Business Analysis

1. Based upon the Team’s analysis of the case, list and explain the major issue(s) or problem(s) facing the business? (3 points)
● Erik Lynn, owner of American Consolidated Barrels, entered a deal with a Chinese supplier with prepaid inventory of 40 faulty Tiger Barrels. Every new barrel leaked from the sides and corners. The prepaid expense amounted to $16,400 and required repairs of $4,000.
● Lynn is stuck with paid inventory, a future repair bill and advertising expenses, with no sales revenue.
● Lynn is uneasy about the Tiger Barrel venture. It is an opportunity that is rife with risk. Lynn’s company would be the sole source supplier of the Tiger Barrels, however the first run was largely unsuccessful due to quality defects.

2. Based upon the information provided in the case, what caused these issues or problems? (3 points)
● Lynn felt that he was pressured into this contract during the first negotiation in China less than two years ago.
● Lynn was not able to bring a French barrel making expert with him to China to provide feedback to the Chinese manufacturing company.
● The chinese workers did not have the proper training in order to effectively build a wine barrel. ● There is a high risk associated with importation of foreign products.
● Language and Cultural barriers.
3. Identify the primary work you wish the consulting team to perform to assist you in addressing the performance issues. (3 points)
We would like the consulting teams to conduct an in-depth analysis of the wine barrel market to determine if value can be found elsewhere with other barrel making companies. If that is not possible, the consulting teams are to determine feasibility of the tiger barrel venture and provide supplementary information and analysis (break-even, value proposition, any financial figures) as to why Lynn should continue the business venture.
The Chinese Supplier has already agreed to pay for the barrel repair cost, however, in order to avoid any future issues the consulting teams will conduct an impact assessment as well as a root cause analysis of the quality issues with the barrels. Important things to consider for an impact analysis is damages done to brand, monetary losses, time to market failure costs, and any other considerations. A root cause analysis determines where the issue lies within the existing manufacturing process.
From there, the consulting teams will utilize their root cause analysis to suggest PPI. PPI stands for practical process improvement. As Lynn is a business partner with the Chinese supplier he has considerable power to suggest changes within the Chinese Supplier’s manufacturing process. By detailing out a practical process improvement plan Lynn can execute the plan to ensure that quality defects in the manufacturing facility are limited to a 3 sigma level of quality (93% defect free).
5. List the specific criteria the Team will utilize in evaluating the consulting reports. Be specific as to your expectations from the Consulting Teams. (3 points)

● Quality of Impact Assessment
○ What stakeholders have been affected?
○ What are the measurable monetary costs?
○ Measurable amount of loss time?
○ What is the effect on Consolidated Barrels Brand?




Sample Solution