Axeon

1. Axeon A caseanalysis, group A1 Maria Therese Björk Alexander Eklöw Jakob Nettelbladt Sara Valentin

2. Questionone: • What do you feel about the initial analysis? Was there, in your opinion, anything wrong with it?

3. Answer • From Ian’s and Hollandsworth’s perspective there is nothing wrong with the analysis, a local perspective has been used instead of a global one from Axeon’s point of view. • There is a problem however that Hollandsworth does not include Axeon’s capabilities in their strategic planning in general. • Ian has spotted a potential market in the U.K. and wants to develop it. • The board of directors sees the opportunity from a global perspective and wants Axeon to exploit it. • A weakness in the presentation is the vague facts for how to exploit half the market in the U.K. • Another weakness is that Ian counts on being able to learn the manufacturing processes needed fast, which may not be realistic.

4. Question two: • Is construction of the new factory in the U.K. in the best interest of Axeon?

5. Answer • Expanding the factory in the Netherlands would be more profitable, from Axeon’s point of view. • Currently all the production expertise is located in the Netherlands. • Although building the factory in the U.K. would be a way of spreading the risks it does not outweigh the economic benefits of expanding Axeon’s current factory. • Also, the potential market in the U.K. may be dependent on having the factory in the U.K.

6. Question three • Why did Mr. van Leuven behave as he did?

7. Answer • Mr. van Leuven was probably carried away by the positive presentation made by Ian. • It was Mr. van Leuven’s staff that realized the alternative solution of expanding the existing factory in the Netherlands.

8. Question four • Discuss what transfer price should be established if AR-42 is supplied from the Netherlands to the U.K.

9. Answer • The lowest transfer price possible is £2,155 per ton during the first five years due to depreciation. • The years following this five year period, the lowest possible transfer price is £2,060 per ton. • However, these prices would mean no profit for the factory in the Netherlands, therefore we propose a higher transfer price since both companies are profit centres. • We suggest a 30 percent mark-up, which means a transfer price of £2,800 per ton. This creates profit for both parts, with a slight overweight to Axeon since they take a lot of the risk.

10. Question five What is Axeon's corporate strategy?

11. Answer • Axeon’s corporate strategy is to make money globally, and thereby create value to its shareholders. • This is achieved by using their size as a company and through decentralisation in order to acquire local knowledge.

12. Question six • What do you believe to be the critical success factors in Axeon?

13. Answer • To identify the market needs. • To take advantage of the globalized nature of the organisation. • To have regular meetings between the different sub companies in Axeon in order to secure their overall goals. • The lack of this kind of meetings is partially why the AR42 project got so complicated.

14. Question seven • What do you believe are the key recurring activities in Axeon?

15. Answer • Investment decision making • Problem solving • Teambuilding • Personell development • Evaluating new markets • Research

16. Question eight • Discuss Axeon in terms of its centralization / decentralization.

17. Answer • The global profit is of higher importance than the expansion of the local knowledge. • The company uses decentralization to collect local knowledge but in this case the global profit was of more importance, and the local knowledge was in fact in the Netherlands.

18. Question nine • What should Mr. van Leuven do?

19. Answer • Expand the factory in the Netherlands rather than build a new one in the U.K. • Increase the number of cross functional and multi national meetings in Axeon. • Use Ian’s analytic skill in Axeon globally, perhaps by appointing him a place in the board of directors.