Jot Toy Industry

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Jot Toy Case
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Jot Toy Case

This report is far more comprehensive than would be expected from a candidate in exam conditions. It is more detailed for teaching purposes. 
T4- Part B – Case Study Jot – toy case – March 2012 REPORT To: Jon Grun, Managing Director, Jot From: Management Accountant Date: 28 February 2012 Review of issues facing Jot
1.0 Introduction
2.0 Terms of reference
3.0 Prioritisation of the issues facing Jot
4.0 Discussion of the issues facing Jot
5.0 Ethical issues and recommendations on ethical issues 6.0 Recommendations 7.0 Conclusions
Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 SWOT analysis
PEST analysis
Selection of new outsourced manufacturer for products YY and ZZ VP  “own  brand”  proposal Inventory valuation
Calculations for outsourced manufacturers P and Q for licensed action figures Email on the key criteria for the selection of outsourced manufacturers 1.0 Introduction
Jot  is  a  small  unlisted  company  which  designs  and  outsources  the  manufacture  of  a  range  of  children’s   toys. It has grown rapidly since it was established in 1998. It is currently experiencing manufacturing problems due to an earthquake affecting 2 of its outsourced manufacturers and also quality problems with another outsourced manufacturer. The quality of the company’s  products,  upon  which  its  reputation  is  based,  must  not  be  compromised. The Jot brand name is known for quality toys but it is important that its products appeal to cost- conscious retailers and price sensitive customers. Jot can use the cost-leadership strategy, using Porter’s   generic   strategy   framework,   to   select   the   minimum   cost   in   its   choice   of   manufacturers   for   products YY and ZZ. 2.0 Terms of reference

I am the Management Accountant appointed to write a report to Jon Grun, Managing Director of Jot, a toy company, which prioritises, analyses and evaluates the issues facing Jot and makes appropriate recommendations. © The Chartered Institute of Management Accountants 2012 Page No: 1 I have also been asked to write an email to the management team to set out the key criteria for the selection of new outsourced manufacturers in general, together with my recommendation on which manufacturer(s) should be appointed for products YY and ZZ. This is included in Appendix 7 to this report. 3.0 Prioritisation of the issues facing Jot

3.1 Top priority – Manufacturing problems
The top priority is the loss of 2 outsourced manufacturers following the recent earthquake. They are unable to manufacture any products for Jot for the remainder of 2012. Therefore new outsourced manufacturers need to be identified and appointed urgently in order to manufacture products YY and ZZ, which total 150,000 units in 2012. This volume of products represents over  17%  of  Jot’s  planned  sales   of 868,500 units in 2012. 3.2 Second priority – Quality problem

The second priority is considered to be the quality problem with outsourced manufacturer Q for the licensed action figure products. The current quality is not acceptable and the order of 80,000 need to be started again. However, it needs to be considered whether the order is retained by outsourced manufacturer Q at a higher price than the current contract or whether Jot should appoint outsourced manufacturer P. 3.3 Third priority – VP proposal

This is considered to be the third priority as this is a large contract for this key customer. Additionally, there is a risk that Jot could lose VP as a customer, if Jot were to decline the  “own  brand”...
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