MANCOSA: MBA YEAR 2 41

Question 1 (s)
Outline the reasons for the fast global growth of McDonald's.

Question 2 (30)
McDonald's needs to adapt to different cultures and conditions when it sets up business in different pa rts of
:he world.

problems might McDonald's encounter when it opens outlets in:

'Vhat
2.1 Countries in Eastern Eurooe? (10)
2.2 Countries in West Asia? (10)
2.3 Countries in Africa? (10)

Question 3 (2s)
3.1 Critically discuss McDonald's globalisation strategy. (1s)
'1.2 Explain how and why the entry strategy of McDonald's was different in China in comparison with the rest
of the world. (10)

Question 4 (10)
ixplain some of McDonald's efforts to locallze its offerings in China and describe how successful these efforts
"\,e re,

luestion 5 (20)
liscuss the challenges that McDonald's faced when entering the Chinese market and to expand its operations.
'ou need to use the Geert Hofstede's Model to compare China and the U.S. and then highlight cultural
:^allenges that U.S. managers must be aware of in managing McDonald's operations in China)

luestion 6 (10)
, nere do you think the best opportunities for future growth lie for McDonald's? Why?

ignment Format
Word Limit: Your assignment (excluding index, cover page, list of references and appendices) must not
exceed 6000 words.
Your assignment should include a Table of Contents page.
Text: Font: Arial or Times New Roman (12), Spacing:7% lines
All text must be justified at each margin.
Your answers must include any theories, charts, tables, appendices or exhibits necessarv to support your
analysis and recommendations.
References - At least 10 sources of reference (textbooks, journals, press reports, internet, etc) must be
included in your list of references.
The Harvard system of referencing must be used.
You MUST use theory/literature to support your discussion/observation and opinions. Do not merelv
extract information from the Case Study.
Ensure that readings are not merely reproduced in the assignment without original critical comments and
VICWS.

A1
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COURSE AND ASSIGNMENT HANDBOOK: JANUARY 2011
 MANCOSA: MBA YEAR 2 +z

QUESTION 1 (20 MARKS)

t.L INFORMATION
Telstar electronics manufactures product Z. An estimate of the number of units expected to be
sold in the first four months of 207I is given below:

JanuarV 1 000
Fe brua rv 1 200
March 1 600
April 2 000

It is anticipated that:
r There will be no work-in-process at the end of any month.
I Finished units equal to 50% of the expected sales of the following month will be in inventory at
the end of each month (including December 201-0)'
The budgeted production and production costs for the year ending 31 December 20L7 are as
follows:
Prod uction 22 000 units
Direct material cost per unit R24
Direct labour cost per unit R14
Other manufacturing costs R56 000

REqUIRED
7.7.7 Draw up a production budget that shows the1q1!-er,of units to be manufactured for each month
(January to March 2071). (6)
L.7.2 Calculate the expected production cost for March 2011. (4)

r.2 "The task of preparing a sales budget is usually approached from two different angles viz. judging
and evaluating external influences and considering internal influences."

Explain five external influences that may impact on the preparation of a sales budget. (10)

QUESTTON 2 (20 MARKS)

2.L INFORMATION
Extracts of the Income statements and Balance sheets for the year ended
31 December 2Ot0 are given below for two companies viz. ABC Limited and XYZ Limited.

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COURSE AND ASSIGNMENT HANDBOOK: JANUARY 2011
 MANCOSA: MBA YEAR 2

Extracts of Balance Sheets as at 31 December 2010:

i--:--------------
- i Ri Ri

REQUIRED
ratios:
Z.t.t Compare and comment on the profitability of both companies by using the following
r Return on caPital emPloYed
r Gross profit (Gross margin) ratio
r Net profit (Profit margin) ratio ft2\

The earnings per share (EPS) for ABC Limited 2009 was R1'15 (115 cents) for 2009'
Calculate the earnings per share for ABC Limited for 2010. Comment on the
EPS' (4)

How much dividend per share would you recommend that XYZ Limited declare for the year
(4)
ended 31 Decembe r 2OtO? Motivate.

(20 MARKS)
QUESTION 3
31 INFORMATION
Sellrite Enterprises produces a single product. The following informatio n f or 2017
is available:

Fixed manufacturing costs R160 000 ,

Variable manufacturing costs per unit R28

Selling price per unit R66

Marketing costs:
Advertising R8 000 per month
Sales personnel's salaries and commission R10 000 per month Plus 6% of sales !

Administration costs:
Salaries R24 000 per month
Other office costs R8 000 per month plus R4 per unit sold

The number of units expected to be produced and sold is 15 000'

REQUIRED
(6)
1.1. Calculate the break-even quantity for 20Lt.
price of the
!.2 Suppose Sellrite Enterprises is considering a R6 per unit decrease in the selling
product with the expectation that this would increase sales by 12%.

ls this a good idea? Motivate your answer with the relevant calculations' {6)

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 MANCOSA: MBA YEAR 2 44

3.2 INFORMATION
The following figures (in '000 Rands) were extracted from the records of Zimbesi Manufacturers:

Department
A B c D Total
Sales 150 300 450 600 1 500
Y_a f]CQ!_e_.n.eI!]I? ct u dlt g 9 9 !E (e3) (267\ (411) {s48) (1319)
Direct material 60 150 1aA 435 915
Direct labour 30 772 L5) 105 382
FactorV overheads 3 5 8 22
Other variable costs (1s) (23) (18) ll ql (7Ll
Other fixed costs (8) (1s) {8) (ot (371
Profit (loss 34 (s) 31. 73

REQUIRED
On the basis of the above information, the management of Zimbesi Manufacturers wants to
close Department B and redeploy the employees to the other departments. What advice
would you offer the management of Zambesi Manufacturers? Support your advice with the (8)
a ppropriate motivation.

QUESTION 4 (20 MARKS)

4.r INFORMATION
Crimson Enterprises has set a number of transfer prices to be used by service departments within
the business, all of which used to be cost centres. One is for typing services, The charge is R15
per hour which is based on the total budgeted hours of available service and total budgeted costs
for the typing service pool. Budgeted costs for the pool are 75% fixed. The manager of one of the
operating departments has obtained a price of R10.50 per hour of typists'time from an outside
agency. This manager informed B. Lara, the manager of the typing cost centre, of the outside
price. B. Lara replied that he could make use of the outside facility if he so desired, but the price
set internally would not be lowered from the existing rate of RL5 per hour.

REqUIRED
4.t.L Describe two disadvantages to the supplying division of the transfer pricing method used by
Crimson Enterorises. (4)
4.1.2 Comment on the position taken by B. Lara. Make your recommendations. (6)
4.2 INFORMATION

REQUIRED
Studythe balance sheets of Beta Limited and comment on its financial oosition. (10)
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 MANCOSA: MBA YEAR 2 45

quEsTroN s (20 MARKS)

5.1 INFORMATION
SD Enterprises has the option to invest in machinery in projects A and B but finance is only available
to invest in one of them. You are given the following projected data:
Project A Project B
(R) (R)
lni al cost 302 000 150 000
Net profit:
Year 1 12 000 70 500
Year 2 25 000 70 500
Year 3 34 000 70 500
Year 4 43 000 70 500
Year 5 4 000

Additional information
All cash flows take place at the end of the year except the original investment in the project which
takes place at the beginning of the project.
Project A machinery will be disposed of at the end of year 5 with a scrap value of R42 000.
Project B machinery will be disposed of at the end of year 4 with a nil scrap value.
Depreciation is calculated on a straight line basis.
The discount rate to be used by the company is 72%.

REQUIRED
7.7 Calculate the payback period for both projects.
(Answer must be expressed in years and months.) (4)
t.2 Calculate the accounting rate of return (on average investment) for project B.
(Answer expressed to 2 decimal places) (4)
1.3 Calculate the net present value of each project. (Round off amounts to the nearest Rand) (6)
L.4 Using your answers from question 5.1.3, which project should be chosen? Why? (1)

] INFORMATION
A machine with a purchase price of R2 850 000 is estimated to eliminate manual operations by
R86 000 per year. The machine will last 5 years and have no residual value at the end of its life.

REQUIRED
Calculate the internal rate of return. (s)

nt Format
Your assignment should include a Table of Contents page. Start each solution on a new page.
Text: Font: Arial or Times New Roman (12), Spacingl' t%lines. All text must be justified at each margin.
Number each solution according to the numbering in assignment handbook.
Your answers must include any theories, charts, appendices, tables or exhibits necessary to support your
analysis and recommendations.
You may use a spreadsheet (e.g. Microsoft excel) to assist you only in the construction of tables and the
drawing of graphs.
Solutions generated by software packages will not be marked.
No marks will be awarded if only the final answers are given. All relevant working must be shown.
All calculations must be done using the appropriate formulae.
The Harvard System of referencing must be used if documents, literature and data (excluding formulae)
other than that provided in the assignment question are used.
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COURSE AND ASSIGNMENT HANDBOOK: JANUARY 2011