1 / 20

AXEON CASE

AXEON CASE. Group A4 Jie Cao, Laurentine, Asako, Zeynep, Jonathan. Agenda. Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy

maxima
Download Presentation

AXEON CASE

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. AXEON CASE Group A4 Jie Cao, Laurentine, Asako, Zeynep, Jonathan

  2. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  3. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  4. Q1: What do you feel about the initial analysis? Was there, in your opinion, anything wrong with it? Ian’s investment proposal (initial analysis) offers room for improvements Problem Solution • Initial Investment of 1,4 million £ does seem very low for a new chemical factory • Discount rate of 8% seems too low • No inflation is considered • Sales forecasts doubtful • Flat variable cost over 7 years is unrealistic • Review the investment proposal and create an sensitivity analysis • Sensitivity analysis for different rate of borrowings and inflation rates • Engage an independent market research agency in order to estimate the potential market size • Include a growth factor on the cost side Evaluation • Basic structure is ok, but the investment proposal should be refined • More effort, time and money has to be spent in order to generate a truthful analysis Alternatives • Costing, pricing and forecasting sales based on Simulation (Monte Carlo)

  5. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  6. The construction of the factory in UK- - pros and cons Q2: Is construction of the new factory in the UK in the best interest of Axeon? • Close to the market • Smaller transportation costs • Diversify production • risk sharing, potential • decentralization • Motivated management to implement the project • No currency risk - Con‘s • Dutch factory is producing the product already • Lack of skilled workers • Huge investment into new factory • No economies of scale used + Pro‘s

  7. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  8. Mr van Leuven‘s behaviour Facts • Before the dispute between parent and subsidiary • Gives a too fast first answer • Has a subjective behavior • During the dispute between parent and subsidiary • Doesn‘t take part to the discussion in the board meeting • Has changed his behavior: decisive to indecisive • After the dispute between parent and subsidiary • Postpones his answer: stops the meeting without decision • Delegates a lot, asks every time advices Reasons • Personal limitation • - Lack of management skills • - Lack of organization, has not prepared and analyzed enough before • Lack of direction • - Problems of procedure • Personal limitation • - Lack of leadership • - Lack of making decision power • Lack of direction • Personal limitation • - Lack of leadership • - Lack of confidence • Lack of direction • Lack of motivation • - Doesn’t motivate

  9. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  10. quate the subsidiaries the same price as they quoted agents in all countries • negotiable pricing, based on costs • no mark-up is taken into account in Ian‘s proposal • variable manufacturing cost, eg raw materials, labours • - 2000 GBP/ton in UK; 1860 GBP/ton in Netherland • transportation cost from Netherlands to UK (If Netherland to UK) • - 100 GBP/ ton from Netherland to UK • UK import duty (If Netherland to UK) • - 100 GBP/ton from Netherland to UK • curreny rate between Euro and Pound (If Netherland to UK) • actual transfer price depends on negotiation result between manufacturing and sales-need more information about how to cut the profit cake • actual size of the profit cake depends on the actual sale price and cost – need more information about the sales price and manufacture costs • actual costs and price depends on exchange rate between UK and EU- need more information to do the estimation of curreny rate between Euro and Pound Claculation of transfer price Facts Important factors Further consideration

  11. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  12. business established in chemical industries • actions taken in diversified geographic area • decentralized, loose production & sales • instant yearly evaluation and reward, fat bonus package • revenue & profit focused, based on yearly target • more transportation cost due to diversified business area • lower trust building speed due to distant places • harder to understand and communicate due to individual operation of each business part • conflicts in business interests due to decentralized and loose production & sale • short-term and selfish behaviour due to reward and evaluation system • long-term evaluate indicators, eg, job satisfaction rate of employees, amount of improvements • long-term reward system, eg, replace yearly bonus partly by stock share • design programs to build close relationships among departments, branches and areas, eg, monthly meeting of senior managers, corporate weekly press of latest activities of each business part • earlier involvement in project planning,eg, build Gate-Stage model and work together from ideation Axeon's corporate strategy Facts Problems suggestions

  13. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  14. Critical Success Factor(CSF) • What is really needed to accomplish the company‘s goal. • CSF in Axeon • ・To sell appropriate products to each market • ・To develop new products • ・Differentiation against the competition • ・The autonomy and morale of subsidiary Critical Success Factors in Axeon Facts low high Value of sales low high CSF

  15. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  16. Key Recurring Activities(KRA) • What is not so important, • but happens again and again in the company. • KRA in Axeon • ・manufacturing along production methods • ・market research • ・financial planning Key Recurring Activities in Axeon Facts low high Value of sales low high KRA

  17. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  18. Disadvantages of decentralization • Difficulties to take decision • Managers conflict of interests • The previous point was about efficiency. The proposal to build of a new factory is a problem of investment which is a more trouble point. Axeon tries to solve the problem by a centralization way. Axeon‘s centralisation / decentralisation Facts • Highly decentralized corporate policy • Subsidiaries management and decisions • Ian’s autonomy in production method, marketing strategy, financial planning, organization changes the first year • Subsidiaries selling • Assume responsibilities of sell • Take the final decisions • Subsidiaries production • possibilities to produce competitive products and tp propose new one • Possibility to propose to build new factory Discussion • Advantages of decentrlization • time saving • closesr to market

  19. Agenda Q1: Initial analysis Q2: Alignment of factory in the UK and Axeon‘s interest Q3: Reasons for Mr van Leuven‘s behaviour Q4: Claculation of transfer price Q5: Axeon's corporate strategy Q6: Critical success factors in Axeon Q7: Key recurring activities in Axeon Q8: Axeon‘s centralisation / decentralisation Q9: Recommendations for Mr van Leuven

  20. Ian: • +British Market knowledge • -Subjective (tend to overestimate) • * took 6 months • headquarter: • - British Market knowledge(-) • +Objective (a little tend to underestimate) • * took 1 month • It is not effective to say just Yes or No to this proposal simply • Negotiation can be a better choice • take into consider the real situation, resources are limited, especially time • Initiate another research by using a time limitation (1 month) • Estimation of sales and costs again and more exactly (divided into 2 parts) • Sales: external consulting company (market research) • Cost: internal Audit (company research) Recommendations for Mr van Leuven Facts Suggestions

More Related