Page 1. Additional Operative Information: Alt. C 1) FOREX rates: AUD/EGP 0.073; EGP/AUD 13.63 (fixed rates). Once off-and up-front costs Entry Mode Alt. C: capital requirements to expanding home operations by 3x (times) for direct export to Egypt is $7.65mn. This amount is to be viewed as Fixed Assets (FA). 2) Note that the MENA operations pays interest only on the above investment. The cost per SKU should be calculated using production-, marketing-, and overhead costs as they occur in both Home Market and Host Market for this alternative. 3) Cost of Capital: the market provides the investment at 3.48x the 4.25% interest rate (El Salvador) due to percieved risk and lower salvage value of an extended plant should the expansion fail. 4) Sorbet servings: each serving equals one SKU; each SKU weighs 125 gram; SKU's are packaged in boxes of 4; one standard (Australian) pallet takes 125 boxes. The box size is 200mm x 200mm x 200mm. Each fully loaded pallet equals 1m3 in volume. The three product types are similar in all and every aspects (e.g.cost, size) apart from flavour. 5) Current production: 30% of total capacity (home base operations). 6) Corporate Tax Rate: % on EBIT (apply the Dec 31, 2021 Egyptian Tax rate). 7) Transportation concerns: ensure to use proper TEU's or ULD's (regardless of shipping method). 8) Additional costs: Include all costs associated with producing at the home production plant. 9) Mark-Up 1: (MU1) is 175% for products sold by FLUSH in MENA (FGI export). 10) Mark-Up 2: (MU2) products re-sold by the Retailers in MENA is 110% (for Sea transport). (MU2) products re-sold by the Retailers in MENA is 90% (for Air transport). 11) Financial Comparison: to enable comparing all entry modes, you must: a) complete an Income Statement for export when shipping by sea; and, 11) Financial Comparison: to enable comparing all entry modes, you must: a) complete an Income Statement for export when shipping by sea; and, 12) b) complete an Income Statement for export when shipping by air; and, c) compare the Income Statements for export when shipping by sea with air; and, d) calculate and compare GP-margin, EBIT-margin, and NP-margin; and, e) make your decision regarding shipment methods; and, f) complete a Strategic Profit Model for your selected method of shipment; and g) compare the NPM and ROA and reflect upon the outcomes vs. the Income Statements. Customer Locations: map the locations of the Customers in the target market and assess their approximate distance (in Km) to where the Egyptian headquarter is located. 13) Inventory & Asset values (balance sheet formulas): - Inventory is described here as: ['Inventory $' = "Safety Inventory #' * 'Sales Price SKUS'] - Accounts Receivables have a credit time of 21 days: ['Accounts Receivables $' = ('# Customers' * '# Deliveries per week' *3) * 'Sales Price SKU$'] - Cash (e.g. current assets) is here calculated as the value of: ['Current Assets $' = 'Inventory Replenishment Point' * 'Sales Price SKU$'] 14) All blue boxes = a field where you need to create the formula / insert the correct value. F17 X fx A B E F 1 2 3 FLUSH in NUMBERS 4 5 Current Production: 6 Production Utilization: 7 Production Capacity: 8 Available Production capacity (surplus): 9 Capacity expanded plant (Salvador): x3 10 11 Sorbet Sales volume: 12 Weight/ SKU 13 SKU's/box 14 Weight/box 15 Total Production (boxes) 16 Total Production (weight) 17 Load/pallet 18 Weight/pallet (total) 19 Needed #boxes 20 Needed #pallets 21 22 Average customer freq. Prod.1 23 Average customer freq. Prod.2 24 Average customer freq. Prod.3 25 Average customer order Prod.1 26 Average customer order Prod.2 27 Average customer order Prod.3 28 Average customer order Prod.1 29 Average customer order Prod.2 30 Average customer order Prod.3 31 Total Boxes / Customer 32 Customers needed for total sales 33 Total Boxes/Customer 34 Inventory needs/week 35 Minimum (safety) Inventory Page 2. Production & Market Entry Calculations: Alt. C Units 150 metric tons 30% percentage 500 metric tons 350 metric tons 1500 metric tons/year 1,800,000 SKU 125 grams 4 pcs/box 0.50 kg 450,000 # boxes 225 metric tons 125 boxes/pallet 62.5 kg 450,000 #boxes 3,600 #pallets/year 60% Arrayan 30% Jocote 10% Tamarind 30.00 boxes per week 15.00 boxes per week 5.00 boxes per week 1,560 boxes per annum 780 boxes per annum 260 boxes per annum 2,600 boxes per annum 173 #Retailers (i.e. hotels) 50 delivery per week 8,654 boxes 34,615 4 weeks supply 17,308 2 weeks supply FLUSH in NUMBERS Units Capital requirement: Entry Mode (Alt. C) $ 7,650,000 $ Cost of capital: Entry Mode (Alt. C) Interest costs: Entry Mode (Alt. C) 14.79 % $ 1,131,435 $ per FY Tax rate (Alt. A): Capacity needed in 1 MENA country Capacity needed in 2 MENA countries Capacity needed in 3 MENA countries Capacity needed in 4 MENA countries Capacity needed in 5 MENA countries Capacity needed in 6 MENA countries 22.5% on EBIT 225 Total tons/year 450 Total tons/year 675 Total tons/year 900 Total tons/year 1,125 Total tons/year 1,350 Total tons/year 36 Inventory Replenishment Point (IRP) 37 Total Inventory @ IRP 51,923 boxes 38 Order cost (admin) $ 25.00 cost per order 39 Needed Warehouse space @ max inventory needed space in m3 40 Needed Warehouse space @ safety margi rounded up to nearest 100m3 41 G21 X fx =G19+G20 A B 2 D E F G H TABLE 1 TABLE 2 TABLE 3 Mode of Entry (Alt. C): EXPORT Production cost Data (Home Market) Production cost Data (Host Market) Product related costs per SKU if produced in Home Market and shipped TABLE 4 Product related costs per SKU if produced in Home Market and shipped J 3 by SEA by AIR 4 Raw material costs/SKU (fruit) $ 0.96 $ 1.15 $ 0.96 $ 0.96 5 Raw material costs/ SKU (all other) $ 0.48 $ 0.29 $ 0.48 $ 0.48 6 Other direct costs / SKU (Home Market) $ 0.37 N/A $ 0.37 $ 0.37 7 Other direct costs / SKU (Host Market) N/A $ 1.08 N/A N/A 8 Total COGS / SKU: $ 1.81 $ 2.52 $ 1.81 $ 1.81 9 Operating Expenses / SKU if produced in Home Market Operating Expenses /SKU if produced in Host Market 10 Operating Expenses per SKU if produced in Home Market and shipped by SEA Operating Expenses per SKU if produced in Home Market and shipped by AIR 11 Production cost / SKU (labour) $ 0.42 $ 0.92 $ 0.42 12 Overhead costs / SKU $ 0.42 0.55 $ 0.31 $ 0.55 $ 0.55 13 Marketing costs/SKU $ 0.44 $ 0.68 $ 0.44 $ 0.44 14 Storage & Logistic costs/SKU $ 0.29 $ 0.55 $ 0.29 $ 0.29 15 a Transport 1 costs/SKU (Raw Material) $ 0.51 $ 0.87 N/A N/A 16 b Transport 2 costs/SKU (FGI) by road $ 0.33 $ 0.66 N/A N/A 17 c Transport 3 costs/SKU (FGI) by sea $ 1.65 N/A $ 1.65 N/A 18 d Transport 4 costs/SKU (FGI/Raw) by air $ 3.11 N/A N/A $ 3.11 19 e Allocated Operating Expenses: T1 $ 3.35 T1 $ 4.81 20 f Other associated costs/alternative: T2 $ 1.81 T2 $ 1.81 21 g Total Base Cost/SKU when sold in Host Market: $ 5.16 $ 6.62 22 23 NOTES TO ABOVE 'a, b, c, d, e, f and g': 24 a Cost from point of sourcing to point of production. 25 b Cost for all road transportation in applicable country/countries (regardless of distance). 26 c Total cost from point of production to 'location of distribution center' in Host Market (sea). 27 d Total cost from point of production to 'location of distribution center' in Host Market (air). 28 e Decide which costs to include here for this alternative entry mode (sea and air respectively). 29 f Decide what Host Market costs to add in this entry mode. 30 g This is the total cost per SKU to include/use where applicable (e.g. other spread sheets/boxes). 21 L10 123 A X fx B D Page 4. Operational Income: Alt. C Mode of entry: Alt. C Export Outcomes if produced in Home Market FLUSH Sales and shipped by SEA E Mode of entry: Alt. C Export Outcomes if produced in Home Market and shipped by AIR 4 5 67 Sales Volume in SKU: MU1/SKU 7 Total Costs/SKU (from p. 3) 8 Sales price $/SKU 9 MU1 $/SKU $ 10 Sales price /SKU 11 Sales Revenue $ total S 12 Sales Revenue total 13 14 34 FLUSH Gross Profit 15 Gross Profit/SKU (AUD) 16 Total Gross Profit (AUD) 17 Total Gross Profit (EGP) is is H $ $ 18 19 20 Retailers Sales 21 MU2/SKU MU2 $/SKU $ $ 1,800,000 175% 5.16 9.03 Export by Sea $ $ SS 4 S4 Export by Sea 110% $ SSH F G 1,800,000 175% 6.62 Export by Air 11.59 Export by Air 90% $ S SC Export by Sea Export by Air $ is is es $ $ ssssss $ RRP (retail) $/SKU 24 RRP (retail) /SKU 25 26 22222222222233 34 27 Retailers Gross Profit Gross Profit/SKU (AUD) 28 Total Gross Profit (AUD) 29 Total Gross Profit (AUD) / Retailer 30 31 FOREX: AUD-EGP FOREX: EGP-AUD $ 1.00 = 4 0.073 1.00 = $ 13.63