Operational Case Study Examination May 2022 - Astranti

1 Operational case Study Examination November 2022 - February 2023. Pre-seen material Operational case Study Exam - November 2022 - February 2023. Contents Your role .. 2. Company background .. 3. FireWorks' ethos .. 4. The industry .. 5. Extract from the FireWorks website: Our products .. 7. The Directors .. 9. Management in key departments .. 10. Extract from the employee induction manual .. 12. Overview of the manufacturing process .. 12. Day two quiz .. 15. Other information about company operations .. 16. Financial statements for the year ended 30 June 19. Budget information for the year ending 30 June 2023 .. 22. Articles .. 28. Tax regime in Beeland .. 30. Your role You are a Finance Officer working within the Finance Department of FireWorks. You are principally involved in the preparation of management accounting information and providing information to managers to assist with decision making. At times, you are also expected to assist with the preparation of the financial statements and answer queries regarding financial reporting and other financial matters.

2 CIMA 2022. No reproduction without prior consent 2. Operational case Study Exam - November 2022 - February 2023. Company background FireWorks is a company that designs, manufactures and sells a range of outdoor grills. The company is based in Beeland, a country in Europe which has the B$ as its currency. The products that FireWorks sell are moveable stand-alone grills that can be located wherever the user wishes in an outdoor setting. FireWorks was founded in 1984 by David and Debbie Wheeler after they had experienced the widespread outdoor grilling, eating and socialising lifestyle in North America, while on holiday. Prior to founding FireWorks, David was an executive in marketing and Debbie was a production manager in a metal works company. After receiving an unexpected inheritance, David and Debbie decided to invest in a small manufacturing plant and formed FireWorks. David and Debbie were both passionate about food and the great outdoors and wanted to inspire others to experience the pleasure of the dining and entertaining outdoor lifestyle.

3 At the time, few inhabitants of Beeland owned (or even knew anyone that owned) an outdoor grill. They identified a gap in the market for quality, easy-to-use grills. The first of FireWorks' grills, launched in 1984, was a simple but high-quality design, fuelled by charcoal. It was sold through specialist outdoor furniture retailers and large garden centres, all based in Beeland. As 1984 had a particularly good summer, sales were healthy and, as the product was of high quality, FireWorks established a good reputation. The following year saw a marked increase in sales and greater awareness of the FireWorks brand. As the concept of outdoor cooking continued to gain in popularity in Beeland, FireWorks expanded the range of products it offered. In 1998, a gas-fuelled grill was added to the FireWorks range. More recently in 2018, an electrically-powered wood pellet grill was added to the range. With only a few exceptions (due to recession or exceptionally bad weather), FireWorks has experienced sales growth every year since its foundation.

4 In 2018, David and Debbie retired and the task of running the company was handed to their youngest child, Catherine Wheeler, who spent her early career as a qualified chef working in top restaurants throughout Europe. Prior to taking over, Catherine had worked at her parents' company for 4 years. She has many ideas for the future direction and growth of the company. Currently, FireWorks operates from three sites which are located within 10 kilometres of each other: Head Office, Production Facility and Distribution Centre. The company does not operate any retail outlets. In 2021, FireWorks sales volumes were split: 68% through retailers in Beeland, 20% direct to customers in Beeland through the FireWorks website and 12% to third- party agents based in other countries. In the year to 30 June 2022, the company's revenue was B$ million, gross profit was B$ million, and profit before tax was B$ million. During that year, the company sold 192,500 grills. On 30 June 2022, the company had 316 employees.

5 All employees live and work in Beeland. CIMA 2022. No reproduction without prior consent 3. Operational case Study Exam - November 2022 - February 2023. FireWorks' ethos FireWorks' current aim is to create grills that will enhance the outdoor eating experience. As a professionally trained chef, Catherine Wheeler wants the company to be at the forefront of all outdoor cooking trends in Beeland. She often states that the business is about creating opportunities for hospitality and friendship and not just metal welding. Catherine's vision is to enable the people of Beeland to socialise outdoors, while enjoying a vast range of food, perfectly cooked on a FireWorks grill. The advertising for FireWorks always includes the phrase, FireWorks for delicious food . Catherine is also concerned with sustainability and ensures that the raw materials used in production are ethically and sustainably sourced. Relationships with suppliers are seen as important to FireWorks' success.

6 The company aims to be carbon neutral within 6 years and is continually striving to improve its supply chain, manufacturing processes and outward logistics to get closer to this. CIMA 2022. No reproduction without prior consent 4. Operational case Study Exam - November 2022 - February 2023. The industry The global market In 2021, consumers spent the equivalent of B$ billion on outdoors grills and accessories across the globe. By far the largest market, with an equivalent of B$ billion of sales (38%. of the global market), was the United States of America. Other countries that have extensive outdoor grilling cultures are Argentina, Australia, Brazil, Canada and South Africa, where sales are strong. In 2021, sales in Beeland were worth the equivalent of B$ billion. The global market for grills is dominated by specialist grill brands that design, manufacture and sell only outdoor grills and accessories. In 2021, global sales of grills and accessories was split as follows: 10%.

7 20% Specialist global brands Specialist regional brands Non-specialist brands 70%. Specialist global brands: There are four specialist global brands. These brands originated, and are still based, in the United States of America. They sell their products globally. Specialist regional brands: There are 14 specialist regional brands. Each of these brands focusses its sales efforts in particular regions of the world and do not have a global sales presence. These brands originate and are based across the world (with three in the region of Europe, one of which is FireWorks). Non-specialist brands: A non-specialist brand refers to any brand that includes grills as part of their product offering. These include Do-It-Yourself (DIY) retailers that offer own-label'. grills. None of the 18 specialist brands operate their own retail stores, although they do all have their own on-line sales channels. CIMA 2022. No reproduction without prior consent 5. Operational case Study Exam - November 2022 - February 2023.

8 The market in Beeland In 2021, sales in Beeland were worth the equivalent of B$ billion and were split as follows: 18%. Specialist global brands 52% Specialist regional brands Non-specialist brands 30%. The four specialist global brands are less dominant in Beeland, where they have a 52% market share as opposed to their global 70% share. There are three specialist regional brands that sell within Beeland, and FireWorks is the largest of these in terms of sales value. Non- specialist brands have greater influence on the market in Beeland than they do in the rest of the world. One reason for this is that Beeland consumers are more price sensitive and are, unlike consumers elsewhere, less inclined to be swayed by brand names. In 2021, 32% of grills were sold through on-line sales channels (either direct to consumers from the brand or from retailer websites) in Beeland. The other 68% were sold in retail stores. As this is a significant purchase for most consumers, they will research their purchase carefully before making their final selection.

9 This will include visiting at least one store to inspect and touch the grills on offer. Future prospects The Beeland market for sales of grills is expected to grow on average by 5% a year over the next 5 years. Potential reasons for this include: An increasing interest in outdoor cooking. Continued development of grills to embrace digital technologies, including precision temperature systems and temperature probes linked to smartphone apps. CIMA 2022. No reproduction without prior consent 6. Operational case Study Exam - November 2022 - February 2023. Extract from the FireWorks website: Our products We manufacture our grills in our own Production Facility. Each grill starts with a cook-box (a base and a lid), which we create from high-grade stainless steel and coat in premium porcelain enamel to protect against rust and corrosion and to give our unique one colour finish. To each cook-box, we add components such as legs, bezels (metal rings that are placed beneath the control dial), dials and the all-important cooking grill plates.

10 Each of our grills is fitted with the best components available and designed to provide the ultimate outdoor cooking experience. Click on one of the buttons below to find out more about our range of gas, charcoal and electric grills or our range extensive range of grill accessories. Gas grills Charcoal grills Electric grills Accessories Customer warranty FireWorks has an industry-leading parts and labour warranty on all grills. The grill cook-box is guaranteed for 10 years. If your cook-box shows signs of rust or burn-through within 10 years, we will replace the grill completely free of charge. All other components of your grill (including handles, legs, wheels, bezels, control panels, cooking grills) are guaranteed free of fault for 5 years. In the unlikely event of your grill developing a fault, we will replace or repair the faulty part free of charge. CIMA 2022. No reproduction without prior consent 7. Operational case Study Exam - November 2022 - February 2023.