KEPO Investment Decision: Project Analysis & Strategic Options

This presentation provides a comprehensive analysis of KEPO Company's investment options, including acquiring new production methods, establishing retail outlets in America, and acquiring an existing retail outlet in Africa. It employs SWOT, Porter's Five Forces, and PESTLE analyses to evaluate each option's strengths, weaknesses, opportunities, and threats, as well as the competitive and macro-environmental factors. Financial analysis, including payback period, NPV, and IRR, further informs the decision-making process. The presentation concludes that Option 2, establishing retail outlets in America, is the most favorable due to its shorter payback period, higher NPV, and IRR, making it the recommended investment for KEPO Company. Desklib provides a platform for students to access similar solved assignments and presentations.

Decision Making
and Problem
Solving
Presentation
Decision Making and Problem Solving 1

Decision Making and Problem
Solving
GROUP MEMBERS
Decision Making and Problem Solving 2

Presentation Objectives
As the managers of a large, multinational company based in
Vietnam with its outlets in Europe and Australia have to
choose the best investment project among the available
options.
Decision Making and Problem Solving 3

Investment Options
Option 1: Acquire a new, modern production
method for both factories
Option 2: Establishing retail outlets in
America.
Option 3: Acquire an existing retail outlet in
Africa
Decision Making and Problem Solving 4

Company Profile
• Company Name: KEPO
• Location: Vietnam
Outlets
 Europe
 Australia
• Company Brand: KEP
• Product Prices Range: USD 30-1000
• Budget Investment: USD 1 million
Decision Making and Problem Solving 5

SWOT ANALYSIS
SWOT Analysis is an important technique
that is applied when evaluating the
internal strengths and weaknesses that
would face a new business as well as
establishing the opportunities available to
the business as the Threats likely to be
faced
Decision Making and Problem Solving 6

SWOT-Option 1
Acquire a new, modern production method for both
factoriesSTRENGTH
Improve capabilities: New production methods
will be based no technology which improves
production efficiency
Enable employees to work faster
Increased productivity
More competitive advantage: New production
methods enhance efficiency, quality and customer
satisfaction.
Improved safety: New machinery reduces the
risks and threats on employees’ safety.
WEAKNESS
Expensive: The cost of acquiring new
production machines is too costly for the company.
Lack of expertise: The current employees
cannot operate the new machines and production
techniques.
High maintenance cost.
OPPORTUNITIES
New Markets: Many people are embracing
products from the company. New production
techniques will help to meet the emerging
demands
Innovation: New production machines will
promote creativity at the company
Reduced cost: The investment would lead to
reduced production costs hence increased
productivity
THREATS
Taxation: Increased taxation on new machines
and manufacturing companies
Negative brand image: Laying off employees is
to attract protests and conflicts from trade unions.
Uncertain sales projections
Decision Making and Problem Solving 7

SWOT-Option 2
Establishing retail outlets in America
STRENGTH
•Consistent quality: The products are easily
recognised in the American market due to their
consistency in quality.
•Experience: The Company has vast experience in
the electronic manufacturing industry.
•Good reputation in the market
•Cost and technological advantage
•Strong ethical values globally.
WEAKNESS
•Lack of adequate funding: The Company will
have to borrow $ 1000000 to fund the project.
•No reputation: KEPO has not yet established
itself in the American market
•Marketing deficiencies in the new market.
OPPORTUNITIES
•Growing market: The American market is huge
and expanding.
•New technological advantage
•Availability of new market
•Lack of aggressive competition in the
market.
THREATS
•New competition: It is easier for new
competition to enter the market which pose
increased competition.
•Demographic changes are a challenge in the
new market
•Adverse government and taxation policies
•Possible economic slowdowns
Decision Making and Problem Solving 8

SWOT-Option 3
Acquire an existing retail outlet in Africa
STRENGTH
•Existing brand image: Customers can easily
identify with the outlet to be acquired.
•Huge number of loyal customers
•No rental costs: The premises will be owned by
the business.
•Highly motivated employees
•Effective marketing techniques.
•Low cost strategy
WEAKNESS
•Financial constraints: The company will have to
borrow from financial institutions to meet the
acquisition cost.
•High competition: There is high competition in
the market which require diversity and innovation.
•Overreliance on imported raw materials
•High labour cost
OPPORTUNITIES
•New brands: The company will use its new and
unique brands to increase its market share.
•Increased innovation: The company enjoy
creativity that easily match customer
expectations.
•Low taxation: Increased profitability
opportunities
THREATS
•Increasing customers demands cause stiff rival in
the market.
•Government policies: Strict policies which are
hard to adhere to.
•Low differentiation: Customers cannot easily
recognise KEPO products because of high level of
similarityDecision Making and Problem Solving 9

5 Force
Analysis
5 Force Analysis is a market analysis
tool that was developed by Michael
Porter in 1979. The analytical tool
evaluates attractiveness and
competitive intensity of a market
based on forces like;
•Threats of new entry.
•Competitive Rivalry
•Supplier Bargaining Power
•Buyers Bargaining Power
•Threat of Substitution
Decision Making and Problem Solving 10

5 Force Analysis
Analysis Option 1 Option 2 Option 3
Buyers bargaining
power
 There are many brands with low level
of differentiation in the market. Cost
is the main competitive factor in the
market. The switching cost is also
low.
 Competition Level: High
 Buyers can easily switch from one
brand/ product to another.
 Competition Level: Highest
 Buyers can easily switch from one
brand/ product to another. However,
quality and price are the main factors
considered by customers
 Competition Level: Medium
Suppliers bargaining
power
 There are few suppliers in the market
who provide raw materials to the
many manufacturers like KEPO.
 Competition level: High
 There are many suppliers in the
market.
 Competition level: Low
 There are moderate number of
suppliers in the market.
 Competition level: Medium
Competition Rivalry  There are over 30 competitors in the
industry. The key players are PIKO,
Levtec, and Lectlink.
 Competition Level: High
 There are over 100 competitors in the
industry. Competition Level: Highest
 There are few competitors in the
industry. Competition Level: Low
Threats of substitute  The number of companies offering
substitute washing and electronic
equipment have increased over
years.
 Competition level: High
 There are many companies offering
substitute goods
 Competition level: Highest
 There are many companies offering
substitute goods
 Competition level: Low
Threats of new
entrants
 The market has a high cost of
entrant.
 Competition level: Low
 The market has a low cost of entrant.
 Competition level: High
 The market has a low cost of entrant.
 Competition level: High
Decision Making and Problem Solving 11

PESTLE
ANALYSIS
• PESTLE analysis is a tool/ framework used to
evaluate factors associated with the macro-
environment and how they impact the business.
• PESTLE analysis is used to identity the SWOT
factors for a business.
• PESTLE analysis factors include;
 Political
 Economic
 Social
 Legal
 Environmental
 Technological
Decision Making and Problem Solving 12