System Analyses and Design: Deli Mote - Case Study Example

0 Introduction Deli mote is a comprehensive creative, fruit Juice Company, which provides soft drinks service to the residents of the city of London and its surrounding region from a medium small scale to a large scale distribution. It has expanded its distributors from conventional outlets to modern service technologies that have greatly made the company very famous in the supply of soft drinks to all categories of consumers. Deli mote was established in the year 1989, in London dedicated to serve a world leading class of clients with a full range of products, now a world class supply of soft drinks (Anderson, Benjamin & Fuss, 1994). On the last London Olympic Games Deli mote was awarded the contract to supply soft drinks for the entire period of the Olympic Games. It has the staff of over 2500 that ranges from management, subordinate to technical employees. Over and above, it has professional body of experts who comprises of market research and extension, constantly involved on how to develop the quality of the products. Deli mote produces more than 40 types of products it sells, and this has greatly helped it, boost it is revenue base. These 40 types of brands are highly accepted in the whole region of London city. The technical group that involves the, advertising group has also helped market the brands through various animations, video technologies, this has also helped to change people’s tests and preferences. This has put great value in the products also helped to over them the maximum value they derive from the consumption of this soft drinks. The company has a combination of a cutting edge, highest quality, and the most efficient food production in technology, promotion and production. It has build in a range of array on horticulture, nutrition and food chemistry that give rise to a combination of a quality brand produced by Deli mote (Aruba, 2011). 1.1 Mission Deli mote is a juice producing company whose mission is to become a leading provider of juices in soft drink production industry. This will be produced by providing quality brands that aims at satisfying the consumers at affordable prices while exceeding customers’ expectations. It therefore encompasses the following: Quality: Deli mote Juice Company is to produce the highest quality juices of the most nutritious value. Innovative: The brands of Deli mote have always been in the fore front of a health and nutrition wave. The innovative products, the state of art manufacturing, quality assurance and technical expertise are the bases for the past and future successes. Integrity: The customers depend on the quality of our juice products. The foundation of the company is the customer’s trust in the Deli mote’s juice. Delivering quality freshly made juice to clients depends on an elaborate cooperation and mutual dependence that can exists between supplier and retailer. The company solidly stands behind the company’s products, service and technology. 1.2 Vision Our vision is a road map that serves to establish and guides every aspect of the society through the provision of sustainable of soft drinks brands that seeks to meet their demands. This is possible with sustainable, quality and established growth in the juice production industry. People: To be a great place to work where individuals interact freely with the spirit of togetherness as provided in the best practices. This is where people are inspired to the best they can be. Portfolio: Nurture and establish a winning and organized team of clients and suppliers, which together will provide an inspiring working environment with and need to create value. Partners: Bring all those involved into play providing quality brands and beverages that are anticipated by potential clients and safety of the people as well. Planet: By nurturing through educating people on how to be well behaved in order to bring up supportive and sustainable communities. Profit: Maximize sustainable long-term needs of the communities through the provision best brands and increase the wealth of the shareholder at the same time being mindful of the overall responsibilities. Productivity: Be a highly efficient, lean and motivating company with fast track records. 1.3 Business Objectives Accelerate carbonated soft drinks growth by providing what the customers want. Deli mote leads with the best strategies, and as a result carbonated soft drinks remains their most preferred profitable businesses. Selectively increasing earnings through efficient production practices in the manufacture of their brands that meet the client’s needs, and satisfaction for the duration of their operations. Grow system profitability by increasing the stakeholders trust through best practices that may be reflected in the end year financial results. Deli mote is a company of relationships that will at all times ensures that the company shares it is bottling practices with the affiliate companies. The company seeks to serve the clients and workers with creativity of the highest scale across all channels. It endeavors to increase businesses with the existing customers, by helping to create a context of a company’s growth among it is customers. It also seeks to elaborate direct investments to highest potential areas across the markets. This means to increase profits enables the company to increase in businesses and expand their potential markets and pay more dividends to its stakeholders. 1.4 History Deli mote is a successful juice producing company in the city of London that has existed over three years providing carbonated juices to its customers. The company’s sales have grown tremendously over these years and are operating currently in over 100 store outlets in the great city of London. Deli mote juicy company has experienced gross revenue of $ 600, 000 in sales this year, alone. This is a generation from the initial investment of $ 200, 000. Deli mote is planning to expand it is the operation to include sales distribution of stores within the entire UK region. Among the short term, plans of service of the company are to secure a short term loan of $ 150, 000. This loan will help in the expansion of the logistics management, create by increasing sales avenues and enhance skill development in management through research and extension. Sales plan and projection for the next annual year will lie on the current success based in efficient productions, promotions and advertisements through a target customer base in the entire region of UK. To this far initial contacts have been identified and completed with retail outlets throughout the city and the potential target markets have also been designated. 1.5 Organizational Structure Deli mote company possesses a good market information about it is products and now what it is customers want and when they want it. This even has helped create a class of loyal customers. Deli mote has leveraged this information to greatly understand to better understand who they serve, their specific needs and the company communicate with them. Deli mote head of marketing department is located in London and it is functional responsibility is to develop main strategies that seek to put the company at the top in relation to the company brands that will ensure that products are consistent with potential clients’ needs. This department is responsible for marketing the products and advertising them by differentiating them to the best standards ever. This department is at the core of maximizing the outcomes of the company (Burns & Mitchell, 2006). This means therefore that if this objective is fully realized then the company will realize it is goal. Also, the sales department of Deli mote is to coordinate the distribution of the soft drinks to the respective clients. It is also responsible for ascertaining the potential marketing grounds for the Deli mote brands. In addition they are also responsible in reporting the best distribution links and the general market behavior as expressed by the consumer as this will help design different approaches aligned with the customers’ needs. Over and above, they decide on how much to distribute and how much to store in the warehouse (Anderson, Benjamin & Fuss, 1994). Besides, this department is the one responsible for choosing the best method of transportation factoring in efficiency and fastness of delivery. This is Deli Mote Company organization chart as applying to the sales and marketing department. Sales and marketing summary with respect to consumer behavior is represented in the table below. Market Analysis       2001 2002 2003 2004 2005   Potential customers Growth CAGR Middle class 9% 120,547 131,396 143,222 156,112 170,162 9.00% customers   upper class 8% 80,457 86,894 93,846 101,354 109,462 8.00% customers   others 0% 0 0 0 0 0 0.00% Total   8.60% 201,004 218,290 237,068 257,466 279,624 8.60% This information can be represented in the pie chart below (Isobel, & Robin, 2010) 2.0 The market Trends The market trend for Deli Mote Company is headed towards a more sophisticated customer relation where it emphasizes: Product quality development-the preference for higher carbonated soft drink is increasing as the customers are subjected by the company by the increasing service deliveries and new products. Innovative creations-the market trend shows that more innovative brands are increasingly accepted as the current demand suggests. The reason behind this trend is traced within the recent past few years where there has been a steady increase in the sales of these carbonated fruit juices and brands. This is summarized in the following diagram. (Thomas, Adams & Birchenough, 1996) 2.1 Financial Department for Deli Mote Company The financial department in Deli mote is solely responsible for keeping financial records updated. This involves keeping financial records for money received and for the money paid out. To evaluate the company’s financial performance by the shareholders, the financial department often prepares the annual financial reports for them. Again, the financial departments are responsible for updating and preparing financial records for all departments, for instance department of marketing. In addition, the financial department within Deli mote is responsible for financial and expenditure budget for the whole organization. It is also, responsible for allocation of financial budgets to various departments, like research, extension and development. This department is also involved in the planning process of the organization for instance taking over of the company (Greene, 1990). 2.2 Financial Statement of Deli Mote Company Deli Mote Company., Consolidated Statement of Financial Position, Liabilities and Stakeholders Equity           31-Dec-10   31-Dec-09 Accrued marketing 400 367 Sales 900 790 Container deposits 869 456 Accounts payable and accrued expenses 2169 1613 Loans 876 765 Current mutual debt 876 786 Income taxes 234 213 Current liabilities 1986 1764 Long term debt 567 543 Other liabilities 543 345 Deferred income taxes 453 423 Noncurrent liabilities 1533 1313 Total liabilities 5688 4690 Common stock, 0.25 par value 234 213 Capital supplies 345 324 Reinvested earnings 234 213 Treasury stock at cost 189 178 Equity attributable to shareholders 1002 928 Equity attributable to non controlling interests 567 543 Total equity 1058 1471 Total liabilities and equity     6746   6161 2.3 Payback period for Deli Mote Company This payback period for Deli Mote Company is the time for a Capital Budgeting to recover its initial cost. Capital Budgeting       Year Cash Flow Net Cash Flow 0 -1000 -1000   1 500 -500   2 400 -100   3 200 100   4 200 300   5 100   400   From the table above, it can be observed that the Net Cash Flow is negative, that is (-1000 + 500 + 400 = -100), in contrast the Net Cash flow after three years is positive (-1000 + 500 + 400 + 200 = 100). This can be seen that the Payback Period, commonly referred as the breakeven point, occurs within the third year. Therefore the Payback Period for Deli Mote Company can be computed as follows (Burns & Mitchell, 2006). Payback Period = 2 + (100)/ (200) = 2.5 years. 1. Net Present Value (NPV) for Deli Mote Company Net present value formula (Burns & Mitchell, 2006) This is an investment proposal for Deli Mote Company, offering a series of cash flows at the end each of the next four years as $ 5000, $ 4000, $ 3000 and $ 1000. The initial cash outlay for the proposal is $ 10,000 and the weighted average cost of capital is 12 % This is represented in the table below Year Net Cash flow PVIF@ 12 % Present Value 1 5000   0.893   $4,465   2 400 0.797 $3,188   3 3000 0.712 $2,136   4 1000 0.636 $6,36         NPV= $425 $10,425-10.000 2.4 Internal Rate of Return (IRR) The Internal Rate of Return (IRR) is the rate of return used in capital budgeting used to evaluate the profitability of investment. It often referred to discounted cash flow and in the situation of savings and loans it is called effective interest rate. The fact that it bears the name internal, it means that it does not incorporate environmental factors for instance inflation. In Deli Mote Company, given a collection of time and cash flow, the internal rate of return follows from the rate of return. This means therefore, a rate of return for which this function is zero is the Internal Rate of Return (IRR). Progressively given time and cash flow where n is a positive integer, the total number of periods N, and the Net Present Value (NPV), the IRR is given as r in: An investment example by Deli Mote Company given by cash flows is as follows: Calculating IRR for Deli Mote Company Years   Cash Flows 0 -4000   1 1200   2 1410   3 1875   4   1050   Then the IRR r is given by NPV = -4000 + 1200/ (1 + r) 1 + 1410/ (1 + r) 2 + 1875/ (1 + r) 3 + 1050/ (1+ r) 4 = 0 In this case IRR r is 14.3% 3.0 Project Evaluation and Review Technique (PERT) and Probabilities Q2) (10 Points) Use the following data to complete the table and answer the bellow questions: Activity Immediate predecessor Optimistic (o) Most probable (m) Pessimistic (p) T Variance Ϭ2 A - 4 5 6 5 0.11 B - 2 4 6 4 0.44 C A,B 5 6 7 6 0.11 D A,B 2 9 10 8 1.77 E B 2 4 6 4 0.44 F C 1 2 3 2 0.11 G D 6 8 10 8 0.44 H D,F 6 8 10 8 0.44 I E,G,H 3 4 5 4 0.11 T = (to +4tm +tp) /6 Therefore A = 5, B = 4, C = 6, D = 8, E = 4, F = 2, G = 8, H = 8, and I = 4 a) Draw a project network. C F G A 6 2 8 5 H dummy variable 8 4 B I E 4 4 b) What is (are) the critical path(s)? The critical path is A, C, F, H and I c) What is expected project completion time? Expected project completion time is 25 days d) Find the probability that the project will be completed within 25 days? The probability of completing the project within 25 days = 25/25 =1 e) If company wants a 0.99 (99%) probability of completing the project on time, how far a head of the scheduled meeting date should he being working on the project? (Note: z = 2.33 at area = 0.49) Variance Ϭ2 = = (tp – to/6) Therefore the variance for A = 0.11, B = 0.44, C = 0.11, D = 1.77, E = 0.44, F =0.11, G = 0.44, H = 0.44 and I =0.11 0.11+0.44+0.11+1.77+0.44+0.11+0.44+0.44+0.11 = 3.97 Ϭ = 2 From the table 0.49 = 1.65 Therefore, (t-25)/2 = 1.65 t = 2+25 = 27 that is, he will be 2 days ahead of the scheduled meeting date Q3) (10 Points) given the following project management project: Activity Predecessor Optimistic (o) Most Probable (m) Pessimistic (p) Expected time (T) Variance (ϭ2) A ----- 4 6 8 6 0.44 B ----- 6 8 16 9 2.77 C ----- 2 4 6 4 0.44 D A,B 8 10 24 12 7.12 E B,C 7 10 13 10 1.00 F C 4 6 8 6 0.44 G D,F 4 6 20 8 7.12 H D,E 4 6 8 6 0.44 I G,H 4 6 14 7 2.77 1- Draw a project network. 6/19 0/0 A 6 10 E B 9 D C 12 G H I 4 9/9 8 6 7 F 21/21 29/29 35/35 42/42 6 4/15 2- What is the expected project completion time? The expected completion time is 42 days 3- What is (are) the critical path(s) activities. The critical path activities are B, D, G, H and I 4- If the manager wants a 0.90 probability of completing the project on time, how many days this project needs to finish with this probability? If 1 = 42 0.9 =? 0.9 *42 = 38 days 5- Find the probability the project will be completed in 30 days. The probability that the project will be finished within 30 days 30/42 = 0.71 6- If the manager wants a 100% probability of completing the project on time, how many days this project needs to finish with this probability? To finish this project within 100 % probability the project need to done within 42 days. 4.0 Document flow chart – Visio – (2 systems) of Deli Mote Company Suppliers This is basic DFD for Deli Mote Company (Isobel, & Robin, 2010) This is showing how data is flowing in and out of the operations of the company. It also involves an external entity that is able to receive and send out information at any time of the business operations. This involves the suppliers of the raw materials, customers who demand the products and who perhaps wish to communicate with the production department on the quality of the products or stakeholders to the management. 4.1 This is also the context diagram DFD (LEVEL 0, 1) Visio on the operations of Deli Mote Company (Isobel, & Robin, 2010) This helps to transform data between the company, customers and the bank on matters of money payments and transactions. Within the cooperation is also the physical DFD, as represented in the diagram below. It follows that within the financial department, various entities are involved. These include: cashiers, book keeping, customers and the bank. They must coordinate in the most efficient way in order to achieve success, because if the finance department fails, then whole company will have failed. (Burns & Mitchell, 2006) This also reveals how data are able to flow in this organization. It is data design as explained here above. This specifically shows the flow of information within the financial department. 5.0 In summary Deli mote is a successful juice producing company in the city of London, established in the year 1989 dedicated to serving a world leading class of clients with a full range of products, now a world class supply of soft drinks. Deli mote juicy company has experienced gross revenue of $ 600, 000 in sales this year, alone. This is a generation from the initial investment of $ 200, 000. Deli mote is planning to expand it is the operation to include sales distribution of stores within the entire UK region. References Alder, C.E. (2008). System Analysis and Design. The fundamental fact; the Deli Mote Foundation 25, (2), 233-244. Anderson, G.A., Benjamin, D. and Fuss, M.A. (1994). “The determinants of success in Cooperate Company”, Journal of Economic Education, 25, 99-119 Aruba, S.B. (2011). Management Analysis. Journal of Operation Management; Case Study-Deli Mote Inc, 36:983-988. Burns, F., & Mitchell. W, (2006). Deli Mote Financial Management and Analysis – Why is it so under-researched? Occupational Management, New York: NBER. Greene, W.H. (1990). Econometric Analysis, Macmillan Publishing Company, New Jersey Isobel. D., & Robin, L (2010). International Marketing Strategy. London, Print. Thomas, M., Adams, S. and Birchenough, A. (1996). “Deli Mote Company Case Study”, Financial Management and Administration, 24, 207-221. Read More