23.08.2019
 Essay regarding Costs and Good Health Cookies

KANPUR CONFECTIONARIES PRIVATE LIMITED

By Venkatesh. G, NMIMS

Objective:

KPCL has to lift weights for the possible options to cover its losses and supply a eco friendly business model. It also has to opt to act upon the proposal provided by A-One Confectionaries Pvt. Ltd.

SWOT Examination:

Let us execute a SWOT examination first pertaining to KPCL to identify the internal and external monitoring environment that affects its business. Inside Factors: Advantages • • • • • Weakness • • • Large Absenteeism amongst workers causing low and fluctuating production 50% usage capacity (Under utilization of resources) Closure of sister organization (Candy Sale) Running organization on honest lines Well-known brand – ‘MKG' Participative Decision Making Large Production Potential Ploughing back again surplus

Exterior Factors: Chances • Deals with APL and Pearson (thereby ensuring utilization of spend resources and gaining technological expertise) • Explore new markets (currently present only in northern region) • Improve the current market share • Supply to Canteens in Institutions Hazards • • Increased competition in the arranged and unorganized sectors Substantial Excise Responsibility and Florida sales tax

Based on the analysis, KPCL can take both of the following decisions  Status Quo – Do not agree to the agreement with APL and continue with the development of " Good health” by Pearson and " MKG” biscuits  Acknowledge the proposal by APL and become a CMU. Both of the decision should be taken as soon as is possible. Hence, the huge benefits and disadvantages of KPCL taking the proposal with APL should be properly analyzed just before a right decision is considered.

Merit – Demerit Examination:

KPCL has tied up currently with Pearson in making " Great Health” Biscuits. The change ratio given by Pearson is additionally high. Therefore it might appear to be a good option of continuing a similar and raising the production of " Very good Health” biscuits. But the marketplace response of " Great Health” cookies is not attractive. It is considered as a ‘high priced' biscuit thus the sustainability of this business model is skeptical. Now, coming to the proposal by APL, it is necessary to evaluate the advantages and downsides of the KPCL-APL contract. Merits:  APL – Great brand name and a larger reach  Wastage of resources taken care of (Production of 70 extra tons in the beginning. Increased in the event that requirements met)  Prevention of pointless expenses (Marketing, Distribution Expenses)  Little Business Risk  Steering clear of losses and therefore a lasting model  Learning technical expertise and quality productivity methods via APL  Exploring new markets with the help of APL  Less cost of raw materials Demerits:  Low conversion expense when compared to Pearson  Possible Dilution of ‘MKG' brand name  Simply no control over decision-making process  APL is a competitor in corporate to KPCL while Pearson is not really  Large contract period leading to unsure situations  Bearing capital expenditure in case of change in products or process.  Range factor between Chennai – Kanpur. Likelihood of interference and miscommunication. Hence, both the merits and demerits are evenly weighed and it is seen that either in the decision possesses its own merits and pitfalls. The charge based evaluation of various situations is then performed.

Cost Analysis:

Fixed Costs (Overhead): o Permanent Income Bill um Other Responsibilities o Interest Variable Costs: o Recycleables (Maida, Vanaspati and Sugar) o Chemical preservatives and Presentation Costs u Casual Labor Calculations: Contribution per load = (Price per ton) – (Variable Costs) Breakeven point sama dengan Fixed Cost / Contribution Revenue sama dengan (Units created for MKG * Selling price per ton) + (Reimbursement Costs for Raw Material) + (Conversion costs every ton 5. No . of units created for Pearson/APL) Expenses = (Variable Costs per lot * Number of products produced) +Fixed Cost Earnings = Income – Expenses Conversion cost/ton = (Fixed Costs/Units Produced) + Labor cost per ton (Amortizing the expenses to check if the conversion price...