CASE: BRIDGE PORT

COLORSCOPE, INC

Saddam Roberto Binu

NIM : 01044821719001

Teaching Lecturer:
Mr. Mukhtaruddin, SE., M.Si., Ak.,CA

The Accounting Profession Education Programs

Sriwijaya University
2017
I. Introduction
Company Profile
Colorscope, Inc. is a company graphic that is rapidly growing, founded by Andrew Cha
an expert graphic design in 1976. In the framework of the anniversary Colorscope, Inc.
the 20th of March 1996, Cha ponder things to advance Colorscope, Inc. in the future.

Born in China, in 1938, Andrew Cha immigrated to America in 1967 to seek a better
livelihood. Through luck and hard work, finally Cha accidentally find employment and
take advantage of his artistic abilities in draftsmanship and photography, the success of a
company promotional art graphic is convinced him to start his own business. Colorscope
Inc. was founded on March 1, 1976 was moving on areas of special-effects photography
serving the local advertising agency in Southern California.

Along with the reputation of the Cha, sales increased, culminating in 1988 which reached
5 million. The company serves the giant agencies like Saatchi & Saatchi, Grey
Advertising, and J. Walter Thompson and the company's retail and entertainment such as
the Walt Disney Company and R. H. Macy & Co. to improve customer service, Cha
proprietory computer equipment invested to continue to provide an elaborate special
effects.

During the years 1988, Cha invited cooperate by R.R. Donneley & Sons Co. on the
acquisition. Donneley is the world's largest printer companies with gross sales of 4.3
billion dollars was attracted acquired Colorscope of 10 million dollars. Its interest against
Colorscope be doubled. First, the Cha has built strong relationships with high-value
printing companies and pre-press buyers. Every pre-press sold valued higher than print.
By having a business pre-press belongs to the Cha and hiring him be the consultant sales,
Donneley hoping to secure agreement of the printing is great, which is still in the betting.
Second, the operations of the Cha is one of the most efficient in the business. Previous
workers of Donneleys have visited activities operations and making modelling some of
how it works, adapted the design to the pre-press facilities of their own. As a result,
Donneley outlines business process as a method of training by Cha as the operational
profit they can take advantage of the pre-press facilities for others in the network their
operations across the country.

After looking at the options and confidence in the tremendous potential business, Cha
became dissatisfied with some of the contingency clause and the agreement is not
complete, and ultimately decided not to sell the company. The time required to decide
these things proved to be a costly charge. While serving clients primarily who has high
margins, disregard of certain trends in the Cha business, especially the price pressure
caused by a cheap PC and Mac-based microcomputers. With this device, which features a
page layout that is increasingly sophisticated and software correction, proliferated and
improvement in function, a small advertising agency and printing stores began taking
pieces of business from the company's larger graphic arts such as Colorscope. Cha is still
unprotected from these trends, because it has a strong personal relationship with the
client.

However, changes in technology and industry in 1990, forcing significant changes in its
business. Although the Cha have been seeking quality and confidence in his work, market
pressures forced him to reduce the price of the staple where previously still high against
industry trends (see Exhibit 1). However this proved not enough. In May 1994, its main
income, which includes 80% of the overall business, announced to sell production of
graphic design and tools, replacing an internal group Colorscope. This process continued
until the following year. After losing the primary and long-term customers, Cha think of
to rebuild its business by evaluating the State of the industy, the position of the company
in the segment of pre-press, policy of prices and activity operations.

The Production Process Of Pre-Press

Pre-press production process is the basic process for print material or better known as
the separation of colors, which is basically this process lasts a long time, for about 20
years.

Pre-press process begins with the design and arrangement of "book" or "project" that
requires approval.
 After approval, the photographer took and developed the image to be processed
further on pre-press house.

During the process (proofing) client can compare and make a request for change or
do various adjustments. Adjustments for particular effects certain fee anyway.

After receiving final approval, Colorscope will send a "master book" or file to a
printing press.

After printing is complete, the order is ready to be sent to the client.

Industry Dynamics

Printing in America in 1995 reached its peak that is $66 billion dollars. This is due to
the diversification of the print material produced by any company. Companies tend
to do market specifications such as greeting cards, business forms, financial
statements, newspaper, magazine, catalog, etc.

Colorscope considers the market changed dramatically which position the

Colorscope is known to have quality and good service is not correctly on full market
conditions by service providers who claim to have the same quality at a lower price.

Direct Competition

Type I: A company that technically have expertise printing is supported by a

professional sales force that pushes the price package by combining the services of
pre-press house and printing. Among them are R.R. Donnelley Sons Co. & and Quad
Graphics.

Type II: Local company that combines the services of pre-press house horizontally.
An example of a this local company is American Color and Wace Techtron.

Type III: Companies working with printing or advertising agencies to head off
potential competitors. Main competitors Colorscope included in this third type.

Work Flow Organization

Job begins when consumers order will be accepted by the Customer Services and
will be noted on the details of the job spec.
 The Job will be assigned in accordance with the specifications for processing jobs
cutting, pasting text, graphics, photographs, and extensive marking.

The next process was scanning and generate output in the form of computer files.

The next Work is the assembly that generates a particular output device.

The next process is quality control on proofing that is by comparing the output
hardcopy with customer specifications. This often occurs in the stage work again
because found differences between the specification and hardcopy.

The Future

Cha realized that Colorscope need to do assets capitalization and employees.

Required the existence of a short-term strategy to increase its main marketing on

certain months in which order to pre-press to increase.

Minimizes rework due to changes in specifications and rework caused by fault of the
process.

The determination of prices of products related to a specific effect or special orders.

II. The Issue

a. How Colorscope can improve operations?

b. How do Colorscope change the pricing strategy?

c. Accounting system and the system of control of what should be used?

III. Analysis Of Cases

To resolve the problem that needs to be solved by Andrew Cha, then that needs to be
done is to analyze market conditions and competition faced by Colorscope. Here are the
conditions faced by Colorscope namely:

Colorscope refused to follow the trend in business is to remain serving in large

numbers (high-margin client) and a higher price.
 Technological developments and rapid changes force the occurrence of significant
changes on the influential Colorscope at the price. (Exhibit 1)

Colorscope in production process spend a lot of time in the pre-press production

(Exhibit 2).
 Proofing processes a lot of time is wasted due to the rework caused by customers
change the specifications of the order.

The intense Competition (Exhibit 3) in pre-press.

 Once consumers are consistently able to and will pay for a top quality but now
consumers prefer in a price quote (Exhibit 5).
 The allocation of overhead costs into the proper of the five production process

Colorscope owned excellence is a quality product and a good philosophy Andrew Cha
related good relationships that must be maintained by the customer.

IV. Discussion Of The Case

a. To increase Colorscope operations, Cha must improve management operations by
following the technological developments and improvements in the quality of human
resources, as well as minimize the rework products by applying rigorous quality
control.
b. Pricing strategy should be based on the effectiveness of the work with a frequency
smaller rework and imposition to consumers should be based on the consumption
costs of each order. Consumers with special orders will incur a greater cost of
production or the cost of production plus a special cost (fee). The calculation of the
allocation of overhead costs, seen that Colorscope calculate the cost based on the
process so that the price for special orders and special orders not received the
imposition of the same cost. In addition, the Cha needs to invest in a technology
update, using cutting-edge equipment/machine can minimize cost and quality
outcomes. If this is not done, then the customer will be left because Colorscope price
offered price exceeds the company's competitors head for the same quality.
c. The company's tagline set the work Order cost in determining price orders to match
the consumption costs of each type of customer orders.
 REFERENCE LIST

Robert S. Kaplan and Robin Cooper (1999). The Design of Cost Management System; Text and
Cases, 2nd edition, Prentice Hall

All resources

Colorscope Inc. Case