UNIVERSITI KUALA LUMPUR BUSINESS SCHOOL
OCTOBER 2023 SEMESTER
INTEGRATED CASE STUDY
(EAB 41403)
CASE STUDY ANALYSIS PROJECT REPORT
CASE: KREATIVE KUNSTE
PREPARED BY:
No. Name ID No
1. MUHAMMAD AUF HAZIQ BIN AHMAD POZI 62213119259
PREPARED FOR:
DR. NUR FATIN KASBUN
SUBMISSION DATE:
02 January 2024
COVER PAGE
UNIVERSITI KUALA LUMPUR BUSINESS SCHOOL
Bachelors in accounting (Hons)
___________________________________________________________________________
Semester: February 2023
CASE STUDY ANALYSIS INSTRUCTION
Course Code EAB 41403
Course Title Integrated Case Study
Lecturer Dr. Nur Fatin Kasbun
Assessment Title Case Study Analysis Project
Group Assignment Guidelines:
1. This assignment must be completed in the form of a written final report, that should
have introduction, main point and conclusion (Refer detail instructions).
2. The report should be written in the Font Arial 11 and 1.5 spacing, with the justify
alignment. Consistent formatting including main titles and its subs, the indent,
numbering, page number etc.
3. The usage of any kind of artificial intelligence should be conducted in a safe and
ethical manner and with high integrity. No direct copy & paste wordings.
4. Marks will not be awarded for any PLAGIARISM (plagiarism checks will be done) and
marks will be deducted for LATE SUBMISSION.
5. There are 2 parts of this assignment:
I. Report – Detail report write-up must be submitted in the same week after
presentation.
II. Presentation – presentations will be held in week 9 until week 14. Each group will
present each week and will be given not more than 2 hours to present the
Instructions:
analysis of the case study and there will be allocated time for Q&A session after.
6. Submission of report in the form of double-sided hardcopy (by-hand) and softcopy in
the ecitie. Attach the report grading rubrics with the report.
7. Provide the hardcopy of slides and presentation rubric to the lecturer/assessor
before your presentation.
8. This assignment will carry 100 marks will contribute to 30% of the course total marks.
Report and presentation will be allocated 60 (group work) and 40 (individual) marks
respectively.
9. Please use the provided cover page/own cover that contains all the details.
10. This is an academic essay assignment that must be supported with at least FIVE (5)
research papers from seminars/conferences, research articles from local and
international journals and published reports. [You can download the article from the
Unikl library or any other sources].
11. The report must be using a proper citation and reference based on the APA style.
12. Format of report:
a. Title/Cover page
b. This instruction
c. Table of content
d. Case study extract
e. Introduction
f. Main analysis, findings and discussion (Refer detail instructions)
g. Conclusions
h. References
i. Appendices – presentation slides and report rubric
13.
Reference (sample):
Example from book
Author, A. (Year of Publication). Title of work. Publisher City, State: Publisher.
APA format example:
Hall J.A (2018). Accounting Information Systems 10th Edition. Asia Edition, Asia: Cengage.
Website article with an author
Author, A. (Year, Month Date of Publication). Article title. Retrieved from URL
References General website article without an author
APA Style
Article title. (Year, Month Date of Publication). Retrieved from URL
Journal article in print.
Author, A. (Publication Year). Article title. Periodical Title, Volume(Issue), pp.-pp.
APA format example:
Kasbun, N. F (2021). Carbon Stakeholder Collaboration’s Influence on The Carbon
Accounting Implementation of Organizations in Malaysia. International Journal of Academic
Research in Accounting, Finance and Management Sciences. 11(1), 20-36.
WE hereby certify that this assignment is OUR own work and where materials have been
used from other resources, they have been properly acknowledged. I/WE also understand
I/WE will face the possibility of failing the module if the content of this assignment are
plagiarized.
Student’s
declaration
Signed: ________________________ Date: _________________
(LEADER NAME: )
Student’s comments:
Feedback Lecturer’s feedback:
WEEK 5 WEEK 14 Marks obtained
Release Submission
(21 NOVEMBER 2023)
Date Due Date
Student’s work
Date
assessed by /
Received
date
Contents
COVER PAGE ...................................................................................................................................... 1
CASE STUDY ANALYSIS INSTRUCTION ..................................................................................... 2
CASE STUDY EXTRACT ................................................................................................................... 5
INTRODUCTION TO THE CASE: APPRAISING LONG TERMS INVESTMENT .................... 7
COMPANY BACKGROUND .......................................................................................................... 8
CASE SUMMARY ............................................................................................................................ 9
ISSUES AND PROBLEMS OF THE CASE .................................................................................. 10
Technology Dependence: .......................................................................................................... 10
Leadership Influence: ................................................................................................................. 10
Human Resource Strategy: ....................................................................................................... 10
Risks Management: ..................................................................................................................... 10
Strategic Growth Decisions: ..................................................................................................... 10
ANALYTICS TOOL ........................................................................................................................... 11
• SWOT Analysis .................................................................................................................... 11
• PESTLE Analysis ................................................................................................................ 14
CASE STUDY EXTRACT
INTRODUCTION TO THE CASE: APPRAISING LONG TERMS INVESTMENT
Long- term investment appraisal involves a meticulous assessment of financial instruments
or assets with the intention of holding them for an extended period. One of the crucial
methods for evaluating such investments is the Net Present Value (NPV) technique which
calculates the present value of expected future cash flows, discounted at an appropriate
rate. According to Graham and Dodd (1934), this method helps investors determine the
intrinsic value of an investments whether it is undervalued or overvalued in the current
market.
Additional to the statement above, the Capital Asset Pricing Model or known with their short
form as CAPM is often utilized in long-term investment appraisal that are developed by
Sharpe (1964) and Lintner (1965), CAPM considers the risk and return relationship, factoring
in the asset’s beta, risk-free rate, and the market risk premium. By incorporation these
elements, investors can gauge the expected return on an investment related that may
appear to its risk by aiding in the decision-making process for long-term periods.
Furthermore, Fisher’s (1930) concept of “time preference” plays a pivotal role in evaluating
the long-term investment that had been or might be happen in the future. This theory asserts
that investors usually demand a premium sacrificing liquidity and committing to an
investment over an extended duration. By having to understand the given principle that
assists the investors in assessing the trade-off between immediate gains and the potential
for higher returns over time, thus informing their decisions on long-term investment
strategies.
To summaries the entire thing, appraising long – term investments necessitate a
comprehensive, evaluation using methods such as NPV, CAPM and considerations of time
preferences. These tools have been outlined by Graham and Dodd (1934), Sharpe (1964),
Lintner (1965) and Fisher (1930), collectively provide investors with a robust framework for
making informed decisions regarding the allocation of capital in the long run.
COMPANY BACKGROUND
Kreative Künste Production (KKP) has carved its niche in the realm of multimedia
entertainment where it seamlessly blending in the film, advertisements, stage theatre, and
music production. The company are founded by Ms Tan, the current dynamic CEO where
the company initially distinguished itself through innovative technology developed in-house,
revolutionizing computer – generated imagery and three-dimensional graphic in its films. Ms
Tan’s visionary leadership has been instrumental in propelling KKP to its current stature as a
multifaceted powerhouse in the entertainment industry.
In its formative years, KKP relied on a project-based, part-time production crew, a testament
to its agile and adaptive approach. Over time, the company has evolved, incorporating a
cadre of permanent staff into its ranks. The early technological breakthroughs, spearheaded
by Ms Tan, laid the foundation for KKP’s commitment to quality, a principle that continues to
underscore its productions. The company’s foray into education reflects their dedication to
nurture the current and upcoming talent that are under their wings where they offer certified
courses and workshops, largely aligned with the esteemed Trinity College London Syllabus.
Kreative Künste Production has seamlessly integrated various facets of the entertainment
business, overseeing everything from casting and directing to managing artists and
negotiating distribution deals. The emphasis on Trinity College London certification adds a
layer of credibility to the performing art courses offered, ensuring that graduates receive
recognized qualifications. Despite not able to achieve or obtain major awards, KKP’s films
have been able to gain a quite loyal fans and have garnered client confidence and the
company’s overarching goal remains rooted in producing transformative content that uplifts
society. Aspiring performers enrolling in KKP’s courses not only gain theoretical knowledge
but also practical experience through active involvement in productions, setting the stage for
a vibrant and impactful journey in the performing arts.
CASE SUMMARY
Kreativ Künste Productions (KKP) is a versatile private company, founded in 2012,
specializing in the production of films, advertisements, stage theatre shows, music recording,
talent management, and performing arts education. Guided by Ms Tan, the current CEO, the
company initially set itself apart through innovative technology developed in-house,
enhancing computer-generated imagery and three-dimensional graphics in its films. Over the
years, KKP evolved its workforce structure from a part-time, project-based production crew
to incorporating permanent staff members, showcasing its adaptability in the dynamic
entertainment industry. The company's commitment to education is evident through certified
courses and workshops aligned with the Trinity College London syllabus, catering to
individuals passionate about developing their talent in the performing arts.
In managing its operations, KKP incurs various costs, including initial investments in
technology, operational expenses for technical experts and performers, location-related
costs, and periodic certification fees to Trinity College London. Despite facing inherent risks
such as accidents, licensing issues, and copyright challenges, the company has sustained
moderately successful film productions, instilling client confidence.
Looking forward, KKP contemplates a significant business expansion both in terms of
products and market reach. Mr Ramsey, recently appointed as the business development
manager, is instrumental in navigating this growth trajectory. The company faces an
intriguing opportunity with two television companies proposing a documentary series for the
next five years. However, this opportunity presents financial challenges, requiring an
estimated RM500,000 initial outlay. To address this, Ms Jothy, the finance manager,
suggests securing a bank loan with an estimated cost of capital of 10%. While the CEO is
cautious due to resource constraints, Mr Ramsey and Ms Jothy see the potential for
expanding KKP's business activities into the Asian market, marking a pivotal point in the
company's future endeavours.
ISSUES AND PROBLEMS OF THE CASE
Based on the case study, there are many factors that drive the reason for long – terms
investment which are not only focus on the future investment. Some of the factors that can
be look and considered are:
Technology Dependence:
o From the beginning KKP success came from their developed
technology where it could be a huge threat if its not maintain and
sustained.
Leadership Influence:
o Since Ms Tan has shown significant success in the company during
with her strong leadership it will lead to concern towards long – term
stability and other cases where Ms Tan will no longer be leading the
company.
Human Resource Strategy:
o In the case study it stated that it took a long time for the company to
take permanent staff to be part of the team since they only hire by
contract and short-term employment, the shift in require employment
status show an evolvement and need in using permanent or long-term
staff.
Risks Management:
o Ms Tan considered their lack of sources could be harmful towards the
production when making the documentary. Since there will be a lot of
financial requirements are needed when making the documentary. Yet
however, Ms Jothy and Mr Ramsey highlight the requirement for them
to go for company expansion to upkeep with the upcoming trend in five
years period.
Strategic Growth Decisions:
o In the last paragraph of the case study, Ms Jothy highlighted that the
company can pursue for bank loan for them to invest towards new
equipment and other machinery to make the documentary work.
However, the concern for loan payback may give a huge hiccup on the
company finance.
ANALYTICS TOOL
• SWOT Analysis
Strength:
• Diverse Production Capabilities:
o KKP engages in various areas of production, including films,
advertisements, stage theatre and music, showcasing their versatility
and expertise in the industry.
• Educational Program
o The offering of film production and performing arts courses certified by
Trinity College brand and contributes to talent development.
• Leadership and Innovation
o Ms Tan, the founder, and the current CEO for the company has been
contributing towards the innovation and technology in the early years of
the company start up which drive the company’s growth and
development.
Weaknesses:
• Limited Resources
o The company currently face limitations in resources, where the issue
can be seen in the study case when the note mention that Ms Tan
considered to turn the project down due to the lack of resources.
• Lack Of Recognition
o The company are doing well with having and gaining the client
confidence to believe in them yet the absence of recognition in the field
such as the absence of major awards may impact the company’s
industry reputation and visibility.
• Cost Structure
o Having operational costs which include the costs for technical expertise
and certification fees, may strain the company’s financial resources,
especially when considering the potential expansion of the company
where it will involve in purchasing new machinery or new equipment to
able to capture what the client requests for.
Opportunity:
• Business Expansion
o The proposal that has been proposed by Ms Jothy and Mr Ramsey
about the documentary project presents and opportunity for KKP to
expand its business both product and market wise, in which they
particularly focusing towards growing in the Asian market.
• Talent Development
o The educational programs where KKP offers to their talents are align
with the Trinity College London certification which can attract a lot of
aspiring performers, where it can contribute hugely to the talent pool
and towards the industry growth.
• Growing Market
o In the statement provided, Mr Ramsey has a good point when he
mentioned a growing market for documentary production in Asian
countries, providing them with a potential avenue for increased
revenue.
Threats:
• Financial Risks
o The estimated amount of RM500,000 financial outlay for the
documentary project poses a potential financial risk since the turnover
in the future are not yet certain, especially when the situation requires
new digital machinery and digital equipment to fulfil the documentary
project.
• Competitive Landscapes
o Even with the current success of KKP in the industry, film industry itself
already highly competitive and this will possess a lot of challenges for
KKP in distinguish itself and securing lucrative projects while
maintaining their current reputation.
• Market Uncertainty
o Despite having opportunity to expand in the Asian market, the
uncertainty of market dynamics and demands poses a threat to
successful penetration.
• PESTLE Analysis
• Political
o Government Incentives:
▪ Government policies of incentives supporting the creative industry
could present opportunities for KKP, especially in expanding its
business.
o Regulatory Compliance:
▪ The film industry is subjective to various regulations and licensing
requirements, posing challenges and potential costs for KKP.
• Economic
o Financial Outlay for Expansion:
▪ The estimated RM500,000 initial financial outlay for the documentary
project may pose economic challenges for KKP.
o Market Expansion in Asian Countries:
▪ The growing market and demands in the documentary production in
Asian countries present a huge economic opportunities for the
company to increase their revenue.
• Social
o Talent Development and Education:
▪ KKP’s commitment to offering certified courses and workshops align
with the societal emphasis on education and skill development in the
arts.
o Inspiration and Social Upliftment:
▪ KKP’s always aim to produce life-changing films and shows that
reflects a societal interest in content that inspires and
contributes towards social upliftment.
• Technological
o Technological Advancements in Film Production:
▪ The reliance towards new technology in the early stages of the
company development indicates a technological aspect and the need
for new digital equipment for the documentary project so it can
highlight the consistent ongoing technological considerations.
o Digital Production Tools:
▪ Investing in new digital equipment reflects the industry’s continuous
integration of advanced tools for enhanced production quality.
• Legal
o Copyright and Licensing Challenges:
▪ Issues related to copyrights, licensing for locations, music, logos and
artwork pose legal challenges common In the film industry.
o Regulatory Compliance in Education:
▪ Offering certified courses requires adherence to legal and regulatory
standards, adding a layer of legal consideration for KKP when
extending their business out of their region.
• Environment
o Location Related Costs:
▪ Filming at certain locations may incur environmental
considerations such as adhering to environmental regulations,
sustainable practices, or logistic expenses.
o Sustainability in Film Production:
▪ The film industry including KKP may face a lot or increasing pressure
to adapt towards environmentally sustainable practices when creating
their product during the production stage.
APPLICATION QUESTION
Question 1:
Using the information in Appendix 1, evaluate the documentary project using the payback
method and the net present value method.
• Net present value method is used to determine the current value of all future cash
flow either inflows or outflows which are generated by a project, including the capital
investment.
• Calculate the Net Cash Flow (before tax)
0 1 2 3 4 5
Year
RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000
Capital 500
Revenue 250 300 320 380 420
Production Costs -92.5 -115 -124 -151 -169
Nonproduction
-67.5 -72 -80 -95 -115
costs
Net Cash Flow 90 113 116 134 136
• Net present value: (500,000) + 113,000 + 116,000 + 134,000+ 136,000
= 89,000 (the values of revenues is greater than the costs so
it is assumed this investment will be profitable)
Payback period = 4 years 4 months
Question 2:
Evaluate the company’s performance for the year 2018
• Using profitability ratios for evaluations:
➢ Return On Capital Employed (ROCE)
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥𝑒𝑠 121 𝑥 100
𝑥 100 = = 20.68%
𝑁𝑜𝑛 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 + 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 − 𝐶. 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 585
(𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠)
➢ Operating Margin
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 121 𝑥 100
𝑥 100 = = 21.76%
𝑆𝑎𝑙𝑒𝑠 (𝑅𝑒𝑣𝑒𝑛𝑢𝑒) 556
➢ Gross Margin
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 352 𝑥 100
𝑥 100 = = 63.3%
𝑆𝑎𝑙𝑒𝑠 (𝑅𝑒𝑣𝑒𝑛𝑢𝑒) 556
➢ Asset Turnover
𝑆𝑎𝑙𝑒𝑠 (𝑅𝑒𝑣𝑒𝑛𝑢𝑒) 556
= = 0.9 𝑡𝑖𝑚𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 585
Based on the given calculation that has been made the ROCE value are at 20.68% means
that capital is used more efficiently for them to earn more profits and the company is more
productive. To improve his ROCE for the next few years, the company must find a way to
increase operating income without increasing capital. Operating margin is 21.76%, which is
considered good for the company. This indicates the company's efficiency in managing costs
and expenses related to business operations compared to revenue's gross profit margin of
63.3% is very high, indicating that the company's performance is very good, and the
company's performance was better than its competitors during the reporting period. The
company's asset turnover ratio is 0.9 times. This means that the company's net sales are
almost, and this is its total assets for the year. This also proves that the company is
effectively leveraging its assets to generate revenue. In summary, the company uses
capital/assets effectively while managing costs/expenses well. The company's financial
position is healthy, and its business is growing.
Question 3:
Despite having a clear set of strategic objectives, the company does not have a mission
statement. The CEO feels that this should be remedied as a matter of urgency. Discuss the
issues which KKP should consider when creating an appropriate mission statement.
➢ KKP's core mission revolves around crafting life-changing films,
documentaries, and shows that serve as sources of inspiration for the
masses. Their unique appeal stems from the positive messages embedded in
their productions, which also contribute to social upliftment. Utilizing cutting-
edge technology developed by one of the founders, KKP maintains a
competitive edge over its rivals. Additionally, the company remains dedicated
to nurturing aspiring performers and aiding in their talent development within
the industry.
Question 4:
Discuss where the proposal to make documentaries for television would feature in Ansoff’s
product – market matrix.
The matrix outlines four strategic approaches to aid companies in devising a planning tool
for future growth. Given KKP's strong existing productions in the market, it adopts a market
penetration strategy. To illustrate, its new initiative to produce a series of documentaries for
television companies over the next five years reflects product development. KKP also
intends to expand its business both in terms of products and markets. Success in the
documentary production venture, coupled with selling the documentaries to television
companies abroad, will facilitate entry into the broader Asian market, constituting part of its
market development strategy. Additionally, the new documentaries can bolster KKP's market
share and penetration in its existing markets.
RECOMMENDATION
Before making any investment or proper decision for the project, here are some of
recommendation that can be consider by Mr Ramsey and Ms Jothy in their proposal :
• Strategic Investment in Expansion
When recommending for the documentary project, they should put a lot of
consideration towards long – term strategic benefits as a significant opportunity for
business expansion by emphasizing the business portfolio, reaching new markets
and generating stable income over the next five years which after proper calculation
can be seen as a huge possibility.
• Financial Viability Assessment
o In the proposal, it will be good to conduct a thorough financial analysis to
assess the feasibility of raising the initial RM500,000 outlay for the
documentary project. Based on the given study case, Ms Jothy has high
confidence in the project ability to generate a high stable income by
showcasing the potential returns on the investment by 4 years and 4 months.
The numbers are gathered based on the calculation given.
• Exploration of Asian Market
o It is a good opportunity to expand the business horizon to a new region.
However, it should be advice to explore the growth of Asian market for
documentary in the Asian countries which is a country that Mr Ramsey has
pointed out. Once a thorough study and exploration has been made related to
the Asian market for documentary project, the proposal need to emphasize
the opportunity to expand KKP’s business activities into the Asian market,
aligning it with the company’s plans for both product and market growth.
Conclusion
In conclusion, Kreativ Kunste Productions (KKP) stands at a pivotal juncture, considering the
enticing opportunity presented by two televisions companies for a series of documentaries
over the next five years. The strategic expansion into the documentary realm, led by the
newly appointed business development manager, Mr Ramsey, carries the promise of not
only diversifying KKP’s product portfolio but also tapping into the burgeoning Asian Market.
While the initial financial outlay for the documentary project is estimated at RM500,000, Ms
Jothy, the finance manager, expresses confidence in the project’s potential to generate a
stable in come for the next five years. This optimism, coupled with the recognition of a
growing market for documentary production in Asian countries able to add additional weight
to the argument in favour of the project. Moreover, the supportive stance of the long – time
client bank, able to offer the company with a full loan at a reasonable interest rate while also
provides a feasible financial avenue.
In light of these considerations, it is recommended that KKP serious considers seizing the
chance since the potential for long – term growth, revenue generation and market expansion
align with KKP’s overarching goals. As the company navigates this decision – making
process, a strategic mindset and thorough financial assessment will be crucial to ensuring
success of this venture. Overall, venturing into documentary production appears to be a
strategic move that could propel KKP into new dimensions of success and recognition within
the entertainment industry.
REFERENCES
- Graham, B., & Dodd, D. L. (1934). Security Analysis. McGraw-Hill.
- Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions
of risk. The Journal of Finance, 19(3), 425-442.
- Lintner, J. (1965). The valuation of risk assets and the selection of risky investments in
stock portfolios and capital budgets. The Review of Economics and Statistics, 47(1), 13-37.
- Fisher, I. (1930). The Theory of Interest. The Macmillan Company.
