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2 BACKGROUND
The Corporation is a mid-sized manufacturer and
supplier of products for the food industry, mostly
centered on seed crops with high content of Omega-
3. Omega-3 is the common name given to a family
of unsaturated fatty acids that has been shown to
reduce risks of heart disease and have potential
positive effects on other diseases (e.g. high
cholesterol). Omega-3 is not produced by the human
body and must be incorporated in the diet. The
Corporation processes flax and chia seeds, to
produce cold press oils and partially defatted flours.
Cold press oils with high contents of Omega-3 can
be consumed as part of a regular diet or used as
additives in sunflower or olive oils. Partially
defatted flours are included as additives in bakery
and other products (bread, cookies, cereal and
energy bars). Both flax and chia seeds have high
contents of Omega-3. The Corporation has been
especially successful at targeting whole food stores,
supermarkets and the bakery industry. The combined
annual production capacity of oil and flour extracted
from chia and flax seeds has made the Corporation a
major player of Omega-3 additives for the food
industry in South America. The Corporation has
recently added other seed crops to its list of
products, including quinoa (sold as flour and whole
grain) and safflower (processed to produce cooking
oil, margarine and cosmetics). The Corporation has
production and distribution capabilities in several
countries in South America. It has its headquarters in
Buenos Aires, Argentina, and affiliates in Uruguay,
Brazil, Chile, Peru and Colombia. The Corporation’s
production plants are located in Argentina, Peru and
Brazil. Chia and flax products are manufactured in
Argentina, whereas quinoa products are processed in
Peru. The Brazil affiliate is setting up a processing
plant for safflower.
The Corporation has a matrix organizational
structure, with management in each country and
traditional functional areas (production, sales and
marketing, finance). The finance division in each
country reports to a country manager and to the
Chief Financial Officer (CFO) with headquarters in
Buenos Aires. The information technology (IT)
function is small: an IT division headquartered in
Buenos Aires led by an IT director that reports to the
CFO’s office. Each country holds a reduced IT
support group that reports to the IT Director (in
some cases no more than one or two people
depending on the size of the branch).
The continued growth and expansion of the
Corporation from a small family business into a
multinational organization has created the need for a
regional strategic planning process and information
infrastructure. Each country is treated as a separate
business unit, and has its own financial regulations,
tax code, currency, interest rates and labor
considerations. Consolidated corporate financial data
is reported in dollars but is handled in each country
using local currency.
The financial planning process at the Corporation
includes two versions (scenarios) of the data (Actual
and Budget). All financial statement accounts are
recorded with a monthly granularity for each of the
scenarios. Sales and expenses data should have the
possibility of being sliced from multiple
perspectives (dimensions of analysis), including
countries, scenarios, products, and customers.
Products are grouped in product lines according to
the type of seed (chia, flax, quinoa, and safflower).
Customers across countries are grouped according to
the type of target industry (whole foods,
supermarkets, bakeries, and cosmetics).
The planning process and consolidation of
financial reports historically used by the Corporation
is labor intensive. Most of the budget analysis is
performed and kept in Excel spreadsheets whereas
the financial information is handled through
accounting applications running onsite at each
country, or outsourced to a local accounting firm,
according to the size of the branch. Accounting data
is readily available, but the lack of a common
analytical reporting framework paired with the
differences among countries’ accounting regulations
and the distributed nature of the reporting process in
terms of hardware / software platform and staff
makes it difficult to have consistent reporting of
analytical data with adequate levels of granularity
across the Corporation.
The Corporation would like to create a financial
planning and management reporting system that a)
helps compare actual results versus planned
scenarios and enables consolidation of financial data
across countries b) measures the financial health of
the organization through a number of key
performance indicators (KPIs) included in a
financial dashboard. Three types of KPIs are of
special interest to the Corporation: (1) Profitability
KPIs; (2) Solvency KPIs; (3) Cash Flow ratios.
The CFO’s office has decided to initiate a project
to develop a planning and financial analysis tool to
meet the Corporation’s immediate and future
reporting needs.
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