8+3 10+2 9+1 8+2 6+1 =50

TASK 1

To, Board of directors

From, Management consultant

Date, dd/mm/yy

Subject, Analysis of macro environment of FM and evaluation of competition in supert market industry.

FM is operating in a very competitive market where there are many local and foreign superstores.
Despite of it FM had given tough time to the market as it survived for more than 100 years ago
operating in a vast market. The following matters are being addressed in this report

a) Analysis of macro environment of FM

Political
Arboria is a wealthy country and there is no evidence of political uncertainties there as foreign stores
are also operating in arboria very well. This gives a very good impact on foreign suppliers to deal with
the stores of Arboria. This factor should be considered as the local suppliers are very small and are being
exploited by all super stores.

Further political preference is also being seen as superstores are being preferred by the government as
less need of butchers and small grocery shops have been seen. The political factor is being very good for
the FM and other super stores but now the government is started to impose some legislations to help
the disabled people and that is completely fine.

Social Cultural
As it is witnessed that the need of butchers and small grocers have been declined this is not only due to
government not regulating superstores but also due to consumer preferences have being changed as
the time passes. They steady growth in the super market industry is being evident as public at large is
being involved in it by not preferring small retailers above the superstores which ultimately create a
downfall for small traders.

Further due to the growth in this sector 2 foreign stores get also attracted to the market as they also see
the potential in the market due to the change in consumer preferences. This will increase the
competition for FM as foreign brands will be operating with quality standards which FM may not be able
to maintain.

Environmental
Some customers are now concerned about the small grocers such as green grocers have been affected
by the stores and people are now complaining for not having the fresh goods because of inappropriate
packaging and processes are being done by the stores. The stores especially foreign stores are motivated
to do cost cutting in this regards to give there institutional investor a higher return. These actions are
now being against the stores as public is not accepting the goods from the stores they are willing to pay
high/premium prices but they want good hygiene goods with the proper source.

Not only food process are being rejected by the public but the food miles that is the travel a good has
before going to the shelf of superstores. These issues have now made FM more conscious about
environmental concerns and have also increased the financial risk.

Legal

Consumers are now feeling that the fat- cat managers are exploiting the small suppliers to reduce the
cost as the suppliers don’t have a healthy market of trade. The superstores are increasing their margins
by these means and are not operating ethically which shows a negative impact for future dealings.
Government may impose some strict regulations to regulate these market as it can be seen that the
government has announced a legislation for disabled people which has created an additional cost for the
superstores for making different type of shelfs for the disabled people. The fine of $1,000 is also being
set by government for any incident happened this create a reputational risk also if any incident
happened in FM.

Further FM has increased financial risk as government has also made mandatory contributions into the
pension plan by employer and employee both on equal amounts. The FM has high number of employees
and will be affected more as they are shareholder also. The employees will be provided with dividend
plus salary plus increased contributions in the pension plans.

b) Evaluation of competition in Arboria

Bargaining power of customers

Bargaining power of customers is very low as they have only one type of market left that is super
markets. The market of small traders and butchers is not presented there in a competitive manner.
There is an increased competition in superstores which may increase the bargaining power of customer
but is not very much effective as stores may create a cartel and store prices are fixed so there is no
question of bargaining exist.

Bargaining power of supplier

Bargaining power of supplier is also very low as there are only small suppliers presented in the market
which are being exploited by the superstores. Further it is also witnessed that some stores were forcing
their suppliers to reduce cost so that the profit margins of super store gets increased.

Further due to absence of any other markets supplier have very limited options to sell their goods as
superstore giants are in the market only.
Threat of substitute
As there is weak substitute in the market for superstores i.e. local shops there is low threat of substitute
but due to unethical business practices have been witnessed by public there may be a chance that public
start to react an boycotting the super stores and going for the alternative markets. The threat is not
much likely to happen therefore it should be minimized by taking mitigating actions.

Threat of new entrant

As there is a good growth and potential presented into the superstore market therefore there is greater
opportunity presented for the new entrant however there is a problem that when entering into super
market industry high capital is being required with appropriate geographical strategies and good
marketing strategies. Further to remain competitive into the market new entrant need to penetrate the
market which is not possible as supplier are small in arboria. Further it is also seen that two international
stores have also entered the market and are performing very good because of the advanced consumer
software and data analytics.

TASK 3

Briefing note

FAO Board of directors

From Management consultant

Subject Financial and ethical issue raised by gray about Itrus.

Date dd/mm/yy

Financial Issues

Price quoted by Itrus Is $200,000 which is significant part of the itrus revenue as in 20x6 revenue was
$754,000. This shows that the contract is (200000/754000*100) 26.5% of the revenue which sound
something unnatural as itrus may be incompetent to provide us the required facilities. Further it is also
seen that there are very high cost of sales in the itrus i.e. (708/754*100) 93.8% which is also very
significant this shows that itrus may have poor cost controls or deliberate use of high cost of sales just to
avoid taxation and availing tax returns.

There is no significant noncurrent assets but there is a significant goodwill presented which create a
question mark as it’s a small software company. The goodwill is 140,000 out of 190,000 which is 73.6%
of the noncurrent assets this is very concerning as how the goodwill was evaluated and whether the
impairment testing have been done or not on a regular basis.

The noncurrent liability of itrus have been increased and Noncurrent assets have been decrease but on
the other hand short term borrowings have been decreased which shows that company is paying its
short term debts by selling its assets and getting long term loans. The current assets over current liability
shows a good short term position as it’s 2.5 in 20x6 and 1.16 in 20x5. The following change is due
repayment of significant short term liabilities. This is not good for company to repay its short term
liability like this. Because of the fact that its major current assets are receivables not cash or inventory it
is identifying that the bad debts are being there and receivable aging is very high. Due to lack of control
in the internal controls and debtor collection procedures by the administration these are affecting itrus.

The administrative expense is the second most cost of the company which is not performing well as
debtor is not paying on time which ultimately make itrus to issue loan notes. Further the gross profit is
around 6% which is very low as administration is not implementing the adequate controls. The lack of
competency also shows that the customers may have been not entertained which will be ultimately
results in higher sales return.

The lack of staff may also be one of the factor as there is a reduction observed in the number of staff
annually by 15 employees out of 40. But the performance in 20x5 was also poor so there may be
reduction in staff in the previous years also. There is also a concern as staff has been reduced but
administrative cost have been increased by 5,000. This shows that there may be any fraud or error
happened in Itrus.

The cash position of itrus is also worsen as if falls to 5,000 from 20,000 which indicates that there may
be problems for itrus not providing adequate resource on the time due to lack of cash. These factors are
important to consider as the implementation of data analytics is material.

Ethical Issues

The marketing director’s brother in law is one of the owners of itrus which indicates several ethical
threats. This creates a familiarity threat and self-interest threat as due to the relationship in itrus will
make marketing director biased for itrus company. As there may be different other suitable software
companies which will be providing better services. The marketing director have only contacted 3 of
them which is a less number as they may be the expensive suppliers of the software. This will sacrifice
the marketing director’s objectivity and integrity with the FM.

Further as it is mentioned that the itrus is very small software company which indicates that they may
lack resources to full fill the contract given by FM which will also create accountability on the marketing
director about the professional competence and due care. As marketing director should have adequate
knowledge and skills to differentiate the suppliers on the basis of quality and price to provide the FM
value for money. Moreover cost benefit analysis should also be done by the marketing director to
provide a better image to the board for the data analytics implementation.

There is another ethical threat if itrus has to provide the services and that is advocacy threat as the itrus
belongs to the marketing director’s brother in law then the marketing director will always try to make
future arrangements with iturs on high prices. Further any fault or error will be cleaned by the by the
marketing director just to provide an unjust benefit to itrus. This is not a professional behavior as the
directors have a fiduciary duty to act on behalf of the shareholders not for their own benefits. The
compliance with the Ethical code of conduct for directors is must and necessary safeguards should be
taken to decrease the ethical threats from the marketing director.

TASK 4
Briefing note
FAO Anya khan (Procurement director)
From Management consultant
Subject Identify risk and provide recommendation on procurement.
Date dd/mm/yy
Options Risk
1 The price of meat is very low of new
supplier but there are quality concerns in
the meat which will increase the
reputational risk of FM. As the
environment in which FM is operating is
seriously concerned about the quality in
fact they are willing to pay premium
prices just to secure the good quality of
items. There is another risk also that
competitor is also being supplied by the
same supplier which may create a trade
war between them just to create stock
outs for the competitor by demanding
high quantity.
The supplier is also have concerned over
animal welfare which may increase legal
risk for the FM also.
2 There is a risk that all stores doesn’t
maintain the required level of stocks. This
will create customer dissatisfaction and
ultimately loss of customer. The supplier
is smaller due to it there is a risk that
supplier may not be consistent with the
commitments.
3 The new range of cheese is available and
FM is unsure how the customer will react.
Therefore it will be increased financial
risk as if the customers doesn’t like the
taste , color or shape of cheese they may
not purchase it and all the inventory will
be unsold and may give loss to FM.
4 The supplier of high quality fish has been
contacted but it is presented on a remote
Recommendation
The FM co should not consider this supplier as
they already have a good quality supplier.
Further if they want to decrease the price they
may shift to the new supplier by keeping in
mind all the risks associated with it. further
the new supplier should be given quality
standards to maintain to ensure no animal
rights have been violated and good quality of
meat is ensured.
To reduce this risk supplier should be
contacted about commitments and minimum
level of order. The limits of ordering quantity
with number of orders should be set to ensure
the minimum chance of stock out. As the
supplier is impressed with the ethical
approaches of FM therefore the supplier may
help FM to gain competitive edge of selling
unique peers in the market.
To decrease this financial risk the supplier
should be contacted for samples and product
surveys should be done in FM store before
ordering. As the cheese is new and is sold in
rest of the world there is an increased chance
that people will accept it and FM will have the
benefit of introducing the new type of cheese
to the customers.
The supplier should be communicated for just
in time approach but this will increase the
 island of arboria . from there transporting
fishes to the FM stores will be a concern.
The quality of fish may get decreased as
after transporting the fish may rest in
stores of the FM. The quality issue may
arise as the fish may perishes before
reaching the stores.
TASK 2
Slide 1
ordering cost. Therefore use of advanced
transport system by supplier may reduce the
risk of perishability. The supplier should be
selected after accounting other suppliers
quality and prices. There may be different
suppliers available with low transportation
cost and reasonable quality.

Critical Success Factor

 Value for money service to the customers

 Ethical Sourcing of supplies
 Share Success with the members

Notes

 Value for money service to the customers

It is the mission of FM to provide value for money service to its customers by providing them Economy,
Efficiency and Effectiveness. By having these qualities customers will be satisfied which will ultimately
improve FM’s profitability.

 Ethical Sourcing of supplies

It is important for FM to remain ethical as it gives a positive impact to the customers. Further the
customers have been now demanding good quality and ethical procedures or processes by the
superstores which became the requirement for critical success.

 Share Success with the members

The employees and many customers are shareholders of the FM which makes him responsible to take
care about the stakeholders and bring success to the company. It is important to make the employees
motivated by providing them good returns on the shares they have.

Slide 2

Key performance indicator

 Value for money analysis
 Customer ratings and reviews regarding quality
 Dividends and bonus on shares
Notes

 Value for money analysis

By having value for money analysis FM will get the information that how much value they create for
their customers. The analysis can be done by evaluating three E’s which are economy, efficiency and
effectiveness. The VFM will highlight which sector is not performing well and then the adequate steps
will be taken.

 Customer ratings and reviews regarding quality

The customers of FM should be given survey or rating forms to ensure the quality is maintain and by
having results of survey any unethical thing will be highlighted which will then be mitigated by the
management.

 Dividends and bonus on shares

Dividends and bonus on shares held by the members should be given regularly and with appropriate
amount so that members remain satisfied.

Slide 3

Integrated Reporting
 Report to members with more information
 CSR reporting
 Ethical suppliers relationship

Notes

 Report to members with more information

Reporting the members with more information helps to achieve the objective of sharing success with
the members. This includes the overall performance of the FM through 6 capitals. As the employees are
also the members in FM it will help them to know the better insight of the FM.

 CSR reporting

As the mission shows that FM has a duty towards local community and through integrated reporting this
will highlight how the relationships have been made with the local community and how much capital is
being invested in betterment of customers and employees.

 Ethical suppliers relationship

In the integrated reporting ethical suppliers relationship is also being reported which will help customers
to know about how they are being taken care by the FM. The Reliance on FM will get increased by
customers when they will get to know how suppliers and customer relationship have been valued.