate the positioning of two of your major competitors, relative newco

Supply Chain Process Development and Design Issues

1. I was watching a show recently on Boeing and the new plane that they just launched they faced numerous problems because of assembling parts in different countries they had a lot of issues with quality of the products. Is there a metrics or process development and design issue? What are your thoughts? 2. What is the value

Pepe began to produce and sell denim jeans in the early 1970s in the United Kingdom and has achieved enormous growth. Pepeâ??s success was the result of a unique approach in a product market dominated by strong brands and limited variety. Pepe presented a range of jeans styles that offered a better fit than traditional 5-pocket Western jeans (such as those made by Levi Strauss in the United States)â?"particularly for female customers. The Pepe range of basic styles is modified each season, but each style keeps its identity with a slightly whimsical name featured prominently on the jeans and on the point-of-sale material. Variations such as modified washes, leather trim, and even designer wear marks are applied to respond to changing fashion trends. To learn more about Pepe and its products, visit its Web site at http://www.pepejeans.com. Pepeâ??s brand strength is such that the company can demand a retail price that averages about Ã?£45 ( Ã?£1 = $1.6 ) for its standard products. A high percentage of Pepe sales are through about 1,500 independent outlets throughout the United Kingdom. The company maintains contact with its independent retailers via a group of approximately 10 agents, who are self-employed and work exclusively for Pepe. Each agent is responsible for retailers in a particular area of the country. Pepe is convinced that a good relationship with the independent retailers is vital to its success. The agent meets with each independent retailer three to four times each year in order to present the new collections and to take sales orders. Because the number of accounts for each agent is so large, contact is often achieved by holding a presentation in a hotel for several retailers. Agents take orders from retailers for six-month delivery. After Pepe receives an order, the retailer has only one week in which to cancel because of the need to place immediate firm orders in Hong Kong to meet the delivery date. The company has had a long-standing policy of not holding any inventory of jeans in the United Kingdom. After an order is taken and confirmed, the rest of the process up to delivery is administered from the Pepe office in Willesden. The status of orders can be checked from a Web site maintained by Pepe. The actual orders are sent to a sourcing agent in Hong Kong who arranges for manufacturing the jeans. The sourcing agent handles all the details associated with materials, fabrication, and shipping the completed jeans to the retailer. Pepe has an outstanding team of young in-house designers who are responsible for developing new styles and the accompanying point-of-sale material. Jeans are made to specifications provided by this team. The team works closely with the Hong Kong sourcing agent to ensure that the jeans are made properly and that the material used is of the highest quality. A recent survey of the independent retailers indicated some growing problems. The independents praised the fit, quality, and variety of Pepeâ??s jeans, although many thought that they had become much less of a trendsetter than in their early days. It was felt that Pepeâ??s variety of styles and quality were the companyâ??s key advantage over the competition. However, the independents were unhappy with Pepeâ??s requirements to place firm orders six months in advance with no possibility of amendment, cancellation, or repeat ordering. Some claimed that the inflexible order system forced them to order less, resulting in stockouts of particular sizes and styles. The retailers estimated that Pepeâ??s sales would increase by about 10 percent with a more flexible ordering system. The retailers expected to have some slow-moving inventory, but the six-month order lead time made it difficult to accurately order and worsened the problem. Because the fashion market was so impulsive, the current favorites were often not in vogue six months in the future. On the other hand, when demand exceeded expectations, it took a long time to fill the gap. What the retailers wanted was some method of limited returns, exchange, or reordering to overcome the worst of these problems. Pepe was feeling some pressure to respond to these complaints because some of Pepeâ??s smaller competitors offered delivery in only a few days. Pepe has enjoyed considerable financial success with its current business model. Sales last year were approximately Ã?£200M. Cost of sales was approximately 40 percent, operating expenses 28 percent, and profit before taxes nearly 32 percent of sales. The company has no long-term debt and has a very healthy cash position. Pepe was feeling considerable pressure and felt that a change was going to be needed soon. In evaluating alternatives, the company found that the easiest would be to work with the Hong Kong sourcing agent to reduce the lead time associated with orders. The agent agreed that the lead time could be shortened, possibly to as little as six weeks, but costs would increase significantly. Currently, the agent collects orders over a period of time and about every two weeks puts these orders out on bid to about 1,000 potential suppliers. The sourcing agent estimated that costs might go up 30 percent if the lead time were shortened to six weeks. Even with the significant increase in cost, consistent delivery schedules would be difficult to keep. The sourcing agent suggested that Pepe consider building a finishing operation in the United Kingdom. The agent indicated that a major retail chain in the United States had moved to this type of structure with considerable success. Basically, all the finishing operation did for the U.S. retail chain was apply different washes to the jeans to give them different â??wornâ?? looks. The U.S. operation also took orders for the retail stores and shipped the orders. The U.S. firm found that it could give two-day response time to the retail stores. The sourcing agent indicated that costs for the basic jeans (jeans where the wash has not been applied) could probably be reduced by 10 percent because the volumes would be higher. In addition, lead time for the basic jeans could be reduced to approximately three months because the finishing step would be eliminated and the orders would be larger. The Pepe designers found this an interesting idea, so they visited the U.S. operation to see how the system worked. They found that they would have to keep about six weeksâ?? supply of basic jeans on hand in the United Kingdom and that they would have to invest in about Ã?£1,000,000 worth of equipment. They estimated that it would cost about Ã?£500,000 to operate the facility each year. They could locate the facility in the basement of the current Willesden office building and the renovations would cost about Ã?£300,000. Q U E S T I O N S 1 Acting as an outside consultant, what would you recommend that Pepe do? Given the data in the case, perform a financial analysis to evaluate the alternatives that you have identified. (Assume that the new inventory could be valued at six weeksâ?? worth of the yearly cost of sales. Use a 30 percent inventory carrying cost rate.) Calculate a payback period for each alternative. 2 Are there other alternatives that Pepe should consider?Pepe began to produce and sell denim jeans in the early 1970s in the United Kingdom and has achieved enormous growth. Pepeâ??s success was the result of a unique approach in a product market dominated by strong brands and limited variety. Pepe presented a range of jeans styles that offered a better fit than traditional 5-pocket Western jeans (such as those made by Levi Strauss in the United States)â?"particularly for female customers. The Pepe range of basic styles is modified each season, but each style keeps its identity with a slightly whimsical name featured prominently on the jeans and on the point-of-sale material. Variations such as modified washes, leather trim, and even designer wear marks are applied to respond to changing fashion trends. To learn more about Pepe and its products, visit its Web site at http://www.pepejeans.com. Pepeâ??s brand strength is such that the company can demand a retail price that averages about Ã?£45 ( Ã?£1 = $1.6 ) for its standard products. A high percentage of Pepe sales are through about 1,500 independent outlets throughout the United Kingdom. The company maintains contact with its independent retailers via a group of approximately 10 agents, who are self-employed and work exclusively for Pepe. Each agent is responsible for retailers in a particular area of the country. Pepe is convinced that a good relationship with the independent retailers is vital to its success. The agent meets with each independent retailer three to four times each year in order to present the new collections and to take sales orders. Because the number of accounts for each agent is so large, contact is often achieved by holding a presentation in a hotel for several retailers. Agents take orders from retailers for six-month delivery. After Pepe receives an order, the retailer has only one week in which to cancel because of the need to place immediate firm orders in Hong Kong to meet the delivery date. The company has had a long-standing policy of not holding any inventory of jeans in the United Kingdom. After an order is taken and confirmed, the rest of the process up to delivery is administered from the Pepe office in Willesden. The status of orders can be checked from a Web site maintained by Pepe. The actual orders are sent to a sourcing agent in Hong Kong who arranges for manufacturing the jeans. The sourcing agent handles all the details associated with materials, fabrication, and shipping the completed jeans to the retailer. Pepe has an outstanding team of young in-house designers who are responsible for developing new styles and the accompanying point-of-sale material. Jeans are made to specifications provided by this team. The team works closely with the Hong Kong sourcing agent to ensure that the jeans are made properly and that the material used is of the highest quality. A recent survey of the independent retailers indicated some growing problems. The independents praised the fit, quality, and variety of Pepeâ??s jeans, although many thought that they had become much less of a trendsetter than in their early days. It was felt that Pepeâ??s variety of styles and quality were the companyâ??s key advantage over the competition. However, the independents were unhappy with Pepeâ??s requirements to place firm orders six months in advance with no possibility of amendment, cancellation, or repeat ordering. Some claimed that the inflexible order system forced them to order less, resulting in stockouts of particular sizes and styles. The retailers estimated that Pepeâ??s sales would increase by about 10 percent with a more flexible ordering system. The retailers expected to have some slow-moving inventory, but the six-month order lead time made it difficult to accurately order and worsened the problem. Because the fashion market was so impulsive, the current favorites were often not in vogue six months in the future. On the other hand, when demand exceeded expectations, it took a long time to fill the gap. What the retailers wanted was some method of limited returns, exchange, or reordering to overcome the worst of these problems. Pepe was feeling some pressure to respond to these complaints because some of Pepeâ??s smaller competitors offered delivery in only a few days. Pepe has enjoyed considerable financial success with its current business model. Sales last year were approximately Ã?£200M. Cost of sales was approximately 40 percent, operating expenses 28 percent, and profit before taxes nearly 32 percent of sales. The company has no long-term debt and has a very healthy cash position. Pepe was feeling considerable pressure and felt that a change was going to be needed soon. In evaluating alternatives, the company found that the easiest would be to work with the Hong Kong sourcing agent to reduce the lead time associated with orders. The agent agreed that the lead time could be shortened, possibly to as little as six weeks, but costs would increase significantly. Currently, the agent collects orders over a period of time and about every two weeks puts these orders out on bid to about 1,000 potential suppliers. The sourcing agent estimated that costs might go up 30 percent if the lead time were shortened to six weeks. Even with the significant increase in cost, consistent delivery schedules would be difficult to keep. The sourcing agent suggested that Pepe consider building a finishing operation in the United Kingdom. The agent indicated that a major retail chain in the United States had moved to this type of structure with considerable success. Basically, all the finishing operation did for the U.S. retail chain was apply different washes to the jeans to give them different â??wornâ?? looks. The U.S. operation also took orders for the retail stores and shipped the orders. The U.S. firm found that it could give two-day response time to the retail stores. The sourcing agent indicated that costs for the basic jeans (jeans where the wash has not been applied) could probably be reduced by 10 percent because the volumes would be higher. In addition, lead time for the basic jeans could be reduced to approximately three months because the finishing step would be eliminated and the orders would be larger. The Pepe designers found this an interesting idea, so they visited the U.S. operation to see how the system worked. They found that they would have to keep about six weeksâ?? supply of basic jeans on hand in the United Kingdom and that they would have to invest in about Ã?£1,000,000 worth of equipment. They estimated that it would cost about Ã?£500,000 to operate the facility each year. They could locate the facility in the basement of the current Willesden office building and the renovations would cost about Ã?£300,000. Q U E S T I O N S 1 Acting as an outside consultant, what would you recommend that Pepe do? Given the data in the case, perform a financial analysis to evaluate the alternatives that you have identified. (Assume that the new inventory could be valued at six weeksâ?? worth of the yearly cost of sales. Use a 30 percent inventory carrying cost rate.) Calculate a payback period for each alternative. 2 Are there other alternatives that Pepe should consider?

Pepe began to produce and sell denim jeans in the early 1970s in the United Kingdom and has achieved enormous growth. Pepeâ??s success was the result of a unique approach in a product market dominated by strong brands and limited variety. Pepe presented a range of jeans styles that offered a better fit than traditional 5-pocket

Describe's Mozilla's value chain

See attached file. Describe's Mozilla's value chain - what are their key activities? Why? What are Mozilla's core competencies and key resources? What are Mozilla's generic and grand strategies? What is Mozilla's 'crowdsourcing' model? How does this model 'fit' Mozilla's long-term goals and objectives? What problems di

* What should be the role of designer brands as part of the fashion merchandise selection process for an upscale women's clothing specialty store chain? * Explain the role of designer brands in category management. * Why do designer brand owners so aggressively fight knockoffs, even though many consumers know they are less costly copies?

* What should be the role of designer brands as part of the fashion merchandise selection process for an upscale women's clothing specialty store chain? * Explain the role of designer brands in category management. * Why do designer brand owners so aggressively fight knockoffs, even though many consumers know they are less

Threat of entry of large chain store to small hardware store

The owner of a small hardware store - the only one in a medium-sized town in the mountains - has just learned that a large home improvement chain plans to open a new store nearby. The owner knows you are studying marketing at Columbia Southern University and has asked for your advice on how to plan for this new competitive threa

The Organization's Supply Chain and Its Financial Chain

1. What is the relationship between the organization's supply chain and its financial supply chain? 2. How does the supply chain differ from the value chain? 3. What do we mean by "supply chain management" and is this concept relevant to the financial supply chain? What is the set of relationships here? How do the relati

Hedging and Forecasting in Global Value Chains

1) What are some hedging strategies in global value chain management? What is the difference between any two of the common strategies available for global value chain management? What criteria might an organization use to select the most appropriate hedging strategy? 2) What are the major forecasting techniques used in global

Major hotel chain and one cruise line

Using credible sources, choose 1 major hotel chain and one cruise line, and discuss a change that each has made in the last 2 years to keep up with current industry trends. What outcomes were the companies trying to reach? If you were the manager of either the hotel chain or on the cruise line, what is another change you w

Apple Inc. Cost accounting exercise 1-15

See attached file for proper format. Value Chain and Classification of Costs (L.O. I): Apple, Inc. incurs many types of costs in its operations. Required: For each cost in the following table, identify the stage in the value chain where this cost is incurred. Cost

New business network versus traditional value chain approach

Please I need help in building my research on the following: Read the article: Van Heck, E. & Vervest, P. (2007) Smart business networks: How the network wins, 'Communications of the ACM, 50(6), pp. 28-37, the guide to computer literature. Identify and analyse the key characteristics that comprise a smart business netwo

Garcia's performance evaluation system

Diego Garcia owns a chain of travel goods stores. Last year, his sales staff sold 10,000 suitcases at an average sale price of $150. Variable expenses were 80% of sales revenue, and the total fixed expenses were $110,000. This year, the chain sold more expensive product lines. Sales were 8,000 suitcases at an average price of

Ford, Value Chain, and Profitability

Please see attached question for the full version.... In Strategy Capsule 2.3, we observed that Ford's profitability was low primarily because it costs were high. Using the value chain, what suggestions do you have to help Ford lower its cost of producing cars?

What is the Value of a Smaller Chain

Brau Auto, a national autoparts chain, is considering purchasing a smaller chain, South Georgia Parts (SGP). Brau's analysts project that the merger will result in the following incremental free cash flows, tax shields, and horizon values: Year 1 2 3 4 Free cash flow $1 $3 $3 $7

Describe operational plan for a windmill venture in Japan

Summarize an operational plan for a windmill venture (clean energy) in Japan. Include: Operations plan: modes of entry; value chain, such as logistics, purchasing, facilities, infrastructure, and so forth; organizational structure; modes of management; staffing; recruiting; training; compensation; expatriate policy; and cr

Impact of Internet on performance of the global value change

Describe specifically how Volkswagen can achieve the following in a global environment: Assess the impact the Internet has had on the performance of the global value chain relative to Volkswagen and specifically how the internet has increase the flow of time-sensitive information as well as complete information other division

EBay Global Strategy Analysis Case Study

EBay Global Strategy Analysis Case Study Instructions: The Case Study assignment for this class, EBay, addresses issues pertinent to the topics studied in this course. Complete your assigned readings, learning activities and online discussions before you complete the assessment. Prepare a paper discussing Ebay's globalizatio