Question

Case Scenario Canaervon Company is a medium sized packing material manufacturing company. The following are the most recent financial statements of the company Statements of profit or loss for the year end ed 315t December 01 2000 4200 01 es es Gross profit 1800 ibution costs Administration expenses Operating profit 2040 900 erest Profit before taxation 540 axation Profit after taxation 140 Statements of financial position as at 31st December 018 15 201 on-current assets urrent assets ventory Receivable 18 18 1000 15000 Equity and Liabilities Share 18 Non-current liabilities 10% Loan notes Current liabilities Loans and other borrow 12 1000 200 15000 Total Equity and liabilities

Answer 1

To make six months plan for two types of packing material Milk powder Cans and Chips pouch, Canaervon company should evaluate certain strategic framework such as PESTEL analysis, SWOT Analysis, Balance Scorecard and Porter's five force to analyze the business environment, planning & design go-to market strategies for two types of packing materials.

Porter's Five force Analysis for assessing Industry attractiveness - Before entering into new market or launching any new product category in the business, It is necessary to ascertain Industry attractiveness for optimizing resources. Five forces are mentioned below.

• Bargaining power of Supplier- This term refers to negotiation skills for suppliers of the certain products/services.
• Bargaining power of Buyers- If there are more number of buyers than supplier of the certain goods or services then buyer's bargaining power is reduced and visa-versa.
• Threat of Substitutes- If there are large number of substitute products available in the market then industry is less attractive to enter and visa-versa
• Threat of New Entrant- This refers to the entry barriers for a new company to enter in the industry. High entry barriers will increase the industry attractiveness and visa-versa
• Rivalry among existing firms- This refers to the level of competition related to the product, pricing strategies within the same industry. Less rivalry is desirable to maximize returns & profits from the business.

SWOT analysis refers to the strategic framework to assess company's Strengths, Weakness, Opportunities & Threats

Strengths	Weakness
Opportunities	Threats

• Strengths refers to company's core competencies and capabilities to deliver as per the need & requirements of the customers
• Weakness refers to all the major areas & scope of improvements as compared with the industry standards & benchmarks
• Opportunities refers to favorable future outcomes or possibilities, firms wants to maximize their future opportunities  
• Threats refers to unfavorable future events which might hamper growth of the organization.

PESTEL Analysis is the strategic planning framework which include external macro-economic factors in the business environment that may impact the performance and growth of the organisation these macro-economic factors are mentioned below.

Political

Economic

Social

Technology

Environmental

Legal

Before launching any new product category or diversifying into new market or geographical area, it is crucial to assess all the external macro-economic factors in the business as all the factors mentioned above are likely to impact performance of the company. Impact of such change will vary according to nature of the industry and scale of business

Costing of the packaging materials, From above information given

Cost of producing Milk Powder can will be 2.25 OMR + 7 OMR = 9.25 OMR

Cost of producing Chip pouch will be 3.75 OMR+ 3.5 OMR = 7.25 OMR (Calculation based on Raw Material T and R pricing)

Sales budget of 2019 require 4000 units of Milk Powder can and 3000 Chips Pouch

Calculation of requirement of Material R and T according to the Sales budget of 2019

Raw material R requirements = 4000*1.5 L + 3000*2.5L = 6000+7500 i.e. 13500 Litres

Raw Material T requirements = 4000*2 Kg +3000*1 Kg = 11000 Kg ( as per sales budget of 2019)

Provision for damages and deterioration of items Milk powder can 25 units and Chips Pouch 50 units

Provision of Raw Material R = 250 litres+ 25*1.5L +50*2.5L = 412.5 Litres ( Provision for Damages)

Provision of Raw Material T= 100 kg+ 25*2Kg+ 50*1Kg =200 Kg (Provision for damages)

Company plans to hold 300 of each product at 31 December therefore 450 units of Milk powder can is excess and deficit of 150 units of Chips pouch

Inventory of raw material R = 2500 L + 3000*1.5L +1400*2.5L

Inventory of raw material T = 1750Kg+ 3000*2 Kg+ 1400*1Kg

From this estimates company can form a six month strategic plan for sustainable growth and solve financial problems