Divine Word College of Legazpi

School of Business, Management and Accountancy

2nd Semester, A.Y. 2020-2021

ACCTG ED 23: STRATEGIC BUSINESS ANALYSIS

PRE-FINAL EXAMINATION

TABLE OF SPECIFICATIONS

# OF PERCENT # OF COGNITIVE DOMAIN LEVELS ITEM

LESSONS
HOURS (%) ITEMS REMEMBERING UNDERSTANDING APPLICATION ANALYSIS EVALUATING CREATING PLACEMENT
Topic 1:
Business
3 25% 20 20 Part 1
Strategy and
Models
Topic 2:
Corporate 3 25%
Strategy
Topic 3:
International 3 25%
Strategy
Topic 4:
Entrepreneurship 3 25% 20 20 Part 2
and Innovation
12
Total 100% 40 40
HOURS

Prepared by: Reviewed by: Approved:

Zer Jethro Rodmell A. Roscuata Daria Labalan Tressa Adelfa Mortola

Lecturer I Program Head Dean, SBMA

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 QUESTIONNAIRE

PART 1: BUSINESS STRATEGY AND MODELS (20 marks)

Chemical Transport (CT) is a specialist haulage company providing transport services for several chemical wholesalers. Despite these wholesalers
being in competition with each other, many of them have outsourced their distribution to CT, recognizing the company’s expertise in this area and its
compliance with stringent and emerging legislation. This legislation is at both national and international level and concerns the transportation and
handling of chemicals, as well as the maintenance of trucks and trailers and the health, competencies, safety and driving hours of drivers. There are
also chemical wholesalers in the country who either organize their own distribution or outsource to one of CT’s competitors.

CT handles the distribution of chemicals from either the port of importation or point of production to the wholesaler’s depots or directly to the end
customers of the wholesaler. The chemical wholesalers are increasingly attempting to minimize their own storage costs, so many of CT’s deliveries
are now directly from the point of production (or port of importation) to the end customer. Most of these end customers are manufacturing companies
with limited chemical storage capacity.

The complex and changing nature of legislation has led to CT engaging a specialist legal consultancy to provide it with advice. They have found this
advice to be both useful and proactive. The consultancy has identified the potential effect of employment, tax and health and safety legislation in
advance and has notified CT of its likely implications. CT has benefited from this advice but it is concerned that it is expensive and it is considering
employing a full-time legal expert, instead of using the legal consultancy.

The chemical wholesalers have asked CT to provide an internet-based system which would allow them to request and track deliveries. CT does
currently have a website, but it only contains information about the company: its structures, history, key contacts and case studies. CT has agreed to
provide such a system because it is aware that failure to do so will lead to wholesalers looking for an alternative distributor. CT does have an internal
IT capability with some expertise in building web-based systems.

The internal IT team have also developed a bespoke payroll system. Drivers at CT are rewarded with basic pay, together with a complex set of bonuses
and deductions which have been developed and enhanced over the last few years. There are bonuses for certain skills and attainments and deductions
for missed or delayed deliveries or mistakes. The drivers themselves find the pay arrangements very confusing. One commented that ‘we find it almost

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impossible to check if we have been paid correctly and it confuses us rather than motivates us!’ Changes in national tax legislation are also continually
affecting the payroll calculation. Indeed, recent changes in legislation led to the IT team being fully occupied for three months, developing and testing
the required modifications to the payroll system.

Required:
1. Three significant business process areas have been identified in the scenario: (1) payroll, (2) legal advice and (3) an enhanced web service
allowing wholesalers to request and track deliveries. Use Harmon’s process-strategy matrix to analyze the characteristics of each of the three
process areas defined above and suggest how each should be sourced and implemented at CT. (10 marks)
2. Requesting and tracking information could be the first part of a comprehensive customer relationship management (CRM) system. Evaluate
how CT could use a CRM system to acquire and retain customers. (10 marks)

PART 2: ENTREPRENEURSHIP AND INNOVATION (20 marks)

Local neighborhood shops are finding it increasingly difficult to compete with supermarkets. However, three years ago, the Perfect Shopper franchise
group was launched that allowed these neighborhood shops to join the group and achieve cost savings on tinned and packaged goods, particularly
groceries. Perfect Shopper purchases branded goods in bulk from established food suppliers and stores them in large purpose-built warehouses, each
designed to serve a geographical region. When Perfect Shopper was established it decided that deliveries to these warehouses should be made by
the food suppliers or by haulage contractors working on behalf of these suppliers. Perfect Shopper places orders with these suppliers and the supplier
arranges the delivery to the warehouse. These arrangements are still in place. Perfect Shopper has no branded goods of its own. Facilities are available
in each warehouse to re-package goods into smaller units, more suitable for the requirements of the neighborhood shop. These smaller units, typically
containing 50–100 tins or packs, are usually small trays, sealed with strong transparent polythene. Perfect Shopper delivers these to its neighborhood
shops using specialist haulage contractors local to the regional warehouse. Perfect Shopper has negotiated significant discounts with suppliers, part
of which it passes on to its franchisees. A recent survey in a national grocery magazine showed that franchisees saved an average of 10% on the
prices they would have paid if they had purchased the products directly from the manufacturer or from an intermediary – such as cash and carry
wholesalers.

As well as offering savings due to bulk buying, Perfect Shopper also provides, as part of its franchise:
(a) Personalized promotional material. This usually covers specific promotions and is distributed locally, either using specialist leaflet distributors or
loosely inserted into local free papers or magazines.

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(b) Specialized signage for the shops to suggest the image of a national chain. The signs include the Perfect Shopper slogan ‘the nation’s local’.
(c) Specialist in-store display units for certain goods, again branded with the Perfect Shopper logo.

Perfect Shopper does not provide all of the goods required by a neighborhood shop. Consequently, it is not an exclusive franchise. Franchisees agree
to purchase specific products through Perfect Shopper, but other goods, such as vegetables, fruit, stationery and newspapers they source from
elsewhere. Deliveries are made every two weeks to franchisees using a standing order for products agreed between the franchisee and their Perfect
Shopper sales representative at a meeting they hold every three months. Variations to this order can be made by telephone, but only if the order is
increased. Downward variations are not allowed. Franchisees cannot reduce their standing order requirements until the next meeting with their
representative.

Perfect Shopper was initially very successful, but its success has been questioned by a recent independent report that showed increasing discontent
amongst franchisees. The following issues were documented.
(a) The need to continually review prices to compete with supermarkets
(b) Low brand recognition of Perfect Shopper
(c) Inflexible ordering and delivery system based around forecasts and restricted ability to vary orders (see above)

As a result of this survey, Perfect Shopper has decided to review its business model. Part of this review is to re-examine the supply chain, to see if
there are opportunities for addressing some of its problems.

Required:
1. Explain how Perfect Shopper might re-structure its upstream supply chain to address the problems identified in the scenario. (10 marks)
2. Explain how Perfect Shopper might re-structure its downstream supply chain to address the problems identified in the scenario. (10 marks)

(NOTHING FOLLOWS)

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