Cheche Maldives, a cosmetic manufacturing company was established in 1995. Up until 2010, Cheche was manufacturing its own brand and marketing in the country but since 2010 in order to face the competition, it has diversified into OEM manufacturing where CheChe now accepts custom orders to be done for different brand owners based on their requirement.

Due to years of experience in the market, CheChe has been getting custom orders at an unexpected rate till late 2017 and a sudden drop of orders was seen in trend analysis.

You have been appointed to analyze the situation and provide a report to the management. Below data is given as findings from a status analysis

Project Management

Due to high number of orders received to Cheche, the operational management team has not given a lot of weight in providing customer requirements as specified in the initial agreement. Further analysis of the situation highlights that the operational manager did not have the right capacity and competencies with a proper plan to cater different requirements at the same time.

There was a discussion on the concept of projects, having project managers and making them responsible for the deliverables.

Investment Opportunity

Due to increase in competition and expanding the product line, a potential investment of US$ 100,000 for a new machine was brought to the table. Below cashflow information are given with respect to the investment.

Unit

Description Note

Price

(US$)

Selling Price Expected to increase by 5% per annum

800

Material Cost Expected to increase by 6% per annum

300

Other variable Cost Expected to reduce by 5% per annum

150

It is estimated that 95 units would be sold in year 1 & this would increase by 10% per annum. The Cost of Capital is 10% and the scrap value is at 2% of the initial investment.

PV = FV * DF DF = 1/(1 + R)

Potential New Order

A new order for 1,200 units of a brand-new product has come to CheChe. This is the first time the organization is going to manufacture such a product. Based on past experience, it as estimated that the first unit would take 105 hours and 85% learning effect will be applied to first 900 units. You are also required to conduct a labour hour requirement calculation.

Y = a * X T = Y * X b = Log (LC)/Log(2)

Your report to management should address/include the below points.

The concept of project management.

Who is a project manager and the characteristics of a project manager? Why CheChe should use a project manager?

Investment appraisal using payback period and NPV with a recommendation. Labour requirement calculation for the new order.