cost price and discount analysis of lock and lock

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY INTERNATIONAL UNIVERSITY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT REPORT PROCUREMENT MANAGEMENT TY LOCK& LOCK Cost Price and Discount

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

INTERNATIONAL UNIVERSITY SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT REPORT PROCUREMENT MANAGEMENT

TY LOCK& LOCK

Cost Price and Discount analysis of Lock and Lock

GROUP 5

1 Trần Anh Kiệt IELSIU20334

2 Đỗ Mạc Thanh Trúc IELSIU20237

3 Phan Nữ Thảo Chi IELSIU20276

4 Võ Thị Mỹ Hương IELSIU20313

5 H6 Thi Thao Tran IELSIU20442

6 Tran Thi Mỹ Trâm IELSIU20438

7 Nguyễn Ngọc Đức IELSIU20285

8 Nguyễn Minh Tính IELSIU20435

Instructor: Duong Vo Nhi Anh

Ho Chi Minh city, Vietnam May 2023

Table of Contents

2 Current market price and any historical price trends 9

However, it is important to consider the potential disadvantages of excessive GiSCOUNTING? essere 12

TABLE OF FIGURE

I0 Ssve‹(8ec de eo .":.:'.-'-"' -'^"- 1 Figure 2: Cost table that make up the total cost of Lock&Lock's multicooker 4 Figure 3: Percentage chart of cost types over total COSt 0.0 cee ceeecee ce tee cease eeeeeeeenenanes 5 Figure 4: Percentage chart of Jumbo Tumbler 900 ml cost types over the total cost 6 Figure 5: The components Of Price O.R-Œœ-œRgRgAH, 7

TABLE OF TABLES

Table 1 Detail cost and total cost of MultI Cook€T ác 2c 12111211011 213 1319121111111 e2 8 Table 2 Detail cost and total cost of Jumbo 'Tumbker 2c 2c 2221311225255 x22 8 Table 3 Discount quantities correspond with discount percentage of Multicooker 13 Table 4 Discount quantities correspond with discount percentage of Jambo Tumbler 15 Table 5 Discount cash flow of Multicooket cc ccccececsceseesseeseeeseesecuscnsecnecseceserseesseeenees 16 Table 6 Discount cash flow of Jumbo TumbÌer ác ccc cccceccccececcececcntseeeeeeeneteuees 17

I Introduction

1 Background company of Locks& Locks

Lock & Lock is a home products company based in Seoul, South Korea Since its founding in

1978, Lock & Lock has exported its products to 119 countries worldwide

The company provides products and services that can be quickly and conveniently found anywhere for anyone Based on their responsibility to nature and the environment, they help generations to enjoy a more environment-friendly life Their products promise the best quality that is harmless and safe for everyday life, by rigorous and strict verification of quality and stability Besides, the company has 11 overseas sales units including China, Germany, the United States, and Vietnam, and 87 direct overseas stores worldwide

- 1978: Established distribution company Kukjin

- 1998: Launched the Lock & Lock four-sided locking food container

- 2003: Changed company name to Lock & Lock Co., Ltd

- 2004: Established the first overseas sales unit in China

- 2008 ~ 2009: Established overseas sales units in Vietnam, Indonesia, Thailand

- 2010: listed on the KOSPI market

- 2010: Established overseas sales unit in Germany

- 2011 ~ 2012: Completed glassware and cooking utensils factory in Vietnam

- 2016: Established overseas sales unit in the United States

2 About two Products

Our research group intends to conduct an evaluation of the production cost, price, and discount events associated with two specific products offered by Lock & Lock Company: the Lock & Lock Multi Cooker and the Lock & Lock Tumbler

The Lock & Lock Multi Cooker represents a highly sought-after product within the company's product portfolio, acclaimed for its quality and long-lasting durability Comprised

of premium-grade materials such as stainless steel, tempered glass, and PP plastic, the multi- function pot underscores Lock&Lock's steadfast commitment to meticulous material sourcing and production practices This unwavering dedication to ensuring optimal material quality and production efficiency ultimately contributes to the higher price point associated with this product, aligning with the company's commitment to delivering exceptional quality to its

customers

Sumilarly, the Lock & Lock Tumbler has garnered significant popularity both domestically in Vietnam and internationally This particular product incorporates a range of essential components, including 304 stainless steel, PP plastic, TPE, and an outer silicone gasket Lock&Lock Company demonstrates a thorough consideration of these components throughout various stages, encompassing production, packaging, and shipping processes The company's rigorous attention to detail ensures that consumers are presented with a price that

is most suitable for their needs, without compromising the product's overall quality

3 Objective

The objective of this report is to analyze two outstanding products of Lock & Lock Company, focusing on the analysis of production costs and the evaluation of pricing strategies in the market The primary goals are to identify areas of cost optimization in the production process and to develop effective discount strategies that can enhance the purchasing process while minimizing costs By achieving these objectives, this report aims to provide actionable insights and recommendations to improve the overall cost efficiency and competitiveness of Lock & Lock Company

4 Limitati

Despite achieving satisfactory results in our final project, our group encountered several problems and limitations The most significant drawback we faced was the severe time constraint Each group member had conflicting schedules and numerous class deadlines, leaving us with insufficient time for thorough discussions and analysis

Another limitation we encountered was the availability and accessibility of relevant data on

cost price and discount information for Lock and Lock products The lack of complete or comprehensive data restricted the depth and accuracy of our analysis, potentially limiting the insights and conclusions we could draw

Additionally, the complexities of the market in which Lock and Lock operates posed another challenge Factors such as consumer behavior, demand elasticity, and competitive dynamics play crucial roles in shaping cost price and discounting strategies However, due to inherent limitations, our analysis may not have fully captured the intricate nature of these market complexities

Lastly, our analysis relied on the information publicly available or provided by Lock and Lock The unavailability of additional internal or proprietary data restricted our ability to gain deeper insights into the company's cost price and discount strategies, thereby limiting the depth and accuracy of our analysis

Despite these limitations, our project still yielded valuable insights and recommendations It

is essential to acknowledge these challenges as they provide context to the scope and interpretation of our findings and demonstrate opportunities for future research and analysis

II Cost overview

1 Definition of procurement cost

The charges incurred by the organization to offer the goods or services that your consumers anticipate are referred to as procurement costs The firm must keep track of a variety of buying expenses Assessing these expenses in relation to a company's procurement budget is

an important KPI that shows how effective a company's procurement management tactics are

2 Types of cost

Procurement expenses are classified as either direct or indirect

Direct procurement expenses include product and sales costs as well as labor costs for

contractors Raw materials, manufacture, delivery, and storage of products are all examples

of direct procurement costs

Indirect procurement costs are those that are not directly tied to product manufacturing but are required for the firm to run Contractors' hourly labor prices, research and development costs are examples of indirect procurement costs

Figure 2: Cost table that make up the total cost of Lock&Lock's multicooker

@ Multicooker-EJP544WHT:

The cost breakdown of Lock&Lock's Multicooker can be analyzed based on various factors The total cost of the product comprises several components including R&D, raw material, labor, infrastructure, energy, environment, package, taxes and other fees, material

transportation, and staff

R&D accounts for 4.55% of the total cost, which translates to 35,000 dong This cost covers the expenses incurred during the research and development phase of the product Raw

material accounts for the largest share of the cost, at 64.94% or 500,000 dong This includes the cost of procuring high-quality materials required to manufacture the Multicooker Labor cost is 6.49% or 50,000 dong, covering the salaries and wages of the employees involved in the production process Infrastructure cost accounts for 10.39% or 80,000 dong, which

includes the cost of setting up and maintaining the necessary facilities and equipment for

production Energy and environment costs, at 0.91% each or 7,000 dong each, are incurred for the energy consumed and the environmental impact of production Package cost is 0.39%

or 3,000 dong, which includes the cost of packaging the product for distribution Taxes and other fees, at 4.94% or 38,000 dong, cover various taxes and regulatory fees levied on the production and sale of the product Material transportation cost is 1.95% or 15,000 dong, covering the cost of transporting raw materials to the production site Staff cost is 4.55% or 35,000 dong, which covers the salaries and wages of the administrative staff involved in the production and sale of the product

In conclusion, the cost of Lock&Lock's Multicooker is determined by a combination of various factors, with raw material being the largest component The company has to balance the cost and quality of materials to offer the product at a competitive price in the market

@ Staffs (Engineers, accountants,collectors,ect)

Figure 3: Percentage chart of cost types over total cost

e Jumbo Tumbler 900 ml - LHC4300

Various considerations may be used to examine the price of the Jambo Tumbler 900 ml from Lock&Lock The cost of R&D, raw materials, labor, infrastructure, energy, the environment, packaging, taxes, and other fees, material transportation, and personnel make up the entire cost of the product Raw materials make up the greatest portion of the cost, at 62.75%, or

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160,000 dong, while R&D accounts for 5.10%, or 13,000 dong, of the total Costs for labor are 7.84%, for the infrastructure they are 11.76%, for energy and the environment they are 0.78% each, for packages, they are 0.39%, for taxes and other fees they are 3.53%, for

material transportation they are 1.96%, and for staff, they are 5.10%

The Jumbo Tumbler's cost structure is different from Lock&Lock's Multicooker's in that it has a greater raw material cost but a lower R&D cost The Jambo Tumbler also has greater infrastructure expenses and lower labor costs, although both products have the same costs associated with energy and the environment The Jumbo Tumbler is less expensive in terms

of packages, taxes, other costs, and material transportation Both goods have the same staff

costs

In the final analysis, a variety of factors combine to decide the price of Lock &Lock's Jumbo Tumbler 900 ml, with raw materials making up the majority of those elements To sell the product in the market at a competitive price, the corporation must strike a balance between the price and the quality of the materials

@ Taxs and other fees

& Material's Transportation

§ Staffs (Engineers,accountants,collectors,ect)

Figure 4: Percentage chart of Jumbo Tumbler 900 ml cost types over the total cost

III Price Overview

1 Price component

The price component of a product is the part of the total cost that is associated with the materials, labor, and other expenses required to produce and deliver it to market This factor is crucial in determining the final price of a product, but marketing, branding, and competition may also influence the price that consumers pay

These figures illustrate the cost breakdown of the specific ingredients that make up the prices

of two products from Lock & Lock: the Multi Cooker and the Jambo Tumbler

Purchasing services cost 2.300

Figure 5: The components of price

7700

00 | 550000 | 220000) 209000 132000 110000 | 63800 44000 | 44000 2200 55000

® Jumbo Tumbler

Table 2 Detail cost and total cost of Jumbo Tumbker

2 rrent market pri nd _any historical pri n

The current market price represents the most up-to-date price at which a particular product or asset 1s actively traded It reflects the prevailing value at which buyers and sellers are willing

to engage in transactions This real-time information is essential for investors and traders to assess the current market sentiment and evaluate the potential value of the item

On the other hand, historical price trends refer to the patterns and movements observed in the price of the same product or asset over a specific period in the past Analyzing these trends provides valuable insights into market behavior over time By examining historical data, analysts can identify recurring patterns, trends, and fluctuations that have occurred in the market

By considering both the current market price and historical price trends, investors and traders can make more informed decisions regarding their investment and trading strategies The current market price offers a snapshot of the present market sentiment, allowing for real-time decision-making On the other hand, historical price trends provide a broader perspective and help identify long-term patterns and trends

Analyzing historical price trends offers several benefits Firstly, it enables the identification

of patterns such as price cycles, seasonal trends, support and resistance levels, and market trends These patterns can assist in anticipating future market behavior and making more accurate predictions

Secondly, understanding historical price trends empowers investors and traders to make informed decisions It allows them to assess potential risks and rewards associated with the product or asset and optimize their investment portfolios accordingly

Lastly, historical price analysis aids in risk mitigation By recognizing patterns of price volatility or market downturns, investors can implement risk management strategies They can set appropriate stop-loss orders, diversify their portfolios, or adjust their trading strategies

to mitigate potential risks

Considering both the current market price and historical price trends is essential for investors and traders The current market price provides real-time information on market sentiment, while historical price trends offer insights into long-term patterns and trends By combining these perspectives, market participants can make informed decisions, predict future price movements, and mitigate risks associated with their investment and trading strategies

IV Discount Overview

1 Definition

Discounting refers to the process of assigning a lower value to a future amount compared to its present value It enables us to convert future sums of money into their equivalent worth in today's terms By discounting, decision-makers can gain a comprehensive understanding of the costs and benefits associated with policies that have long-term consequences This article aims to elucidate the rationale behind discounting, delve into the calculation of discount rates, and underscore the significance of discounting in the context of climate policies

Moreover, in the realm of business, discounts manifest as reductions in the listed prices of specific products or services by a certain percentage This strategy is commonly employed in marketing campaigns to entice shoppers, particularly first-time buyers, by communicating a more favorable price point for the product Such discounts serve as effective tools for supporting and promoting businesses while stimulating consumer demand

2 Example

Discounts bring advantages to both customers and businesses when implemented Customers can enjoy purchasing goods at reduced prices, while businesses benefit from various accompanying advantages, such as increased sales and improved inventory management For instance, let's consider a Lock & Lock store offering a 10% discount on orders totaling | million VND This attractive offer encourages customers to spend an additional 300,000 VND to meet the threshold and avail themselves of the discount As a result, customers not only save 100,000 VND but also end up purchasing more items than initially planned This

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