The Invisible Poor in Singapore Singapore was hailed as one of the world’s richest countries. However, while the living conditions among Singapore’s poorest were not as dire as in other countries in the region, about 14% of its citizens faced severe financial constraints and could not afford even their basic requirements. Over 2012-2015, there was an increase of about 43% in the number of families living in poverty and dependent on government assistance, the worst result to be reported officially in Singapore. In 2015, the country had one of the largest inequality gaps in advanced Asian countries. As of June 2020, after the elderly (60 years plus), Singaporeans between 15 – 34 years of age were the most financially-affected group with around 5% unemployed (double of other age groups), and about 41,500 working in low-paying entry-level jobs earning below S$1,000 a month. While the Ministry of Social and Family Development (MSF) provided short to medium term financial aid to 5,644 young households (applicants below 35 years of age), it was inadequate in addressing the issue over the long term. According to Chng, people with challenging backgrounds often struggled in Singapore’s highly competitive education system. She explained, “If you fall behind, you stay behind. It is very difficult to catch up.” To alleviate poverty for the long term, it was important for the government, industry and society to ensure that the young and working poor were better employed and help them remain employable by providing them skilling and reskilling opportunities. This, Chng thought, was true sustainability. In 2018, Singapore had committed to the United Nation’s 2030 Agenda for Sustainable Development and Chng felt BB was making a profound contribution to the cause. Nonetheless, more need to be done, she felt. For BB to be truly sustainable, Chng felt the need to expand BB’s “coffee academy” business model internationally as the Singapore market was small and offered limited growth potential. However, Chng was concerned that such a strategy could stretch the company’s already limited financial and managerial resources. Moreover, BB’s “coffee academy” business model was unique to Singapore, and the level of market development, technology, governance structures and government support varied significantly across different countries. Instead, Chng thought it might be best to begin with an overseas expansion of the BB coffee roasting operation. Coffee Roastery Focused on keeping its entire supply chain green, the roastery carefully selects the suppliers from whom it sources coffee beans. It works directly with farms and farm cooperatives, who are accredited as treating their farmers and employees fairly and ethically. Approximately 50% of the roastery’s output is used by BB’s academy and coffee bars, ensuring a continued green chain across its businesses. In 2020, the coffee roasting unit produced 4500 tonnes and contributed 15% of BB’s total revenue. The sustainability positioning has differentiated BB from its peers, and helped it earn collaborations with socially responsible corporates. Best of all, there is now capacity to expand production to around 18,000 tonnes at the roastery and start exporting roasted coffee beans to other countries. At present, the roastery is roasting 100% Arabica beans. The average wholesale price BB is able to sell the Arabica beans for in 2021 is US$3.10, down from US$4.42 in 2014. However, projections are that the wholesale price of roasted Arabica coffee beans will increase 5% every year for the next 10 years and beyond. By contrast, on average, Robusta beans are selling for US$1.94, but the wholesale price of Robusta beans is projected to increase by 11% every year for the next 10 years and beyond. Chng believes a move to Robusta beans might be a viable option in the future, because they can be grown in a much wider range of climates and altitudes. Importantly, because of their established relationships with coffee bean farmers around the world, BB would be able to source raw ‘green’ Arabica and Robusta beans at the same price, which they would then use in the roastery. Thus, the cost of raw beans will be the same, whether they use Arabica or Robusta beans in the roastery. This is unlikely to change in future. To be financially sustainable, Chng wants to plan the type of coffee beans the roastery should be roasting in the coming years. To do so, you should: a. Explain what planning model(s) is/are appropriate for this b. Using the current wholesale price projections as a basis, determine what type of beans BB should use in its roastery now and in future. (Present the information in a clear, quick and easy to understand chart) c. Provide a brief justification for your choice of chart
The Invisible Poor in Singapore
Singapore was hailed as one of the world’s richest countries. However, while the living conditions among Singapore’s poorest were not as dire as in other countries in the region, about 14% of its citizens faced severe financial constraints and could not afford even their basic requirements. Over 2012-2015, there was an increase of about 43% in the number of families living in poverty and dependent on government assistance, the worst result to be reported officially in Singapore. In 2015, the country had one of the largest inequality gaps in advanced Asian countries.
As of June 2020, after the elderly (60 years plus), Singaporeans between 15 – 34 years of age were the most financially-affected group with around 5%
According to Chng, people with challenging backgrounds often struggled in Singapore’s highly competitive education system. She explained, “If you fall behind, you stay behind. It is very difficult to catch up.” To alleviate poverty for the long term, it was important for the government, industry and society to ensure that the young and working poor were better employed and help them remain employable by providing them skilling and reskilling opportunities. This, Chng thought, was true sustainability. In 2018, Singapore had committed to the United Nation’s 2030 Agenda for Sustainable Development and Chng felt BB was making a profound contribution to the cause. Nonetheless, more need to be done, she felt.
For BB to be truly sustainable, Chng felt the need to expand BB’s “coffee academy” business model internationally as the Singapore market was small and offered limited growth potential. However, Chng was concerned that such a strategy could stretch the company’s already limited financial and managerial resources. Moreover, BB’s “coffee academy” business model was unique to Singapore, and the level of market development, technology, governance structures and government support varied significantly across different countries. Instead, Chng thought it might be best to begin with an overseas expansion of the BB coffee roasting operation.
Coffee Roastery
Focused on keeping its entire supply chain green, the roastery carefully selects the suppliers from whom it sources coffee beans. It works directly with farms and farm cooperatives, who are accredited as treating their farmers and employees fairly and ethically. Approximately 50% of the roastery’s output is used by BB’s academy and coffee bars, ensuring a continued green chain across its businesses. In 2020, the coffee roasting unit produced 4500 tonnes and contributed 15% of BB’s total revenue. The sustainability positioning has differentiated BB from its peers, and helped it earn collaborations with socially responsible corporates. Best of all, there is now capacity to expand production to around 18,000 tonnes at the roastery and start exporting roasted coffee beans to other countries.
At present, the roastery is roasting 100% Arabica beans. The average wholesale price BB is able to sell the Arabica beans for in 2021 is US$3.10, down from US$4.42 in 2014. However, projections are that the wholesale price of roasted Arabica coffee beans will increase 5% every year for the next 10 years and beyond. By contrast, on average, Robusta beans are selling for US$1.94, but the wholesale price of Robusta beans is projected to increase by 11% every year for the next 10 years and beyond.
Chng believes a move to Robusta beans might be a viable option in the future, because they can be grown in a much wider range of climates and altitudes. Importantly, because of their established relationships with coffee bean farmers around the world, BB would be able to source raw ‘green’ Arabica and Robusta beans at the same price, which they would then use in the roastery. Thus, the cost of raw beans will be the same, whether they use Arabica or Robusta beans in the roastery. This is unlikely to change in future.
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To be financially sustainable, Chng wants to plan the type of coffee beans the roastery should be roasting in the coming years. To do so, you should:
a. Explain what planning model(s) is/are appropriate for thisb. Using the current wholesale price projections as a basis, determine what type of beans BB should use
in its roastery now and in future. (Present the information in a clear, quick and easy to understand
chart)
c. Provide a brief justification for your choice of chart
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