OTTAKRINGER

Ottakringer is one of the biggest brewing manufacturer in

AUSTRIA

Members of group B0815: David GIEFING Florian HAGMAIRDavid SCHEFFELPhilipp ZWICKLHUBER

Ottakringer

Managment Control SystemThe most likely used system in the

Ottakringer brewery: Result control

To controll the output of each boiler is enough to know for the managment about the efficency in the company!!!!

Result controls involve:

•Establihing results mesasures that minimize undesirable behaviour

•Establishing performance targets

•Measuring performance

•Providing rewards or punishment

Ottakringer

Planning for the future

The beer consum will DECREASE!

Corrective measures

Use the EM 2008 for advertising purpose

Make beer more trendy for younger people

Different beer flavours

Carried out measures

Adaption of the 16er Blech especially for younger people

Sponsoring of a famous football club

Funny games at opening a beer bottle (the Pflop game)

Ottakringer

2007

108 lper capita

Forecast for 2015

90-100 l per capita

Two-stage allocation process

Ottakringer

Ottakringer

fixed costs

Salaries 11800000

Depriciation 5210000

Rent 1100000

Consulting 600000

Ad 3200000

miscellaneous 3700000

variable costs

material 26780000

maintanance 1000000

recycling 600000

beer tax 11300000

transport 5900000

total variable costs

45580000

variable costs per unit

61,97144799

units produced 735500

total Turnover 75100000

turnover per unit 102,10741

assumptions

capacitz per boiler 160000

semi fix/ boiler 3402000

Semi-fix costs 17010000

Fixed costs 8600000

( )

0 25610000€

102,11€ / 61,97€ /

638016

........ _ cos

.........var _ cos

..

......

.......... _ _ _ /

NP Px a bx

Contr P b

NP ax

Contr

xhl hl

x hl

a fixed ts

b iable ts

Contr Contribution

NP Net profit

x Number of units produced sold

Estimates of sales demand at different price levels

Price Units of demand Total revenue marginal revenue

118 350000 41300000  

114 450000 51300000 100

110 550000 60500000 92

106 650000 68900000 84

102 750000 76500000 76

98 850000 83300000 68

94 950000 89300000 60

90 1050000 94500000 52

86 1150000 98900000 44

82 1250000 102500000 36

Estimate of total costs at different volume levels

Price Units of demand Total costs marginal costs

118 350000 47300007  

114 450000 53497152 61,97

110 550000 59694296 61,97

106 650000 65891441 61,97

102 750000 72088586 61,97

98 850000 78285731 61,97

94 950000 84482876 61,97

90 1050000 90680020 61,97

86 1150000 96877165 61,97

82 1250000 103074310 61,97

Estimate of profits at different outputlevels

Price Units of demand Total revenue Total costs Profit

118 350000 41300000 47300006,8 -6000007

114 450000 51300000 53497151,6 -2197152

110 550000 60500000 59694296,4 805704

106 650000 68900000 65891441,2 3008559

102 750000 76500000 72088586 4411414

98 850000 83300000 78285730,8 5014269

94 950000 89300000 84482875,6 4817124

90 1050000 94500000 90680020,4 3819980

86 1150000 98900000 96877165,2 2022835

82 1250000 102500000 103074310 -574310

Ottakringer

stay at current amount of production

  probability Outcome weighted outcome A-Ax (A-Ax)^2 (A-Ax)^2*p

market grows 0,6 4500000 2700000 400000 1,6E+11 9,6E+10

market stagnates 0,3 4000000 1200000 -100000 1E+10 3E+09

market decreases 0,1 2000000 200000 -2100000 4,41E+12 4,41E+11

  Expected value 4100000 Summ 5,4E+11

        standart deviation 734846,92

increase production

  probability Outcome weighted outcome A-Ax (A-Ax)^2 (A-Ax)^2*p

market grows 0,6 6000000 3600000 1900000 3,61E+12 2,166E+12

market stagnates 0,3 2000000 600000 -2100000 4,41E+12 1,323E+12

market decreases 0,1 -1000000 -100000 -5100000 2,6E+13 2,601E+12

  Expected value 4100000 Summ 6,09E+12

        standart deviation 2467792,5

decrease production

  probability Outcome weighted outcome A-Ax (A-Ax)^2 (A-Ax)^2*p

market grows 0,6 3000000 1800000 50000 2,5E+09 1,5E+09

market stagnates 0,3 3000000 900000 50000 2,5E+09 750000000

market decreases 0,1 2500000 250000 -450000 2,03E+11 2,025E+10

  Expected value 2950000 Summ 2,25E+10

        standart deviation 150000We are trying to explain the decission tree with a simple excample: We have the decisions of increase, decrease, or stagnate the production, and the market also reacts, by a higher, lower, or an equal demand.

Ottakringer

How to increase the production?

• There are two options to increase the production:– To take over a smaller competitor (option A):fast increase in production, but not very efficient– To add a new production facility (option B):efficient production, but more time is needed to

build it

Comparison of the two options with a 8 year horizon

Option Year 0[mio. €]

Year 1[mio. €]

Year 2[mio. €]

Year 3[mio. €]

Year 4[mio. €]

Year 5[mio. €]

Year 6[mio. €]

Year 7[mio. €]

Year 8[mio. €]

NPV at 9%[mio.€]

IRR

A -15 2,9 2,9 3,0 3,0 3,1 3,1 3,2 3,2 1,76 12,02%

B -8 -6 3,2 3,2 3,4 3,4 3,5 3,5 3,6 2,09 12,73%

8

0 (1 )nn

n

CFNPV

r

• Use of NPV and IRR:

8

0

0(1 )

nn

n

CF

IRR

Option B is to prefer!

A new production facility should be build in order to increase the output