Business analysis of Merbatty

CIMA Global Business Challenge 2014

MNA206Management Accounting II

Semester2 2013-2014

Mid-term assignment

Content

  1. Background 1.1 Industrial background………………………………………………………….4 1.2 Merbatty’s background……………………………… … … … … … … … … … … … .4 – 5
  1. SWOT analysis 2.1 Strength 2.1.1 Large portion of economic of scale………………………… … … … … … … … … 5 2.1.2 Low involvement rate during tough economic……………………………… … 5 2.1.3 Advantages of naming on the stock market…………………………… … … 5 2.1.4 Improve public image by Charitable work…………………………… … ..5 2.1.5 Latest technology………………………………………………… … … … ..5 2.2 Weakness 2.2.1 Less control of outsourcing interior designers………………………… … .6 2.2.2 Disadvantages of a public limited company……………………….……..6 2.2.3 Narrow produce theoretical accounts and weak gross revenues allocation…………………… … .6 2.3 Opportunities 2.3.2 Five old ages program including new theoretical accounts production………………… … … … .6 2.3.3 Five old ages program including new gross revenues offices…………………… … … … … … .6 2.3.4 Opening of 3rd boat edifice facility………………………………… … 6 2.3.5 Introduction of new technology………………………………………….6 2.4 Threats 2.4.1 Competitors…………………………………………………………… … 7 2.4.2 Restriction of production capacity………………………………… … … … .7
  2. Ratio analysis 3.1 Liquidity ratios………………………………………………………… … … … … 7 3.2 Profitability ratios……………………………………………………… … … 7 – 8 3.3 Efficiency ratios………………………………………………………… … … … .8 3.4 Investing ratios…………………………………………………………… … ..8
  1. Problem analysis 4.1 Accident at work…………………………………………………………..9 – 10 4.2 Rushing boat…………………………………………………………….…10 – 11 4.3 Late bringing of a hull from Topcrest………………………………… … ..11 – 12
  1. Proposals analysis 5.1 New design provider for 3rd boat edifice facility………………….…..12 – 13 5.2 Gross saless staff employment issue…………………………………………………13
  2. Ethical issues 6.1 Rushing boat issue……………………………………………………………..14 6.3 Subsequently bringing from Topcrest issue……………………………………………14
  3. Reference…………………………………………………………………………14

  1. Background1.1 IndustrialEuropean were being the leader of the leisure boat edifice industry until the recent 20 century, the USA and Australia has come in and portion the market as one of the developed luxury boat edifice states. Changes with the times, people live longer and bask more leisure clip, the demand of luxury boats as a consequence addition greatly and correspondingly the quality of leisure boats. The mark clients of luxury boats are major come from the upper category who are affluent and successful. To them, they ever don’t have much restriction on the disbursement to the boat and hence they tend to hold higher criterions of demand on the quality of the boat. That makes the luxury boat industry to be more customer-oriented. On the other manus, with the new station of environmental statute law ( Recreational Craft Directive ) in EU and USA increases the cost of the industry.1.2 MerbattyMerbatty is a luxury boat edifice company which has a 33 old ages history located in the Northern of EU. There are two boat mills locate at the USA and the EU. There are about 2200 employees working in the two mills. It goes public in 2012 and presently issued 120 million portion at monetary value of ˆ2.8. Thus, the shareholding of the president drops to 30 % and the JKL has become the 2nd big shareholding with 28 % shareholding. Merbatty are presently selling 15 types of boats with different sizes in assorted monetary values. Base on the cardinal cost, clients can hold their ain specific direction for the interior design of the boat with extra payment. The edifice procedure varies from three to ten months depending on different theoretical account and size of the boat. Beyond EU and USA, Merbatty employs gross revenues agents worldwide to bring forth gross revenues from different parts of the universe. In twelvemonth 2012, Merbatty had a gross revenues record of 280 boats which account 8 % of the planetary market. The major gross revenues are chiefly come from Flybridge and Cruisers Model which are comparatively lower monetary value theoretical accounts. The EU made up the largest net income proportion with ˆ219 and following by USA made a benefit of ˆ148.
  2. SWOT Analysis2.1 Strengths2.1.1 Large portion of economic of graduated tableDuring 2012, Merbatty have a boats production record of 280 boats which occupy the planetary market portion at 8 % . Therefore could set Merbatty in the competitory advantage.2.1.2 Low involvement rate during tough economicDue to the tough economic system environment, Governments tends to implement quantitative easing pecuniary policy, which increase the supply of money, and lower the involvement rate. Thus would be a benefit to the Merbatty as they enjoy a lower involvement rate on the new loan of ˆ200m.2.1.3 Advantages of naming on the stock marketMerbatty became a listed company in the 2012, it can so bask assorted beginnings of finance.2.1.4 Improve public image by Charitable workAs the president of Merbatty has been ever involved in charitable work, therefore aid Merbatty to do betterment of image over the populace.2.1.5 LatestengineeringMerbatty is presently utilizing the latest engineering, including Computer Numerical Controlled ( CNC ) machining and robotic spray systems. Therefore can assist to cut down the costs of production.2.2 Failings2.2.1 Less control of outsourcing interior interior decoratorsMerbatty decides to outsource several elements of its interior design services. Therefore would take to loss of direction control and merchandise quality jobs.2.2.2 Disadvantages of a populace limited companyEvery coin has two sides, as Merbatty is being a populace limited company, has to portion its net income with outside stockholders and increase its disposal disbursals.2.2.3 Narrow produce theoretical accounts and weak gross revenues allotmentMerbatty is presently selling 15 types of self-praises, which is rather a narrow picks provide to its clients. Therefore may set Merbatty in the competitory disadvantage.2.3 Opportunities2.3.1 Five old ages program including new theoretical accounts productionMerbatty is be aftering to bring forth a much wider scope of new boat theoretical accounts. Thus would assist to work out the failing of non holding adequate diverseness of boat theoretical accounts as rivals which mentioned above.2.3.2 Five old ages program including new gross revenues officesMerbatty will open gross revenues offices in over 20 locations around the universe and to end some gross revenues agents’ contracts. Thus would wider the gross revenues web of the company,2.3.3 Opening of 3rd boat edifice installationThe 3rd boat edifice installation located at the Surania would be a great competitory advantage to the Merbatty. Thus could supply a scope of targeted services to the great demand from Middle East.2.3.4 Introduction of newengineeringMerbatty has introduced the provider evaluation systems and Cardinal Performance Indicators ( KPI’s ) to keep a closer relationship and to construct a long standing relationship with its provider.2.4 Menaces2.4.1 Rivals

Merbatty merely focus on the edifice of boats powered by engines and doesn’t include other types of leisure boats, as a consequence it would restrict its fight towards other boats builders and set its rivals in a competitory advantages.2.4.2 Restriction of production capacityConfronting the increasing demand of luxury boats, the capacity of Merbatty’s two installations would make the impregnation point.

  1. Ratio analysis3.1 Liquidity Ratios

2012

2011

Current ratio

3.15

0.79

3.1.1 Current ratioThe current ratio of 2012 addition quickly from 2011 which from 0.79 to 3.15. The state of affairs reflect that the liquidness degree of the company has a important addition, which means the company has hold more hard currency than that of receivables. Other the other manus, 3.15 is considered to be a excessively high current ratio that shows the Merbatty may non expeditiously utilizing its current assets in coevals of net income.3.2 Profitability Ratios

2012

2011

Net income border

8 %

7 %

ROCE

0.09

0.21

3.2.1 Net income borderThe net income border of Merbatty had a really little addition of 1 % from twelvemonth 2011 to twelvemonth 2012, which explains that the gross revenues status and disbursals incurred is remain changeless for the past twelvemonth.3.2.3 ROCESimilar to the excessively high current ratio, a diminishing ROCE of Merbatty one time once more indicates the inefficiently usage of its capital investings.

3.3 Efficiency Ratio

2012

2011

Asset turnover

0.52

0.80

3.3.1 Asset turnoverA lower plus turnover ratio than old twelvemonth could be a strong grounds that Merbatty is presently utilizing its assets in an inefficient manner.3.4 Investment Ratio

2012

2011

Gearing

0.25

0.40

EPS

0.22

0.66

3.4.1 Gearing ratioA diminishing geartrain ratio would be a positive alteration to the company, which means that the debts of Merbatty had decreased from last twelvemonth. The pitching ratio of Merbatty is 0.25 ( & A ; lt ; 1 ) which can be considered as healthy.3.4.2 EPSMerbatty is presently sing a lessening of EPS while it holding an increasing net income. The dropped EPS is caused by the new issue of portions of Merbatty, as there is no large alterations on its net income generated in both old ages while its portion issued had increased from 2011 ( 30m ) to 2012 ( 90M ) .

  1. Problemanalysis4.1 Accidenct at work4.1.1 Impact of the jobRecently Paulo, a Scotsman of Merbatty, had felt down while he is working on a hull and had broken his leg because he arrived for work high on drug. This reflects that there is non adequate security cheque for bad workers of Merbatty. Besides on the other manus shows that the working guideline is non perform purely. When employees are injured during occupation, it may do unhappiness and fright in workers around the on the job environment. Employees may be hesitating to go on with the undertaking environing the inflectional morphology topographic point. Therefore would damage the morale of employee. Thereafter, Merbatty has to manage the aftercare works with utmost cautious because the populace, including the brotherhood, are following really closely on the issue. Once the public consider the company makes improper actions, it will convey serious amendss to the image and repute of the company. In November 2009, 6 workers were unluckily fall down from a faulty lift and caused decease during the building procedure of the International Commerce Centre in Hong Kong. The deceased’s households urged the developer, Sun Hung Kai Properties, to explicate the accident. The developer non simply provided no account but besides tried to cover the renters in nearby. Such improper managing drawn the choler of the populace, the brotherhood so raised presentations to knock the unscrupulous of the Sun Hung Kai Properties.4.1.2 Solutions1. Merely to let go of a compensation to Paulo and to cover the accident to the populace. 2. To supply a good aftercare ( compensation and medical service ) to Paulo and to apologise to the populace about the improper implement of safety guideline and promise to better.4.1.3 RecommendationSolution 2 are recommended as it benefits the company in both short term and long term. In short term, supplying a good aftercare to the victim could keep employees’ morale and do the paused undertaking continue. In long term, it is a good manner to apologise before any public sentiment come out. Because this could avoid the company image being damaged by ballyhoos.4.1.4 ProblemBy solution 1, if it is running good with the covering work on the accident, there would non be a rigorous feedback from the populace, therefore aid to cut costs and shorten the stairss it may necessitate to take comparison to solution 2. The company on the other manus has to bear the hazard that if the covering work is fail, there would be an irreversible harm to the company.4.2 Rushing Boat4.2.1Impact of the job

Jesper is the market manager of Merbatty. He has an thought to advance Merbatty’s top boat P-3000 through rushing boat. Although the rushing boat cost a batch to Merbatty, Jesper has do a computation and analysis on the P-3000 costing. He believes that the gross revenues of P-3000 after the publicity through rushing boat can cover the cost spent on rushing boat. However, the president of Merbatty Alberto feels dismayed about the event of rushing boat. Alberto thought passing on rushing boat to advance the boat of Merbatty is blowing of money while without any warrant of success.

4.2.2 Solving the job

  1. Alberto and Jesper can hold a meeting to discourse about the issue about the racing boat event. Other stockholder can give advices on the issue and happen out the best manner.
  2. Other than publicity through rushing boat, there are still a batch of events that can advance Merbatty. May be they can do some advertizement or go to some boat exhibition to catch notice.

4.2.3 RecommendationSolution 1 is the best options, other stockholders have the rights to vote for the proposal and advices in the meeting. Merely two work forces thoughts are non plenty, may be the proposal works and attract batch of clients.

4.2.4 Problem

Solution 2 may set the company into a high hazard of loss because of non guaranteed of net income.4.3 Late bringing of a hull from Topcrest4.3.1 Impact of the jobAs there are non a batch of providers picks that Merbatty can take and the contract was excessively moneymaking to turn down, the best thought is to trust on Topcrest. A late hull deliver would give a bad repute to the concern. However, Topcrest offered a sensible compensation to Merbatty, which can work out the merbatty’s short term fiscal jobs. For illustration, a figure of little parts such as chemical coating or adhesive agents such as capacitive providers frequently have to confront Apple ‘s demanding demands and forcing for lower monetary values. Apple will inquire the makers “ if they have the ability to make this? Or we will happen another provider, ” It can normally coerce providers into entry. Confronting such a big individual concern, the bulk of providers will be pushed to the bound of the production line, and Apple can therefore cut down costs. This is in fact the bulk of big companies control the agencies of cost. Furthermore, for case iphone 6 needed sapphire glass for the phone. There is non a batch of companies sell sapphire glass in the universe and making the criterions of Apple is more hard. This shows Apple has no better trades from other companies, merely like Merbatty has no better options than Topcrest.4.3.2 Solving the job

  1. Merbatty could take another hull provider.
  2. Merbatty can accept the offer by Topcrest. In the interim, Merbatty can happen other more dependable providers.
  3. If Topcrest and Merbatty have a contract and Topcrest failed to finish the offer which includes good quality and warrant no late bringing, Merbatty can action for breach of contract and possible get more compensation. The compensation they get can put on other dependable providers.

4.3.3 RecommendationShort term

Finding other providers in such short clip would be hard, hence Merbatty should accept the offer by Topcrest. They have good quality of hulls and besides would give compensate for the hold. If Merbatty decides to happen other providers, they can non vouch that the hulls would get on clip and they would hold a higher loss.

Long term

Merbatty should happen more different providers and negotiate to hold the best trade for the hereafter. They can trust on more providers and avoid late bringing.

4.3.4 Problem

Solution 2 should be the best option to work out the job. First, it can work out the job instantly that hull has non plenty to utilize in Merbatty. Second, Merbatty can still happen better providers to avoid the job in the hereafter in the interim.

  1. Proposalsanalysis5.1 New design provider for 3rd boat edifice installation5.1.1 Background of proposalThe 3rd boat edifice installation located in Surania was approved by Merbatty Board on March 2012. Lukas Dian has provided the background information of two possible design companies that willing to work for the new Surania Facility, the Merbatty has to do the pick.5.1.2 Discussions1. Cooper Design

Cooper Designs is a Western European multinational boat interior design concern company. It has a new office which is located in Dubaria, 200 stat mis off from the Suranian boat edifice installation. It is a successful designing company supplying high quality services and its designs are winning the best modern design awards. Furthermore the Cooper make full usage of computing machine assisted design techniques ( CAD ) and provides an extranet service leting clients to remotely see the current design for their boat at any clip.

2. Arabian Insides

Arabian Interiors is a four year-old company but it has won acknowledgment at the 2013 Dubaria international boat show for the best Arabian designed boat inside. The company’s employees are local people who are good educated and full trained in the usage of the latest CAD systems.5.1.3 RecommendationsFor suggestion to Merbatty, it is a good manner for it to take the Arabian Interiors. Although it has been founded for four old ages, it already got an award from the 2013 Dubaria international boat show. The hazard of utilizing this interior decorator is lower because the employees are well-training to the latest Cad system.5.2 Gross saless staff employment issue5.2.1 Background of the proposalThe Merbatty gross revenues manager, Mr. Stefan Gil and HR manager Marie Lopp had discussed about employ gross revenues staff as oppose to agents.5.2.2 Discussions1. Opinion of Mr. Gil

Gross saless agents are more motivated to sell the merchandises. And most of the boat merchandising concerns have been used this for twelvemonth and Merbatty should seek to maintain the state of affairs if there is no profitable issues.

2. Opinion of Miss Lopp

The growing of Merbatty boats’ monetary value presents are more low-cost by the clients. Most of the mark market of agents are non the same as Merbatty’s mark while the gross revenues staff of Merbatty can indicating to the company’s chief market.5.2.3 RecommendationIt is a good suggestion to maintain the state of affairs now as agents have their ain client dealingss that Merbatty do non hold at this minute, it may cut down its fight and diminish the gross revenues of merchandises if Merbatty lost its gross revenues agents.

  1. Ethical issues6.1 Rushing boat issueIn the instance, Jesper involves his opportunism to asseverate himself on the concern and is non objectivity plenty. Without any confirmed analysis and grounds, Jesper assert that there will be a excess gross revenues of the P-3000. Thus would set the stockholders on a high hazard to loss.6.2 Subsequently bringing from Topcrest issueIn the instance, the late bringing from Topcrest would impact the repute of Merbatty because therefore may do a late bringing of Merbatty to its clients. The careless of Topcrest shows that it merely base on its ain involvement and neglect the honestness between Topcrest and Merbatty.
  2. MentionNg, Maggie. Death of 6 at ICC an accident, medical examiner regulations. ( 11stDec, 2010 ) hypertext transfer protocol: //www.scmp.com/article/733022/death-6-icc-accident-coroner-rules ( visited 23rdMarch 2014 )

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