Task

This assignment continues our consideration of the case firm, Blackmores. This assignment is broken
into three parts and the totals marks available is 100.

Part A (70 Marks) 2000 words

In recent years, directors and CEOs of companies have been placing more importance on holistic
reporting of company activities rather than simply reporting what is required by the Accounting
Standards, the Corporations Act and other legislation. The Global Reporting Initiative (GRI) is an
international not-for-profit organisation that has pioneered and developed the world’s most widely
used voluntary Sustainability Reporting Framework.
www.asx.com.au/documents/public-consultations/global-reporting-initiative-and-sba-submission-
15Nov13.pdf

In 2013, the fourth iteration of the Sustainability Reporting Framework guidelines were released.
These can be accessed via the link below.
www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-
Disclosures.pdf

As explored in Assessment 1, Blackmores is one of Australia’s largest healthcare businesses.

Blackmores has been conscious to implement a range of strategic and operational initiatives to
enhance the sustainability of their operations and has been moving towards providing greater
transparency in regards to their environmental impacts.

Required:

With specific reference to Section 5.1 of the Sustainability Reporting Guidelines of the GRI, your task
is to write a report that:

1. Describes the key features of Blackmores (i.e. size, products, history, locations of
operation) and provides an overview of the environmental and social impacts (positive and
negative) of the firm’s operations (15 Marks).
2. Applies gap analysis to analyse how fully applying the GRI guidelines might alter the
information presented by Blackmores within their Annual Report and within other sources
provided through their corporate website (25 Marks).
3. Evaluates whether and how complying with the GRI guidelines would benefit potential
investors, shareholders and other stakeholders of Blackmores (20 Marks).
The report is to be 2,000 words in length and presented in a standard business report format
comprising an:

 Executive summary
 Table of contents
 Introduction
 Body
 Conclusion.

(marks available for academic writing: 10 Marks)

This assignment requires individual research. The links below are provided to get you started on your
research. Please note you may be required to register to access the materials.
www.globalreporting.org/network/regional-networks/gri-focal-points/focal-point-
australia/Pages/default.aspx
www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

Part B (20 Marks)

It was recently reported that Blackmores had acquired Byron Bay firm Global Therapeutics for $23
million. This acquisition was part of Blackmores’ strategy to increase their share of the Chinese herbal
medicine market.

Required:

1. Identify the likely major costs associated with the ongoing operations of Global Therapeutics
(2 Marks).
2. Estimate the cost behaviour (fixed, variable or otherwise) of each of the major costs identified
above in part 1 (2 Marks).
3. Given your understanding of the cost behaviour of the major costs associated with the
ongoing operations of Global Therapeutics, critically evaluate whether the use of break-even
analysis would be a useful and reliable screening tool for Blackmores as they assessed the
desirability of the Global Therapeutics acquisition (6 Marks).
4. Develop a balanced scorecard that could be used to evaluate the success of Global
Therapeutics. For each perspective, identify two objectives and include a range of financial
and non-financial measures and goals. Discuss the key features of your scorecard and the
reasons behind your chosen measures (10 Marks).
 Part C (10 Marks)

In 2015, Blackmores opened its first flagship Retail Store in Bondi. The following discussion presents
information in regards to a hypothetical new concept in which Blackmores will fit-out their new flagship
store with a “Recharge Bar”. Through this bar, customers will be able to purchase protein shakes,
power-up vitamin juices and recharge bars. The following table presents sales mix, selling price and
cost per unit forecasts for these three product lines.

Protein Shakes Power-up Vitamin Juices Recharge Bars

Expected Annual Sales (units) 15,000 15,000 7,000
Selling price $7.80 $9.50 $5.60
Ingredient cost $3.10 $3.60 $2.75
Packaging cost $0.35 $0.35 $0.05

Staffing and facilities related costs associated with running the Recharge Bar are expected to total
$117,000 per annum. The installation of the Recharge Bar is expected to increase the firm’s
marketing costs by $28,000 per annum.

Required:

1. Calculate the number of protein shakes, power-up vitamin juices and recharge bars that will
need to be sold to:
1. break-even, and
2. achieve an after-tax profit of $150,000 (provide workings) (3 Marks).
2. Prepare a memo which suggests a number of possible strategic initiatives that Blackmores
could implement in relation to the Recharge Bar concept to enhance the break-even point
and/or annual profit. These initiatives could impact the firm’s sales mix, selling prices, variable
or fixed costs. Provide workings which illustrate how your proposed initiatives could influence
the break-even point and forecast profit (7 Marks).
Rationale

Assessment Task 2 is designed to assess your understanding of the learning outcome ‘Explain and
evaluate the concepts behind the management decision processes associated with the efficient
allocation of business resources’ covered by Topics 5, "Social and Environmental Accounting", and
Topic 6, "Management Accounting and Professional Ethics".

NOTE:-

There is a 2000-2500 word limit for Part A.

There is no prescribed word limit for the discussion components of Part B and Part C.

Use the marks available for these discussion components as a guide as to the amount of

depth required.

Performing the gap analysis will involve comparing: 1. what the GRI requires to be

disclosed and What the firm currently discloses. There is no prescribed way in which you

are to organise your analysis.

The move to release there first GRI report will obviously eliminate many gaps between what
the firm discloses and what the GRI requires. You may consider how this report has
removed many gaps in the firm's sustainability reporting practices and review, identify
and discuss any remaining gaps.

It will be difficult to locate publicly available financial statements for Global Therapeutics (it
was a private firm and now it is part of the Blackmores group).For the purposes of this
assignment, you are not required to list operating costs from Global Therapeutics'
financial statements. Rather, you are required to think about what the firm does and, in your
own words, identify likely operating costs that could be involved with these activities.