AMN430 International Logistics Management
Assignment 2 – Semester 2 2024
Assignment 2: Operations Plan – International Business Expansion
This assessment targets the students’ knowledge of logistic concepts, terminology, functions and procedures and the ability to formulate solutions to logistic problems. Place yourself in the role as the operations manager for a company where your job is to assess the business objectives and create a comprehensive operations-plan with key focus on international business expansion covering all aspects of the VC. I.e., what you recommend your CEO to do and why, including complete revenue-cost-profit predictive calculations.
Submission: Part A – The Excel calculations. Being a prerequisite to Part B. I.e., it is very difficult to complete Part B unless you have first completed Part A. It is strongly recommended to complete this part by Friday, Week 9.
Part B – The Operations Plan is due Friday, Week 13 @ 23.59PM.
This part is the research-intensive component where you learn to become a future Executive decision maker. You will assess VC needs and craft recommendations regarding how to operate your business supported by solid in-depth justification and rationale. You must include every page of Part A in the final report in form of screen shots (placed in an appendix) and email the complete excel booklet to your professor.
Coverage/Duration: 2,500 words (+/- 10%) excluding a 1-page mandatory Executive Summary, table of contents and supportive appendices (max 40 pages). Diagrams, pictures, and graphs, should be in the body of the text (not included in the word count).
Group or Individual: Individual assessment
Optional/Compulsory: Compulsory
Learning outcomes: ULO 2, 3, 4: AoL KS 1.2; HO 2.2; PC 3.1.
Format: Written report must use size 12 pt. Times New Roman font, 1.5 line spacing, 1-inch margins. APA Referencing required. Submit your report in Word format (only).
Space Allocation: [SUGGESTION / EXAMPLE]
Once you have completed your foundational research you can start compiling your insight and commence writing your report. How you structure it is individual but remember it must read like a professional business report. Do not recapitulate the case-study or theoretical concepts. Suggestion: (500 words) target country geography and specific logistic challenges, target country market conditions, location of customer clusters, suitable means of transportation in target country. Then, write your recommendations to meet the case objectives (500 words); justification of the recommendations (1000 words); performance (logistical and financial) outcomes and results of your decisions (500 words). Use support from all your appendices.Instructions:
- First, read and analyse the provided case study several times to understand the tasks, your ‘job description’, the context, and the business objectives!
- Second, complete all Part A components (the Excel workbooks).
- Third, complete all the mandatory appendices below as they represent contextual and foundation research. These provide you with an overall, necessary, and foundational context-based knowledge. It is further a tool to create an operations-plan with a focused systematic approach. It also covers associated models (risk assessment, tactical procurement plan), and instructions (mapping the input- and the output side of the value-chain) so that you have an in-depth understanding of what the different solutions results in. NOTE: pending on the target market and case objectives, some appendices need more (or less) attention. Your Lecturer will advise which to include/exclude.
- Four, compile your insight based on the findings from your appendix-based research and start drafting your report. Present realistic recommendations on what you (being the operations manager) should do to meet the business objectives and to manage the overall situation and its challenges (including at least one key topic from each of the unit topics listed below). Create a checklist to remember addressing all the objectives.
- Five, remember to address the below lecture topics in appropriate parts of Part B. You do not need to discuss or repeat any theoretical aspects. Applications only – no need to retell the case study story. Here is a list of topics you must apply in your A2:a) Customer Service: how to ensure the service objective from a logistic perspective.
b) Logistic Network Configuration: what LN configuration do you need to meet all objectives? How should you implement it?
c) Facility Location Decisions: where should you locate all LN nodes?
d) Finding the Optimal Location: where should you locate your HQ and your main warehouse/DC?
e) Types of Warehouses & DC’s: what type of WH/DCs do you need to meet your objectives? What technology do they need to meet your objectives?
f) Number of Warehouses & DC’s: how many do you need to meet your objectives?
g) Packaging: Fundamentals of packaging – what do you need?
h) Transportation attributes and mode selection: what type of transportation attributes and categories do you need? Why? How many of each? Where to use them etc?
- Six, remember to support your recommendations and arguments with additional sources (quality information from e.g., academic journals, industry reports, business news sources, corporate- and watch-dog websites, ranking institutes etc). Remember to include the financial outcomes (the excel workbooks) in your rationale.
- Seven, when you are 100% ready to submit, you write the Executive Summary. Now finalize and submit your complete work (both Part B and Part A). NOTE: we will mark your assignment as incomplete if you do not include Part A in the final report (screen shots in an appendix). Also note that an ‘Executive Summary’ is not an abstract!
Note: the grading procedure is discretionary and considers for example the quality of the report; how professional it is; content covered and its value contribution for the client and the reader (i.e., your two bosses in the job description). See also the rubric on CANVAS. An assessment submitted after the applicable due date will be unmarked and receive a grade of 0%. If special circumstances prevent you from meeting the assessment due date, you can apply for an extension. If you do not have an extension approval beyond the 48 hours grace period, or if you await to have an extension application approved, you must submit the work you have completed (regardless of its level of completion) by the due date. An incomplete assignment will be marked against the assessment criteria enabling the student to potentially receive partial grades should their extension application not be successful.Cream Andes Case Study
AMN430 Assessment 2 (S2-2024)
INTERNATIONAL OPERATIONS PLAN
“Cream Andes” (CA) is a Bolivian ice-cream company. The head quarter and main production facility is in La Paz from which they operate in parts of South America. They currently produce one hundred and fifty metric tons of premium sorbet per annum. The sorbet comes in three flavours (Tamarillo, Curuba, and Lucuma) which are native to the region and exported FGI to regional wholesalers who on-sell them to unknown retailers and establishments.
While the business is successful in the region, CA lack necessary skills to embrace international opportunities. At core, CA lack understanding of international logistics, the nature of international business (IB) and necessary IB management skills. Due to various societal, political, and market challenges in that region, the production plant is currently underutilized resulting in surplus capacity for IB expansion.
The new CEO, Ms Tina, is a former IB expert at Nestle’ with FMCG experience. Ms Tina used her network to raise necessary funds towards the IB expansion. She plans to undertake an IPO and list CA on the Sydney Stock-Exchange. During her first month at work, Ms Tina replaced the entire Top Management Team (TMT) with specialists through a geocentric HR approach and announced her expansion plans. This is where you enter the picture. You are the new International Operations Manager (IOM) congratulations. As IOM, you report to the CEO and CMO due to the new matrixorganization. The new TMT consists of:
| Title | Name | Nationality | Global Responsibility |
| CEO | Ms Tina | Australian | Chief Executive Officer |
| CFO | Dr Juan | Mexican | Chief Financial Officer |
| CTO | Mrs Li-Jin | Hong-Kong | Chief Technology Officer |
| CMO | Mr Garg | Hungarian | Chief Marketing & Sales Officer |
| IOM | “You” | [your culture here] | International Operations Manager |
The CEO and CMO decided to allocate AUD $19 million towards the first expansion phase outside the ‘Americas’. The new strategy involves branding, customer service, and tight control over the VC and all downstream B2B customers.
The new TMT have decided to enter five countries in the APAC region in the next five years. The target countries are Malaysia, Indonesia, Philippines, Thailand, and Australia. The first host market is Australia. Your annual profit contribution (to the La Paz HQ) is set to 40% of the net profits (applicable to each APAC market) payable in Bolivianos and must exceed Bs 7.5 million.
Your task is to decide which entry mode to apply; the international strategic approach; to set up CA’s regional HQ; the location thereof; to secure production capacity (in the Home or Host Markets); to design and implement sales and distribution capability; to erect a robust supply-chain, high-quality operations, and a logistics system covering the Australian needs.
Make sure you therefore address the input side, the transformation, and the output side of the value-chain in detail. Once the Australian operations are productive it must further be scalable to successfully enable sales and distribution into the other targeted APAC markets. Your capacity metrics is to supply 225 metric tons of sorbet per APAC market equivalent to 1,800,000 servings of sorbet (approximately).
The tactics is to sell directly to the ultra-premium segment (i.e., high-quality upper-end restaurants located in luxury hotels and potentially their room-service menu). The hotels will be your customers. The patrons will in turn be their customers. Your net profit target is $3-5 million AUD, with an EBIT (operating profit) of $6-9 million AUD, and an ROA >25%. Your Asset Turnover KPI is to exceed 2.2. Expect that similar projections, performance, quotas, and outcomes and other metrics applies for the other target markets.
Conducted market research displays a strong market potential for CA’s products in the APAC region indicating a sales spread for the three products of 30%, 10% and 60% (for the P1: Tamarillo; P2: Curuba; P3: Lucuma sorbets respectively). Success in this industry is dependent on logistics excellence, strong supplier relationships, and the provision of an utterly amazing customer service. Note that these fruits are exclusively unique to the region and are unsuitable for cultivation elsewhere.
To compete with these niche products, there is a discussion among the TMT of how to best enter the Australian market to enable future scalability. They have discussed the following entry modes:
Alt. A: Acquire and convert a sorbet company based in Surabaya with similar production capacity as the Bolivian operation. The products will then be shipped to the host market. The investment costs for this entry mode are $11.8 Mn excluding a $5.2 Mn conversion costs of the existing property, plant and equipment (PPE), and local labour costs (host market).
Alt. B: Set up a Wholly Owned Subsidiary (WoS) in Australia including a purpose-built sorbet production plant with three times the current maximum capacity of the home market plant. The inputs will be shipped by air cargo to your selected WoS location. The WoS investment costs is $12.2 Mn., including labour costs (host market).
Alt. C: To enter a Joint-Venture (JV) with a larger ice-cream company located in Kuala Lumpur and produce the specialty sorbet in their existing production plant and then ship FGI to Australia. The approximate investment costs for the JV are $10.5 Mn, including labour costs (host market).
Alt. D: Expand the Bolivian operations (production capacity) by 300% and export FGI to your selected HQ site in Australia. The investment costs for this entry mode are $8.75 Mn., excluding the labour costs (host market).
While considering all four entry modes, the TMT requires you to assess the benefits and issues for each alternative, to justify which two to exclude and which two to compare financially before making your entry mode decision (see appendices).
Your job is therefore to make specific, detailed, and justified decisions based on among other things- the ‘Income Statement’ and the ‘Strategic Profit Model’ outcomes, the risk- and procurement analysis etc. You must also craft and describe your recommended value-chain in detail (covering all components thereof), and complete necessary foundation research (see appendices).
Assume your HR needs are 42 FTE in the Host Market (monthly salary $1,650/FN for each worker + twenty-five per cent social costs) to get your APAC expansion operative in the first Host Market (apart from costs listed in the spreadsheets, these FTEs might be part of your budget). Assume that your staff jointly have the necessary job skills and language capabilities (English, Betawi, Thai and Malaysian) so that they as a team are capable to perform the different organizational functions and tasks as you decide. Yet, you need to decide in which warehouse, DC, cross-docking facility etc they should work in. Further, these location decisions must be based on your customers locations (clusters).
Additional operating information is provided in the provided excel-spreadsheets. Remember, your decisions should not rest upon costs or profit outcomes alone.