(1) Perform a sensitivity analysis based on the given information and draw a tornado chart. From your analysis, list up the three most important factors that you think Tajima should be most concerned about and state your reasons. You might have to make some assumptions (including which costs are fixed or variable) and come up with your own hypothetical numbers. (2)What specific ways can you think of to solve problems or avert risks for the points raised in (1) above? Present several options, and discuss their advantages and disadvantages.

Crithink had its head office in Tokyo, and was mainly engaged in corporate training. Its main focus was on training manager-level staff to think logically. Its programs were originally designed by the US company Logithink. and its training materials have been translated and rearranged for Japan. Crithink had the exclusive rights to provide Logithink' 5 programs in Japan. The training program was based on a class of 20 participants, and was provided over three days at the standard price of 1.2 million yen. Crithink referred to this three-day unit as \"one session". The unavoidable costs of one session were the cost of the materials and the cost of a lecturer. Crithink did not have full-time lecturers. but utilized its network of external partners. including university professors, consultants and other professionals, to deliver the course. The cost of a lecturer for one session was 15,000 yen per participant. and the cost of the materials was 10,000 yen per participant. The policy of using external lecturers was adopted when the company was founded a year and a half ago. with the intention of minimizing risk. The company had around 15 external partners. all of whom were acquaintances of Tajima. Crithink's marketing activities were centered on the human resources divisions of large companies and foreign-invested companies. Small and medium sized companies found the price of 1.2 million yen per session too high. Marketing activities were carried out by Tajima and two new salespersons. both of whom had been recently recruited mid-career. These three members of staff would cost the company 22 million yen in fully-fixed salary and bonuses (8 million of this was for Taiima). plus around 15% of that amount in fringe benefits during the next fiscal year. Crithink set its sales target for repeat business during the next fiscal year at 70 sessions, or 80% of the forecast for this fiscal year (88 sessions). As for new customers, the company intended to approach a total of 450 new companies, and close a deal with 10% of them, averaging 1.5 to 1.6 sessions ordered. The forecast for this fiscal year was making approaches to 200 companies, of which 18% resulted in orders, averaging sales of 2.4 sessions. The sales were made, essentially. by Tajima alone during this fiscal year. The reason for lowering both the order ratio and the average number of sessions for the next fiscal year compared with this scal year was that Tajima thought that it would be difficult for the new salespersons to reach the level of Tajima's this fiscal year performance immediately. The average amount of lead time between taking an order and implementing the course was around one month. In terms of promotion, the company did not use large-scale advertising, still preferring word-of-mouth and direct mail, as well as web promotion. These costs should not require a budget of more than 15 million yen, since the customer base was fairly focused. In terms of the basic teaching methods, the manual created by Logithink was available, but since this was written mainly for teaching American businesspeople, the content had to be rearranged for Japan. The development of teaching methods and training of external lecturers required a minimum of 10 million yen investment. If insufficient investment was made in these areas, it could lead to lower customer satisfaction. In addition to this, the major administrative costs included personnel expenses for one temporary employee who operated the wage system and performed other paperwork. The annual cost of renting the office and leasing office equipment was 6 million yen. Further. of course, there were some small expenses for supplies. utilities and communication. The major worry for Tajima was the fact that Logithink's major US competitor. Think and Act Inc., may be entering the Japanese market. According to one source. the company was looking at providing essentially the same curriculum as Crithink for around 1 million yen. Other rumors, however, suggested that the price would be the same as Crithink. around 1.2 million yen. Furthermore. it was said that Think and Act was looking to adopt a policy that did not involve hiring full-time lecturers too. This might result in competition for the same external lecturer. Exhibit Plan for the Next Fiscal Year (Unit: 1000 yen) No. of Session Total Average sessions Hui Hui No. of Order No. of Prev. year Amount Unit cost sessions sessions customers ratio leads Repeat ratio results Sales 168,000 1,200 140 Repeat 84,000 1,200 70 80% 88 New 84 000 1 200 70 1.55 45 10% 450 Cost Lecturers 42,000 300 140 Materials 28,000 200 140 Gross prot 98,000 700 140 Source: created by the case authors END