Page 12 - CIMA OCS Workbook February 2019 - Day 1 Tasks

CIMA FEBRUARY 2019 – OPERATIONAL CASE STUDY

One aspect of this could be previous problems encountered by Trigg, resulting in complaints,
missed start dates and errors in installation. The decision to bring installation in-house has
dramatically reduced such complaints but the company may still have to work hard to rebuild its
reputation in this sector.

Another potential issue could be ground work. Instead of offering customers a one-stop solution
in which Trigg sub-contracts ground work, customers are instead given recommendations
concerning partner companies to do this aspect. This may be sufficient to make some look
elsewhere.
Finally there have been problems in the past where employees with criminal records have ended
up working at schools due to a lack of disclosure.
All of these issues must be addressed for Trigg to exploit enhanced future growth due to the
government FITKIDS initiative.

Financial performance
Revenue fell by 4% from 2017 to 2018, resulting in a decrease of 15% in operating profit. This also
reduced operating margins from 15.4% to 15.0%.
In terms of working capital and liquidity, cash increased by F$226,000 fuelled mainly by an
increase in borrowing of F$300,000. It is questionable how future growth will be financed.
Inventory days and receivables days also increased resulting in an additional F$475,000 tied up in
working capital.
The future

Budgeted sales for 2019 give an increase in revenue of 5% over 2018, which relies on increasing
commercial sales.

This will depend very heavily on the extent to which Trigg can address the perceived weaknesses
highlighted above and also whether Sally Gomez can use her previous experience at Jacks, a major
competitor in the commercial sector, to increase Trigg’s chances of winning commercial tenders.

3 KEY TOPICS

The key topics that this case would suggest are as follows:

E1
Organisational structure

Trigg is currently organised on functional grounds. An obvious change would be to switch to
divisional with a division for commercial and another for domestic sales. Make sure you revise the
pros/cons and other issue associated with such a switch.
IT/IS

There is huge potential for Trigg to exploit IT/IS to facilitate future growth, whether in terms of
updating the website or the use of CAD/CAM for developing new products or better MIS to
coordinate sales and production planning better.

Operations
The current production system has not changed for twenty years. Available options could include
the use of BPR to redesign the approach or a change in capacity management to reduce inventory
levels.

8 KAPLAN PUBLISHING