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Case Analysis

Case Analysis. Axeon N.V ME2028 Behavioural Management Control. Group B6. Presented by: Olivia Hue Cyrielle Peillon Roberto Lanz Ismael Valero. 10/11/2008. Managing Director Anton Van Leuven. Senior VP Dutch Operations Willem Backer. Saraceno S.p.a.

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Case Analysis

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  1. Case Analysis Axeon N.VME2028Behavioural Management Control Group B6 Presented by: Olivia Hue Cyrielle Peillon Roberto Lanz Ismael Valero 10/11/2008

  2. Managing Director Anton Van Leuven Senior VP Dutch Operations Willem Backer Saraceno S.p.a Managing Director Hollandsworth Ltd Ian Wallingford KAG Chemicals Manufacturing Director Sales Geert De Rijcke Sales and marketing R&D Finance Director Mfg Marc Oostering • New investment proposal by Ian Wallingford, managing director of Axeon N.V ‘s England • subsidiary: • The construction, in England, of a AR-42 plant • Different reactions: Situational Analysis ---Opposite ---For the project ---Indecisive

  3. Q1.What do you feel about the initial analysis? Detailed • Analysis: • Project feasible and attractive • Should have specified and shown figures about the market study • Main problem: • Two possible options: • - constructing a new factory in Britain • - buying the product from Netherlands • He voluntarily forgot to speak about that last option • Why is it a problem? • The whole company which could have a better gain • Interest of Ian’s subsidiary Complete

  4. Q2. Is construction of the new factory in the UK in the best interest of Axeon? Loose of legitimacy Decrease of subsidiaries’ employees motivation and trust Risk of resign

  5. Q3. Why did Mr Van Leuven behave as he did? • Two opposite clans with different interests, different power and different influence: • Competition and no communication between the two parts • Influence problems • Profit or decentralized management? • No real gap between the two propositions’ profitability

  6. Q4. Discuss what transfer price sould be established if AR-42 is supplied from the Netherlands to the UK? • There are different transfer-pricing alternatives: • Market prices £3,700 • Marginal costs • Full costs • Negotiated • Full costs plus a mark-up

  7. Q5. What is AXEON’s corporate startegy? • Different independent subsidiaries • Decentralised organisation • Results controls • Objectives settled • Bonus plan providing rewards • Action controls • Action Accountability • Preaction reviews • Personnel controls • Empowerment of the subsidiaries and his employees • Selects and places competent employees • Train employees

  8. Q6. What do you believe to be the CSF in Axeon? Current key success factors • Money: revenue growth and profit margins • Cost leadership: the product has to be as cheaper as possible • R&D: they try to constantly develop new products, meet new demands, find new markets and acquire new customers • Expertise of the subsidiaries: They have to be competent in their field • Autonomy of the subsidiaries but with a strategy’s coherence: initiative, creativity, empowerment • Profit: They want the subsidiaries to reach a target and evaluate them on results achieved

  9. Q6. What do you believe to be the CSF in Axeon? Advisable key success factors • External communication between the subsidiaries and Axeon • Internal communication: improve the internal communication in order to improve the employees motivation ( integrate employees in the global strategy) and so the performance • Internal competition: define which company should produce what product in order to avoid competition between them

  10. Q7. What do you believe are the key recurring activities in Axeon? • Profits and sales controls to measure the subsidiaries’ performance • Processes related to each new project: • - Initiation – R&D • - Pre-Study • - Axeon Board Meeting • - Planning • - Execution • - Implementation • - Control • - Closure

  11. Q8. Discuss Axeon in terms of its centralisation / decentralisation

  12. Q9. What should Mr Van Leuven do? • To solve this problem: • From the economical point of view • Should not accept the project • More profitable to produce in the Netherlands • Sell the product to the UK subsidiary at the transfer price £2,760 • Nevertheless, in our opinion • Should not focus in the final economical analysis • Ian saw the business and made a complete analysis for the project, justifying the whole investment • Not only Ian but all the subsidiaries’ managers will think is not worth it to search and propose the development of new products • Headquarter managers never saw the opportunity of selling the product in the UK • Should have seen the opportunity years ago • Thus, Mr Van Leuven should accept the proposal

  13. Q9. What should Mr Van Leuven do? • To avoid any similar problem: • The problem comes from the bonus plan • Each subsidiary will to increase profit • Each manager wants to be rewarded • It is a personal interest conflict • Rewards regarding profits and others non monetary performance (idea, innovation) should be established

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