FREEZING

OUT
PROFITS
AMIRA NUR AFIQAH 172018976
FATIMA ARIENA 181019702
LINXUE 163917748
CASE SUMMARY
• Cold Cuts Ltd (CC) might lose their biggest customer and the plant in China that
they have a venture in might fall as well.
• Mr Nelly asked CC to lower the price of the materials as it is much more
expensive than CC’s competitors in China.
• Mr Dali have intentionally set a high price to gain more profits from Secconz.
• Mr Nelly said the company was considering stopping outsourcing and start
producing their own materials as it is far more cheaper.
• the plant in China is under investigation for anti-dumping activities. The
authorities said that they were exporting goods to the United States with a lower
price than in China.
• The authorities wanted some bribes to “help” smoothen things out for the plant.
• If not, the authorities might still shut them down long enough for them to be in
trouble with their customers.
SWOT ANALYSIS
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
• Singapore’s only • No control over the mark • If they lower their price of • Might lose their biggest
refrigeration parts up price of the products. the materials, Secconz customer over the
manufacturer. • Produce only refrigerator would create a new supply premium price of the
• Main manufacturer for components. contract with CC. materials.
Secconz. • The organizational • Prevent the plant from • Secconz would stop
• Had a major development structure is doubtful. shutting down by bribing outsourcing and start
of the newly upgraded • The plant in China does the authorities, so that producing their own
Fuzzy Frost Alpha System. not have any other they won’t be in trouble materials
The system had an superior person that could with their customers. • Could lose customers in
enhanced feature that make or recommend a • Have a good relationship China due to the plant
enabled perishable items decision. with their biggest client if shutting down.
to be stored far longer • Did not research more they don’t take advantage • The plant could be closed
than conventional about the activities that is of them by rising the price down or CC have to suffer
refrigerator. going on in China. too high. a huge anti-dumping tax.
• Their products were Therefore, did not have • The plant was under
exported worldwide. any knowledge regarding investigation without any
• The higher quality of the the bribing before it hard evidence.
system became popular in happen. • The authorities in China
advanced markets of asked for some money in
Singapore and Europe. exchange of stopping the
• CC was the only investigation.
Singaporean supplier for
the part.
• Able to achieve payback
on its investment of the
new machinery within two
years
 The price of FFA was over-priced for their biggest
customer.

Secconz and CC may not relent on the price of the

products.

CC was taking advantage of Secconz by giving them

premium prices but gave lower prices for the

ISSUES
customers in Europe.
The plant in China was under investigation due to
possible anti-dumping activities.

Possible need to bribe the authorities to stop the

plant from shutting down and be in trouble with their
customers.
The plant could be close down or need to pay a huge
anti-dumping tax as a result of the investigation if
they were to be found guilty.
 • To reduce costs; It can reduce costs in
management and choose the lowest-
cost logistics method when transporting
goods.
• Provide the promotion to the
biggest customer when they buy
FFA; Companies can set discount
levels, such as a 3% discount when
ordering 10,000 units, and a 5%
discount when ordering 100,000 units.

ALTERNATIVES • Modify price; increase the price in

China market then give customer
promotion
The WTO stipulates that the dumping
margin shall not exceed 2% of the
import price.
• Prevent the plant from shutting down by
bribing the authorities, so that they
won’t be in trouble with their customers.
• Use third countries to avoid dumping
taxes
DECISIONS & WAYS TO
IMPLEMENT
Since Secconz is CC’s biggest supplier, we decide to keep them in our
business to reduce cost and time to search for other suppliers. Here
are some ways to implement our decision in order not to lose business
relation with Secconz;
• Cut overhead cost and revise pricing strategy; use inexpensive
product and cut down unnecessary processes.
• Review and re-evaluate SOP; trim ineffective processes from
operation. Improvement will also enhance productivity and
therefore, increase the quality of product.
• Use current, updated technology; adopt the right technology that
can save money in the long term and save time in production. Stay
informed of the latest technology suitable for business
• Convincing client; explain the product and why it is important for
the business and its reputation to maintain the quality of the
product.
 Secconz is CC’s biggest customer, therefore if they
CASE were to lose Secconz as their customer it could put
a damper in their financial statements.

QUESTION 1;
Explain to the Other customers could also drop the company
after seeing Secconz not continuing their contract

board how the with CC.

problem with Secconz decision to make the materials instead of

Secconz can outsourcing could start a potential trend in the

industry, that could lead to lose of customers.

be damaging Sales volume from Secconz equals to one third of

financially. all FFA sales of Cold Cuts Ltd, therefore it could
lead to them losing a huge part of their profit from
Secconz if they do not lower their price.
CASE QUESTION 2; What are the
strategic options for the CC Board?

provide the promotion to For China's anti-dumping In order to prevent them

the biggest customer activities, they want from continuing to need
when they buy FFA. When some bribes to solve this bribes, we can avoid anti-
they order 100,000 units problem, then we will talk dumping by transferring
will give them 3% to them to minimize the the goods to a third
discount, 1000,000 units price as much as country and then to
will be 5% to them. possible. China.
 Tax return.
CASE
QUESTION Tax return for businesses .

3; What are Tax return for VAT.

CC’s
reporting
Shareholder report.

obligations S company want to our products can

reduce price event .

? China cracks down on anti-dumping

incidents.
 Cold Cuts Ltd sell the materials at
CASE QUESTION 4; 140 for Secconz while 100 for
What are the other customers.
implications on the
financial
statements? What Secconz is the only customers for
FFA in Singapore.
accounting
standards are
relevant to present There is a mark up of 170% from
a better picture of the margin cost for the selling
price for Secconz.
the CC’s
performance and Most of the costs are being paid
valuation of its by Secconz while the other
assets? customers only paid for a portion
of it.
CASE QUESTION 5; How should the request for a bribe be handled and what
are the potential consequences of the various options open to them?

• Take appropriate action on the person offering bribe

by reporting to local authorities (SPRM) or
international intelligence (IAACA)
• Conviction for bribery is severe even for a first-time
offender. Felony charges that comes with fines and
imprisonment. Cases charged with bribery will also
get the government to prove whether or not you’re
guilty regardless of your intention.