Details

Case

Sapphire Dairies (Pvt) Limited (A) Where Did The Business Plan Go Wrong?

Shazib Ehsan Shaikh, Abdul Rauf, Arif Iqbal Rana, Seyyed FJ

INDUSTRY : Livestock, Milk

AREA : Management Information Systems

ORGANIZATION : Sapphire Group

LENGTH : 8

LUMS No : 18-441-2014-1

PUBLICATION YEAR : 2014

KEYWORDS:

Sapphire,Business Plan,Decision Modelling,Quantitative Methods,Textile Sector,Spread Sheet Modelling,Relative Sensitivity Analysis,Scenario Planning,Dairy Agri-Business Tornado Charts,Unrelated Diversification

DESCRIPTION:

The Sapphire Group entered the nascent commercial dairy sector in 2007. A critical driver in this decision was the financial attractiveness of the business plan presented to them in an electronic spread sheet form by one of the largest milk processing companies in Pakistan. The case presents the situation in 2010 when Sapphire Dairies is incurring substantial and unexpected losses 2 years into the operations. The outlook seems bleak if operations continue without change. The CEO needs to evaluate what went wrong with the plan and whether they can turn the project around.

LEARNING OBJECTIVES:

1) The purpose and value of what-if analysis in business planning. 2) Introduction of two specific approaches to what-if analysis, especially emphasising how they complement each other: a) Forecasting using scenario-planning. B) Relative sensitivity analysis using tornado charts. 3) Introduction of the value of parameterisation in spread sheet design, especially as a pre-requisite for what-if analysis application to electronic models. 4) Appreciation of the executive manager in guding the design of business modelling support systems used for planning and forecasting.

SUBJECTS COVERED:

Management Information Systems (MIS)