Secondary School Group (Level 1 and 2) · PDF fileCompetitive positioning in the industry ......

Dora Lee 18 November 2017

Secondary School Group

(Level 1 and 2)

HKICPA Accounting and Business Management Case Competition

2017-18

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• Level 1: Financial Analyst (page 2: Question paper and guideline)

• Level 2: Management Consultant (page 3: Question paper and guideline)

• Target company: Hung Fook Tong (HFT)

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• To study HFT 2015 and 2016 annual reports

• To conduct HFT financial analysis (70 marks) and business analysis (30 marks)

• To prepare a business analysis to identify at least FOUR examples of HFT achievements + ONE suggestion for improvement:

o Environmental Protection 環境保護

o Corporate Social Responsibility 企業社會責任

o Corporate Governance 公司管治

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Prepare a business proposal (商業企劃書) to:

• Part A: HFT overall group financial performance for the past TWO years, for the years ended 31 Dec 2015 and 2016 (30 marks); and

• Part B: Formulate a business [*promotion] plan of HK$10 million for the coming TWO years (i.e. for the years ending 31 Dec 2018 and 2019) to improve operations of HFT in Hong Kong. (45 marks, excluding D. II a: Revenue/profit review – 10 marks)

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• Review business environment

• Enhance HFT performance

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A. Introduction

1. HFT mission and value

2. Current state of business

B. Non financial analysis

1. External environment

2. Product portfolio

3. Competitive positioning in the industry

C. Business analysis

1. Environmental Protection 環境保護

2. Corporate Social Responsibility 企業社會責任

3. Corporate Governance 公司管治

D. Implementation Plan

1. Implementation plan (Part 1) [* Part 2: to be discussed on 27 December, 2017]

2. SWOT Analysis (Part 1) [* Part 2: to be discussed on 27 December, 2017]

3. Evaluating Strategy (Part 1) [* Part 2: to be discussed on 27 December, 2017]

4. Measurement and Control (Part 1) [* Part 2: to be discussed on 27 December, 2017]

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Question: Why it is important to understand HFT mission and value?

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• The Group … adhered firmly to its belief …, as reflected in its motto of “Naturally Made, Wholeheartedly Good”, … has adopted its “No additive” as approach and stringent quality control measures for its production.

• 集團…堅守「真心製造，自然流露」宗旨，採取「無添加」生產過程，並配合以嚴格的品質監控措施。

Source: http://www.hungfooktongholdings.com/html/about.php

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• Level 2: Management Consultant (page 5: Question paper and guideline)

• In preparing the business proposal, you should ensure that all your suggestions and recommendations are in line with Hung Fook Tong Group's mission and values.

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1. Problem identification

2. Current management priority issues

3. Current state of retail business in Hong Kong

4. etc.

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• The first step in the problem solving & decision making process is to identify & define the problem.

• A problem can be regarded as a difference between the actual state

(Now; 2017) & the desired state (Future, 2018- 2019).

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Example 1 (level 1):

“… make one suggestion for improvement.”

(Page 2: Question paper and guideline)

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Example 2 (level 2):

“… to further enhance the performance of HFT's retail operations in HK.”

(Page 3: Question paper and guideline)

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Question: What is the current state?

positioning

revenue from the retail operations

customer attitudes towards ECC

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China, HK,

other

countries

New herbal

& non-herbal

products

Decrease in revenue

from wholesale

operation

• Economic and Trade Information on Hong Kong : The value of retail sales, increased by 0.3% year-on-year in January-August 2017 compared with the same period in last year, after the decline of 8.1% for 2016.

(HKTDC, 26 Oct 2017)

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• Monthly retail sales statistics: Trend of retail sales growth in Hong Kong

• (a) Total sales value growth vs last year

• (b) Total volume growth vs last year

(HKRMA, 2017)

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B.1 External environment – Macro/ micro

(

1. Macro (宏觀):

Political (政治)

Economic (經濟)

Socio-cultural (社會)

Technological (科技)

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2. Micro (微觀):

• Structure of market/ competitors (市場結構/競爭者)

• Consumer needs (消費者需要)

• Trends of the market (市場趨勢)

• Stakeholders (持份者)

• etc.

( Vrontics, Kogetsidis and Stavrou, 2008.)

• Political (政治)

• Economic (經濟)

• Socio-cultural (社會)

• Technological (科技)

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• The need to follow the laws and regulations in the countries from where HFT buys the raw materials.

• Individual Visit Scheme

• Any existing ordinance to supervise manufacturing and marketing of the (private label) products?

• Trade Descriptions Ordinance (商品說明條例):

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• Some other factors to consider are:

oTax policy

oEmployment Laws

oMinimum Wages Ordinance

oPlastic Shopping Bag Charging

Scheme

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• Weak global economy……

• Increases in rental expenses…… (“Currently, HFT has more than 130 self-operated retail shops primarily in Hong Kong and Mainland China.”)

• “The products are sold through two principal business segments: Retail and Wholesale.”

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• Consumer purchase behavior change

• Changing family patterns in HK and China

• Consumer preferences

• Changing work patterns

• Changes in lifestyles of local population

• The level of education of the population in local markets

• Changing values among population

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• Emergence of innovative technology/ mobile wave

• New e-commerce business (e-commerce platforms development)

• Social media (to increase HFT's exposure)

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• Structure of market/ competitors (市場結構/競爭者)

• Consumer needs (消費者需要)– “P-E-Social-T” refers

• Trends of the market (市場趨勢) ??

• Stakeholders (持份者)– Government (政府), customers (顧客), employees (員工), …… [*Community Involvement refers]

• etc.

.

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• Business sector: Food & beverages

• Activities: HFT is engaged in the production and sales of Chinese herbal drinks & other drink products, Chinese-style soups and tortoise herbal jelly.

(HFT Company Data Report, the Wall Street Journal, 2017)

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Market analysis:

• Environmental scanning - Screening large amounts of information to detect emerging trends

• Competitive intelligence - Accurate information about competitors that allows YOU (*) to anticipate competitors’ actions rather than merely react to them

Segmentation, Targeting and Positioning Strategies

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36 (Census and Statistics Department HKSAR, 2015)

• The Hong Kong Resident Population is projected to increase from 7.34 million in mid-2016 to a peak of 8.22 million in mid-2043, and then decline to 7.72 million in mid-2066.

• Population ageing is expected to continue. It will accelerate notably in the coming 20 years, and will be most rapid in the coming 10 years.

• The proportion of elderly persons aged 65 and over is projected to increase from 17% in 2016 to 31% in 2036, and further rise to 37% in 2066.

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• HFT is positioned in a more mature area of soft drinks and its products are priced affordably to target the mass market in the mid-range and low end of sales.

(Euromonitor International, 2017)

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A. Introduction
















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1.Environmental Protection 環境保護

2.Corporate Social Responsibility 企業社會責任

3.Corporate Governance 公司管治

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• To reduce energy

consumption, a “Heat

Recovery System” is

used in the Multifunction

Chiller plant to recycle

the heat energy to a pre-

heat water storage tank.

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• “A Steam Condensate Recovery System”

is also used to collect and recycle the heat

energy from steam pipelines.

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• As a move to help advancing the

development of local renewable energy in

Hong Kong, HFT is one of the first

companies to support WWF-Hong Kong’s

first ever Renewable Energy Certificate

(REC) scheme.

• These certificates allow companies to

purchase energy that is guaranteed to be

100% solar – generated from WWF’s

“Solarizing Communities Project” in Tai O.

• This initiative has enabled HFT to offset a

small part of its carbon footprint. In 2016,

400 kWh of HFT’s electricity consumption

is from renewable source.

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• HFT believed in having open communication with its

suppliers. Regular meetings are in place with major

suppliers to communicate on the supply of critical materials

and pricing trend that allows HFT to take a more proactive

approach in managing suppliers.

• HFT also shared with its suppliers its ongoing supplier

monitoring process, which measures their performance

through areas such as arrival time, quantity variance, and

quality problem. Their performance forms part of HFT’s

future decisions in retaining the use of specific suppliers.

A. Introduction
















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To be elaborated on 27

December 2017

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SWOT analysis

Analysis of an organization’s

strengths, weaknesses,

opportunities & threats in order

to identify a strategic niche that

the organization can exploit

To be elaborated on 27 December

2017

Strengths (優勢)

•

•

Weaknesses (劣勢)

•

•

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61 Image from: https://www.slideteam.net/blog/create-swot-analysis-template-in-powerpoint/ [2 November 2017]

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Strategy Formulation

Evaluation

Implementation and Execution

To be elaborated on 27 December

2017

6%

35%

32%

27%

New project 1

New project 2

New project 3

New project 4

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Measurement and control against :

a. (Marketing and management) Objectives

b. Promotion budget allocation (e.g. HK$10 M)/ financial

situations

c. Impact on store locations, sales and average

spending per customer for the year ending 31

December 2018 & 2019.

• Census and Statistics Department HKSAR (2015). Available at http://www.statistics.gov.hk/pub/B1120015062015XXXXB0100.pdf [6 November 2017]

• Hung Fook Tong Company Data Report (2017), the Wall Street Journal. Available at http://quotes.wsj.com/HK/1446/company-people [6 November 2017]

• Hong Kong Retail Management Association (2017). HKRMA Monthly Sales Statistics Press Information in September 2017. Available at http://www.hkrma.org/upload/press/Monthly%20Retail%20Sales%20Statistics%20Press%20Info_20171103.pdf [1 November 2017]

• Hung Fook Tong Annual Report (2015)

• Hung Fook Tong Annual Report (2016)

• Hung Fook Tong Environmental, Social and Governance Report (2016) Available at file:///E:/HKICPA%20Business%20Case%202017-2018/Powerpoint_2017%202018/HFT_Environmental%20Report%202016.pdf [1 November 2017]

• Euromonitor International (October 2017)

• Vrontics, D., Kogetsidis, H. and Stavrou, A. (2008) ‘Strategic marketing planning for a supplier of liquid food packaging products in Cyprus’, Journal of Business and Industrial Marketing, 21 (4), pp. 250-261.

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http://quotes.wsj.com/HK/1446/company-people




http://www.hkrma.org/upload/press/Monthly Retail Sales Statistics Press Info_20171103.pdf



E:/HKICPA Business Case 2017-2018/Powerpoint_2017 2018/HFT_Environmental Report 2016.pdf




Thank you & see you (Level 2)

on 27 December 2017:

“Business Management & Marketing

Strategies”

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Secondary School Group (Level 1 and 2) · PDF fileCompetitive positioning in the industry ......

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