Annex 4-Business Case Part II

Annex 4_Business Case Part II
HUGO ALEXANDER NOGUERA ORTEGA
ALICIA ESTELA CARRANZA ROMO
Group number
66
Date
19/10/2023
1
[CASE II -Group Number 66]
BUSINESS CASE INDEX
1. STRATEGY..................................................................................................................................................................
2. IMPACTS OF THE PROPOSAL.................................................................................................................................
3. RISK MANAGEMENT................................................................................................................................................
4. RECOMMENDATIONS..............................................................................................................................................
5. METRICS......................................................................................................................................................................
6. CONCLUSIONS...........................................................................................................................................................
7. REFERENCES..............................................................................................................................................................
2
1. STRATEGY
Strategy choice
Describe the type of strategy selected by the group to resolve the situation: (1) Name of the strategy,
(2) General definition.
1. Strategy name Cost leadership
2.General definition of the

strategy is a competitive approach in which a company strives to be the most efficient
and economical producer or supplier in its industry or market. This strategy is
based on the idea that by minimizing production and operating costs, a
company can gain significant competitive advantages, such as the ability to
offer lower prices to its customers or improve its profit margins.
This strategy focuses on reducing production costs and offering products or
services at a lower price than the competition, while maintaining acceptable
quality.
Cost leadership is a competitive strategy that companies use to achieve the
greatest market share. By being able to sell their products at a low price, they
increase their sales volumes, thus leading the market.
Some measures that can be taken to implement this strategy are process
optimization, reduction of production costs and efficiency in resource
management.
3
3.Example of application in McDonald's:The McDonald's fast food restaurant chain is an example of Cost
other companies Leadership in the food industry. Standardization of production processes,
efficiency in the supply chain and large-scale purchasing of raw materials
allow it to offer low prices and maintain its position in the market.
Southwest Airlines:In the aviation industry, Southwest Airlines is known for
its Cost Leadership strategy. The company has kept operating costs low by
using a fleet of Boeing 737 aircraft, minimizing ground turnaround time and
maintaining a no-assigned seat policy, allowing it to quickly fill flights and
optimize occupancy.
Walmart: Walmart uses a supply chain management information system to
keep its costs and, consequently, its prices low.
Walmart is able to offer low prices to its customers due to its efficient supply
chain and logistics. This company purchases large volumes of products
directly from manufacturers and distributes them efficiently to its stores. In
addition, it uses advanced technologies to optimize supply and distribution
processes.
IKEA: has managed to reduce costs by producing furniture that can be easily
assembled and sold in flat boxes, reducing transportation and storage costs.
4. Why might this type of focuses on optimizing its production and operation processes to reduce costs
strategy be adapted to the as much as possible. This may include automation, process standardization
4
case situation? and the constant pursuit of efficiency improvements, although the pursuit of
cost efficiency strives to maintain high quality standards to meet customer
expectations and may involve the production of standardized products or
services that minimize the need for customization and additional costs.
Because through this strategy the supermarket can increase its market share
and lead in the industry, by reducing lower prices without lowering the quality
of the products it offers in order to beat the two chains. of supermarkets that
have competencies in the region and satisfy the needs of consumers
Scope of the strategy
How would you apply the strategy at the Diamante Supermarket?
Identify reliable suppliers and seek agreements that allow obtaining raw materials and products at more competitive
prices, reduce storage and inventory management costs through more efficient stock management, implement an
inventory management system that allows real-time tracking of stock and automated replenishment when necessary
Implement point-of-sale systems and management software that help control costs, track sales and optimize inventory
management, use technology to improve efficiency in personnel management and customer service, Provide training to
employees in customer service techniques and operational efficiency to maximize productivity and finally constantly
monitor financial and operational results to identify areas for improvement
By applying these actions, the Diamante Supermarket could improve its operational efficiency, reduce costs and offer
more competitive prices to its customers. Additionally, it would be important to balance this focus on costs with the
quality of products and services to maintain customer satisfaction.
Negotiate lower prices with suppliers: By purchasing products at lower prices, the supermarket can reduce its
production costs and offer lower prices to customers.
Optimize the supply chain: By improving the efficiency of the supply chain, the supermarket can reduce production
5
costs and offer lower prices to customers.
Reduce operating costs: By reducing operating costs, the supermarket can offer lower prices to customers.
Offer white label products: White label products are generally cheaper than name brands.
Cost reduction in strategic products: Identify the best-selling products and reduce the costs associated with them
Expected results
Detail five (5) specific tactics and their measurable results for the group's proposed strategy,
including a timeline for each over a three-year perspective. Customize table elements to fit your
proposal. (Examples: New procedures, Events, Activities, etc.)
TACTICS RESULT / DELIVERABLE ESTIMATED COMPLETION DATE
- Reduction of the acquisition

cost by 10% in the first year. 10/26/2023
1. Negotiation with - Increase in gross margins by
Suppliers 5%. 11/29/2023
Establish agreements with

new local suppliers. 02/28/2024
- Reduction of storage costs

by 15% in the first year. 04/19/2024
2. Supply chain - Decrease in inventory losses
optimization by 8%. 06/20/2024
Implementation of an
inventory management
system in the first year. 08/06/2024
3. Reduction of - Reduction of energy

operating costs consumption by 10% in the
first year. 10/15/2024
6
- Reduction of public service
costs by 7%. 10/25/2024
Distribution optimization to
reduce logistics costs. 11/23/2024
Improved real-time sales

tracking in the first year. 10/12/2024
4. Technology
implementation Reduction of logistical errors
by 12%. 03/15/2025
Automation of administrative
processes. 04/16/2025
Increased customer
satisfaction by 15% in the
first year. 04/25/2025
5. Staff training
- Increased staff productivity
by 10%. 03/05/2025
Development of customer
service skills. 06/10/2025
- Increased market share by

5% in the first year. 06/11/2025
6. Marketing strategy - Retention of 80% of
existing clients. 08/12/2025
Launch of loyalty and

discount programs. 09/30/2025
- Identification of areas for
improvement in the first 6
months. 01/10/2025
7. Monitoring and
continuous improvement Implementation of corrective
actions based on the results. 11/02/2025
Evaluation and adjustment of
strategy annually. 12/12/2025
7
Proposal assumptions
Outline the key assumptions and preconditions you need to achieve strategy implementation.
Assumptions include expected resources and financial support.
The senior management of the company, in this case, Joaquín Pérez Rodríguez and his family, must support
and commit to the Cost Leadership strategy. This implies the willingness to allocate resources and lead the
change process, and requires access to financial resources to carry out initial investments in technology,
staff training and supply chain improvements. It is essential to have the financial support necessary to
implement the strategy's tactics.
It is assumed that the company has the necessary financial resources to invest in supply chain optimization,
technology implementation, staff training, and marketing strategy execution. In addition, it is expected that
the company will be able to access additional sources of financing if necessary.
The strategy includes negotiation with suppliers to obtain better conditions and favorable prices.
Don Juaquin, as manager of the company, must allocate financial resources to finance the research and
development of the acquisition of technologies to be implemented in the supermarket and therefore the
expansion of the business.
Have the ability to keep operating costs and prices low to capture customer attention.
Don Juaquin, with the financial resources allocated, should be able to maintain the quality of the products
while reducing the costs of said products.
8
2. IMPACTS OF THE PROPOSAL
Requirements statement
Specify how the proposal meets the business needs (consider the needs identified in the business
case Part I of Phase 2).
Mainly, the Diamante Supermarket faces a decrease in its profit margins due to competition from other
supermarket chains. The Cost Leadership strategy seeks to reduce operating costs, which will contribute to
increasing the company's profitability by offering competitive prices and maximizing profit margins, the
company faces operational inefficiencies in its supply chain and supplier management, the proposal includes
tactics to improve supply chain management and negotiate favorable agreements with suppliers, which will
increase efficiency in operations
On the other hand, the arrival of new supermarket chains has increased competition in the market. The Cost
Leadership strategy will allow Diamante Supermarket to remain competitive by offering lower and more
attractive prices to customers, which is essential in a competitive environment.
Finally, the proposal to implement the Cost Leadership strategy addresses the commercial needs of the
Diamante Supermarket by improving profitability, operational efficiency, competitiveness and adaptation to
market trends. It also establishes a foundation for long-term sustainability and customer satisfaction, which
benefits the company in multiple aspects.
Due to the competition generated by the two supermarket chains that arrived in the region, the diamond has
decreased its income, so it is important to implement strategies such as the cost reduction strategy since
through this it can be achieved to have Greater reception in the market, expansion of the El Diamond
supermarket chain, achieving consumer satisfaction in terms of low prices and good quality over the
competition.
Through the cost reduction strategy, a financial balance can be achieved in the supermarket, which allows the
reduction of the cash flow deficiencies that the company presents, through the implementation of standardized
9
processes and procedures that allow the reduction of each of the costs generated by the production and
operational part of the organization.
Business impacts
Indicate the business and operational impacts that the proposal offers for each stakeholder (consider
the stakeholders identified in Phase 2 of the Business Case, Part I).
Interested Actors Requirements

Owner (Joaquín Pérez) 1. Understanding the benefits of the strategy in terms of profitability.
2. Financial support for initial investment and supply chain improvement.
Employees 1. Training in new processes and procedures to improve operational

efficiency.
2. Participation in the implementation of sustainability practices and

management of responsible suppliers.
Suppliers 1. Negotiation of long-term supply agreements with favorable terms.
2. Compliance with quality and sustainability standards in products

supplied.
Customers 1. Access to high quality products at lower prices.
2. Improved shopping experience through an efficient supply chain and

sustainable product selection.
Competitors 1. Adaptation to the competition in terms of prices and product quality.
2. Possibility of establishing strategic alliances or cooperation agreements

with other market players.
New inhabitants 1. Access to organic and sustainable products that meet your demands.
2. Awareness that the supermarket operates in a sustainable and socially

responsible manner.
10
Local Community 1. Contribution to corporate social responsibility (CSR) projects that
benefit the local community.
2. Generation of employment and economic opportunities for the

community.
Regulators and Authorities 1. Compliance with environmental and product quality regulations and
standards.
2. Support and monitoring in the implementation of sustainable and CSR
practices.
3. RISK MANAGEMENT
risk assessment
Detail five (5) potential risks. Risks represent events or conditions that can increase costs and
extend the implementation timeline. Risks can include delays, lack of approval, difficulties,
interruptions, and more. For each potential risk, indicate the probability of the risk occurring, the
severity of its impact (High, Medium, Low), and include a brief description of a mitigation strategy.
Delays in supply chain improvement PROBABILITY IMPACT
Delays in implementing supply chain

improvements can result in operational issues
and increased costs
Quality problems if the delivered products do

not meet quality standards, they may be returned Half High
or rejected by the customer. This can cause
delays in the supply chain and affect customer
satisfaction.
11
Establish a detailed schedule with clear
milestones and constant monitoring. Hire
external logistics advice to speed up the
process if necessary.
MITIGATION STRATEGIES
Implementation of standardized processes

and procedures to monitor and control
existing risks in the organization.
Difficulties in employee training PROBABILITY IMPACT
Resistance to change or lack of resources for

training can make it difficult to adopt new Half Half
practices.
Involve employees in the design of new

MITIGATION STRATEGIES processes, offer incentives for training, and
provide a gradual adaptation process.
Problems with suppliers PROBABILITY IMPACT
Suppliers may face delivery difficulties or non-

compliance, which would affect the supply Low Half
chain.
Diversify supply sources and establish

strong relationships with key suppliers.
MITIGATION STRATEGIES
Have contingency plans for emergency
situations
Competition resistance PROBABILITY IMPACT
Competitors may respond with similar strategies

high Half
or lower prices, which could affect profitability.
MITIGATION STRATEGIES Closely monitor competition and quickly

adapt strategy as necessary. Differentiate in
quality and service when it is not possible
12
to compete on price.
Changing regulatory requirements PROBABILITY IMPACT
Changes in environmental or safety regulations

may require additional investments or changes Half High
in operation
Stay up to date with regulations,

MITIGATION STRATEGIES collaborate with local authorities and have
a response plan to regulatory changes.
RESOURCES
Proposed governance structure
Recommend an organizational structure that indicates the positions to be hired.
This organizational structure is based on the need to improve operational efficiency and manage the supply chain more
effectively. Hiring will depend on the size of the supermarket and the specific needs of the implementation of the Cost
Leadership strategy.
Board of Directors (Owner and Pérez Duque family)
 Owner
 Key family members
High direction
 General manager
 Director of operations
 CFO
Supply chain
 Purchasing Manager
 Warehouse and Logistics Manager
 Inventory analyst
Store Operations
13
 Store manager
 Cash boss
 Procurement Manager
 Butchery Manager
 Bakery Manager
 Head of Fruits and Vegetables
 Head of Cleaning
Human Resources
 Human resources manager

 Training Coordinator
 Human Resources Assistant
 Marketing and sales
 Marketing and Sales Manager

 Advertising Coordinator
 Promotions Coordinator
Finance and accounting
 Main Accountant
 Financial Analyst
 Accounting assistant
Customer service
 Customer Service Coordinator

 Customer Service Team
Information Technology
 IT Manager
 Support Technicians
Security and Maintenance
 Security boss
14
 Maintenance crew
Legal and Compliance
 Lawyer or Legal Consultant

Comptroller
 Internal Auditor
Quality and Control
 Quality coordinator
Proposal costs.
Detail the costs as proposed and summarize them to identify the amount of money needed:
infrastructure, new employees, advertising, and more.
Concept Estimated cost
Infrastructure $300,000,000.00
New employees $150,000,000.00
Advertising $5,000,000.00
Vehicles $80,000,000.00
Commodity $200,000,000.00
Total $735,000,000.00
15
4. RECOMMENDATIONS
1.CRITERIA 2.ALTERNATIVE
consider different strategic approaches, such as cost
leadership, differentiation or market segmentation. Each
alternative will have a different impact on the company in
terms of revenue, costs, human resources, processes, etc. You
must analyze how each alternative aligns with your
company's objectives and resources.
BUSINESS AND
OPERATIONAL IMPACT
Take into account the implementation of strategies that allow
you to identify and classify each of the critical processes and
activities that may affect the operation and performance of
the supermarket.
PROJECT RISK Identify and evaluate potential risks associated with the
ASSESSMENT implementation of the strategy. This includes operational,
financial and strategic risks. For each risk, you must
determine the probability of it occurring, the impact on the
project, and how to mitigate or manage that risk. Some
examples of risks could be staff resistance to change, funding
issues, or changes in market competition.
The risk assessment of the project consists of identifying
each of the risks that may arise during the development of the
project. Therefore, it is important to take into account the
16
potential risks, the probability and the impact that each of
these can generate, for example. Therefore, it is important
that the company and the people qualified to carry out the
project take into account the development of a plan to
manage the risk and thus mitigate it. The potential risks
present in the development of the strategy: low quality of
products, lack of financial, administrative and human
resources, not satisfying customer needs in terms of prices
and product quality.
Conduct a detailed analysis of the expected costs and benefits

of the strategy. Costs include initial investment, additional
operating expenses, and any other expenses associated with
implementation. The benefits can be an increase in revenue
COST-BENEFIT ANALYSIS due to the acquisition of new customers, savings in operating
costs, increase in market share, etc. Calculate the return on
investment (ROI) and other relevant financial indicators to
determine if the strategy is viable from an economic
perspective.
5. METRICS
What metrics can be used to measure benefits? Indicate one (1) metric for each category, include
the formula to calculate it and the number or percentage to be achieved with the proposal.
INDICATOR FORMULA TO
CATEGORY GOAL (# or %)
NAME CALCULATE IT
Net Profit / Total Increase net profit margin
Financial Net Profit Margin
Revenue) x 100 by 5% over the next year.
17
[(Customers at the end
of the period - New
Achieve a customer
Customer Retention Customers Acquired) /
Customer retention rate of 90% or
Rate Customers at the
more.
beginning of the
period] x 100
(Number of
Successfully
Achieve a process
Process Performance Completed Processes /
Process performance rate of 95%
Rate Total Number of
or higher.
Started Processes) x
100
(Number of
Employees Who Increase the learning and
Human resources and Learning and
Received Training / development rate to 70%
innovation Development Rate
Total Number of or more.
Employees) x 100
6. CONCLUSIONS
In the context of the case study, according to the information from the Business Case Part II,
students include their video links with the description of the strategy of Activity 5 in the guide, they
also write in their own words a conclusion of a 100-word paragraph explaining the results for
Diamante Supermarket including the following words in bold: (1) Strategy Implementation, (2)
Metrics, (3) Business Case, (4) Costs
1.Student 2.Video link 3.Conclusion

name
Hugo
Noguera
18
In conclusion, the implementation
of the Cost Leadership strategy at
the Diamante Supermarket
represents a fundamental step to
address the commercial and
operational challenges facing the
organization. Through a strategic
approach and the application of
well-defined metrics, Diamante
Supermarket can establish a solid
business case to improve its
competitiveness and profitability.
The implementation of the cost
leadership strategy will result in the
reduction of operating costs, which
will allow the company to offer
products at more attractive prices to
customers. This cost reduction will
be achieved through supply chain
optimization, more efficient human
resources management, the
introduction of technologies for
process automation and data-based
decision making.
The application of metrics will be
essential to evaluate the progress
and impact of the strategy. Financial
performance indicators, such as
profit margin, return on investment,
and cost reduction, will help
measure tangible results.
Additionally, customer-related
metrics such as satisfaction and
loyalty will provide valuable
19
insights into how the strategy is
perceived in the market.
In terms of costs, the initial

investment in infrastructure,
technology and employee training is
expected to translate into significant
long-term savings. The costs related
to the implementation of the
strategy will be justified by the
benefits obtained, such as greater
efficiency, higher margins and a
competitive advantage.
2. ALICIA https://youtu.be/LJNlBKfu7OQ?si=K-
By implementing strategy, the
ESTELA fD8dUWzgp53Gab
diamond supermarket can recover
CARRAN
the prestige and obtain the benefits
ZA
that it had managed to achieve
ROMO
during the years it has been in
operation by reducing production
and operation costs in order to
continue maintaining something that
identifies them as an organization
and is to provide products at low
costs and of high quality, which
generates an advantage over their
competition, achieving greater
acceptance by consumers.
Furthermore, through the metrics,

Don Juaquin, as manager of the
organization, can evaluate, analyze
and monitor each of the processes
20
that make up the company, with the
objective of achieving the
identification of risks that may arise
during the development of the
strategy.
In this business case, it is possible

to establish the necessary financial
bases to make the implemented
strategy a success and, in this way,
achieve the goals set by the
supermarket manager.
It is important to take into account

the costs needed to develop the
strategy in terms of new
technologies to be implemented,
staff training, and research carried
out.
3.
4.
5. In conclusion, we could say that in
21
YERSON order for the diamond supermarket
ESTEVEE to generate profitability, it must stop
NS https://youtu.be/0ACsjdWcblM? distributing some low-distribution
MUNAR si=2CD9clJbIf2XDwbd products (little demand), and
PANQUE promote star products so that stock
VA moves and generate income for the
business.
Focusing on what sells the most and
simplifying the sales catalog can
save storage space and costs related
to this item.
The diamond supermarket through
the main head must look for
suppliers in the region and in this
way reduce transportation and
freight costs.
This is a strategy that will enable a

Don Juaquin Perez to cut its costs,
something that will enable it to
increase the overall profit of the
business or enable price cuts on the
items they sell, thus enticing more
customers into the stores. This is
really important for the supermarket
given the increase competitiveness
in their core market
22
7. REFERENCES
Use APA guidelines, make sure references are organized by author's last name in alphabetical order
(AZ)
Hans-Ulrich Krause, & Dayanand Arora. (2019). Key Performance Indicators for Sustainable
Management: A Compendium Based on the “Balanced Scorecard Approach.” De
Gruyter Oldenbourg.
https://bibliotecavirtual.unad.edu.co/login?url=https://search.ebscohost.com/login.aspx?
direct=true&db=e000xww&AN=2317397&lang=es&site=eds-
live&scope=site&ebv=EB&ppid=pp_5
Harvard Business Review Press. (2011). Developing a Business Case. Step 5: Make a Choice
and Assess the Risk. Harvard Business Review Press.
direct=true&db=nlebk&AN=675118&lang=es&site=eds-
Krassimir Todorov, & Yusaf H. Akbar. (2019). Strategic Management in Emerging Markets :
Aligning Business and Corporate Strategy. Contemporary Corporate Strategies (pp. 225-
259). Emerald Publishing Limited. https://bibliotecavirtual.unad.edu.co/login?
url=https://search.ebscohost.com/login.aspx?
direct=true&db=nlebk&AN=1827693&lang=es&site=eds-
Krassimir Todorov, & Yusaf H. Akbar. (2019). Strategic Management in Emerging Markets :
Aligning Business and Corporate Strategy. Generic Strategies (pp. 345-365). Emerald
Publishing Limited.
direct=true&db=nlebk&AN=1827693&lang=es%2ces&site=eds-live&scope=site
%26ebv%3DEB%26ppid%3Dpp_345
Triana Ortiz, K. (21,04,2020). Porter´s Generic Strategies. [Video].

https://repository.unad.edu.co/handle/10596/33487
23
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Annex 4_Business Case Part II

HUGO ALEXANDER NOGUERA ORTEGA

ALICIA ESTELA CARRANZA ROMO

2. IMPACTS OF THE PROPOSAL.................................................................................................................................

1. Strategy name Cost leadership

2.General definition of the

This strategy focuses on reducing production costs and offering products or

services at a lower price than the competition, while maintaining acceptable

Cost leadership is a competitive strategy that companies use to achieve the

increase their sales volumes, thus leading the market.

optimization, reduction of production costs and efficiency in resource

Walmart: Walmart uses a supply chain management information system to

keep its costs and, consequently, its prices low.

chain and logistics. This company purchases large volumes of products

directly from manufacturers and distributes them efficiently to its stores. In

addition, it uses advanced technologies to optimize supply and distribution

have competencies in the region and satisfy the needs of consumers

Scope of the strategy

How would you apply the strategy at the Diamante Supermarket?

production costs and offer lower prices to customers.

TACTICS RESULT / DELIVERABLE ESTIMATED COMPLETION DATE

- Reduction of the acquisition

Establish agreements with

- Reduction of storage costs

3. Reduction of - Reduction of energy

Improved real-time sales

- Increased market share by

Launch of loyalty and

expansion of the business.

while reducing the costs of said products.

operational part of the organization.

Interested Actors Requirements

2. Financial support for initial investment and supply chain improvement.

Employees 1. Training in new processes and procedures to improve operational

2. Participation in the implementation of sustainability practices and

Suppliers 1. Negotiation of long-term supply agreements with favorable terms.

2. Compliance with quality and sustainability standards in products

2. Improved shopping experience through an efficient supply chain and

Competitors 1. Adaptation to the competition in terms of prices and product quality.

2. Possibility of establishing strategic alliances or cooperation agreements

2. Awareness that the supermarket operates in a sustainable and socially

2. Generation of employment and economic opportunities for the

Delays in supply chain improvement PROBABILITY IMPACT

Delays in implementing supply chain

Quality problems if the delivered products do

Implementation of standardized processes

Difficulties in employee training PROBABILITY IMPACT

Resistance to change or lack of resources for

Involve employees in the design of new

Problems with suppliers PROBABILITY IMPACT

Suppliers may face delivery difficulties or non-

Diversify supply sources and establish

Competition resistance PROBABILITY IMPACT

Competitors may respond with similar strategies

MITIGATION STRATEGIES Closely monitor competition and quickly

Changing regulatory requirements PROBABILITY IMPACT

Changes in environmental or safety regulations

Stay up to date with regulations,

Recommend an organizational structure that indicates the positions to be hired.

 Human resources manager

 Marketing and Sales Manager

 Customer Service Coordinator