atrops, schäfer, schmidt, stäcker, trebing behavioural management control 6. dezember 20151...
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Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 1
Behavioural Management Control
Seminarquestions
The Aexon Case
Group D2
Group members: Susanne Atrops 860304-A164Kathrin Schäfer 811219-A328Fabian Schmidt 850127-A137Christian Stäcker 840214-A116Sebastian Trebing 851005-A215
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 2The Aexon Case
Question 1: What do you feel about the initial analysis? Was there, in your opinion, anything wrong with it?
First, the analysis seems to be a good business idea • Big market potential for AR-42in the UK (800tons)• Actually no sellings from Aexon in UK
Estimations seem to be overoptimistic• Is it realistic to cover half the market after three years?• Are production difficulties considered properly?
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 3The Aexon Case
Is it realistic to cover half the market after three years?
• Totally unknown on the new market (0 tons sold actual)
• Covering quarter of the market value in the first year
• Estimated growing rate of 50% per year
• Target of 400tons per year reached in third year.
• 400tons just in UK by 600tons in the rest of the world market.
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 4The Aexon Case
Are production difficulties considered properly?
• The analysis mentions no production difficulties
• No comment on technical challenges
• Mr Oosterling mentions complications in production process
``…even with trained workers, who have long experience´´
• Experienced workers can be called in from
Netherlands
Lack of information to validate the question
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 5
Question 2: Is construction of the new factory in the UK in the best interest of Axeon?
Working Capital in the NL lower than estimated in UK• If NL produces for the UK market: 160 vs. 190 (in UK)
NL production obviously not at its capasity maximum:• AR-42 for the UK market can additionally be produced in NL
Fixed costs per ton in NL decrease with higher outputVariable production costs in NL lower than in UK
• Higher than in UK when including shipping and duty• Unknown fixed costs in UK disable complete comparison
Preferred method: Enlarge production in NL
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 6The Axeon Case
Question 3: Why did Mr van Leuven behave as he did?
Some quotiations by Mr van Leuven during the case:
``…the decision seems to be clear.´´
``…seemed (just) to sit there and listen.´´
``…did not back me up…´´
``…key importance for the whole company.´´
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 7
Passiv: • Does not make the decisions for the other managers • but shows the company’s direction and • supports the development of ideas
Without making decisions, he does not take the responsibility, so the other managers cannot lean back and refer to his decisions when problems appear
They are supposed to find agreements on their own
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 8The Axeon Case
Question 4: Discuss what transfer price should be established if AR-42 is supplied from the Netherlands to the UK.
You have to consider the short and the longterm
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 9The Axeon Case
Short term:
• Just consider the variable • plus shipping and UK import
Fix costs are sunk costs. It is already invested.
Long Term:
• Including fix costs and mark up
Price per ton = 2060 + 360 + X
2060£/ton
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 10The Axeon Case
Negotiated Price:
• Transfer price has to be negotiated
•Without producing, Hollandsworth has still the promotion
costs and want a mark up
• Promotion costs after third year: 250£/ton
Market price: 3700 £/ton
Total costs: 2670 £/ton
Negotiation basis: 1030 £/ton
Mark ups or lower price to increase market share
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 11
Question 5: What is Axeon‘s corporate strategy?
• diversification into headquarter and 3 subsidiaries
• related business (producing chemical products)
• Manager are free to decide with products they offer
→ Rivalry between products within company
• Managers are encouraged to develop new products and establish plants → investment in their own markets must be justify
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 12
• interdependence among the subsidiaries should be high
• competition between subsidiaries
→ not effective
• Managers has to communicate with each other to avoid business competition
→ Ian takes no active part in the discussion between the managers, because they have to unify each other
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 13
Question 6: What do you believe to be the critical success factors in Axeon?
Axeon:
• Effective and efficient positioning of subsidiaries on the market
• Hiring of capable managers for the subsidiaries (PC)• Maximization of economic profit • Enhancing market share• Entering new markets
The Axeon Case
By acquisition
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 14
Hollandsworth Proposal:
Reaching the Target of 400 tons sold AR-42 per year• All calculations of the proposal are based on this• Without it payback time will never be reached• New project else wouldn‘t fit Axeons yield demands• No need for an additional brand with fewer sellings
New Plant must be able to produce the aimed amount AR-42• Oosterling brings up problems in the Dutch plants• Even experienced workers have problems• Dutch workers could help their UK colleagues
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 15
Question 7: What do you believe are the key recurring activities in Axeon?
• annual planning and budgeting process
• profit sharing for the subsidiary managers
• transfer price negotiation
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 16
Question 8: Discuss Axeon in terms of its centralisation / decentralisation.
Defintion Centralisation:
• Decision making• Most decisions are made by the top management• Top managers have reputation of being “detail
oriented”• Managers often tend to reserve for themselves many
of the most critical decisions that fall within their authority
• Impossible to centralize all critical activities
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 17
Basically:
• Style of Axeon’s top level managers was to emphasize a high degree of decentralisation -> Subsidiary managers had considerable autonomy
• Little attempt to rationalize the company production• Mr Ian Wallingford had considerable freedom
after the Board-Meeting all these thesis were satisfied
Dispute between Parent and Subsidiary
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 18
Influence of: • Report of Director of Manufacturing• Report of the vice president finance
Result:
• The Point that Mr. Leuven has the power to decide if the project will be allowed or not, shows a high grade of centralisation in the company
• However there is a big difference between the predetermine company structure and the actual practise
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 19
Considering advantages and disadvantages:
• Pro:
– To satisfy the company’s philosophy (decentralisation)– Keep the worker-motivation on a high level– Mr. Ian Wallingford is very important for the company
because of his experiences, knowledge and abilities– To promote new ideas and innovation– extension of the company
Question 9: What should Mr van Leuven do?
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 20
• Contra:
– Financial point believing in the knowledge of VP Finance and Director of Man.
– Overhead costs and variable costs too high– Cheaper possibility is available– Plant in Netherlands is max. on 60% of capacity
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 21
• Result:
Mr Leuven has to decide what is more important:
Following the companys strategy of decentralization, he should build up a plant in UK
Regarding the actual capacity used, he should produce in Netherlands.
If he decides so, he has also to change the company‘s philosophy, due to authenticity
The Axeon Case
Atrops, Schäfer, Schmidt,Stäcker, Trebing
Behavioural Management Control
21. April 2023 22
Our Recommendation:
• Considering probably difficulties of production start• Using of free capacity in Netherlands and• Interrest of company development due to decentralized
philosophy
• First enlarge production in NL and export to UK• While building plant and ramp up production in UK
carefully
Win-Win-Situation
The Axeon Case