MANAGEMENT PROBLEM SOLVING:
• PART 1 – presentation on a solution. Be concise and explain what theories, models or ideas you would use to suggest a change to this process outlined in the diagram provided (page 4).
• PART 2 – A strategy going forward
Problem Scenario:
Welcome to the firm! You have just been hired by a start up called GoChi Enterprises as a manager. While the details of your role are sketchy at best, you are ready to start and keen to prove yourself. One of the main things you have been hired to do is to manage the day to day operations of the business. It’s a very small business by international standards with only the CEO, the IT Manager, Sales and Marketing Manager and a personal assistant to the CEO.
The business model for GoChi is very simple. Many years ago, in the dark recesses of the Himalayan mountains, a mysterious plant was found. It was called the GoChi plant. What makes this plant so amazing is that it controls a major hormone in the human body that is responsible for well-being. It’s been called the miracle plant because it promotes well-being, helps weight loss, improves skin tone and assists in digestion.
The CEO of the company Marcy Du Plessis is a South African travel writer who was living at the foothills of the Himalayan Mountains for a year when she learned of the GoChi plant. She took some and within three days noticed she had lost weight, felt better and cured a life long problem with reflux. It’s a miracle. Marcy also has an MBA so she knows about business strategy. She was able to get some seeds of the plant, take them back home to South Africa and grow it there in controlled conditions. She then worked with her husband scientist to create an extract of the plant that could be put into a tablet. In 2010 she released her first product called the GoChi tablet which sold over a million units.
After that success was not so easy. She got pregnant, had two kids and was about to put the business into high gear when the Global Financial Crisis (GFC) hit. She was just about bankrupt as previously fertile markets turned hostile within months. She had scaled from her and the husband to staff of over twenty. She had to fire the twenty people and barely scrapped through the GFC in one piece. Late in 2012 she moved her family to Australia as her husband got a position with the CSIRO. Beaten but not down she took the GoChi brand to fresh shores.
By 2013 things are not good in the business. Marcy is now the only employee with less than five thousand sales a year. It’s a real shame given the money she had and lost during the GFC. Just when she is about to give up, something totally unexpected happens. Marcy meets with an entrepreneur who she knew from South Africa. He is doing really well and had lost a great deal of weight. She asked what he did and he explains he is on the ‘Paleo Diet’. The Paleo diet is basically eating what men and women from the Paleontological (Cavemen/Cavewomen) era ate. Marcy laughs right in his face but stops dead when Mark tells her what he found.
“Laugh as much as you want Marcy,” he says, “but I lost 40 kilograms and kept it off.”
Marcy is stunned.
“That’s not why I invited you here. I also own the rights to a Paleo product that’s probably run its course. I wanted to use your supplement to boost sales. I did some market research last year and learned that most of the people in my sales lists buy supplements.”
When she learns that there are one million people on his sales list her entrepreneurial fire is lit once again. She pays mark referral commission of 50% and her overall cost is 20% more than that. Within a month she produces the supplement for $29.95 (plus tax) and on-sells it Marks Paleo Fire brand. She makes a substantial amount of money and suddenly finds herself in the same position as before.
Once bitten, twice shy this time however as she realizes that she needs a manager to oversea the basic running of this and not just leave it to the wind like she did last time. She invests some of her profit into hiring a junior manager from a local university to help her run the business. She also has an IT person help her with systems. As this is a partnership arrangement Marcy has two main problems that she needs you to solve.
PART 1:
Hint: Use graphs and short sentences to address the problem.
What you need to do:
1. What Marcy can do to ‘optimise’ her process (page 4). That is, what are the bottlenecks above? Where could this be improved?
2. What model have is used to optimize this process?
3. Present your results in a short report format. Be concise, clear and as visual as possible. She has less than 15 minutes to talk to you about this.
In PART 1 you will outline the following:
• How do you optimize the process (see diagram below)?
• The objective is to reduce the money in two areas.
• You need to make this process as smooth as possible. She needs diversification. You have to come up with 4 possible strategies, with basic justifications, as to what she can do to sell products. She doesn’t want costings, she has an accountant for that, what she wants is for you to draw on your university knowledge to think about 4 different strategies she could employ to diversify her business and reduce her risk.
PART 2: A strategy going forward.
1000 words
Fast-forward to 2014 sales are steady but declining. Mark was hit by a bus and requires surgery so he has put his business into autopilot for a while with no growth plans for this year. Marcy is also noticing that the referral fee she pays him is starting to show diminishing returns. While it’s not panic stations yet, she is starting to worry that this is 2010 all over again. You walk into the office with her and all of a sudden she is hit with an amazing idea. Get you to solve the problem.
She remembers you rattling on about diversification and unique selling positions from your time at university. She wants you to come up with a pitch for her business that outlines in a presentation (Marcy doesn’t like reading) 4 things she can do this year to create diversified revenue streams. In plain English Marcy is looking for something she can do to create alternative revenue streams. She is suspicious of Mark and his intentions about the bus incident. She wants four things she can do right now to use her profits to find revenue streams. Oh… by the way she does not want to hear ‘find another partner’. The partnership arrangement is exactly what caused this mess in the first place. So, here’s the catch… Marcy is paranoid she wants an evergreen (meaning one that will last as long as the problem is around) business model. That is, she wants a problem solving approach that will always be around, not tactics… but strategy.
Using creative thinking and problem solving go and find Marcy four creative solutions. She wants the following from you:
What you need to do:
1. Write a 1000 words (short report format) using as many visuals as possible.
2. Use the space you have to explain to Marcy what a detailed strategy going forward looks like.
3. What other models can she use.
4. Investigate at least 3 options for Marcy and then recommend just 1 to her.
5. Marcy needs to know what to do and she is paying you good money to get this done.