Aqua Fish Canada Inc Ai
Page 1 (8 pages)
Practice Case Examination
Aqua Fish Canada Inc. (AFC) Additional Information
May 2007 to April 2009 Update Over the past two years, AFC has faced more intense competition, particularly from aquaculturists in Chile. In addition, Chilean output has increased the supply of salmon and the Canadian dollar has strengthened in relation to the U.S. dollar. As a result, AFC has been unable to meet its budgeted revenue targets. Stocks of unsold harvestable fish have increased, as well as the corresponding cost of maintaining the fish, and the company barely made a profit in fiscal 2009. In January 2009, AFC lost one of its largest retail customers, S&F Seafood, to a new salmon aquaculture firm, Nu-Farm Inc. This new competitor uses a sophisticated, computerized system for supply chain and product distribution functions. The system allows Nu-Farm to establish web links with customers, such as S&F Seafood, and to manage orders and deliveries directly for each of the customer’s retail outlets. This has eliminated the need for customers to make separate arrangements to receive and warehouse fresh fish, and to ultimately distribute the fish to their retail locations. In February 2009, 2,000 kilograms of fish from Site 4 were rejected by three important customers, two of which are located in the United States. An internal investigation revealed that two employees at Site 4 had neglected to follow established procedures and failed to reject some fish that did not meet quality standards and were not certified by the staff veterinarian. In April 2009, employees neglected to secure some of the net-pens at Site 3. During a storm, more than 300,000 kilograms of young fish escaped from these net-pens and most were subsequently lost to predators. Although the company’s property and liability insurance covers criminal theft of fish, it does not cover the loss of fish from disease, parasites, escape, or predators. In addition, there is no liability coverage with
Practice Case Examination
Aqua Fish Canada Inc. (AFC) Additional Information
May 2007 to April 2009 Update Over the past two years, AFC has faced more intense competition, particularly from aquaculturists in Chile. In addition, Chilean output has increased the supply of salmon and the Canadian dollar has strengthened in relation to the U.S. dollar. As a result, AFC has been unable to meet its budgeted revenue targets. Stocks of unsold harvestable fish have increased, as well as the corresponding cost of maintaining the fish, and the company barely made a profit in fiscal 2009. In January 2009, AFC lost one of its largest retail customers, S&F Seafood, to a new salmon aquaculture firm, Nu-Farm Inc. This new competitor uses a sophisticated, computerized system for supply chain and product distribution functions. The system allows Nu-Farm to establish web links with customers, such as S&F Seafood, and to manage orders and deliveries directly for each of the customer’s retail outlets. This has eliminated the need for customers to make separate arrangements to receive and warehouse fresh fish, and to ultimately distribute the fish to their retail locations. In February 2009, 2,000 kilograms of fish from Site 4 were rejected by three important customers, two of which are located in the United States. An internal investigation revealed that two employees at Site 4 had neglected to follow established procedures and failed to reject some fish that did not meet quality standards and were not certified by the staff veterinarian. In April 2009, employees neglected to secure some of the net-pens at Site 3. During a storm, more than 300,000 kilograms of young fish escaped from these net-pens and most were subsequently lost to predators. Although the company’s property and liability insurance covers criminal theft of fish, it does not cover the loss of fish from disease, parasites, escape, or predators. In addition, there is no liability coverage with