Comparative Analysis of Business Strategies and Supply Chain Management

This assignment involves a comparative analysis of business strategies, including marketing strategy and global supply chain management. It presents two different approaches: using 3-year moving averages method and forecasting values using 4 years moving averages method. The assignment also includes commentaries on the results of Mean Absolute Deviation (MAD), Mean Absolute Percentage Error (MAPE), Total Sum (TS), and U test. References to relevant books and journals are provided, along with options for profit calculations in leasing vs buying land.

Logistics and Supply Chain
Management

TABLE OF CONTENTS
1 INTRODUCTION........................................................................................................................1
2 TASK 1.........................................................................................................................................1
1. Competitive strategy...........................................................................................................1
2. Supply chain drivers...........................................................................................................2
3. Distribution network system...............................................................................................3
4. Factors that may cause disruption to supply chain.............................................................3
PART 2............................................................................................................................................4
EXERCISE 1...................................................................................................................................4
a. Calculating NPV to assess whether lease or spot price option is better.............................4
b. Highlighting issues that could affect strategy which selected above.................................4
c. Decision tree analysis.........................................................................................................5
Decision tree...........................................................................................................................5
Determining best option using decision tree..........................................................................5
EXERCISE 2...................................................................................................................................5
1. Graphical presentation of the sales vs the months..............................................................5
2. Use of trend-corrected exponential smoothing (Holt’s method) for forecasting...............6
3..............................................................................................................................................7
1. Producing two way data table.............................................................................................7
2. Using Excel solver to determine the optimal values of  and  using MSE as your
objective function...................................................................................................................7
Obtaining the best forecast by adopting simple exponential smoothing using Excel solver with
MSE........................................................................................................................................8
Forecasting values using 4 years moving averages method...................................................9
4. Commenting on the results of MAD, MAPE, TS and the U test.......................................9
REFERENCES..............................................................................................................................10

1INTRODUCTION
Supply Chain Management (SCM) is a process which used for various activities such as
maximise profitability and improve customers values to get competitive advantages easily. It
includes various activities such as product development, logistics, sourcing, production and
information system to coordinate all these activities. This is oversight of materials, information
and finance as they move in a process from manufacturer to customers. The project report is
based on Coles Supermarkets Pty Ltd which is a discount supermarket chain. This organisation
was founded in the year 1914 by George Coles. Coles Supermarkets Pty Ltd deals with various
products such as food, beverages, household goods etc. This project report includes various
competitive strategies and supply chain drivers. It also represent a brief information about
distribution network system and cause disruption in supply chain.
2TASK 1
1. Competitive strategy
The concept of SCM has become more popular in today's competitive market and it
exists in both services and manufacturing business firms. This project report is based on Coles
Supermarkets Pty Ltd which is a business retailer organisation that deals in various food,
beverages and other goods. Organisation wants to launch new food products in market but they
face strong competition from existing organisation. Coles Supermarkets Pty Ltd is facing strong
compensation war from discount supermarket by “Allshop CJ” to providing same products in
competitive market. So, for them competitive strategy is defined a long term plan to gain various
competitive advantages in market. Therefore, it can be said that as to enhance the operational
efficiency of the business there will be need to make adequate improvement in the products and
operational activities of the business. These types of strategies can be used when industry faces
strong rivalry or they provides almost similar products to customers. According to Michael
Porter, competitive strategy is devised into 4 types such as-
Cost leadership - This strategy is all based on cost of particular product. It is basically
associated with large scale business organisation who faces strong competition while launching
new products in competitive market (Chernev, 2012). A low-cost leader will also discount its
products to maximise sales, market share and to build strong customers of new product. In
accordance Coles Supermarkets Pty Ltd it can be said that there is need to make proper
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development policies which will be helpful for the business in terms of reducing the costs of
expense incurred in a particular operation of firm. This supermarket wants to launch a new
business which will be fruitful as to have better promotion of the brand but here the managerial
professional need to make proper analysis in the market such as prices over the products and
services offered by various rivalries in the environment.
Differentiation – In differentiation theory, a business organisation seeks to be unique in
market along some dimension that are widely valued by customers (Flander, 2014). In this
process, business targets a huge market with an aim to achieve competitive advantages through
new and unique products in market. Differentiation is about charging a premium amount that
covers all additional cost and provides clear reasons for customers to prefer this product over
others. Coles Supermarkets Pty Ltd need to make analysis over the market before launching the
product such as consumer preferences, current trend and fashion as well as the product must be
unique and different from the competitors. Therefore, the uniqueness will help in creating the
brand identity in the market and these strategies will be helpful in terms of attracting the large
numbers of buyers to a particular product.
Cost focus – This strategy is all based on cost advantages in target market. For a new
product or organisation, it is very important to provide effective cost to their customers to get
various advantages easily (Das, 2011). Customers and buyers are easily affected through costing
of products. Through this strategy, organisation can easily build goodwill of new product in
competitive market. It will be beneficial for the business in terms of having appropriate costs
over the products as it do not affect the budgets of consumers as well as the costs of the sale will
be overcome with the sales of such gods. Professionals at Coles Supermarkets Pty Ltd need to
make the adequate analysis over the market by analysing the validity of the product as well as
profitability after allowing the costs to the particular product.
Differentiation Focus – Through this strategy, organisation provides various options to
their customers by different cost and unique products. The target segment must either have
customers with unnecessary need or a unique product and production services in target market.
In accordance with this strategy the Coles Supermarkets Pty Ltd will have favourable outcomes
by analysing the consumer reactions over the various products at various prices. The majority of
buyer prefer a particular product at a particular price will be selected to the prices of such goods.
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2. Supply chain drivers
Supply chain drivers are used to get efficiency and effectiveness in competitive market.
Five driver provides a successful framework to think about its capability easily. It includes
various decisions that how they will operate and get responsiveness or efficiency in supply chain
that is capable of achieving advantages easily.
Production – In this process, organisation uses various techniques to produce wide range
of item according to their customer’s demand and need. Through this process, organisation can
easily provides new product in competitive market to build new customers easily (Jacoby, 2010).
It is all about getting better economies of scale even though delivery time for a longer period.
Coles Supermarkets Pty Ltd have to develop the products which satisfies the consumer needs and
wants which will be fruitful in terms of delivering the satisfactory level of products and services
to consumers.
Inventory – It is a high-level stocking of inventory for a wide range of products for
market. Inventory management is required to reduce wastage level that do not sell frequently
(Viswanadham, 2013). Through this process, organisation easily stores raw material for a long
time to manufacture new products according to customers and market need. There is need to
monitor the requirements of products in the store which will be beneficial in terms executing the
production, availability of resources as well as proper utilisation of them. Therefore, in
consideration with such operations it can be said that it will be beneficial for Coles Supermarkets
Pty Ltd in terms of recording the transactions and analysing the requirements.
Location – Location is one of the most important decision that all organisations take to
improve their market value as well as to meet with new customer easily (Ross, 2013). For this,
company need to understand where they can easily get higher competitive advantages easily and
supply their products without any fear. In order to launch business in the various places Coles
Supermarkets Pty Ltd has to analyse and operate business at the locations which are convenient
to the consumers. It must be nearby the residential areas as well as must be close to the supplying
units. These strategies will help in reducing the transportation costs as well as having the fruitful
business in the log run.
Transportation – This is a mode of supplying various products and services to
customers in an effective manner. Nowadays, lots of companies provide online products to their
customers, so for them it is essential to provide effective delivery through effective
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transportation (Leeman, 2010). To develop the business Coles Supermarkets Pty Ltd need to
have the supplying units and stores must be at a single place which will reduce the costs of
transportation. On the other side if thy are planning for launching the business at various
locations then they have to seek the domestic market and the resources available at such
locations. Therefore, it can be said that with the help of such analysis the firm will have
promptness in the operations and they will be quick and convenient in terms of facilitating the
satisfactory level of gods and services.
Information – For business organisation, it is very important to spread information about
new products, its cost, features, attributes etc. Through this process, they build awareness about
market. Coles Supermarkets Pty Ltd must have the promotional strategies that will help the
business in long run as to have the adequate increment in the profits, consumer retention as well
as raising the financial health of the business. Marketing of the brand can be done on the online,
site, social media, newspaper, television and lot more medium through which this store spread
the informations about the new launch of its products and services. Therefore, such strategies
will be beneficial in terms of having the adequate numbers of consumers and then will help in
raising the funds of the firm. On the other side the informations which will be relevant with the
financial disclosure of organisation. Thus, such data set will help the investors of various
stakeholders in terms of analysing the profitability of the firm, so on behalf of such analysis they
will become to make the valuable investment decisions. It will create the unique image, brand
name as well as better capital structure which helps in rising the market value of the firm.
3. Distribution network system
Facilities – Distribution network system provides effective supply chain of a particular
product through one place to another. It helps in maximising profitability and sales of new
products in target market. New product requires attractive prices and new feature as well as
various facility that can easily attract to new customer (Mathur, 2011). In this process,
distribution network helps in providing all products easily to customers according to their
demand and need. Professionals at Coles Supermarkets Pty Ltd has to access through the market
and make the adequate analysis which will be helpful in analysing the buyer's desire and then
design the products which will give them the satisfaction with every trade.
Type of transport – This process is basically used to provide products and services
easily to customers. Some organisation starts their business through online servicing and in this
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process they need to provide effective services to their customers in appropriate manner (Kwak
and Kim, 2016). In transportation, Coles Supermarkets Pty Ltd uses various modes such as
airlines, railways, package carrier and local or truck transport for small supply.
Flow network – This is a graphical representation in which each edge has a capacity and
flow. It is an effective tool of transportation to provide products and services from one place to
another (Ferrell and Hartline, 2010). It is necessary for Coles Supermarkets Pty Ltd to reduce
barriers in transportation and to solve its problem easily.
4. Factors that may cause disruption to supply chain
Supply chain management is a process which used for various activities as maximise
profitability, improve customers values to get competitive advantages easily. In this process,
some factors are affected and may cause disruption in organisation. These can be-
Untrained employees – For a retailer organisation like Coles Supermarkets Pty Ltd, it is
very important that their employees need to be trained to understand customer’s need and
demand as well as to provide them effective services (Kunnanatt, 2011). Sometimes, untrained
employees can reduce productivity and profitability in organisation.
Machinery breakdown – Machinery and manufacturing equipment are known as
organisation's assets that helps in providing effective outcome of their products and services.
However, machinery breakdown can be a cause of disruption in supply chain.
PART 2
EXERCISE 1
a. Calculating NPV to assess whether lease or spot price option is better
Computation of NPV
Year
Cash
inflow in
the case
of spot
price
PV factor
@ 10%
Discounted
cash inflow
Cash
inflow
(leasing
option)
PV
factor
@
10%
Discounted
cash inflow
1 100000 0.909 90909 100000 0.909 90909
2 100000 0.826 82645 100000 0.826 82645
3 100000 0.751 75131 100000 0.751 75131
Total 248685 248685
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discounted
cash
inflow
Initial
investment 70000 67500
NPV
(TDCF –
II) 178685 181185
Interpretation: The above depicted table shows that NPV is higher in the option of leasing
such as £181185 respectively in comparison to spot price. However, in the case of leasing firm is
obliged to return back concerned land to the entity. On the other side, if business unit will
purchase land then it may result into incline in fixed assets. Further, difference take place
between the NPV of both options account for £2500 significantly. Thus, referring the outcome of
evaluation it is suggested to the Worldwide Logistic plc that firm should lay emphasis on
purchasing land at spot price which in turn offers high benefit to it.
b. Highlighting issues that could affect strategy which selected above
On the basis of section a, Worldwide Logistic plc should purchase land at spot for
operational aspects. However, there are some factors which in turn place impact on the strategy
mentioned above such as salvage value of land and inclining spot price level. Thus, such factors
might affect the selection of spot pricing strategy.
c. Decision tree analysis
Decision tree
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Option
s
Profit after
cost from
year 1 to 3
when buy
land
Profit after
cost from
year 1 to 3 in
leasing
Year1:65000
Year 2:71500
Year3:61750
Year 1: 66250
Year 2: 72875
Year3: 62937

Year 1: Demand (constant) (5000)
Year 2: Demand increase by 10% (5500)
Year 3: Demand decrease by 5% (4500)
Working note:
Year Demand Revenue
Buy
land Leasing
1 100% 5000 100000 65000 66250
2
10%
iincrease 5500 110000 71500 72875
3
5%
decrease 4750 95000 61750 62937.5
Determining best option using decision tree
Considering above depicted tree it can be stated that except 1st year, leasing option will be
suitable for Worldwide Logistic plc as it offers high margin.
EXERCISE 2
1. Graphical presentation of the sales vs the months
Month
Sales
(in £)
Jan 126
Feb 137
Mar 142
Apr 150
May 153
Jun 154
Jul 148
Aug 145
Sep 147
Oct 151
Nov 159
Dec 166
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Graphical presentation shows that sales revenue of ABC company inclined significantly
from January to June. However, after the month of June sales revenue of the firm declined from
£154 to £145 respectively which is not a good indicator. Further, trend of graph exhibits that
revenur increased from £151 to 166 at the end of December. Thus, for enhancing the level of
sales revenue firm should focus on promotional aspects and reducing the level of expenses.
2. Use of trend-corrected exponential smoothing (Holt’s method) for forecasting
alpha
= 0.30
beta = 0.50
period month sales level trend forecast error ABS(error)
Squared
Error
Percent
Error
1 Jan 126 126 0 - - - - -
2 Feb 137 126 -7E-15 126.00 11.00 11.00 121.00 0.08
3 Mar 142 129.30 1.65 130.95 11.05 11.05 122.10 0.08
4 Apr 150 134.27 3.31 137.57 12.43 12.43 154.44 0.08
5 May 153 141.30 5.17 146.47 6.53 6.53 42.61 0.04
6 June 154 148.43 6.15 154.58 -0.58 0.58 0.34 0.00
7 July 148 154.41 6.06 160.47 -12.47 12.47 155.51 0.08
8 Aug 145 156.73 4.19 160.92 -15.92 15.92 253.52 0.11
9 Sep 147 156.15 1.80 157.95 -10.95 10.95 119.91 0.07
10 Oct 151 154.67 0.16 154.83 -3.83 3.83 14.65 0.03
11 Nov 159 153.68 -0.41 153.27 5.73 5.73 32.87 0.04
12 Dec 166 154.99 0.45 155.43 10.57 10.57 111.62 0.06
13 Jan 158.60 2.03 160.64 1.23 9.19 102.60 0.06
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BIAS MAD MSE MAPE
3.
1. Producing two way data table
2. Using Excel solver to determine the optimal values of  and  using MSE as your objective
function
Given that:
:  [0, 1]
: [0, 1]
alpha = 0.91
beta = 1.00
Period Month Sales level trend forecast error ABS(error)
Squared
Error
Percent
Error
1 Jan 126 126 0 - - - - -
2 Feb 137 126 0 126.00 11.00 11.00 121.00 0.08
3 Mar 142 136.03 10.03 146.06 -4.06 4.06 16.51 0.03
4 Apr 150 142.36 6.33 148.68 1.32 1.32 1.73 0.01
5 May 153 149.88 7.53 157.41 -4.41 4.41 19.45 0.03
6 June 154 153.39 3.50 156.89 -2.89 2.89 8.36 0.02
7 July 148 154.25 0.87 155.12 -7.12 7.12 50.71 0.05
8 Aug 145 148.63 -5.63 143.00 2.00 2.00 4.00 0.01
9 Sep 147 144.82 -3.80 141.02 5.98 5.98 35.75 0.04
10 Oct 151 146.47 1.65 148.12 2.88 2.88 8.27 0.02
11 Nov 159 150.75 4.27 155.02 3.98 3.98 15.84 0.03
12 Dec 166 158.65 7.90 166.55 -0.55 0.55 0.31 0.00
166.05 7.40 173.45 0.74 4.20 25.63 0.03
BIAS MAD MSE MAPE
Obtaining the best forecast by adopting simple exponential smoothing using Excel solver with
MSE
Simple Exponential Smoothing
Alpha = 0.3
Period Month Sales forecast error ABS(error)
1 Jan 126 126.00 - -
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2 Feb 137 126.00 11.00 11.00
3 Mar 142 129.30 12.70 12.70
4 Apr 150 133.11 16.89 16.89
5 May 153 138.18 14.82 14.82
6 June 154 142.62 11.38 11.38
7 July 148 146.04 1.96 1.96
8 Aug 145 146.63 -1.63 1.63
9 Sep 147 146.14 0.86 0.86
10 Oct 151 146.40 4.60 4.60
11 Nov 159 147.78 11.22 11.22
12 Dec 166 151.14 14.86 14.86
8.97 9.27 117.43
BIAS MAD MSE
In order to minimize the value of MSE solver has used by adjusting the value of alpha such as
0.3
Alpha = 1
Period Month Sales Forecast Error ABS(error)
1 Jan 126 126.00 - -
2 Feb 137 126.00 11.00 11.00
3 Mar 142 137.00 5.00 5.00
4 Apr 150 142.00 8.00 8.00
5 May 153 150.00 3.00 3.00
6 June 154 153.00 1.00 1.00
7 July 148 154.00 -6.00 6.00
8 Aug 145 148.00 -3.00 3.00
9 Sep 147 145.00 2.00 2.00
10 Oct 151 147.00 4.00 4.00
11 Nov 159 151.00 8.00 8.00
12 Dec 166 159.00 7.00 7.00
3.64 5.27 36.18
BIAS MAD MSE
Forecasting values using 4 years moving averages method
Sales
4 years
moving
average
Jan 126 #N/A
10

Feb 137 #N/A
Mar 142 #N/A
Apr 150 138.75
May 153 145.5
Jun 154 149.75
Jul 148 151.25
Aug 145 150
Sep 147 148.5
Oct 151 147.75
Nov 159 150.5
Dec 166 155.75
4. Commenting on the results of MAD, MAPE, TS and the U test
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REFERENCES
Books and Journals
Chernev, A., 2012. Strategic Marketing Management. Cerebellum Press.
Das, T., 2011. Strategic Alliances in a Globalizing World. IAP.
Ferrell, C. O. and Hartline, D. M., 2010. Marketing Strategy. 5th Ed. Cengage Learning.
Flander, J., 2014. Great strategists say “no”. Strategic Direction. 30(4). pp.31 – 32.
Jacoby, D., 2010. The Economist Guide To Supply Chain Management. Profile Books.
Kunnanatt, J., 2011. Global business chain and twin advantage: Strategic opportunities for
developing countries. Competitiveness Review an International Business Journal. 21(4).
pp.352 – 368.
Kwak, K. and Kim, W., 2016. Effect of service integration strategy on industrial firm
performance. Journal of Service Management. 27(3).
Leeman, A. J. J., 2010. Supply Chain Management: Fast, Flexible Supply Chains in
Manufacturing and Retailing. BoD – Books on Demand.
Mathur, U., 2011. Global Business Strategies: Text and Cases. I. K. International Pvt Ltd.
Ross, F. D., 2013. Competing Through Supply Chain Management: Creating Market-Winning
Strategies Through Supply Chain Partnerships. Springer Science & Business Media.
Viswanadham, N., 2013. Ecosystem-Aware Global Supply Chain Management. World
Scientific.
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