Compass Box Whisky Assignment Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Compass Box Whisky Assignment Case Solution

Question 2

Business standpoint:

A significant volatility in the business will immensely affect the profitability of the business and can be disastrous to the company when predicting the profits. The volatility will slowly eat all the profit margins being generated from the sales, making the business unprofitable.

The volatility in the price of whisky also implies that the prices will be fluctuating day in and out and can become a major reason of inflation. As the volatility in the prices can cause inflation in the economy and indicate that the consumer will have to pay more for the whisky in the upcoming years. It is also expected that due to this price volatility, the purchasers (customer) of whisky might decline their consumption unless there is a change in their income.

Accounting standpoint:

The high volatility in prices will also affect the financial statements of the company. The impact of the rise and fall in the price of the whisky over the financial statements is the possible overstatement and understatement of the cost because of the maladjustment in the fair value of the product.

In order to deal with the fluctuation in the prices of the whisky the company will be required to do the periodic and the timely review of the statements in order to make any necessary adjustments required in order to avoid any inconsistencies in the financial statements.

Question 3

If I was John Glaser I would have pursued a new fill strategy because for Compass Box, purchasing of the mature whisky is the least intensive option available because of the shortage and minimum sales of the whisky, the stock was highly affected and the big firms refused to sell whisky to the small companies like Compass box in order to meet their own demand in the market.

The fact that the older the whisky, the pricier it becomes. So compass box that was relatively a small company used primarily 10 plus year old whiskies and was not able to purchase the high priced stocks and the fact is undeniable that without any supplies, no business can be done. So in order to deal with the issue the company is facing and might encounter again in the near future, the best possible course of action for the company is the implementation of the new fill strategy.

Though it will incur new process and cost in the existing business, which is comparatively more than the current cost for operating the business but it will eventually benefit the company in the long run. As it will provide the company with a complete control during its aging process and will ensure the quality and will provide the company with better future opportunities for innovation. The company will be able to control its variable cost and will not have to be highly dependent upon the suppliers in case of shortage..............

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