FARAH AFIQAH BINTI MUHAMMAD
NASREEN BINTI MOHD REDZUAN
SAIDATUL NAZURAH BINTI ANUAR
CASE SUMMARY
EASY BUSINESS COMPANY LIMITED: COST ANALYSIS ON A SMALL BUSINESS START-UP IN CHINA (A)
This case is about Sindy Sin, a 23-year-old lady who came from a middle class family in Shanghai. Her mother was a teacher and her father was a businessman. The story began when Sindy joined a Hong Kong retailer as a designer for window and shop floor displays after not being accepted at the National Art Academy. However, after a couple of speculative investments went sour, the Hong Kong retailer pulled out of mainland China. Then, she met Michael, an entrepreneur who had just signed an exclusive distribution contract with Esselte, one of the world’s largest office furniture and supplies manufacturers. The early ‘90s was the fastest growth period in the Chinese economy, so demand for office supplies was high. Normally, Sindy would make four to five sales calls and show up at one delivery to a major customer a day. It was quite a challenge at the beginning, but gradually she started to build up a loyal customer base and even became close friends with them. Due to these connections, she had an idea to set up a recruiting agency. A part from that, Sindy has been paid RMB 500 of base salary and incentive which is based on monthly sales. 8 years ahead, she can make about RMB 4,500 per month. However, during 1998, recession occurred and every companies were trying to cut costs. Due to this, disagreement happened between Sindy and Michael regarding the compensation package. Therefore, Sindy has decided to leave Esselte and start a business of recruiting agency which is popular in China.
In order to set up a recruiting agency, Sindy made a market research and she found that there are some costs that need to be considered which are office rental, office furniture and equipment, staff salaries, marketing and promotion and some other operating costs. From the above case,