Reference no: EM132372794 , Length: word count : 2500
Assignment – Group Consulting Report on SPDL Challenge
Task Purpose
This task is designed to provide you with first-hand experience of being a consultant for a bonafide organisation, South Port Day Links Inc (SPDL).
Task Description
SPDL is a not-for-profit organisation offering various aged care services, mainly transportation, to the community living in the City of Port Phillip and nearby areas. With the Commonwealth Government Aged Care Reform becoming imminent, the organisation’s management team has approached your team for advice. They will rely on your report to make critical decisions about their organisation and prepare themselves for the changes. To make a sound assessment and report substantial independent research and judgement is required.
Your team has been assigned to prepare a business consulting report focusing on pricing of SPDL’s Day Link service. In the end, you should be able to give a recommendation on how to price the Day Link service. In order to give an excellent recommendation, you shall integrate cost and market information.
In a prior consulting project, another team of your company worked already on estimating the costs for SPDL’s Day Links service. They found that (based on prior year’s data) one trip costs SPDL about 20 to 25 AUD.1 This cost-information may be a useful starting point for your task.
1) However, also consider the market: Assess competitors and customers. For example, how is SPDL positioned in the market? Which features of Day Links are most relevant to SPDLs main customers?
2) Integrate the cost and market analysis to develop a pricing strategy for SPDL’s Day Link service. SPDL targets an annual profit of about 30 to 50k.
a) If you recommended pricing above market or competitor pricing, please discuss the value proposition upon which SPDL would need to market such higher prices services.3
b) Consider if and how (on what basis) SPDL could have a multi-tiered pricing model.4
3) Conduct a sensitivity analysis to understand how robust your analysis is to key assumptions: What is the effect on profit if your expected sales volume, sales price, costs of (more relevant) inputs fluctuates by 10%/15%/20%? (alternatively, chose other percentages that you believe are appropriate).
When completing the assignment, put yourself into the shoes of a consultant who has been hired by, and thus reports to, SPDL’s board of directors (in fact, the best groups get a chance to do so). As you are accountable, you want to be able to articulate and justify your analysis, assumptions, and recommendations. Even though you may not find the perfect solution, you want to strive for a reasonable and innovative solution to impress SPDL’s board of directors.
Also note that this is a formal report and should include an Executive Summary. Please refer to the resources on writing collaboratively and structuring your report to help you complete the assignment.
Reading
Classic Pen Company: Developing an ABC Model
The beginningd of South Port Day Links
MANAGEMENT AND COST ACCOUNTING By Alnoor Bhimani and Charles T. Horngren.