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TO: BOD
FROM: TRANART CONSULTANTS
SUBJECT: Two Investment Projects Evaluation
Date: August 2013
Introduction:
This report evaluates the two investment projects highlighting its financial and non-financial
benefits and drawbacks and thus, recommends which project it should pursue.
Sailing Dinghies
BENEFITS
Lower Payback Period:
The sailing dinghies project has a payback period of 3.5 years. This implies that yexmarine will be
able to recover its initial investment much more quickly and thus will be able to concentrate on
several other oppurtunities.
Lower Initial Investment required:
This project requires an initial investment of $4m including marketing cost which is substantially
less than the luxury yachts project which costs a whopping $10m. The additional funds can be
invested into other projects which can potentially generate an additional return and will also
diversify the earnings thus reducing the risk for the shareholders.
Faster revenue generation:
This project is likely to yield revenue in 1.5 years which means cash flows are deemed to be
improve. This will also instil confidence in the shareholders and keep them satisified.
Less Competition:
Although a number of local manufaturers work in the region but they are not as established as
Yexmarine which gives Yexmarine a competitve advantage too as it will be able to take advantage
of economies of scale and create barriers to entry for the new entrants.
CONS
Lower Profit margins:
The profit margins are very low which means shareholder return will be less too and since the
objective of the organization is to maximize shareholder wealth, this might contradict with this
viewpoint.
Lower NPV:
The NPV is lower too compared to the other project which implies that this project is not as value
for money as the other project.
No experience:
Yexmarine has experience with manufacturing yachts but lacks the expertience in selling and
marketing dinghies. Thus, its a new market fot them to explore.
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Luxury yachts
PROS
High Profit Margins:
The profit margins are very high compared to the dinghies project and this will also enable
Yexmarine to reach their profit margin target that they ahve planned of in 5 years time.
High NPV:
This project has a high NPV of $7m which means it is more value to money and thus will add more
value to the shareholders wealth.
Access to Global Market:
Luxury yachts have a global market. This will open new horizons for Yexmarine to tap into the
global market and benefit them in the long term by increasing their overall revenues.
CONS
Long revenue generation period:
The revenue generation period for this project is 3 years which is almosdouble to the other project.
another thing to note is that with increasing durartion, there is an increase in uncertainity due to
everchanging technology and demographics.
Long Payback period:
The payback period is about 6 years which implies that will take alot of time to recover their initial
investment. This essentially means this project would appear to be a lucrative one after 6 years
which is a very long period.
Global Competitors:
Since Yexmarine will be operating in the global market for the first time, it will take some time for
them to adapt to the dynamics and they will also be exposed to foreign competition.
RECOMMENDATION
Both options have its pros and cons.In my view, I recommend the luxury yachts as mainly their
profit margins are higher and also meet the required threshold planned to be met in 5 years. Not
only this, but a higher NPV will add more value to the shareholders wealth and keep them satisfied
with the company's operations and decision making skills. Moreover, Yexmarine will benefit from
geographical diversification by tapping into the global market which will able it to generate higher
revenues.
Best Regards,
TRANART CONSULTANTS
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8/28/23, 3:04 PM TestReach
a)
DATE: August 2013
Tony Bursham
CEO
Neoland
SUBJECT: Strategy Committee
Dear Tony,
This letter assesses your proposal to establish a strategy committee. The idea of devising a
committee is the need of the hour and will surely help to meet the corporate governance best
practise requirements as intended. I have highlighted the benefits and the problems with this
proposal as follows:
BENEFITS:
Save BOD time:
The board is already occupied with so much cluster of information and with the formation of the
strategy committee will free up some of the time of the board. This will allow the board to focus on
more important matters which will be beneficial for the overall welfare of the company.
PROBLEMS:
Cost:
This is an additional expenditure and will add to the cost of the organization thereby reducing the
profit margin.
Slower Decision Making:
Even though the Strategy Committee will be actively involved in devising the strategy and making
sure that it complies with the corporate governance principles, the final approval needs to be
premitted by the board and this whole process slows the overall decision making process of the
organization.
No NEDs in team:
There are 3 NEDs in the board, however there is not a single NED in the team. NEDs bring
experience as well as knowledge which may prove to be helpful in various situations.
Please feel to contact me if you require further discussion.
Best Regards,
Tranart Consultants
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b)
TO: BOD
FROM: Tranart Consultants
SUBJECT: The Impact of Employee Dissatisfaction
DATE: September 2013
This briefing notes analyses how employee dissatisfaction may impact upon each stage of the
organisational change process.
Unfreeze
This step involves proper communication with the staff to make them realize of the need for
change in order to mantain the strategic position and competitve advantage in the industry. It is
essential to take the stakeholders primarily the employees into confidence by making them part of
the decision making process so they feel more valued and inclusive. This will also reduce the
resistance coming from their end. Yexmarine can also take senior employees into confidence who
can then portray the message in a much friendlier way to their colleagues.
Change
This is the step of implementation. To ensure that all processes and operations are streamlined,
training sessions need to be conducted. Either external instructors can be hired or an internal staff
member can be nominated who sets the guidelines infront of the staff. The staff survey also shows
demotivation amongst the employees with skiled labour looking for jobs elsewhere because they
believe that they are not being fairly compensated for the effort they are putting in. Hence there is
also a need to reward such employees not only with bonuses but also with recognition throughout
the organization.
Refreeze
This is the step to ensure that the employees are following the new processses and they have
succesfully adapted to the change. It is essential to monitor their work ethics and take regular
feedbacks to ensure that producitivity and efficiency are not compromised by any means.
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a)
TO: CEO
FROM: TRANART CONSULTANTS
SUBJECT: Risk Mitigation Activities
DATE: September 2013
Introduction
This report evaluates the adequacy of the risk mitigating activities for each risk identified and
recommends further mitigating activities if required.
FLOODING
Although the risk level has been identified as not serious, however, isn't it a coastal city where
there are much higher chances of floods? Hence, the risk level should be considered serious so
that appropriate risk mitigating activities are in place to prevent a major natural disaster. These risk
mitiagating activities are not enough. Some additional are:
Staff training
Staff needs to be trained for these emergencies through drills so that everyone knows what to do in
an extremely panicking situation.
Contingency plans
Backup plans should be in place and made sure that these plans are being followed as required
without any discrepancy.
Flood Committee
A flood committee can also be setup whose basic job is to monitor the risk of flood and develop
mitigating activities for this risk. This committee can take responsibility for formulating contingency
plans as well as also holding training sessions for the staff.
PRODUCT OBSOLESCENCE
This is a very serious issue as its a war for market share with competitors and in this day and age,
isn't innovation the key to success of capitalizing on a greater market share? To mitigate the risk
even further following activities can be carried out:
Investment in Research and Development
Investment in R&D accounts for huge proportion of expenses in industries but Yexmarine shouldn't
hold back in it rather look for new environmental friendly ways of developing and enhancing its
products to attract green customers too.
Product Development
Yexmarine should work on the product itself and make sure that customer needs are being fulfilled.
Even reviews and feedbacks need to be incorporated enhance the product version.
Market Development
Emerge into new markets and unveil their potential for your product in their market. Such an
approach will also favour diversification generating substantial returns with lower risks.
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DATA SECURITY
In today's day and age, this is one of the most vital and serious issue. The risk mitigating activities
that are in place although seem sufficient but in a category related to data privacy there are not
adequate. Some further mitigating activities can be the following:
Changing passwords regularly
Employees need to be reminded to change their passwords regularly rather than sticking onto one
for a long time.
OTP
One tim passcode enables an integrated service between multiple devices and ensures two way
verification to deny any non personnel from accessing the system.
Data Encryption
When data is being transmiited, make sure its encrypted and is not being transmitted with the
encryption key, so that even if there is a risk of interception, that data will be meaningless without
the encryption key.
REPUTATION RISK
It is the brand image and the reputation which attracts new customers and retains the old
customers. With it comes brand loyalty which ultimately generates revenue for the business.
Hence, it is a very serious issue and furher mitigating activities should be in place to mitigate it:
Monitor Complaints
Any complaints by the customers need to be taken into account at the earliest and be solved at the
highest priority. A Such a process will make your customer feel valued and a part of the entire
system.
Invest in CSR
Move in CSR denotes good corporate citizenship and is vital for the organization not only on the
grounds of governance requirements but also for the welfare of the society. If u do for the society
wont the society generate an overall premium perception?
BEST REGARDS,
TRANART CONSULTANTS
b)
TO: BOD
FROM: TRANART CONSULTANTS
SUBJECT: E-MARKETING
DATE: September 2013
This briefing note assesses the benefits that E-marketing methods can provide for Yexmarine.
Data Analytics
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Analyzing Big Data especially consumer spending patterns and evolving taste can give a
competitive edge to Yexmarine if they innovate in the direction that consumers want.
Customizations
Personalized messages and emails can be sent to potential customers as reminders to complete
the transaction. This will make the customer feel more valued and might generate profitable
customer relationships in the long run.
Global Presence
Yexmarine will be able to market itself independent of geographical locations and reach out to
greater audience thus increasing its global presence as well as revenue from different regions.
Reduced Cost
E-marketing is cheaper than traditional marketing and this will save Yexmarine added marketing
expenses and will thus improve the profit margin too.
Customer Reviews
Every potential customer goes through the reviews before buying the product. Yexmarine can have
authentic reviews at their home page as well as around its products boasting about its brand
loyalty and amzaing customer experiences.
Customer Feedbacks
Customer Feedbacls play a vital role in innovation as they provide a guide for the company as to
what they expect in future and using this as an oppurtunity, Yexmarine could make use of its
strengths to capiralize on its oppurtunity and benefit through the first mover advantage.
Target Younger Generation too
Currently senior or middle aged citizens are being targeted, but E marketing will not be limited to
any boundaries and will also target younger generation as they are the ones who are 24/7 involved
in SMART devices and Internet of Things. So such electronic marketing can attract younger
customers too.
Market Leader
Since the concept is relatively new, few attention has been paid to its importance, Yexmarine
should take the upper hand in thhis before anyone so that it could grasp on to the greatest market
share possible.
BEST REGARDS,
TRANART CONSULTANTS
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