Page 11 - CIMA MCS Workbook May 2019 - Day 1 Tasks

CIMA MAY 2019 – MANAGEMENT CASE STUDY

This focus on continuously improving their service to customers, by being totally responsive to
their needs, adopting modern management techniques such as Just in Time (JIT) to facilitate
efficiency in the manufacturing process and by constructing sustainable, bespoke and high‐quality
buildings, through a process of consultation and innovation has resulted in Jord becoming
established as one of the most exclusive prefabricated house manufacturing businesses in the
world with an unrivalled reputation in high‐quality bespoke designed homes.

Based on this reputation, customers are willing to wait up to a year to own a Jord house, designed
and built exclusively for them. The Larsson family has a policy of maintaining the current
production levels to continue to position Jord houses as rare and exclusive products with the long
waiting list representing the notion of Jord exclusivity. With new house build per year flat lining
however in the home country of Corvola, this policy has been questioned by some institutional
shareholders, suggesting it is time to grow the business in other directions.

Further growth however in, for example, product or market development will not be without their
challenges. With the majority of its revenue derived from Corvola is it essential that Jord has up to
date and accurate information to facilitate crucial decisions surrounding its customers, range of
products and services, market presence and related current capacity issues. For example, Corvola
has potential to build 400,000 houses over the next four years with some 20% of all new house
building being prefabricated.

Similarly, across the world there is increasing recognition of the benefit of prefabricated housing
as an alternative to traditional housing and the market is, as a result, growing significantly. This is
also likely to be applicable to other expansion opportunities either in neighbouring and/or other
countries. Despite a market presence in North America and Europe, careful decisions will need to
be made regarding the future direction of the business.

All opportunities for Jord will be fuelled by these external pressures requiring the need for greater
awareness of competition, changes in consumer taste, improvements in technology, social and
economic pressures affecting disposable income and consideration of the associated risks. This
makes for a complex trading environment if growing market share by innovation, quality and
reputation is to be achieved. Each aspect of service provision, competition and related costs will
need to be clearly understood to facilitate decisions concerning Jord’s future strategy. .

These challenges are generating risks to the future success within the industry and require
immediate planning, innovation and action to mitigate the risk. Investment will be required to
ensure that the quality Jord offers is maintained, revenue continues to grow, and costs controlled
to ensure that both profitability and reputation are maintained. The internal activities of Jord will
need to be carefully analysed to establish how these costs are incurred and how they can be
better managed in the future. Failure to do so will challenge the future profitability and success of
Jord

8 KAPLAN PUBLISHING