Ab Thorsten Case

Topics: Net present value, Internal rate of return / Pages: 18 (4264 words) / Published: Jun 5th, 2011
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Table of Contents
Executive Summary 3
Company Overview 3
Initial Proposal of XL-4 3
XL-4 Opposiation 4
Strategic Planning and Decentralization of Profit Centers 4
Goal Congruence and Management Control System 5
Conclusion 8
Definitions………………………………………………………………….……………………………………………………………………………8
Case Questions………………………………………………………………………………………………………………………………………10
References …………………………………………………………….……………………………………………………………………………..19
Class Discussion Points …………………………………………. .…………………………………………………………………………….19
Multiple Choice Questions ……………………………………………………………………………………………………………………19
References…………………………………………………………………………………………………………………………………………….22

Executive Summary

Company Overview

AB Thorsten is a subsidiary of Roget S.A., one of the largest industrial companies in Belgium. They were acquired in 1972 by Roget and for the following four years sales rose and fell between Skr. 5M and Skr. 7M. Roget had several options; they could either sell the company or completely change the management team. They opted for the latter by hiring a new managing director in Anders Ekstrom, a graduate of the Royal Institute of Technology. Mr. Ekstrom quickly increased sales to over Skr. 20M by utilizing his nearly 16 years of experience in the industry. Roget was very satisfied with his performance and the profits he helped the company achieve (Anthony, Govindarajan. 2007).

Initial Proposal of XL-4

Ekstrom proposed that Thorsten construct a new manufacturing plant in Sweden for the production of a product. This product, called XL-4, was a “starch-based, adhesive chemical used in drying paper” along with the adaptation of customer dryers, would realize drastic cost savings for their clients. Ekstrom supposed that he could develop a market in Sweden as large as Roget’s current worldwide market for XL-4. Currently Roget



References: • Anthony, Govindarajan. Management Control Systems. 12th edition 2007 • Ross, Westerfield, Jaffe. Corporate Finance.9th edition 2010 • http://en.wikipedia.org/wiki/Net_present_value • http://hspm.sph.sc.edu/Courses/Econ/invest/invest.html • http://www.ecosystemvaluation.org/market_price.htm#advant • http://www.investopedia.com/dictionary

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