MA DB notes
Case: DEUTSCHE BRAUEREI
Assignment:
Prepare a management report (roughly 2,500 words) covering at a minimum the following issues:
1. What accounts for Deutsche Brauerei’s (DB) rapid growth in recent years? What strategic choices were made?
2. What is the credit policy for DB for distributors in the Ukraine? Why is it different from other sales? Is it appropriate (examine the business models in both instances).
3. Why does this profitable firm need increasing amounts of debt?
4. What should Greta do with respect to: the proposed raise for Pinchuk, the quarterly dividend and the financial plan for 2001?
WHO:
Greta Schweitzer; MBA degree and finance experience.
New member of the Board of Deutsche Brauerei, a Schweitzer Family Business
“Uncle” Lukas Schweitzer (57); currently CEO at DB
Oleg Pinchuk; Sales & Marketing manager. Linking pin and responsible for DB sales & operations in Eastern Europe, mainly/only Ukraine
WHAT:
Board meeting with 3 topics:
1. Approval of the 2001 financial budget
2. Declaration of the quarterly dividend
3. adoption of a compensation scheme for Oleg Pinchuk
WHY:
Why does this profitable company need to aggressively
Is the aggressive penetration in the Ukraine so wise
Does it pay off in profit or more dividend
WHEN:
January 2001 in 1994 new equipment after fire late 1998 expansion in Ukraine market (following the dissolution of U.S.S.R.)
Some findings (Sander)
Current production facility is almost maxed out
In 2000 company sold 1.173 million HL
Total production capacity = 1.2 million HL
Investment necessary or otherwise undercapacity
Bad debt % of only 2% in forecast
Extended credit (increase in acc receivable) & stocking of Inventories on behalf of Ukraine distributors (increase in inventories) will increase cash flow problem
Breakeven point is very high in 2000 b-e @ 938,799 HL
If sales drop or if price drops (in € → eg depreciation of hryvna) >> possible to run with
Assignment:
Prepare a management report (roughly 2,500 words) covering at a minimum the following issues:
1. What accounts for Deutsche Brauerei’s (DB) rapid growth in recent years? What strategic choices were made?
2. What is the credit policy for DB for distributors in the Ukraine? Why is it different from other sales? Is it appropriate (examine the business models in both instances).
3. Why does this profitable firm need increasing amounts of debt?
4. What should Greta do with respect to: the proposed raise for Pinchuk, the quarterly dividend and the financial plan for 2001?
WHO:
Greta Schweitzer; MBA degree and finance experience.
New member of the Board of Deutsche Brauerei, a Schweitzer Family Business
“Uncle” Lukas Schweitzer (57); currently CEO at DB
Oleg Pinchuk; Sales & Marketing manager. Linking pin and responsible for DB sales & operations in Eastern Europe, mainly/only Ukraine
WHAT:
Board meeting with 3 topics:
1. Approval of the 2001 financial budget
2. Declaration of the quarterly dividend
3. adoption of a compensation scheme for Oleg Pinchuk
WHY:
Why does this profitable company need to aggressively
Is the aggressive penetration in the Ukraine so wise
Does it pay off in profit or more dividend
WHEN:
January 2001 in 1994 new equipment after fire late 1998 expansion in Ukraine market (following the dissolution of U.S.S.R.)
Some findings (Sander)
Current production facility is almost maxed out
In 2000 company sold 1.173 million HL
Total production capacity = 1.2 million HL
Investment necessary or otherwise undercapacity
Bad debt % of only 2% in forecast
Extended credit (increase in acc receivable) & stocking of Inventories on behalf of Ukraine distributors (increase in inventories) will increase cash flow problem
Breakeven point is very high in 2000 b-e @ 938,799 HL
If sales drop or if price drops (in € → eg depreciation of hryvna) >> possible to run with