[Company name]
CAS3701
Assignment 12
2024 - DUE 4
October 2024
QUESTIONS WITH DETAILED ANSWERS
,CAS3701 Assignment 12 2024 - DUE 4 October 2024
QUESTION 1
1. INTRODUCTION Rhino Cellular Ltd (“RhinoCell”) is a South African based
manufacturer and retailer of low-cost smart phones. RhinoCell was founded in 2011 in
response to the uptake of smart phones in the South African market. The company
quickly saw a market opportunity for a low-cost smart phone that provides a basic
version of features when compared to other high-end smart phones manufactured in
South Africa and other African markets. RhinoCell has a 31 August financial year-end.
The board of RhinoCell expects to authorise the annual financial statements of
RhinoCell for issue on 14 December 2023. The key to RhinoCell’s competitive
advantage is its locally based supply chain. RhinoCell manufactures its products at the
Maluti-A-Phofung Special Economic Zone (“SEZ”) in Harrismith, Free State Province.
The Maluti-A-Phofung SEZ is a key logistic link by road and rail to South Africa’s
economic and industrial heartland, with key links to Gauteng, the Port of Durban, and
the Bloemfontein-Cape Town route. RhinoCell sources its main materials from South
Africa and other African countries and employs workers from the Harrismith community.
This strategy allows RhinoCell to procure materials at competitive prices and pay lower
wages to its employees, as the cost of living in Harrismith is lower when compared to
urban centres such as Johannesburg, Durban, and Cape Town.
2. MARKETING AND SALES STRATEGY The smart phone industry is dominated by a
few international companies that manufacture their products mainly in South-East Asia
and the Americas. The strong expansion program by these companies, coupled with the
rollout of 5G internet, has allowed global consumers to make increased use of the
internet in their daily lives. RhinoCell has identified Sub-Saharan Africa as an
, underdeveloped market for smart phones and believes that low priced smart phones are
the industry future, considering the affordability constraints that plague consumers in the
region. According to the Global Systems for Mobile Communications Association
(GSMA), 49% of consumers in the Sub-Saharan African region have access to 4G
mobile technology, whilst only 17% of consumers have access to 3G mobile technology.
The lack of penetration in the Sub- Saharan African region provides RhinoCell with a
strong opportunity to capture a sizeable portion of the market. RhinoCell’s Africa
expansion strategy includes a newly developed smart phone, named “EnduroPro94”,
which has a 48-hour long battery life and will be capable of utilising 5G mobile
technology. The longer battery life is in response to the electricity challenges that affect
most of Sub-Saharan Africa. EnduroPro94 will be targeted at the lower end of the
market. RhinoCell initially plans to sell the smart phone for R1 300 (excluding VAT) in
Sub-Saharan Africa.
3. MANUFACTURING AND SUPPLY CHAIN The product's battery is the key to
manufacturing a smart phone with a battery life of 48 hours. In its earlier products,
RhinoCell used nickel-metal hydride batteries sourced from China. These batteries
made the smart phones bulkier as they had low energy density and only allowed eight
hours of battery life. The battery for the EnduroPro94 will be manufactured at
RhinoCell’s Harrismith facility. It will use lithium-ion batteries that are lighter in weight
and higher in energy density, meaning they can store more energy in a smaller space.
The main material used in lithium-ion batteries is cobalt, sourced from the Democratic
Republic of Congo (DRC), Russia and Australia, with the DRC making up 70% of global
cobalt production. On 16 August 2023, the management of RhinoCell had received and
signed a proposed agreement with a businessperson, based in the Lubumbashi region
in the South of the DRC, for the supply of cobalt to manufacture lithium-ion batteries to
be used in the EnduPro94. The cobalt will be purchased at a forty percent discount on
CAS3701
Assignment 12
2024 - DUE 4
October 2024
QUESTIONS WITH DETAILED ANSWERS
,CAS3701 Assignment 12 2024 - DUE 4 October 2024
QUESTION 1
1. INTRODUCTION Rhino Cellular Ltd (“RhinoCell”) is a South African based
manufacturer and retailer of low-cost smart phones. RhinoCell was founded in 2011 in
response to the uptake of smart phones in the South African market. The company
quickly saw a market opportunity for a low-cost smart phone that provides a basic
version of features when compared to other high-end smart phones manufactured in
South Africa and other African markets. RhinoCell has a 31 August financial year-end.
The board of RhinoCell expects to authorise the annual financial statements of
RhinoCell for issue on 14 December 2023. The key to RhinoCell’s competitive
advantage is its locally based supply chain. RhinoCell manufactures its products at the
Maluti-A-Phofung Special Economic Zone (“SEZ”) in Harrismith, Free State Province.
The Maluti-A-Phofung SEZ is a key logistic link by road and rail to South Africa’s
economic and industrial heartland, with key links to Gauteng, the Port of Durban, and
the Bloemfontein-Cape Town route. RhinoCell sources its main materials from South
Africa and other African countries and employs workers from the Harrismith community.
This strategy allows RhinoCell to procure materials at competitive prices and pay lower
wages to its employees, as the cost of living in Harrismith is lower when compared to
urban centres such as Johannesburg, Durban, and Cape Town.
2. MARKETING AND SALES STRATEGY The smart phone industry is dominated by a
few international companies that manufacture their products mainly in South-East Asia
and the Americas. The strong expansion program by these companies, coupled with the
rollout of 5G internet, has allowed global consumers to make increased use of the
internet in their daily lives. RhinoCell has identified Sub-Saharan Africa as an
, underdeveloped market for smart phones and believes that low priced smart phones are
the industry future, considering the affordability constraints that plague consumers in the
region. According to the Global Systems for Mobile Communications Association
(GSMA), 49% of consumers in the Sub-Saharan African region have access to 4G
mobile technology, whilst only 17% of consumers have access to 3G mobile technology.
The lack of penetration in the Sub- Saharan African region provides RhinoCell with a
strong opportunity to capture a sizeable portion of the market. RhinoCell’s Africa
expansion strategy includes a newly developed smart phone, named “EnduroPro94”,
which has a 48-hour long battery life and will be capable of utilising 5G mobile
technology. The longer battery life is in response to the electricity challenges that affect
most of Sub-Saharan Africa. EnduroPro94 will be targeted at the lower end of the
market. RhinoCell initially plans to sell the smart phone for R1 300 (excluding VAT) in
Sub-Saharan Africa.
3. MANUFACTURING AND SUPPLY CHAIN The product's battery is the key to
manufacturing a smart phone with a battery life of 48 hours. In its earlier products,
RhinoCell used nickel-metal hydride batteries sourced from China. These batteries
made the smart phones bulkier as they had low energy density and only allowed eight
hours of battery life. The battery for the EnduroPro94 will be manufactured at
RhinoCell’s Harrismith facility. It will use lithium-ion batteries that are lighter in weight
and higher in energy density, meaning they can store more energy in a smaller space.
The main material used in lithium-ion batteries is cobalt, sourced from the Democratic
Republic of Congo (DRC), Russia and Australia, with the DRC making up 70% of global
cobalt production. On 16 August 2023, the management of RhinoCell had received and
signed a proposed agreement with a businessperson, based in the Lubumbashi region
in the South of the DRC, for the supply of cobalt to manufacture lithium-ion batteries to
be used in the EnduPro94. The cobalt will be purchased at a forty percent discount on
