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ANAC Colour Stores Operations - Case Study Example

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The paper "ANAC Colour Stores Operations" is a perfect example of a business case study. One of the requirements when starting a new business is the registration process. This has to abide by the requirements of the law in Australia. The first thing is to register the business name. The type of business can either be a sole proprietor, a partnership, a company et cetera…
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ANAC COLOUR STORE: OPERATIONS Name: Institution: Date: OPERATIONS LEGAL AND LICENCING REQUIREMENTS One of the requirements when starting a new business is the registration process. This has to abide with the requirements of the law in Australia. The first thing is to register the business name. The type of business can either be a sole proprietor, a partnership, a company et cetera. In this case, the Company category is of our interest. The name will give the business the trading powers. The company is then registered with the Australian securities and investment commission. An Australian Company Number (ACN) is issued. This is need for transacting business processes. It is unique to every company. The logo or the trademark is then registered that gives the company rights to use or even sell the trademark. A domain name can then be registered to expand ways of adverting business online. This is via the website domain. The company should then be registered for tax purposes (Australian National University, 2003). ORGANISATION STRUCTURE AND STAFFING The organization’s structure is the sequence in which the task are divided and how they are expected to flow (Paddy,2010). It also looks at the coordination of the flow process (Andrew et al, 2011). In ANAC stores, an overall director is needed to coordinate the activities. An assistant will be placed under him. The human resources director is also required to coordinator junior staff members. Operations manager and the accounts department should also be put in place or shared by one manager. The other employees will oversee customer relations, direct sales personnel, drivers, store controller, cashiers and so forth. A hierarchical structure is therefore designed for this organization. INSURANCE AND SECURITY ISSUES With the risks of natural calamities on the rise in Australia, insuring the company is of dire need. The company should also be insured against burglary and fire with the predisposition that the products they deal with could easily be stolen or destroyed by fire. Employees of the company need also be insured for health purposes and work cover policies. An indemnity for its professionals need also be taken. Loss of revenue cover can also be taken for the times when there are risks of loss of revenue. The most major cover is to insure the goods in transit as the inventory of this company will always be in transit increasing the risk of theft, delay, destruction etc. BUSINESS PREMISES To acquire a premise, the managers can consider the option of leasing, mortgage, rental or even buying. The company will opt for renting a go down for storage purposes and a location for selling its clothes and shoes. A mortgage and a lease agreement might be expensive during the startup process hence can be considered later on. Insurance of the business premise can then be transferred to the owner of the rental property. EQUIPMENT REQUIRED Equipment for process production is not required in this case. The goods are transported in their completed form for sale. Investment in this is therefore not required. Further depreciation is not necessary in this case. PRODUCTION PROCESS The production process of the fashion clothes and shoes is done in China. No consideration is therefore needed by ANAC store. The only required process here is to transport the goods, sort them out on arrival then put them up for sale. CRITICAL RISKS/ CONTINGENCY PLANS Any business venture has its own risk associated with running such an enterprise (William & Lona, 2004). In light of this, every management must be prepared to deal with the unexpected challenges. It is therefore necessary for managers to quantify thoroughly and manage the risk (Houman J. 2002). To be successful, managers in ANAC stores should thoroughly analyze then quantify risk before and during a project. They should also develop effective strategies that can respond to meet the target intended (Peter B., 2008). In this case, the risk involved in running this venture is the transport of the products. Goods in transit can easily be destroyed. Another risk would be failure of the business in the new location given the fact that it is not very popular. The managers should apply critical thinking skills. By doing so, they will be able to analyze the risk, measure it plus find the necessary measure needed to be prepared throughout for the ANAC store. ANAC stores needs strong leadership, communication and problem-solving skills to be aware of any potential for delay during transit, disruption, burglary or fire in the store and to further implement contingency plans as required. They need also to have the knowledge of how to balance limited resources and deliver the fashionable clothes and shoes. This will help them to meet the strict deadlines, in a world of ever-increasing customer expectations (Yacov,2009). Fashion is an ongoing trend and ANAC needs to be up to its toes always. The management also needs to be better equipped to make sound decisions and lead ANAC stores to success. The higher the profits after tax growth on annual basis the better the company stands. FINANCIAL PROJECTIONS The owner will start up the retail with his own contribution of $182,990 and a loan of $354,440. It being a retail business, a good investment base is recommended. CAPITAL EXPENDITURE FORECAST FOR ANAC COLOR STORE $ owner share capital 182,990 (financed by: issued share capital of 50,000 shares of $1 each) loan 354,440 The sales forecast will be projections for the next three years from opening its operations. The expenses for transporting the products from China have been incorporated in the direct cost of sales. An estimate of $150,000 is considered. SALES FORECAST FOR ANAC COLOR STORE year 2012 year 2013 year 2014 $ $ $ Sales 1,875,000 2,881,180 3,847,360 other 0 0 0 Total sales 1,875,000 2,881,180 3,847,360 Direct cost of sales 285,000 285,000 285,000 others 0 0 0 Total direct cost of sales 285,000 285,000 285,000 An estimate of other operating expenses have been projected and charged to the profit and loss statement. A tax rate of 30% company’s rate has been charge on the profits before tax and interest. PROJECTED PROFIT AND LOSS STATEMENT FOR ANAC COLOR STORE 2012 2013 2014 $ $ $ Sales 1,875,000 2,881,180 3,847,360 Direct cost of sales (transfer of products plus overheads) 285,000 285,000 285,000 production payroll 0 0 0 other 0 0 Total Cost of sales 285,000 285,000 285,000 Gross Margin 1,590,000 2,596,180 3,562,360 Gross Margin % 84.80% 90.11% 92.59% Operating expenses Sales and marketing expenses rent 121,000 132,000 132,000 Travel 20,000 20000 20000 Burglary Alarm 11880 11880 11880 marketing payroll 0 0 0 Total sales and marketing expenses. 152,880 163,880 163,880 General and Administrative Expenses General and Administrative Payroll 0 0 0 Payroll Expense 132000 132000 132000 Payroll Burden 19800 19800 19800 office supplies 2000 2000 2000 depreciation 0 0 0 insurance 8760 8760 8760 telephone 10800 10800 10800 utilities 100800 100800 100800 total general & operating expenses 274160 274160 274160 other expenses advertising 50270 54840 57840 other payroll 0 0 0 inventory 285000 285000 285000 accounting/legal 48000 48000 48000 loan repayment 68200 74400 74400 total other expenses 451470 462240 465240 Total operating expenses 878,510 900,280 903,280 Profit before interest and tax 711,490 1,695,900 2,659,080 interest expense long term 0 0 0 interest expense short term 35440 35440 35440 taxes 202815 498138 787092 extra-ordinary item 0 0 0 NET PROFIT 508,633 1,197,713 1,871,988 NET PROFIT/SALES % 27.12712 41.57023662 48.65642934 An increase in the accounts payable from the debtors will increase the projected cash flow. No depreciation has been charged since the production process has taken place in China hence no equipment is needed. CASHFLOW FORECAST FOR ANAC COLOR STORE 2012 2013 2014 $ $ $ NET PROFIT 508,633 1,197,713 1,871,988 PLUS Depreciation 0 0 0 Change in Accounts Payable 147,770 41,260 23,840 Current Borrowing (repayment) 0 0 0 Increase (decrease) Other Liabilities 0 0 0 Long-term Borrowing (repayment) 0 0 0 Capital input 0 0 0 subtotal 656,403 1,238,973 1,895,828 less Change in Accounts Receivable 0 0 0 change in inventory 118,750 0 0 Change in Other Short-term Assets 0 0 0 capital expenditure 0 0 0 dividends 0 0 0 subtotal 118750 0 0 net cash flow 537,653 1,238,973 1,895,828 cash balance 537,653 1,776,627 3,672,455 OWNERS PERSONAL EXPENSES. $ Car maintenance and loan 10000 lease charge 2000 telephone 1420 water bills 2065 food expenses 4000 school fees 55000 entertainment 1000 miscellaneous 2000 Total Expenses. 77485 REFERENCES Andrew V., Albert V., Andrew T. 2010; A legal guide to doing business in the Asia-Pacific, American Bar Association Press. Australian National University 2003, The Australian year book of international law, Volume 23, Butterworths, Australia. Barbara A., Ulrich B., and Joost V. 2000, The risk society and beyond: critical issues for social theory, the University of Michigan press, U.S.A. Houman J. 2002, Project Management Handbook, Universe Press, New York. Paddy O. 2010..How Organizations Remember: Retaining Knowledge Through Organizational Action Organizational Change and Innovation, Springer press, New York Peter B. 2008, Tacit Knowledge in Organizational Learning, Idea Group Inc. William H. and Lona C. 2004, Project+ Study Guide: Exam PK0-002, John Wiley and Sons, United States Yacov Y.2009, Risk modeling, assessment, and management Wiley series in systems engineering and management , 3 ED, John Wiley and Sons publishing house, United States. Read More
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