AXEONA case analysis, group A1

Maria Therese Björk

Alexander EklöwJakob Nettelbladt

Sara Valentin

QUESTION ONE:

What do you feel about the initial analysis? Was there, in your opinion, anything wrong with it?

ANSWER From Ian’s and Hollandsworth’s perspective there is

nothing wrong with the analysis, a local perspective has been used instead of a global one from Axeon’s point of view.

There is a problem however that Hollandsworth does not include Axeon’s capabilities in their strategic planning in general.

Ian has spotted a potential market in the U.K. and wants to develop it.

The board of directors sees the opportunity from a global perspective and wants Axeon to exploit it.

A weakness in the presentation is the vague facts for how to exploit half the market in the U.K.

Another weakness is that Ian counts on being able to learn the manufacturing processes needed fast, which may not be realistic.

QUESTION TWO:

Is construction of the new factory in the U.K. in the best interest of Axeon?

ANSWER Expanding the factory in the Netherlands would be

more profitable, from Axeon’s point of view. Currently all the production expertise is located in the

Netherlands.

Although building the factory in the U.K. would be a way of spreading the risks it does not outweigh the economic benefits of expanding Axeon’s current factory.

Also, the potential market in the U.K. may be dependent on having the factory in the U.K.

QUESTION THREE

Why did Mr. van Leuven behave as he did?

ANSWER Mr. van Leuven was probably carried away by the

positive presentation made by Ian. It was Mr. van Leuven’s staff that realized the

alternative solution of expanding the existing factory in the Netherlands.

QUESTION FOUR

Discuss what transfer price should be established if AR-42 is supplied from the Netherlands to the U.K.

ANSWER The lowest transfer price possible is £2,155 per ton

during the first five years due to depreciation. The years following this five year period, the lowest

possible transfer price is £2,060 per ton. However, these prices would mean no profit for the

factory in the Netherlands, therefore we propose a higher transfer price since both companies are profit centres.

We suggest a 30 percent mark-up, which means a transfer price of £2,800 per ton. This creates profit for both parts, with a slight overweight to Axeon since they take a lot of the risk.

QUESTION FIVE

What is Axeon's corporate strategy?

ANSWER Axeon’s corporate strategy is to make money globally,

and thereby create value to its shareholders. This is achieved by using their size as a company and

through decentralisation in order to acquire local knowledge.

QUESTION SIX

What do you believe to be the critical success factors in Axeon?

ANSWER To identify the market needs. To take advantage of the globalized nature of the

organisation. To have regular meetings between the different sub

companies in Axeon in order to secure their overall goals. The lack of this kind of meetings is partially why the AR42

project got so complicated.

QUESTION SEVEN

What do you believe are the key recurring activities in Axeon?

ANSWER Investment decision making Problem solving Teambuilding Personell development Evaluating new markets Research

QUESTION EIGHT

Discuss Axeon in terms of its centralization / decentralization.

ANSWER The global profit is of higher importance than the

expansion of the local knowledge. The company uses decentralization to collect local

knowledge but in this case the global profit was of more importance, and the local knowledge was in fact in the Netherlands.

QUESTION NINE

What should Mr. van Leuven do?

ANSWER Expand the factory in the Netherlands rather than

build a new one in the U.K. Increase the number of cross functional and multi

national meetings in Axeon. Use Ian’s analytic skill in Axeon globally, perhaps by

appointing him a place in the board of directors.