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AXEON CASE STUDY. Group C5 Erik Seeman 800117-0136. Initial Analysis. No alternate plans or worst case scenario No analysis of what the production costs would be in the Netherlands, for export to the UK Expansion/export plans. - PowerPoint PPT Presentation
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Erik Seeman
AXEON CASE STUDY
Group C5Erik Seeman
800117-0136
Erik Seeman
Initial Analysis
No alternate plans or worst case scenario
No analysis of what the production costs would be in the Netherlands, for export to the UK
Expansion/export plans
Erik Seeman
Is construction of the new factory in the UK in the best interest of Axeon? General analysis:
No, because of:
Profit analysis
Risk
Yes, because of:
Showing trust
Internal competition
Easier expansion
Erik Seeman
Why did Mr van Leuven behave as he did?
No clear MCS Not driven by incentive programs A “hot potato” that needs a more
thorough analysis
Erik Seeman
Transfer price if AR-42 is supplied from the Netherlands to the UKMarket price Marginal cost
Full cost Full cost + mark-up
Negotiated Dual Pricing
Erik Seeman
What is Axeon's corporate strategy?
Decentralisation
Related diversification
Specialisation
Expansion
Erik Seeman
Critical success factors in Axeon
Establish a transfer-pricing system which encourages growth
Establish a more diverse MCS
Establish a better bonus system
Erik Seeman
Key recurring activities in Axeon
Manufacturing Sales Marketing R&D Finance Administration
Erik Seeman
Centralisation / decentralisation
Factors supporting decentralisationLocal information (by subsidiaries)Constrained upper management timeGreater need for training of lower-level managersFeasible incentive costsProduction or service processes that require little coordination across organisational unitsLow level of centralised information needed for local units to function
Common TrademarkBonus Programme
Erik Seeman
What should Mr van Leuven do?
Conclusion: Don’t build the new factory
Change bonus system Apply cultural control in order to make
the subsidiaries work for the good of the company
Introduce a common trademark