GROUP A3 Andreas Wirenhammar Per Hult Peter Hernandez Peter Larsson Axeon N.V.- a case study

Initial analysis Lack of risk analysis To optimistic (50% market share in 2 years) ‏ Hard to be efficient in a new process, child diseases at a new plant. Very low interest rates 8%, high interest rate risk

UK factory in best interest? Differences in variable cost between the alternatives are minimal Working capital more or less equal UK needs 1.4 million investment in plant AR-42 in UK is less than 0,2% of whole company turnover (1% of UK turnover ) ‏ Recommend plant in UK and keep the company decentralised

Mr Van Leuven Conflict on company policy Fear of conflicts What he says decides the companies future policy, needs to think it over He may have decided not to interfere in the issue

Transfer Price Must of course sell below market price Should at least cover the variable costs Should cover Dutch Operations part of the fixed costs Must change Dutch Operations policy to sell at: fixed costs + variable costs + revenues Dutch Operations should sell at cost price

Corporate Strategy High independence and autonomy Create driven subsidiaries Optimize every market/subsidiary by themselves Bonus to achieve certain revenue targets but no bonus for cooperation.

CSF Customer satisfaction Even quality R&D (efficiency, new products), patent protection Continuous production/reliabilty Access to raw materials State of the market

KRA Maintenance Process surveillance/control Quality testing

Centralisation/Decentralisation Decentralisation gives the organisation responsiveness and enthusiastic managers Risk for suboptimization because of decentralisation, each for his own. Current conflict clearly; centralisation vs. decentralisation Have a choice between staying decentralised or take a more centralised approach.

What Should van Leuven do? Has to choose between centralisation and suboptimization Make a decision ASAP Taking into account the small amount of money involved (relative turnover) ‏ Let Ian build their factory and keep the policy of decentralisation