CUTTING EDGE BRANDS

BACKGROUND: Cutting Edge Brands $($CEB$)$ is a dynamic company that has undergone significant transformation since its inception in $2010.$ Originally incorporated with the primary purpose of acquiring Pyramid Pizza, a fast$-$food brand that achieved rapid growth in the preceding decade, CEB has evolved to become a diverse and publicly traded company with interests in both the food and fashion sectors$.$ The Covid$-19$ pandemic saw a period of unprecedented growth for CEB as it was able to acquire several distressed fashion and food businesses and attained record profits from online clothing and pizza sales. In addition to Pyramid Pizza, CEB has acquired Blandora, a fashion accessory business, Sunset Slice, a fast food competitor, and Street Smarts, an innovative footwear business. Each of the CEB business carry different competitive advantages and strategies. Most notably, Pyramid Pizza is a low$-$cost provider of reliable quality fast food while Street Smarts are a highly innovative brand of fashionably functional footwear that regularly introduces new products to market

STREET SMARTS $$ NEW PRODUCT

Street Smarts have invested a considerable amount of product development costs in producing a new line of footwear of detachable heels for stylish women$$s footwear. The value proposition for this product is that stylish footwear can be worn as flats for commuting to the office with heels added for other engagements during and after work. Street Smarts expect to invest heavily in product recognition before a high sales volume period. The leadership team believes that the brand will effectively have exclusivity with this product for $12$ months. With peak sales expected for the following $2$ years, Street Smarts then expects a long slow decline in sales over the next $5$ years as the market becomes saturated with competitors.

PYRAMID PIZZA $$ TRIM LUNCH

As a business that has operated as a cost leader, Pyramid Pizza has innovated a new product that intends to sell at a highly competitive price. The new Trim Lunch range introduces a mini pizza intended to be priced below that of their primary competitor $($Backgammon$).$ Currently Backgammon sells their smallest pizza at $$7,$ so Pyramid intends to price their offering at $$6.$ All Pyramid products are intended to return a gross profit margin of $60\%.$ Currently, Pyramid is able to produce this product for $$3.$

PYRAMID PIZZA $$ OPERATIONAL CONSTRAINTS

Pyramid Pizza are concerned that they may be able to makes changes to become more efficient. It has been identified that using their current store staffing and equipment, they are able to assemble $180$ pizzas per hour. Each store has $2$ fully operational pizza ovens that can cook $12$ pizzas each every $10$ minutes. $50\%$ of all pizzas are delivered to customers $($the remainder collected in$-$store$).$ Each store contracts $6$ delivery drivers who on average are able to deliver $5$ pizzas per half hour.

Questions:

$1.$ Access the Cutting Edge Brands case study on myKBS$.$ Aware that their businesses have different strategies, competitive advantages and operational challenges, the owners of Cutting Edge would like a summary of how different cost approaches may be suitable for their range of businesses and products Discuss and present your findings to the class

$2.$ Access the Street Smarts $$ New Product section of the Cutting Edge case study on myKBS$.$ Cutting Edge would like to understand how their Street Smarts business can benefit from considering life cycle costing. REQUIRED: Summarise the concept of life cycle costing and how it applies to the new line of footwear to be released by Street Smarts.

$3.$ Access the $$Pyramid Pizza $$ Trim Lunch$$ section of the Cutting Edge case study on myKBS$.$ Pyramid Pizza have decided to compete aggressively with their new Trim Lunch range and wish to effectively utilise target costing to make the product successful. REQUIRED: Calculate the cost reduction that Pyramid Pizza will need to make to meet their profitability target. Outline how Pyramid Pizza might use this information in their operations.

$4.$ Access the $$Pyramid Pizza $$ Trim Lunch$$ section of the Cutting Edge case study on myKBS along with your calculations from In$-$Class Activity $2.$ Pyramid Pizza$$s management understand that they may consider value engineering technology. REQUIRED: Suggest some examples of non$-$value added activities that Pyramid Pizza could consider eliminating or reducing

$5.$ Cutting Edge also offer a $$personal shopping$$ service where fashion consultants meet with customers and help select a suitable collection of clothing and accessories $($from Cutting Edge businesses$).$ Management believe that this service can be provided at a lower price if target costing is applied to the service. REQUIRED: Identify some possible non$-$value added activities for this service

$6.$ Access the $$Pyramid Pizza $$ Operational Constraints$$ section of the Cutting Edge case study on myKBS$.$ Pyramid Pizza wish to identify any bottlenecks that are l