1. Behavioural Management Control
Seminar
Case study: Axeon N.V.
Group C6
Isabelle Allais, Sarah Beucler, Raphaëlle Brustel, Camille Jandrain and Warren Oakes

2. #1: Feelings about the initial analysis (1)
Ian:
Capable manager
Good knowledge of UK market
Experience of profit centre manager
Company: fairly decentralised system
Managers: lot of scope to individually explore business opportunities

3. #1: Feelings about the initial analysis (2)
Approved by UK experts
Very complete
No overestimated profits
6 months spent developing it
Falls within the corporate strategy
But:
Conflict with the Netherlands
The Netherlands want the benefit, are afraid by the possibiliy that the others can be successful

4. #2: Interest for Axeon to build a new plant in UK? (1)
PROS
CONS
Being on the UK market makes it flexible
More profit and less investment if production in the Netherlands
Still profitable after 7 years
Market penetration still possible
Morale problem + lack of autonomy and trust in upper management if not placed in the UK
Advantages of Production in Netherlands (longer production runs, lower set-up costs, larger raw materials)

5. #2: Interest for Axeon to build a new plant in UK? (2)
PROS
CONS
Ways to finance in UK and support of UK board members
Experience of the difficult process of porduction in the Netherlands
Competition breeds innovation
Money coming into English banks + jobs and a greater image of the company in England
More security producing it in the Netherlands, less risky concerning investment
Exceeds the 12% threshold for investment yield

6. #3: Explanation of Mr van Leuven behaviour (1)
First meeting:
Do not know the details “on the floor”
Believe in manager (Theory Y)
Proposal already approved by the Hollandsworth board meeting

7. #3: Explanation of Mr van Leuven behaviour (2)
Second meeting:
Does not want conflict or to be involved:
Ian: been in the company for a few years
Netherlands people: been in the company longer
‘Power play’ & Theory Z
Range of views & more knowledge
Change of balance within the company

8. Different possibilities:
#4: Which transfer price if AR-42 supplied from the Netherlands to the UK? (1)
Situation:
no financial structure in place for ‘global accounts’
Different possibilities:
Negotiated transfer prices:
not a good idea: bad relations between Ian, Oosterling and Backler
Ian not as influential in the company as the other managers

9. #4: Which transfer price if AR-42 supplied from the Netherlands to the UK? (2)
Full cost transfer prices:
not incentive for the UK and the Netherlands
Market-based transfer prices:
not a good option: the transfer costs from the Netherlands to the UK not include

10. #4: Which transfer price if AR-42 supplied from the Netherlands to the UK? (3)
Dual-rate transfer prices:
Difficult to implement
Marginal cost (plus a fixed lump-sum-fee) transfer prices:
good solution for both sides
the Netherlands: pay for the variable costs
the UK: still make profits
fair compromise:
the Netherlands: reward for their production
the UK: generate profits

11. #5: Axeon's corporate strategy
Unrelated interdependence corporate strategy
high decentralisation
no focus on the core business
little communication
bonuses
key performance indicators
subsidiaries are autonomous
Dutch Production in a related diversification:
leading to problems with transfer prices etc.

12. #6: CSF in Axeon Money: Quality: Product or service development:
revenue and growth
Quality:
essential for the chemical industry
Product or service development:
increasing business and attracting new customers in different markets.
Ian works on other projects

13. #7: KRA in Axeon Distributing Promoting Manufacturing
Maintaining quality and value (training people)
Allocating resources could be one of the KRA

14. #8: Decentralisation in Axeon
Relative autonomy
Individual reward incentive based system

15. #8: Centralisation in Axeon
Approval needed for product and project development
Problems in interrelations
Producing the good in the Netherlands

16. #9: What should Mr Van Leuven do?
Involve the company as a whole
Schedule a board meeting with all the subsidiaries
Ask for an external assessment on the productivity
Adapt the decision to the UK situation Implement Cultural controls

17. Thank you for your attention