Behavioural Management Control Edris Nazary, Julius Lindner - Group D1

1. What do you feel about the initial analysis? Was there, in your opinion, anything wrong with it?  only considers issues that concerns the subsidiary  lack of transparency in terms of fix costs  sub optimization  sells forecast too optimistic

2. Is construction of the new factory in the UK in the best interest of Axeon? Producing in the Netherlands and England: EnglandNetherlands Units: (600*7years) Variable Costs: Total Variable Costs: Total variable costs Fixed costs Netherlands X (( p.a.)*7) Fixed costs EnglandY Total Costsx+y Production only in Netherlands: Netherlands Units:2500(UK)+4200 Variable Costs:2500* *1860 Total Variable Costs: Total variable costs Fixed costs NetherlandsX Fixed costs England0 Total Costs X Saving for the whole corporation when choosing the production in the Netherlands only: Production in the Netherlands and England x+y Production only in the Netherlands X SavingY Y should be around p.a. according to the data data from the Netherlands. This means it would be *7= of fixed costs Therefore we see a clear advantage in leaving the production facilities in the Netherlands.

3.Why did Mr van Leuven behave as he did?  appreciates the hard work and the management skills of Mr. Ian Wallingford  Mr. Wallingfords did a impressive presentation  feared to loose importance as location in the Netherlands (Ar-42 is key- important for the company)

4. Discuss what transfer price should be established if AR-42 is supplied from the Netherlands to the UK?  The price needs to be between: Minimum Price: 2060 pounds (inc. shipping) and the selling price 3700 pounds.  According to exhibit 3 the net cash flow will be around 400 per t. This means that we suggest that the reasonable price should be below 3300 pound.

5. What is Axeon's corporate strategy?  Sustainable growth through decentralization with using of synergy effects between the different subsidiaries.  Axeon also intends to take advantage of the geographical expertise in terms of logistics in the assigned territories.

6. What do you believe to be the critical success factors in Axeon?  product development - user friendliness of storing for AR-42  global selling infrastructure - leverage effects on fixed costs, nothing is being sold in UK  organization structure - a too high degree of decentralization (Subsidiaries have the option to produce products which compete with those of Axeon factories in the Netherlands).

7. What do you believe are the key recurring activities in Axeon?. - keeping production efficiency high - Spreading out in new territories, which can bring additional profit - An optimization in logistics and in the organizational structure (which requires a higher degree of centralization)

8. Discuss Axeon in terms of its centralisation / decentralisation.. In general there is a decentralized structure. Operational site of the corporation is handled decentralized. to avoid sub optimization the CEO tries to treat big projects centralized subsidiaries will loose authority in management

9. What should Mr van Leuven do?. Use his power to produce in the Netherlands discuss with Mr. Wallingford how they can work more efficient in future (avoid sub optimazation) Restructuring some parts of the organization