Task-1

a)
Briefing notes
To: BOD
From: External consultant
Subject: Impact of general environment
Date: 16- augest- 20X5
Introduction
This briefing notes consider how this might impact its business
model, mission and strategic goals.
External environment
PESTEL MODEL
Political
The Nodia has the coalition government, which means there are two
or more parties. This has lead to experiencing political uncertainty,
which lead to diffcultes in long term planning and investment
Economical
Nodia is a highly developed and have a Free-market economy and
have the developed capital market. However currently in the middle
of a deep economic recession, which has lead to fall in the demand
and can be seen the fall in the revenue of SmartWear.
Social
The Nodia is contributed to record high level of unemployement and
a decline in the standard of living. However as per the past year the
unemployment rate has fallen by 0.3% Which is favourable for the
Smartwear.
Envirnomental
 Smartwear is responbile custodian and user of natural resources which
manage in a sustainable way, this will help to attract more ethical
customer , highest ethical standard of social responsibility and gain
government grants.
Legal
Smartwear remains fully compliant with the Noria code of coporate
goverance. This will help to show the integrity and transperancy to the
government and society. Which results in enhanced reputation.
Risks
Major risk Mitigation
Political risk Smartwear can have expension
The country is experiencing of the business into the other
political uncertainty because of countries outside the European.
its coalition government, which
is unfavouable for the Moreover you can invest on the e
SmartWear. commerce to divesfy the
This can lead to having a impact business.
on the long term planning and
investment
Strategic Risk All the strategies need to be
Your institutional investors are revisited to indentify the problem
dissatisfied with the level of and solve the problem to be in
return because of the wrong touch with its core customers.
strategic direction that has
become out of touch with its core This will help to retain and
customers attract new customer and
This can lead to loss of increase in market share.
customers and may have a
decline in the competitivc
advantage.
Supplier Risk Smeartwear can look for
Smartwear have a high alternatives suppliers as to have
dependency on the supplier as an backup in the critical
products are directly sourced situations and your main supplier
from suppilers in low cost is not able to supply the
economies. resouces.

This can lead a negative impact

on the supply of resources if the
supply is posssbile in any
situation.

Financial risk Smartwear need to impliement

Currently your financial new strategies that may boost the
performance do not provide sales and result in raise in the
company a strong position. profits.
The profits and sales has
dropped significantly over the Moreover there are significant
last year. infrastructure cost and
This can lead to financial issues overheads. These can be reduced
that you may face and may not to lower the costs and have a
be able implement new projects raise in the profits.
due to financial concerns.

Best regards
External consultant

Task-2
a)

Report
To: BOD
From: External consultant
Subject: Southland market and planned shop closures
Date: 16- augest- 20X5
Introduction
This report analyse the company’s strategic position in the Southland
market to determine why SmartWear appears to be performing so well
in this particular country compared to Noria and evaluate the strategic
and ethical implications to SmartWear of the planned shop closures in
Noria and the withdrawal from Centrum.
Strategic position in the Southland
Political stability
Southland have more stable environment as compared to the Noria
were there is a political uncertainty.
This is favourable for Smartwear to have a stable business
environment this will help in long term planning and investment.
Economic Growth
The Southland have the higher growth as compared to the Noria.
Southland have the annual growth rate of 0.8% and the average
annual earnings $51,700. which are higher as compared to Noria.
Moreover, the consumer debt as a percentage of gross domestic
products is 67.5% which is the lowest as compare the other 2
countries.
This have a favourable environment for the SmartWear and customers
have the high disposable income which results in higher revenue and
profits.
Unemployment rate
Southland have a unemployment rate of 6.2% which is lowest as
compared to other 2 countries. This states the consumes have the
higher disposable income and purchasing power. This leads to higher
standard of living and results in higher revenue and profits for the
Smartwear.
 strategic and ethical implications
Reputational loss
The board decided closing the 20 worst performing retail outlets in
Noria, and withdrawing entirely from the neighbouring country of
Centrum. Don’t you think this will have a negative brand image in the
market and your competitors may gain the advantage from it.
Emerging economy
Centrum have a emerging economy with the growth rate of 1.4%
which is highest as compared to the all-other countries. This can lead
loss of future opportunities.
Exit barriers
SmartWear will need to analyze whether there are any exit barriers?
For example, the closure of 35 shops can lead to have redundancy
costs. From where would you raise the fund for the redundancy cost
in a poor financial situation.
Customers
The closure of 35 shops will lead to customers not able have the
access to your product. This may result in loss of customers and
heavy loss of market share.
Staff redundancies
The closure of 35 stores will lead to staff redundancies. There is
already a higher unemployment rate of 12% in Centrum and 8.8% in
Noria. This will reduce the disposable income of the country. What
about your strategic objectives to function with highest ethical
standards of social responsibility?
Loss making outlets
Closing the loss-making shops can be good decision. However, the
shops are having the positive contribution margin, this will lead to
loss in the future. The board need to analyzed all the aspects and then
make the decision.
 Suppliers
The closure of 35 stores will reduce the number of orders required,
this will have an adverse impact on the supplier’s revenue and
profitability.
Best regards
External consultants
Task-3
Memo
To: Buying and merchandising director
From: External consultant
Subject: Internal control systems
Date: 16- august- 20X5
Introduction
This memo evaluates the effectiveness of internal
control systems at the company, particularly on the
procurement side, and recommends control
improvements to rectify the identified areas of concern.
Control weakness Recommendation
Culture of carelessness The buyer should be proactive
in supply management and
Most suppliers have been contracts to ensure that the
working with SmartWear for company is getting the best
more than five years. This has value for money.
led to a rather complacent
attitude from the buying There can be annual visits to
department who do not see the have a look of the working
point in ‘fixing something that environment and also have the
isn’t broken’. As a result, if no performance reviews so that
quality problems arise the they don’t compromise the
buyers rarely contact the performance.
suppliers.

The buyers are not actively

monitoring the suppiler’s so, the
suppilers will perform careless.
This can lead to lower quality
resources provided.
Long term contract The contracts periods can be
Supply contracts are awarded for shortened; this will help to
a period of between three and reduce the cost if any potential
five years, with prices charged cost saving available.
indexed to inflation. This means
that prices rise annually by only The buyers can have frequent
a few percentage points, which visits and survey in the market to
is then built into the SmartWear have the knowledge of any avail
budgeting process. cost benefits.

No effort is made by the buying

department during a contract
period to compare what prices
the company is paying to its
suppliers compared with the
industry average or competition.

This can lead an impact of rise

in purchasing cost due to the
inefficiency in purchase prices
that can directly affact the
profitability of the SmartWear.
Poor working environment The buyers teams should have
proper monitoring on the
The allegations that have been suppilers if they are complaining
made about poor working with the your ethical standards.
conditions in some supplier
factories have gone There can be surpise visits and
unchallenged, and even possibly inspection of the suppilers
unnoticed by the buying team. working environment.

If the suppliers had been more Th buyers can include the

effectively monitored, then the regulation in the contract of
buying department would have following the ethical practices
identified a clear contravention towards the social responsibility
of the general terms and and prioritising the quality
conditions contained within all products.
SmartWear supply contracts.

SmartWear have the strategic

objective of highest ethical
standards of social
responsibility. This will lead to
loss of ethical customers and
loss of reputation.
Not reported The formal reporting should be
The absence of formalised implemented. Standardized
regular reporting, any serious report and dashboard should be
issue is not raised and the
buying and merchandising presented in each board meeting,
director are not aware of any removing any subjectivity.
problem.

The low-level staff are deciding

which matters need to be
escalated, and this in turn could
lead to cover ups or business
failures going unaddressed.

Best regards
External Consultant
Task-4
Report
To: BOD
From: Sales and marketing director
Subject: Customer database management
system and NPV analysis
Date: : 16- august- 20X5
Introduction
This report describes the benefits of introducing a
customer database management system, including
the loyalty scheme, for SmartWear and evaluates
the marketing department’s NPV analysis that
supports the CDMS investment, questioning any
underlying assumptions made.
Benefit of CDMS
In touch with core customers
The availability of detailed and accurate customer
information can help to understand the customer
need and their profile. This is an important factor
as our investors believe that this is the main reason
why you are losing revenues.
Effective marketing campaigns
CDMS will help to design an effective marketing
campaigns, including the customers needs, profile
and buying history. This will help to attract and
retain the customers.
Regular communication
CDMS will help to maintain the regular
communications with our customers. For e.g. You
can send them information about new arrivals,
discounts, gift voucher, etc. The regular
communication is an important factor for the
success of the company, specially in online e
business.
Increase revenue and market share
Detailed CDMS will help to compete with our
various online retailers, which have proven to be
very appealing of many of our traditional
customers.
NPV analysis
Initial Investment
I would like to understand the basis of Initial
capital outlay of $38 million. Is it based on tender
or quotation?
Why sales tax recovery has not been included in
the cash inflow in later years? I think it should be
included to arrive at a correct NPV.
The five year maintenance cost should not be
shown in year 0. It is incorrect. It should be shown
in respective years in which it will be paid.
Additional contribution of $22m
I would like to understand the basis of the
additional contribution of $22 million. Also, it
seems unrealistic, how can the amount be constant
and fixed throughout the 5 years rather than being
incremental?
Operating cost
The operating cost is fixed throughout 5 years,
which is unrealistic. As there is a 7% inflation in
the economy, so the operating cost should rise.
Interest payable
The interest payable on loan should be the part of
the discount factor rather then being shown as a
cash outflow. This is a incorrect treatment.
Sensitivity Analysis
A sensitivity analysis need be carried out in order
to see what are most sensitive assumptions
affecting the NPV. Several what if scenarios would
be helpful in taking the effective decision.
Best regards
Sales and marketing director
Task-5
a)
Benefits of integrated thinking
• Focus on wider stakeholders
• Better communication
• Improve reputation
Focus on wider stakeholders
Integrated thinking will not only focus on the
shareholders, it will consider the other
stakeholders as well e.g. customers, suppliers,
government, community, etc. This will help to
reduce the criticism.

Better communication
Integrated thinking provides a detailed
information about the SmartWear activities,
long term plans, strategies, etc. This help to
have a effective understanding about business
rationale and the company’s integrated
thinking to all the stakeholders.

Improve reputation
Integrated thinking have the voluntary
disclosure, this will show the ethical standards
and transparency. Hence, results in enhanced
reputation and increase revenue.

Briefing paper
To: CFO
From: External Consultant
Subject: How IR framework provides more
relevant information for SmartWear’s
shareholders.
Date: 16- august- 20X5
Introduction
This briefing paper address the wider finance
team to explain how corporate
reporting using the IR framework provides
more relevant information for SmartWear’s
shareholders about
the creation of sustainable long-term value.

Holistic value creation

IR highlights how SmartWear uses and
develops multiple capital e.g. human,
financial, social , natural, intellectual capital
rather then focusing only on the financial
reporting.
Strategy and Performance link
IR show how SmartWear’s strategy, such as
investment in innovation e.g CMDS and
sustainability, directly supports value creation
for the future.
Forward looking prespective
Shareholder are provided insight into the risks,
opportunites, and market trends, this help in
providing a more complete view of
SmartWear’s long term planning.

Sustainability and ESG transparency

IR communities how environmental and social
aspects are managed. This is important factor
for the ethical investor decision to invest or
not.
Enhanced investor confidence
By having a voluntary disclosure including the
ethical standards, transparency, etc improves
the shareholder trust and confidence

Best regards
External Consultant