MKT 460: INDIVIDUAL ASSIGNMENT 2

Assignment Outline

ASSIGNMENT GOALS
Case analysis provides an effective learning opportunity for students to integrate concepts and create solutions to
business problems. Case-based learning requires the student to assimilate a broad range of issues and situations in
providing coherent, thoughtful and supported recommendations.

You would not be asked to answer a series of questions rather you need to assess a situation, create a set of alternatives
and provide recommendations.
Some cases require external research. This case is inclusive and thus, you do not need to do external research.

Please read this outline carefully. It is your responsibility to understand the contents of this outline and follow the
instructions within.

LEARNING OBJECTIVES
Upon successful completion of this assignment, students will have the knowledge and skills to:
 Evaluate a case.
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 Make recommendations to address key issues in the case.
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 Make a business decision.
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 Develop your written communication skills by explaining your reasoning, using data and facts to support
your arguments.
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 Integrate concepts of Accounting, Operations, Marketing & Strategy
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ASSIGNMENT SUBMISSION
Your assignment is due via Canvas Assignments. This is an individual assignment.
Your completed assignment should be:
 ONE document only and in PDF format.
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 Six pages in total:
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✓
1 page for the Cover with your student number, course/section number, assignment title, and date
✓
5 pages for the Write-Up (including exhibits, such as charts or diagrams)

NOTE: You do NOT need to cite any sources, as all the information is contained within the case.

This is an individual assignment.

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 MKT 460: INDIVIDUAL ASSIGNMENT 2
Assignment Outline
ASSIGNMENT GUIDELINES
Read the case below. You are a consultant hired to provide a strategic, operational, financial and marketing analysis for
the given company.
Provide recommendations based upon your analysis.

Your analysis should be supported by calculations and tools or concepts covered in MKT 460. You will be evaluated
based upon the effective use of your business toolkit.

1. On the first page identify and explain the key issues and your three key recommendations. In paragraph form,
explain each recommendation and how it fits into the overall goal of becoming more profitable.

2. On page two provide your analysis and rationale/calculations in support of your first recommendation using
tools from MKT 460.

3. On page three provide your analysis and rationale/calculations in support of your second recommendation using
tools from MKT 460.

4. On page four provide your analysis and rationale/calculations in support of your third recommendation using
tools from MKT 460.

5. On the fifth page provide graphs, tables, diagrams and, or calculations to support your recommendations. Be sure to
reference all items exhibited on page 5 as exhibits within your write-up. Exhibits not referenced are not useful.

You have begun to build your toolkit. You will be required to review tools covered in class and determine which tools are
useful for solving the case. You are not required, nor is it wise, to attempt to try to use all the tools covered to date in
MKT 460. Tool selection and application requires critical thinking.

Make sure that all charts and/or calculations add value and are inserted logically into pages 1-4 or placed and referenced
on page 5. There is no need for citations. Additional pages, beyond the required, will not be graded.

ASSESSMENT RUBRIC GUIDELINES

Assignment 2 Rubric
Criteria Points
Issues: Are major problems identified? Are links to course and external concepts clearly documented? 10
Analysis: Is the analysis thoughtful analysis? Does it effectively apply appropriate concepts in developing
10
and justifying multiple alternatives?
Recommendations: Are recommendations clear, coherent, well supported, and logically consistent? 10
DEDUCTIONS: Spelling/grammar issues or formatting issues or lack of professionalism (max -50%) Up to -15

NOTE: each of the Criteria will be marked out of 10 points using the following scale:

Below Expectations Meet Expectations Exceed Expectations

5-6 pts 7-8 pts 9-10 pts

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 MKT 460: INDIVIDUAL ASSIGNMENT 2
Assignment Outline
IMPORTANT NOTE
This assignment is worth 5% of your course grade!
LATE assignments will NOT be accepted and will result in zero grade!
Assignments need to printed and submitted in class on 20th Nov’19.

GENERAL ASSIGNMENT SPECIFICATIONS

These apply to all written assignments; marks will be deducted for NOT following these requirements.

 Cover Page: 
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Must include course and section number, assignment title, and date. Additionally, Individual Assignment must
include your student number only; while Group Assignment must include team number, team members’ names and
student numbers.
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 Margins/Font: 
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Normal Margins (i.e., 1”), standard Font type and size (e.g., Calibri, Arial, Helvetica; 12 point)
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 Line Spacing: 
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Single – but make good use of headings/subheadings and white space for maximum readability!
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 Page Limits:
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The stated limit, when given, does not include the Cover Page, References List, or Appendices. Work that extends
beyond the page limit will not be graded.
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 Word Limit: 
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The stated limit, when given, does not include the Cover Page, References List, or Appendices. Work that extends beyond
the word limit will not be graded. Please include a Word Count at the bottom of your assignment.
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 MKT 460: INDIVIDUAL ASSIGNMENT 2
Assignment Outline

Kuzama Ltd.
Company Background
Kuzama Ltd. was founded in 2014, by Kahneer, a bike enthusiast. Having been frustrated by the poor quality of bicycle
racks he decided to design and build his own bike rack. A particular irritant in his experience was the lack of a built-in
locking system on the bike racks. He spent $33,000 developing and registering a patent for a unique locking system. He
also paid a designer Ms. Bouwcur, $45,000 to design the locking system. The bike rack carries up to two bikes and was
an immediate success. This bike rack sells for $333 per unit.

Based on his success, Kahneer expanded, with the addition to his product line, of a new rack called “Triple” in 2016. The
Triple can carry three bikes and is sold for $400 per unit. To keep costs down, he purposely did not add in the special
lock on the Triple, saving Kuzama Ltd. $29 on every Triple produced.

Kuzama Ltd. does not sell directly to the end user, but rather sells to 36 retailers; 15 retailers that specialize in selling
racks for automobiles and 21 retailers that are actually bicycle shops. The number of retailers has grown by 20%
annually over the past two years.

Census Data
Kuzama Ltd. operates in a region called Cascadia where the population totals 10,000,000. Statistics recently provided by
a Cascadian Government official, Mr. Haw, reveals that the average size of a household is three people, with a standard
deviation equal to “0.48 of a person”. The average household income is $64,000 with a standard deviation of $4,420.
These figures have been relatively stable for many years. Life expectancy is 82 years.

Management
With his focus on the Triple, the owner hired a manager, Leeshah, in 2016 to run the original product line, which became
known as the “Double”. Leeshah, in addition to her salary of $140,000, negotiated a signing bonus of $44,000 and a
commission per unit of $5. Leeshah has hired two administrative assistants who each receive a salary of $80,000 per
year.

In 2017 Kuzama Ltd. hired a new manager, Zie, for the Triple product line at a salary of $145,000 per year. Zie
inadvertently overheard Leeshah explaining, on a phone conversation in the parking lot, what she was going to spend
her commission on. Zie was confused and grew agitated that Kuzama Ltd. was not transparent with compensation
details. She also wondered if it was legal or ethical to provide one person commissions and not everyone.

General Head Office administration totals $550,000 annually; this total does not include any product line, commission or
factory costs. Part of the $550,000, in fact 5% of it, represents a substantial recycling program that the company is a
participant in. This annual membership grants them the right to use a special certificate/label each year. In 2016, the
firm spent $66,000 on a new logo featuring the locking system. Online reviews indicate strong support for the certificate
and the superb locking system.

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 MKT 460: INDIVIDUAL ASSIGNMENT 2
Assignment Outline

Proposed Retreat
An alpine retreat at Xinsheir Lodge is planned for June of 2019 which would require the shutting down of the factory for
one week and will cost a fee of $41,000 if it is pursued. Kahneer is very keen on this, as it will help the managers bond
with the workers from the factory. He knows the owner, Xinsheir from many years ago when he observed her effective
management of seven highly driven, strong-willed TAs (Training Analysts). Xinsheir will lead a series of team building
seminars at the retreat.

Production
The factory production capacity per month is #1,000 units. This #1,000 units of capacity applies to any combination of
the two products, essentially meaning that the factory production efforts are equal between the Triple and the Double.
Kuzama Ltd. closes production for November and December. Management performs planning and administrative work
during November and then in December the entire company is closed.

The #1,000 units per month is a factory limitation, but each product line has their own specific equipment leased
annually which pertains to their respective product lines. The factory cost is an annual lease of $300,000 and can be
renewed in November each year. There are currently no other suitable factories available in the region.

The Double product line has dedicated production equipment with a lease cost of $190,000 per year and a capacity of
#13,000 units per year based on 12 months of production. The Triple has two pieces of identical production equipment
leased at $56,000 each, with each piece of equipment able to produce #4,000 Triples per year, based on twelve months
of operations. All leases are 12 months in duration.

Triple maintains, on average, 20 units in inventory throughout the year.

Costs
Accounting records indicate that the material cost per unit for the Double and the Triple is identical at $100 per unit. The
labor cost to make a Double is $35 whereas the Triple labor cost is actually lower at $30 per unit. This labor is non-
skilled, requires nominal training and is abundant in Cascadia. There is no inflation and Kuzama Ltd. has a line of credit at
an interest rate of 10% per annum.

The factory overhead costs for the past two years are in the table below. Factory overhead includes the production
equipment for each product line, the factory lease, factory maintenance, and factory electricity.

Year = 2017 Year = 2018

Factory overhead costs $ 949,969 $1,028,711

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 MKT 460: INDIVIDUAL ASSIGNMENT 2
Assignment Outline

Market Research
At the start of the past year, Kahneer paid $21,000 for market research which revealed that 7% of the population have
bicycles and approximately 5% of the population owns a bike rack. The racks typically last, on average, about 5 years
before they are recycled as scrap metal. The scrap metal value, when recycled, ranges from $30 to $43 per rack.

The distribution of types of bike racks, defined by the number of bikes that can be carried per rack, in the Cascadia
population is:

Two bikes per rack Three bikes per rack Other

65% 30% 5%

Recent Conversations and Developments

Kahneer recently met up with a university friend named Ahnstun who suggested that Kuzama Ltd. introduce a bike rack
to accommodate 4 bikes named the “Quad”. The contribution margin on a Quad is estimated to be $230 and direct fixed
costs per year would be $345,000. These direct fixed costs would enable Kuzama Ltd. to produce #5,000 units per year.
Kahneer and Ahnstun thought about it and estimated that they could sell #2,000 units per year. They estimated that
demand for their Quad would then grow by 20% per year. Management believes that the Quad would use factory
production capacity at the same rate per unit as the Double rack.

Kahneer likes the idea of the Quad and especially the healthy contribution margin, but wonders if they should instead
start building racks for kayaks and paddleboards. He thinks that the contribution margin on kayak racks would be much
higher than that of bike racks.

At a recent trade show, a European car manufacturer announced a new partnership with a bike rack company and a lock
company to create bike racks which are specifically designed for electric cars. They are anticipating entering the
Cascadia market in 2020. Zie’s cousin is the CEO of the European car manufacturer and, knowing Zie’s zeal for this
product, her cousin keeps Zie systematically updated on this emerging partnership.

Recently there has been a series of emails and voice messages from retailers complaining that the shipments were not
on time and that the product mix was incorrect. Several complaints indicate that shipments around the holiday season,
at the end of the year, are particularly problematic. There has been no response by management, because each
manager feels that the owner should deal with these complaints.

Kahneer mused, “it seems like we should sell online and if we could save $10 of the margin that the retailers are making
off of us that would be more than $80,000 of easy money each year.”

It is January 2019 and the owner, Kahneer, would like you, the consultant, to provide an analysis resulting in the creation
of three key, actionable recommendations.

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 MKT 460: INDIVIDUAL ASSIGNMENT 2
Assignment Outline

Excerpts from various management reports.

Double Units sold

Year Double (#)

2014 3,000

2015 3,750

2016 4,688

2017 5,859

2018 7,324

Triple Units sold

Year Triple (#)

2016 1,000
2017 1,100
2018 1,210

Double Inventory
Average units in
Year inventory (#)
2014 10
2015 50
2016 400
2017 500
2018 1200

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