Falcon Imc
Falcon Inc
Gunjan Kothari(27)
Global Appliance Industry: A Glimpse
A consolidated industry with less than 10 companies controlling 50% of the total market. Slow growth pace hence making competition tougher Three major segments: Low price, Mid price, Very high price Major players:Electrolux,G.E,Maytag,Whirlpool etc.
Falcon Inc: A Brief Profile
A Publicly held U.S Co A Global player in home appliance industry Wide range of products including refrigerators, kitchen appliances, washers, dryers etc Presence in all three segments low price,mid price and high price Three foreign subsidiaries in Mexico,Denmark & Japan
Falcon Inc: A Global presence
Falcon Inc Subsidiaries
Mexico Product Refrigerators
Denmark High priced kitchen Appliances
Japan Low cost laundry machines Japan U.S Low cost
Production Sales Differentiator
Mexico Mexico Growing demand
U.S Denmark No competition
Question 1 Under the current performance-evaluation system (PES) at Falcon, how would you assess the financial performance of the division managers in Mexico, Denmark, and Japan? Which manager should be awarded the highest bonus, and which should be awarded the lowest bonus?
Current PES: Each Subsidiary is responsible for budgeted US Dollar profit.
Year 2004 Budgeted Profits( US $ ) Actual profits ( US $ ) Difference
Mexico 14,910,000
Denmark 8,282,640
Japan 20,420,825
14,937,721
9,691,788
17,839,177
27,721
14,09,148
(2,581,648)
Highest Bonus
Lowest Bonus
Question 2 Using the approach outlined in Appendix A, calculate the nominal and real changes of exchange rates for Mexico, Denmark and Japan during 2004? In light of your calculations what revisions if any would you make in the 2004 dollar budgets at the time of tracking them? How would you assess the financial performance of the three country managers of Falcon? Which manager should be awarded the highest bonus? Why? Evaluate appropriateness of the three country
Gunjan Kothari(27)
Global Appliance Industry: A Glimpse
A consolidated industry with less than 10 companies controlling 50% of the total market. Slow growth pace hence making competition tougher Three major segments: Low price, Mid price, Very high price Major players:Electrolux,G.E,Maytag,Whirlpool etc.
Falcon Inc: A Brief Profile
A Publicly held U.S Co A Global player in home appliance industry Wide range of products including refrigerators, kitchen appliances, washers, dryers etc Presence in all three segments low price,mid price and high price Three foreign subsidiaries in Mexico,Denmark & Japan
Falcon Inc: A Global presence
Falcon Inc Subsidiaries
Mexico Product Refrigerators
Denmark High priced kitchen Appliances
Japan Low cost laundry machines Japan U.S Low cost
Production Sales Differentiator
Mexico Mexico Growing demand
U.S Denmark No competition
Question 1 Under the current performance-evaluation system (PES) at Falcon, how would you assess the financial performance of the division managers in Mexico, Denmark, and Japan? Which manager should be awarded the highest bonus, and which should be awarded the lowest bonus?
Current PES: Each Subsidiary is responsible for budgeted US Dollar profit.
Year 2004 Budgeted Profits( US $ ) Actual profits ( US $ ) Difference
Mexico 14,910,000
Denmark 8,282,640
Japan 20,420,825
14,937,721
9,691,788
17,839,177
27,721
14,09,148
(2,581,648)
Highest Bonus
Lowest Bonus
Question 2 Using the approach outlined in Appendix A, calculate the nominal and real changes of exchange rates for Mexico, Denmark and Japan during 2004? In light of your calculations what revisions if any would you make in the 2004 dollar budgets at the time of tracking them? How would you assess the financial performance of the three country managers of Falcon? Which manager should be awarded the highest bonus? Why? Evaluate appropriateness of the three country