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Behavioural Management Control

Behavioural Management Control. Seminar Case study : Axeon N.V. Group C6 Isabelle Allais , Sarah Beucler , Raphaëlle Brustel , Camille Jandrain and Warren Oakes. #1: Feelings about the initial analysis (1). Ian: Capable manager Good knowledge of UK market

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Behavioural Management Control

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  1. Behavioural Management Control Seminar Case study: Axeon N.V. Group C6 Isabelle Allais, Sarah Beucler, RaphaëlleBrustel, 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) • Initial analysis: • Approved by UK experts • Very complete • No overestimated profits • 6 months spent developing it • Falls within the corporate strategy • But: • Conflict with the Netherlands

  4. #2: Interest for Axeon to build a new plant in UK? (1)

  5. #2: Interest for Axeon to build a new plant in UK? (2)

  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. #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: • 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 otherprojects

  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 situationImplement Cultural controls

  17. Thank you for your attention

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