Deutsche Brauerei - 1416 Words

Problem As the new member of the Deutsche Brauerei Board of Directors I am faced with analyzing three decisions facing the Board and recommending a course of action. The main problem is to determine if the 2001 and 2002 financial forecast and credit policies implied within are a viable representation of anticipated financial condition. On a secondary basis, the following issues should also be analized: * Is the 75% dividend payout ratio justifiable considering the firm’s business plan? * Does the Sales and Marketing Manager deserve an increase in compensation based on his sales results? Steps for Analysis 1. Analyze the financial forecast for 2001 and 2002 2. Analyze Pinchuk’s ROI calculation 3. Review the†¦show more content†¦The affect on the ROI calculation is distinctly lower than Pinchuk’s estimate [see exhibit]. Step 3. Oleg Pinchuk has taken the initiative to completely change the credit standards of the firm in order to accommodate the needs of the Ukraine distributors. The credit policy for our Western Germany distributors is 2% 10 net 40. We maintain a low accounts receivable balance with modest year over year increases. In an effort to bring aboard Ukraine distributors in order to start the eastward expansion, Pinchuk initiated a relaxed credit policy of 2% 10 net 80. Even with these friendly standards, the 5 distributors are rarely able to pay us back in time and Pinchuk is considering an even more flexible policy of 2% 10 net 90. Loosening the standards for clients who are already struggling to pay in greatly relaxed environment is not a good idea. In fact, now that there is business established in the Ukraine, it is time to reign in the credit policy to bring it in line with that of the West. Pinchuk has a lot of faith in his new distributor network and tightening the credit policy will squeeze out the ones he was wrong about. This will result in fewer sales but will reduce risk by avoiding granting credit to unstable businesses. There is a reason why the banks in the Ukraine will not lend. Step 4. Along with the dividend policy, the philosophy of the entire firm needs to beShow MoreRelatedDeutsche Brauerei2124 Words   |  9 Pagesaccounts for Deutsche Brauerei’s rapid growth in recent years? Specifically, what policy choices account for this success? There are several factors that lead to rapid growth of Deutsche Brauerei. To begin with, Deutsche Brauerei itself has succeed in Germany by winning quality awards consistently over the years. Secondly, After a fire destroyed the manufacturing plant in 1994, the more efficient equipment was purchased. It was capable of increasing the brewery’s potential output. Once Deutsche BrauereiRead MoreDeutsche Brauerei3150 Words   |  13 PagesIntroduction Deutsche Brauerei was founded in 1737 and has been in the Schweitzer family for 12 generations. The company produces quality beer and has won awards over the years and is owned entirely by 16 uncles, aunts and cousins. In 1998, Deutsche Brauerei expanded into Ukraine. Despite the Russian debt crisis, the popularity of Deutsche’s beer increased its sales greatly and within three years of launch, Ukrainian consumers accounted for 28% of Deutsche’s sales. Furthermore, most of the unitRead MoreDeutsche Brauerei4451 Words   |  18 Pages | | | This analysis identifies the break-even volume, where revenues just equal total costs and Deutsche Brauerei recovers all its fixed cost at the break-even volume sale. Sales above Break-even Point will bring profits for the company. Margin of Safety (volume) = Total volume Sold – Breakeven volume Read MoreThe Strategy Of The Deutsche Brauerei Essay902 Words   |  4 Pagesevaluating the Deutsche Brauerei, I am giving my recommendation to Greta Schweitzer on the January 2001 Board of Directors meeting agenda. The items we will be focusing are †¢ The approval of the 2001 financial budget. †¢ The declaration of quarterly dividends. †¢ The compensation scheme of Oleg Pinchuk. On the 2001 financial budget, Deutsche Brauerei calls for a EUR 7 million investment in plant and equipment to be built in the Ukraine. I believe this investment will not benefit Deutsche Brauerei for theRead MoreDeutsche Brauerei Essay example2711 Words   |  11 Pages(2) declaration of the quarterly dividend, and (3) adoption of an incentive compensation plan for the marketing manager. She has to evaluate the past financial performance of company and review the strategies about credits and inventories. Deutsche Brauerei produced the quality beers over the years. Its net sales and profit have been incredibly growing in recent years. There are many of factors explained their growth. One factor is that they acquired the equipment in 1994 which are efficiency improvementRead MoreDeutsche Brauerei As A Brewing Company Essay1594 Words   |  7 Pages Deutsche Brauerei is a brewing company that produces two different kinds of beer, dark and light. The brewery is located in a small village just outside of Munich, Germany. Their brewing techniques have consistently won several quality awards over the years. Deutsche was founded in 1737 by Gustav Schweitzer, whose picture is printed on the label of each bottle of beer that Deutsche sells. The company has been in the family for 12 generations and currently is collectively owned by 16 aunts, unclesRead MoreDeutsche Brauerei Case778 Words   |  4 PagesDeutche Brauerei is a family run German Beer Company. It is owned entirely by 16 uncles, aunts, and cousins from the Schweitzer family. The Schweitzers are brewers, not marketers or finance people, so they have hired Oleg Pinchuk to help with the marketing aspects and Greta Schweitzer, Lukas Schweitzer’s niece, to give financial expertise. The company’s agenda includes: approval of the 2001 financial budget, declaration of the quarterly dividend, and adoption of a compensation scheme for Oleg PinchukRead MoreEssay on Deutsche Brauerei Instructor Case Solution6087 Words   |  25 PagesDeutsche Brauerei Teaching Note Synopsis and Objectives A newly-appointed director of a small German beer brewer must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 2001, (2) declaration of the quarterly dividend, and (3) adoption of an incentive compensation plan for the marketing manager. The student’s task is to evaluate the past and prospective financial performance of the company and to critique its liberalRead MoreSomething5644 Words   |  23 Pagesreceivables and inventory. †¢ Illustrate some of the challenges of doing business in an emerging market. Suggested Questions for Advance Assignment to Students 1. What accounts for Deutsche Brauerei’s rapid growth in recent years? Specifically, what policy choices account for this success? 2. What is Deutsche Brauerei’s credit policy toward its distributors in Ukraine? Why is it different from the policy toward its other distributors? Is the company’s credit policy appropriate? Is it profitableRead MoreDeutsche2679 Words   |  11 PagesValue, 2004; FedEx Corp vs. United Parcel Service Inc. 5. A Thoughtful Forecaster 6. The Financial Detective 8. The Body Shop International Plc 2001: An Introduction to Financial Modeling 10. Kota Fibres Ltd. 11. Deutsche Brauerei 13. Best Practices in Estimating the Cost of Capital: Survey Synthesis 14. Nike, Inc.: Cost of Capital 15. Teletech Corporation, 2005 16. The Boeing 7E7 17. The Investment Detective 19. Target Corporation