Module 3
VISION AND MISSION
Vision
To be the exemplary and pioneer business leaders in cookie industry.
To stand apart from the competition by being the first in the market to innovate.”
Mission
To develop unique and matchless tasting cookie as per customer’s taste.
To maintain high quality, to remain customer-centric and reaching every part of US.
We take a hand-crafted, artisanal approach to each cookie we bake by selecting the finest quality ingredients, relentlessly perfecting our award-winning recipes, and choosing to sell only the ones we secretly want to keep for ourselves. For us, cookies aren't a fad. They're not a dessert. They're not a substitute for boredom. Cookies are at the core of our being. And we promise, we make cookies so good that after your first bite, you'll be marching alongside us in the war against mediocrity.
2
GOALS AND STRATEGIES
Goals
To make the best cookies on planet and revolutionize their image and to spread joy and cheer to US.
To grow the company all over the world.
Strategies
Adding new signature cookies along with our basic like chocolate chip, and also special order cookie cakes.
To reduce shipping time to same day including online ordering irrespective of quantity and difficulty.
Make the best cookies on the planet
Revolutionize the image of our cookies
Share our passion with our customers to keep them coming back for more
Make our customers feel comfortable in our environment by being welcoming and also showing that we pay attention and care about their daily routines
Make sure to grow our company but at the same time be smart about it by implementing “educated growth” so that we are truly capable to take that step and also having the support from our customers
Also expand by adding new signature cookies like our Cheesecake Cookie Heaven recipe along with our basics like chocolate chip, peanut butter oatmeal, and also special order cookie cakes.
Trying to expand our shipping efforts is a must including our online ordering that is shipping in two days but we need to work on shipping in the same day depending on the quantity and difficulty of the order coming in.
3
VALUE AND SUPPLY CHAIN
Value Chain
Cookies will be hand made as well as manufactured by automated robotic plant and machinery.
Value will be added to raw material in manufacturing process with a special focus on elimination of wastage.
Supply Chain
The cookies will be packed at plant, shifted to godown immediately and then to sales department on receiving of order and dispatch shipment to customer thereby reducing supply time to one day.
Emphasis is on reducing all intermediate time wastage.
BALANCE SCORECARD DIAGRAM
COST INFORMATION
Monthly
Selling Price per unit $3.25
Variable Cost per unit $2.28
Contribution Margin per unit $0.67
Fixed Cost for month $3,607
Contribution Margin Ratio = 20.62%
(CM per unit/SP per unit)
Breakeven Point in amount = $17,497
(Fixed Cost/CM Ratio)
Breakeven Point in units 5,384 units
Monthly Sales Required
To earn $1,000 daily, i.e., $30,000 per month
Total CM required $33,607
Sales in Amount required $163,019
Sales in units required 50,160 units
Daily sales required in units 1,672 units
Daily sales required in
amount $5,434
ANALYSIS FOR PRODUCTION FACILITY
Investment $800,000
Revenue $650,000
Less:
Material $70,000
Labor $150,000
Depreciation $80,000
Other $10,000 $310,000
Income before taxes $340,000
Taxes @40% $136,000
Net Income $204,000
Cash flow (Income + Dep.) $284,000
Payback Period 2 Yrs 10 Months
Required Rate of return 12%
IRR 33.5%
NPV $804,657
Accounting Rate
of return 51%
The payback period of the project is 2.82 years, i.e., 2 years 10 months, which is low and project is recommendable.
IRR of project is 33.5% which is more than 2.5 times of required rate of return, therefore the project is recommendable on IRR basis also.
NPV of project is $804,657 which is positive and project should be taken if evaluated by NPV also.
ARR is 51% which is also very high and makes project acceptable.
The project is very profitable in all respects.
7
CONCLUSION
Break even is quite achievable as 180 units daily.
Payback period is 2.82 years
New Production Facility Evaluation
From new investment annual income after tax $204,000 and annual cash flow $284,000.
IRR is 33.5% and ARR is 51%.
NPV is $804,657.
The new production facility should be started and it is highly profitable and on the basis of capital budgeting techniques it is highly recommended.
Thank you for your time…