Start-up costs are initial costs incurred in any venture. Start-up costs include salaries for workers and managers, consultants and costs arising due to diligence policy. Recurrent costs are the cost paid for consultants or other outside services for some activities necessary to facilitate operations. Finally, external costs are expense for supporting suppliers and customers. The figure 1 shows that the majority of the cost was spent on external cost of providing support suppliers and customer to implement RBC. Company C spent the highest amount for this external cost, followed by Company B and Company A. The start-up costs account for approximately 50% of total cost of due diligence in Company A and B while it attributes only around 30% of total cost in Company C. Therefore, it is the external cost that takes the largest amount of expenditure of these companies.
Figure 1: Cost of due diligence
Figure 2: Ranking of cost spent on different activities
Benefits result
Figure 3: Total annual sales of the Company
Figure 3 gives an overview of the sum of sales of each company. It can be seen that Company C had the highest market share in international market but it lost the share in domestic market. However, in total, Company C had the highest sales level while company A accounted for the smallest share in both international and domestic market. A possible explanation is the level of investment. Company C spent the highest amount on all kinds of activities; therefore, it is reasonable to get the highest market share.
Company A met its goals in preventing and mitigating risk because it meets the financial goal. However, Company B failed to meet financial goal and G2 because of operational reason. Company C could not meet financial goal and G2, G3 due to operational reason.
Company C has the ranking of 9 when considering the lack of established digital systems for non-financial supply chain information while company A and B has the same ranking of 7 in this issue.
It means Company C has a serious problem of data storage.
In consideration of confidentiality, Company A and C has the same ranking of 8 for disclosure of supply chain information that may violate contractual obligations of the firm or its suppliers or clients. It implies that confidentiality is a significant obstacle in the implementation of your Company’s RBC due diligence policies.
Figure 4: Ranking of benefits from different activities
Overall, management and labor benefits generate the highest share of profit for Company C. The result can be explained by the fact that Company C spent a lot of money on these aspects, so it is reasonable when they bring the company good returns. It is likely that financial investment does not bring companies much profits. As mentioned above, most of firms fail to meet financial goals due to operation reasons.
A restriction with investigating due diligence is that it is very difficult to find out whether the companies or organization we are dealing with are legitimate. It becomes very difficult when firms do business across border. That is why three companies A, B, C have to spend a large amount of their expenditure on supporting customers and suppliers with RBC. The other solution is that firms can encourage their partners to provide information online and make it accessible to companies to check up.
