mcgill stlaurent where’s the beef? - mbacasecomp.com · goodman school of business brock...
TRANSCRIPT
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McGill StLaurent
Where’s the beef?GOODMAN SCHOOL OF BUSINESS
BROCK UNIVERSITY
BRADEN DAY, CARSON BENDER, PULKIT MODI, ASHWANI JANAGAM
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Where to go?
Where to take McGill StLaurent next?
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RecommendationAdd another commodity trading division to the portfolio of
McGill StLaurent (beef) while creating wood plastic composite products under their architectural division
Key Success Factors
▪ Cash cycle
▪ Inventory Turnover
▪ Gross Profit
▪ ROI
▪Sustainability
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The Plan
Create a new trading division to start trading
beef
Start trading the beef commodity in North America. McGill Meats
Diversify wood product portfolio by
introducing Wood Plastic composite
Bring AI technology to the Beef market
Have a portal for customers to input what they need and allow machine learning to find trends
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Situational Analysis
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Core Competencies▪ Relationship focused
▪ Reliable and trusted logistics
▪ Strong brand image
▪ Risk management
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SWOT
Build(Wood)
Feed(Grain)
Power(Energy)
Beef
S▪ Control over
distribution, logistics, sales
▪ Using e-tailers
▪ Quality relationships
▪ Risk management
W▪ Less margin▪ Lack of technical
advances
▪ Smallest business unit
▪ No diversification
▪ Storage problem▪ More volatile
O▪ Strong demand
expectations▪ Demand is
steady▪ Open market▪ Deregulated
market
T▪ Less barrier to
entry▪ Threat of
substitutes
▪ High competition
▪ Climates changes disturbance
▪ Storage of energy
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Relationship based:
▪ Already have contacts in the farming industry
▪ Already know the agricultural industry with grain
▪ Already have consumers in the wood products
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Reliable logistics :
▪ Can ensure reliable on-time delivery as beef is perishable ▪Masters at JIT inventory
▪ Supply the grain and feed for the farmers
▪ Deliver products to customers JIT
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Strong brand image:
▪ Suppliers trust McGill StLaurent
▪ Customers rely on McGill StLaurent
▪Continued reliability in wood products amongst customers
When trading food for human consumption brand image is critical.
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Risk Management:
▪ Strong growth in the beef market as more and more consumers are consuming beef
▪ Strong connections with current agricultural customers
▪ Growth in beef production emerging markets. India is #2 producer of beef in the world
▪Product diversification in the wood product market
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Alternatives
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Alternatives1. Enter into trading a new commodity
2. Expand current trading markets with product innovation
3. JV with a domestic trading company internationally
4. Become a manufacture of commodities
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Rejected Alternative 1JV with another trading company internationally
▪ + Growth potential high
▪ + International presence possible
▪ - Cultural difference
▪ - No insights for customer characteristics
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Rejected Alternative 2Become a manufacture of commodities
▪ + Good margins on products
▪ + Sustainable and made from recyclable material
▪ - Misaligned with core competencies
▪ - Perfect competition, less advantage of manufacturing
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Accepted Alternative Enter into trading a new commodity (beef) and expand
current trading markets (WPC)
▪ + Grain and beef go together
▪ + Growing beef consumption
▪ + Already established connections
▪ + Sustainable, Different positioning – WPC
Additional $6 million in AI support
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Why Beef?▪Customers of grain will be suppliers of Beef
▪ Twice the usage of already established relationships
▪ Steady growth with population and trends,
▪ Favourable market in our current region
▪Perfect competition
▪Food regulations for US and Canada already known
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Why Wood Plastic Composite?▪ WPC is a wood plastic composite made from wood and recycled plastic which is more machinable, more durable, water proof, fire safe and customisable.
▪ Mid to high end product, Can’t be imitated easily
▪ Relation with yacht builders, architects and aviation industry can be leveraged
▪ WPC will be procured from Europe and Asia, B2B model will to be followed
▪ Offers differentiation and growth potential is high
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Financials
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Assumptions▪Low end of GM for all products▪4% for grain, energy and beef
▪6% for CWP
▪25% for Architectural products
▪Beef achieves $25 million in sales year 1
▪$60k per employee hired
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Gross Profit Projection
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2018 2019 2020 2021 2022 2023
Gro
ss P
rofi
t ($
mill
ion
s)
Year
Gross Profit Projection
ROI 34%$3.4 million NPV
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CostsCosts ($1000’s) 2018 2019 2020 2021 2021 2021Employees for Beef 360 360 450 450 450 450Employees for Grain 180 180 180 180 180 180Employees for Architectural 360 360 360 360 360 360Obtain Clients for WPC 500 50 50 50 50 50
Obtain Clients for Beef 50 50 50 50 50 50Contract AI 2,000 2,000 2,000Implement AI 1,000 1,000Total 3450 3000 3090 2090 2090 1090
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Implementation
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Beef Trading Implementation 1. Hire 5 new employees to form a beef commodity trading
team
2. Call existing agricultural contacts to form a relationship and understand the beef market and what they want
3. Start procuring contracts for beef with sustainable partners
4. Develop a buyer friendly IT system that links consumer needs with suppliers product while predicting needs and identifying trends
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Implementation for WPC1. Connecting with speciality wood suppliers
2. Conduct seminars and conferences across targeted markets and suppliers to educate about the new product
3. Focus on the differentiated benefits and use of the product
4. Leveraging influencers such as architects to recommend WPC
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IT Implementation 1. Research a the customer friendly IT system that can
identify orders and potential suppliers
2. Use machine learning to act on identified trends and predictions from the AI IT system
3. Monitor reports and knowledge that comes from the big data collection
4. Use the network of shipping partners to ensure on-time delivery of this goods
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RisksFailure to stimulate demand for WPC
Continue marketing and developing alternative usages
Offer product samples of innovative usage
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RisksPerishable meat transported without compliance to food safety
regulation
Regulatory compliance and certification, Conditioned atmosphere during transportation
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Key TakeawaysCash cycle: increased growth in beef market with high inventory turnover
Inventory turnover: Beef turnover = 60, WPC = 75
ROI: is 34%
Sustainability: Technology integration with WPC, Higher sustainability standard for beef
Gross Profit: Technology integration to match with integration, Higher investment in AI
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Thank You
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