BSBCRT611 APPLY CRITICAL THINKING FOR COMPLEX

PROBLEM SOLVING
Assessment Task 2
Complex Issue Brief

Provide business overview

 WORLDUCATION
 Worlducation is a start-up that manufactures and markets tablets for primary educational
institutions. Currently, the company is marketing its tablets to companies, as the benefit that
can be used from such a tablet is useful when all students in the class use the device.
Therefore, the company has not yet started selling the product to individual customers and
plans to do so in the future. The company seeks to generate positive profit margins from the
marketing of its products while at the same time making a social contribution, that is why the
company, for each order fulfilled, supplies and instructs a school with low economic
resources, thus seeking to reduce illiteracy in the world.
 As a Senior Financial Analyst at WORLDUCATION the responsibilities that merit the position
include managing cash flow, preparing the budget, collaborating with the sales and
operations teams to understand the sales pipeline and capacity and supply chain constraints
respectively.

Outline complex issue

 The company has a series of issues created by both its production model and the contingent
context in which it operates. Firstly, with the arrival of COVID 19, the company has had a
strong impact on the business, and this due to the closure of the factories, which brought
production down from an average of 2000 tablets to 500.
Secondly, the company's supply chain is quite complex, with many actors interfering in the
process, and this makes the production and marketing of the product equally difficult. Finally,
there are political issues, such as the conflict between China and Hong Kong, which makes
production difficult due to the restrictions imposed on the country and the high degree of
uncertainty that this tension generates in the environment. In summary, this context in which
the company finds itself has caused cash flow forecasts to go down and the company's net
profit to reach negative figures, which is a strong threat to the company's profitability.

 In terms of stakeholders, the project counts management, employees, senior executives and
government as supporters, but lately our distributor, supplier and vendor have joined our
stakeholder group.
For 2019 there were:
Revenues of $35 million.
Net profit of 7 million.
Net cash flow of $4 million.
For 2020 they budgeted:
Revenue of $45 million.
Net profit of 9 million
Net cash flow of 5 million.

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 Against the current backdrop the projections for 2020 tend to be:
Revenues of $55 million
Net profit at 5 million
Net cash flow to negative 3 million.

 These records and projections indicate that the company is decreasing its level of profitability
in a worrying way. Even though revenues are up considerably, net income is declining
substantially differently than projected before the global situation. On the other hand, the fact
that cash flow is projected to be negative is a strong indication that the company may be
carrying a large amount of inventory or debt, and that the ability to pay staff and suppliers is
low.
 Objectives
Maintaining financial viability: This first objective is vital, every company requires profit
generation and profitability of its activities to stay in the market, that is why within the work
team have been mentioned measures such as outsourcing production services or the
inclusion of mobile devices to facilitate the use of the tool itself, all this in order to reduce the
costs of production and marketing and thus make the product more profitable.
Complying with the budget requirement: Complying with the budget requirement is vital to
avoid incurring unnecessary costs and is the surest way to have a responsible financial
control, this objective also goes hand in hand with the measures that the team seeks to
adopt.
 Advantages
Future growth: By maintaining a clear budget and ensuring that production processes are
cost-effective, you are ensuring that the company maintains profitability both now and in the
future.
Maintaining relationships with suppliers: By respecting the budget it is possible to
maintain a constant cash flow and a convenient profit, which generates confidence in the
suppliers and in turn allows the payment or indebtedness with them to be beneficial for both
parties.
Improve customer relations: Ensuring that the supply chain is efficient ensures that
products are of high quality, competitively priced and arrive in the hands of the customer
when requested.
 Risks
 Loss of customers: Restructuring the supply chain can bring a number of risks such as
delays, product failures or supplier defaults. This may cause customers to lose confidence in
the company and opt for other options.
 Reputational damage: This risk stems from the previous one and is the failure to deliver for
customers and the company being seen as inefficient or unreliable.
 Employee dissatisfaction: The desire to increase efficiency can lead to the need for more
effort on the part of staff, as well as parallel events arising from the outsourcing of production
services, such as a reduction in staff.

Legislative and organisational requirements

The company may be regulated under: The Corporations Act
Fair Work Act
Australian Consumer Act
Health and Safety Act.

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This takes into account all the legislation designed by the Australian authority for the conduct of a
company, which highlights all compliance in the welfare, safety and health of employees,
compliance with the duties and rights of all stakeholders and the participation of the company in
the market in a clean and within the framework of honesty in competitiveness.
In addition, the policy underpinning the project is:
Take care of customers' property, create a disciplinary action, prepare a disciplinary action,
prepare a personnel policy, and prioritise safety above all else. prioritise safety above all else

Calculate resources
 Staff time
 Zoom account
 Budget model
 Project sales document

Decision-making process record

Generate alternative solutions for your issue

Decision Making Techniques
 Discussions
Through the debates there is a process of argumentation of points of view, in which the parties
can carry a dialectical process, in which a thesis is established, the opposing party raises an
antithesis, to finally reach a synthesis.
If the points of view are not communicated and presented, critical thinking remains stagnant
because it does not allow the evolution of all the existing ideas in each person .
 Investing in training
Large corporations are investing in training their employees to develop critical thinking. This
method is adopted by most companies since decision making is enhanced by the process of
gaining knowledge and through experience, a trained person has both and uses them as
tools in favor of objectivity and avoiding false statements.
 Alternatives

Decrease in payment terms for customers: This is an alternative that allows the company
not to handle such risky debt figures and maintain an optimal cash flow.
Increased cost of tablets: the cost of tablets can be raised in such a way as to generate a
higher percentage of net profit, this requires a study so that likewise the product does not
become uncompetitive.
Increased cost of training material and applications: The cost of the applications can be
minimally elevated, hoping that in a higher quantity of sales the cost will be justified.
Searching for investors: You can seek through a potential partner, an investment that does
not leave the company so much adrift, taking into account that a fraction of the shares of the
company must be given to that benefactor.
Offer discounts to increase sales: This alternative needs a strong combined strategy

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 between the marketing and financial areas, in which a consensus is reached on what is the
optimal offer to generate profit.
Evaluate alternative solutions
This type of analysis seeks to identify which solution best meets the interests of all parties
involved.
Penalty free
Customer Shareholder Meeting Continued
Solutions supplier
Satisfaction Satisfaction Budget Liquidity
relationship
Decrease in payment
terms for customers YES YES NO YES YES
Increased cost of
tablets NO YES NO YES YES
Increased cost of
training materials and
applications NO NO NO YES YES
Searching for Investors YES YES YES YES YES
Offer discounts YES NO NO YES NO
There are two feasible options that can be compared and selected as the optimal up next.

Compare feasible solutions

Penalty
Customer Shareholder free Meeting Continued
Solutions TOTAL
Satisfaction Satisfaction supplier Budget Liquidity
relationship
Decrease
in
payment 4
terms for
customers YES YES NO YES YES
Searching
for 5
Investors YES YES YES YES YES
Comparing the two alternatives with the highest scores, we can see that seeking an investor is
the one with the highest score, so it is the solution with the highest coverage for the solution of the
problem and the one with the highest level of feasibility for the company to continue being
profitable.

Choose the best solution for your complex issue

Searching for Investors
 This alternative was chosen because it was the one that gave the greatest coverage to the
solution of the main problems, since it was the option that did not involve an increase in
prices that could be a disruptive strategy for customers, in turn getting an investor allows to
generate an injection of capital to the company, which allows not having to resort to debt and
that there is cash flow at the time. Finally, although this alternative may generate conflict for
stakeholders, it is the one that best suits the social, health and financial context through
which the company is passing.

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 The current legislation and company policies do not prevent an investor from joining the
company, as long as this decision is approved by the board of directors and the process is
carried out in accordance with the corporate act, it is completely viable.
 There is a risk that the capital injection from the investor will not be able to cover the
damages caused by the current contingent context, i.e., the COVID 19 crisis may spread,
generating higher costs and for a longer period of time, as in the case of the current political
tension.
On the other hand, there is the risk that the investor, with its investment, may want to take
control of the situation in a way totally contrary to what the current shareholders want,
generating an internal problem in the company.
 The subsequent advantages of adopting this solution are the aforementioned, not having to
resort to changes in payment or product cost issues, which can carry a risk in terms of
consumer confidence. On the other hand, the supply chain is being maintained as it currently
is, allowing to manage good relationships with suppliers and giving a management to the
same with which it is already accustomed.
 Required:
Doing a financial analysis to determine what amount of money is needed to cease the
damages that come with the current situation.
Prepare the company's income statement to know how it is valued.
Determine what portion of the company is willing to give up for the respective investment.
Seek a number of investors who are willing to trust the company and see profitability in it.

Completed Feedback Register

Person
Name of
Project Receiving Action
DATE the Comments
No: the Required
reviewer
Feedback
Risk identified by
Senior Update
11/06/202 CEO as cash flow
67 CEO Financial Solution
1 financial
Analyst Brief
difficulties
           
           
           
           

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Solution Brief Template

Author: Date: 11st June 2021 Department: Financial

Issue being addressed:

 Worlducation is a start-up that manufactures and markets tablets for primary educational
institutions. Currently, the company is marketing its tablets to companies, as the benefit that
can be used from such a tablet is useful when all students in the class use the device.
Therefore, the company has not yet started selling the product to individual customers and
plans to do so in the future. The company seeks to generate positive profit margins from the
marketing of its products while at the same time making a social contribution, that is why the
company, for each order fulfilled, supplies and instructs a school with low economic
resources, thus seeking to reduce illiteracy in the world.

Proposed solution:
Searching for Investors
This alternative was chosen because it was the one that gave the greatest coverage to the
solution of the main problems, since it was the option that did not involve an increase in
prices that could be a disruptive strategy for customers, in turn getting an investor allows to
generate an injection of capital to the company, which allows not having to resort to debt and
that there is cash flow at the time. Finally, although this alternative may generate conflict for
stakeholders, it is the one that best suits the social, health and financial context through
which the company is passing.

Maintaining financial viability: This first objective is vital, every company requires profit
generation and profitability of its activities to stay in the market, that is why within the work
team have been mentioned measures such as outsourcing production services or the
inclusion of mobile devices to facilitate the use of the tool itself, all this in order to reduce the
costs of production and marketing and thus make the product more profitable.
Complying with the budget requirement: Complying with the budget requirement is vital to
avoid incurring unnecessary costs and is the surest way to have a responsible financial
control, this objective also goes hand in hand with the measures that the team seeks to
adopt.

Advantages:
Future growth: By maintaining a clear budget and ensuring that production processes are
cost-effective, you are ensuring that the company maintains profitability both now and in the
future.
Maintaining relationships with suppliers: By respecting the budget it is possible to
maintain a constant cash flow and a convenient profit, which generates confidence in the
suppliers and in turn allows the payment or indebtedness with them to be beneficial for both
parties.
Improve customer relations: Ensuring that the supply chain is efficient ensures that
products are of high quality, competitively priced and arrive in the hands of the customer
when requested.

Risks:

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 Investor´s Overpower: there is the risk that the investor, with its investment, may want to
take control of the situation in a way totally contrary to what the current shareholders want,
generating an internal problem in the company
 Reputational damage: This risk stems from the previous one and is the failure to deliver for
customers and the company being seen as inefficient or unreliable.
 Employee dissatisfaction: The desire to increase efficiency can lead to the need for more
effort on the part of staff, as well as parallel events arising from the outsourcing of production
services, such as a reduction in staff.

Resources:
Doing a financial analysis to determine what amount of money is needed to cease the
damages that come with the current situation.
Prepare the company's income statement to know how it is valued.
Determine what portion of the company is willing to give up for the respective investment.
Seek a number of investors who are willing to trust the company and see profitability in it.

Information relied upon to prepare this brief:

WORLDUCATION:
Strategic Plan 2020-2022.
Finance Authorisation Policy and Procedures
New Supplier Policy
Privacy Policy and Procedures
Performance Management Policy and Procedures
Documentation Policy and Procedures

Australian Legislation:
https://www.legislation.gov.au/Details/C2018C00031

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EMAIL
Date: June 11, 2021
To: WORLDUCATIONCEO@Worlducation.com
From: SeniorFinantialAnalyst@Worlducation.com
Subject: Approval of the proposed solution
Dear CEO.
As you know the situation the company is going through, is one of the strongest it has gone
through since it was founded, by the finance department we have done the work of
projecting the revenues and cash flow of the company and that is why we consider that
actions should be taken immediately. Together with the shareholders we have evaluated
various alternatives and have come to the conclusion that the most appropriate for the
company at this time is to receive an injection of capital from an investor, I am enclosing
the relevant analysis to know the amount of money needed and the percentage of the
company suitable to give, leaving this decision in your hands and hoping that it is the most
prudent for this company.

Please do not hesitate to contact me if you have any doubts regarding the information
provided.

Kind regards
Senior Financial Analyst.

Self-evaluation Form

How happy am I?

How did I do?

 Describe the complex issue associated with my

X
business

 Generate alternative solutions with other

X
stakeholders

 Evaluate and compare alternative solutions X

 Decide on the best solution and justify my choice X

 Prepare and present a solution brief to X

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 stakeholders

 Seek necessary approvals X

 Interact verbally with others X

 Use numerical and financial data in my analysis X

 Use appropriate digital tools and technologies X

Comments
(including strengths, weaknesses and areas needing improvement)
In my opinion I need to improve my knowledge in financial analysis, to know what factors make a
budget a good one, on the other hand, I feel that the use of visual tools would have improved the
presentation of my work, the use of tables or graphs that would expose in a clearer way the
situation of the company and the issue to be solved.

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