HKICPA Accounting and Business Management Case Competition (Level 2)

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1 Dora Lee 28 December 2016

2 HKICPA Accounting and Business Management Case Competition (Level 2) 2

Doctrine in Business Administration (City University of Hong Kong) Master in Business Administration (Distinction) MSc in Strategic Marketing Management (First Class, Worldwide Best Completion Award)

3 Doctrine in Business Administration (City University of Hong Kong) Master in Business Administration (Distinction) MSc in Strategic Marketing Management (First Class, Worldwide Best Completion Award) The Chartered Marketer (UK): The Chartered Institute of Marketing Certified Professional Marketer (Asia Pacific): The Federation of Marketing Institute Professional Marketer (Hong Kong): Hong Kong Institute of Marketing 3

4 Level 2: Management Consultant (page 3: Question paper and guideline) Target company: Bauhaus 4

5 Prepare a business proposal ( 商業企劃書 ) to: Part II - Formulate a business plan for Bauhaus Group s operations in Hong Kong (b) SWOT analysis of Bauhaus Group s operations in Hong Kong non financial analysis in terms of favourable (+) or unfavourable (-) factors external & internal to the organization. (20 marks approximately 3 pages) 5

6 (c) Business plan A business plan of $10 million for launching a promotional project to improve Bauhaus Group s operations in Hong Kong, which should be supported by a marketing expenses budget and implementation details. In order to evaluate the effectiveness of your recommendations, you are required to analyse the projected impact on store locations, sales and average spending per customer for the years ending 31 March 2017 and (25 marks approximately 4 pages) 6

7 A. Introduction 1. Bauhaus mission 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. Information and Communications Technology (ICT) 信息和通信技術 2. Community Involvement 社區參與 3. Environmental Protection 環境保護 4. Operating Practices 營運常規 D. Implementation Plan 1. Implementation plan (Part 1) 2. SWOT Analysis (Part 1) 3. Evaluating Strategy (Part 1) 4. Measurement and Control (Part 1) 7

8 Business Management and Marketing Strategies 1.[Think] - SWOT Analysis 2.[Do] - Implementation plan 3.[Check] - Evaluation, measurement and Control 8

9 Business Management and Marketing Strategies 1.[Think] - SWOT Analysis 2.[Do] - Implementation plan 3.[Check] - Evaluation, measurement and Control 9

10 SWOT analysis Analysis of an organization s strengths, weaknesses, opportunities & threats in order to identify a strategic niche that the organization can exploit 10

11 Strengths ( 優勢 ) Weaknesses ( 劣勢 ) 11

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15 Strengths -domestic market -high profitability and revenue?? -monetary assistance provided?? -skilled workforce -barriers of market entry -experienced business units Weaknesses -high investments in research and development?? Data on this page may have come in part, or entirely, from one or more data providers. We are not responsible for any errors or omissions on this page. This website is for information purposes only. Opportunities -growing economy?? -new acquisitions?? -new markets -venture capital -growth rates and profitability -new products and services -income level is at a constant increase?? Threats -increase in labor costs -cash flow?? -external business risks -government regulations -technological problems -increasing costs -price changes?? 15

16 Marketing and advertising capabilities Strong customer connect through strong brand promotion Brand awareness and reputation/high TOMA (top of mind awareness) Brand loyalty Multi channel strategy by extending online sales Strong and extensive distribution channels in Hong Kong/ Efficient distribution Strategic location Relevancy? 16

17 Lack of marketing capability Higher costs arising from training personnel Lack of e-commerce Lack of product breath and offerings at different price points Low turnover of product Limited stock Relevancy? 17

18 Brand image Company image and social engagement Mobile payments Growth of fashion market Global market penetration Growing Asian market (good, growing market to be in) Online market (expand into internet) Relevancy? 18

19 Fluctuation in exchange rates Market entry barriers Design challenges Global competitors Local competitors Relevancy? 19

20 Business Management and Marketing Strategies 1.[Think] - SWOT Analysis 2.[Do] - Implementation plan 3.[Check] - Evaluation, measurement and Control 20

21 (c) Business plan A business plan of $10 million for launching a promotional project to improve Bauhaus Group s operations in Hong Kong, which should be supported by a marketing expenses budget and implementation details. In order to evaluate the effectiveness of your recommendations, you are required to analyse the projected impact on store locations, sales and average spending per customer for the years ending 31 March 2017 and (25 marks approximately 4 pages) 21

22 Inform, Persuade & Remind customers about the Group and/or its products. 22

23 You need to consider: The target market The nature of the products The stage of the product s life cycle Money available for the promotion 23

24 Question: Bauhaus targets WHO with?? products as its signature categories. Bauhaus is principally engaged in the design, manufacture, wholesale, and retail sales of apparel, bags and sacs, and accessories under its own brand names of TOUGH and SALAD as well as retail sales of apparel under other third party brand names in the fashion industry. Bauhaus s products as well as those sourced from the third party brand names are adopting a trendy & casual line, targeting young consumers with fashion consciousness. (Barits Ho Chong Securities Co Ltd, 2006) 24

25 Bauhaus manufactures and trades a wide range of apparels ( 服飾 )) and accessories for consumers. Its products include jeans, shirts, denim clothes, pants, tops, t-shirts, footwear and other leather accessories. It also sells accessories including handbags, wallets, backpack, clutches, shoulder bags, top handles, tote bags and caps. The company has brand such as BAUHAUS, TOUGH Jeansmith, SALAD, 80/20 and SUPERDR. 25

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27 Growth stage Sold a lot + To sell as much as possible Competitors watch & decide about joining in with a competitor product Growth continues until too may competitors in the market (market saturation) At the end of the growth stage, profits starts to decline & the Group has to spend more money on promotion to keep sales going Spending money on promotion cuts into the Group s profit Persuasive promotion is in place during this stage 27

28 Maturity stage Many competitors have joined market is saturated The only way to sell is to begin to lower the price & profits decrease It is difficult to tell the different between products since most have the same F.A.B. Features, Advantages & Benefits [* no obvious product differentiation] Persuasive promotion becomes more important during this stage *The Group TV commercials (or promotion) almost begging the customers to still buy its products because the Group still makes it just as good 28

29 HK$10,000, million 29

30 Paid & non personal mass communication 30

31 Focus on information & goodwill of the Group Consumer advertising: Rational versus emotional appeals Focus on particular product(s) or brand(s) Stimulate demand for specific brands 31

32 What do you want your ads to do? Who are you trying to reach? [* Target customers] What promotional message do you want to communicate? How much does each medium cost? 32

33 Rate card 廣告收費價目表 33

34 TVB Prime time (Mon to Sun) Rate (30 sec) Air time cost (30 sec) No. of spots F7 $70, (30 sec) F15 $215, (30 sec) 34

35 Run-of-page: (Mon-Thur) Full page 4C HK$306,000 $10,000,000/ 306,000 = 32 FP 35

36 Min booking (4 weeks): HK$36,000 X 4 = $144,000 36

37 Sales promotion ( 促銷 ) : demandstimulating activity designed to supplement advertising o Coupons o Premiums o Contests o Sweepstakes o Specialty advertising places the Group s name, address & advertising message on useful articles that are then distributed to target customers 37

38 Publicity ( 公眾信息 ): a non-paid form of advertising that uses mass communication to stimulate demand o Structured news release to the media o Coordinating personal communication with a group/ customers 38

39 Public relations ( 公共關係 ) : a planned communication effort by the Group to contribute to generally favourable attitudes & opinions toward the Group & its products o Supporting charitable projects o Supplying volunteers or other resources o Participating in community-service events o Sponsorship o Providing information to customers through newsletters 39

40 Promotional plan: marketing expenses budget and implementation details 40

41 Promotional plan: marketing expenses budget and implementation details 41

42 Promotional plan: marketing expenses budget and implementation details 42

43 Business Management and Marketing Strategies 1.[Think] - SWOT Analysis 2.[Do] - Implementation plan 3.[Check] - Evaluation, measurement and Control 43

In order to evaluate the effectiveness of your recommendations, you are required to analyse the projected impact on

44 (c) Business plan A business plan of $10 million for launching a promotional project to improve Bauhaus Group s operations in Hong Kong, which should be supported by a marketing expenses budget and implementation details. In order to evaluate the effectiveness of your recommendations, you are required to analyse the projected impact on store locations, sales and average spending per customer for the years ending 31 March 2017 and (25 marks approximately 4 pages) 44

45 Bauhaus started in 1991 on Nathan Road, Tsim Sha Tsui as a contemporary fashion store bringing the best of international brands to young trend-setters in Hong Kong [ 28 stores] 45

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consumption] Customers preferences Change of average spending

47 Sales data before and after the promotion How many sales are a result of those promotions Timing of promotion [* Hedonic consumption] Customers preferences Change of average spending per customers [*Increased/decreased] Competitors promotional campaigns 47

48 The median monthly domestic household income for 2014 was HK$23,500 (vs for 2013 HK$22,400). (The Information Services Department HKSAR, April 2015) 48

49 Company Shares of Apparel Accessories: % Value ( ) 30 companies (Euromonitor, 2016.) 49

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53 Strategy Formulation Implementation and Execution Evaluation 53

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Barits Ho Chong Securities Co Ltd (2006). Company Update: Bauhaus International. Available at http://www.megasec.com.hk/uploadfile%5ctaiwanlistco/0483hk%20bauhaus%20update %2004JAN.

55 Barits Ho Chong Securities Co Ltd (2006). Company Update: Bauhaus International. Available at %2004JAN.pdf [15 October 2016] Euromonitor International (June 2016) GlobalData (2015). Bauhaus International (Holdings) Limited (483) - Financial and Strategic SWOT Analysis Review. Available at [15 October 2015] Headline Daily rate card Available at [5 December 2016] The Information Services Department, Hong Kong Special Administrative Region Government (April 2015) GovHK Website. Hong Kong: The Facts. Available [30 October 2016] JCDecaux Rate card Available at [5 Dec 2016] Skypost Rate card Available at [5 Dec 2016] TVB Rate card Available at [5 December 2016] 55

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and satisfying customer needs profitably about customers, competitors and market trends through collecting primary and secondary data

The management process that is responsible for anticipating, identifying and satisfying customer needs profitably Marketing The process of gaining information about customers, competitors and market trends