...Case Brief: Zumwald AG By Yangzhaochu CHEN Zumwald AG is a medical equipment manufacturer headquartered in Cologne. Its total annual revenues slightly exceed 3 billion EUR and it conducts decentralized management. Performance was evaluated and management bonus were assigned based on each division’s achievements. There were 3 divisions involved: 1. The Imaging Systems Division (ISD) 2. The Heidelberg Division (Heidelberg) 3. Electronic Components Division (ECD). The dispute arose after ISD tried to commercialize a newly designed a new ultrasound imaging system, called the X73 with advantages in processing speed, cost, and saving- space. Heidelberg participated in the design, but Heidelberg was compensated for the full cost of the time its employees spent on this project. The manager of ISD then wanted to outsource display unit at lower price from Display Technologies Plc instead of internally sourcing from the Heidelberg. The manager of Heidelberg complained about not getting the order to the managing director of the company. And the director arranged a meeting to resolve the dispute. The problem in this case is that decentralized management motivates managers make decision in the best interests of their divisions but may not be in the best interest of the company as a whole. In this case fixed costs of Heidelberg and ECD are irrelevant since the 2 divisions were not operating at full capacity. | Outsource | Internal Source | | Outsource | Internal Source | Revenue...
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...Session 4 assignment: Zumwald AG First of all we need to understand the context and the characteristics of this form, in order to take the best decision. For the information we have, the main characteristics of our company that are important to take a decision in this case are: * Highly descentralized basis / managers of each division have considerable autonomy * Bonuses assigned based on each division’s achievement of budgeted targets for ROIC and sales growth * Partly vertically integrated / Division managers were allowed to source their components externally * 3 operating divisions involved The main objective when we take the decision is to maximize the benefit of the whole company, but we have to take into account other arguments like the autonomy of the managers and their motivation, the success of this new product… At this point, we would like to analyse the impact for the whole company in both cases: external purchasing vs. internal purchasing (we have to take with contributions because fixed costs are irrelevant). External purchasing scenario: | ECD | Heidelberg | ISD | Zumwald | Turnover | - | - | 340,000 € | 340,000 € | Variable Costs | - | - | 26,300 €72,000 €100,500 € | 26,300 €72,000 €100,500 € | Fixed Costs | - | - | 117,700 € | 117,700 € | Contribution | - | - | 141,200 € | 141,200 € | Internal purchasing scenario: | ECD | Heidelberg | ISD | Zumwald | Turnover | 21,600 € | 140,000 € | 340,000 € | 340,000 €...
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...Case Analysis : Zumwald AG Zumwald AG is a German company specialized in the production and retail of medical equipment. In August 2002, the launch of a new ultrasound imaging system, X73, triggered a transfer pricing dispute between two of its six divisions, ISD and Heidelberg. A third division, ECD is indirectly involved because it usually provides some components to Heidelberg. The origin of the dispute between Heidelberg and ISD is the choice of supplier for some components of the X73. Zumwald has a culture of being highly decentralized : it is organized in six operating divisions and partially vertically integrated however the company policy is to let division managers choose their suppliers internally or externally. Nonetheless, in the case of the X73, the division manager of Heidelberg, Paul Halperin, challenges the choice made by ISD managers to supply themselves externally for obvious cost-‐‑based motivations. The managing director of Zumwald, Mr. Rolf Fettinger, is asked to help settle the dispute. The situation is very tricky for Mr. Fettinger. Indeed, freedom of sourcing has been the policy of the company as of now and a settlement in favor of Heidelberg could create a disturbing precedent...
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...Zumwald AG Management Accounting Background: Zumwald AG, headquartered in Cologne, Germany, produced and sold a range of medical diagnostic imaging systems and biomedical test equipment and instrumentation. The company was organized into six operating divisions. Total annual revenues were slightly more than €3 billion. Zumwald manages ran the company on a highly decentralized basis. The managers of each division were allowed considerable autonomy if their performances were at least on plan. Performance was evaluated, and management bonuses were assigned, based on each division’s achievement of budgeted targets for return on invested capital (ROIC) and sales growth. Even though the company was partly vertically integrated, division managers were allowed to source their components from external suppliers if they so chose. In August 2002, a pricing dispute arose between the managers of 3 of the divisions of Zumwald AG: Imaging Systems Division (ISD), the Heidelberg Division (Heidelberg), and the Electronic Components Division (ECD). The case describes a transfer pricing issue that is common in decentralized, divisionalized firms. The case raises issues about internal pricing and, more generally, the operation of a decentralized management structure. Analysis 1: If we see the facts that came out in ensuing the discussion: [pic] It is obvious why ISD take Display tech as their supplier, a total cost difference of € 39,500. Thus, Heidelberg price would result...
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...Zumwald AG case Zumwald produced and sold a range of medical diagnostic imaging systems, biomedical test equipment and instrumentation. The firm has a divisional structure and a highly decentralized basis. Managers of each division have lot of autonomy in decision-making and they are compensated based on achievement of budgeted targets and ROIC. Moreover, Zumwald is vertically integrated (some divisions produce components that are essential to the others). Thus three divisions involved in the dispute are very interdependent because both Heidelberg and ECD can manufacture components for ISD’s new product and both of these two divisions are dependent on business from inside of the company to succeed. (That does not seem coherent with the fact that the company allow department managers to outsource if they want) Concerning the cost of the component at stake, Display technology PLC is far more competitive than Heidelberg. Heidelberg can’t afford to cut the price of its product below cost to match the lowest offer because it would destroy the division’s ROIC. In the same way, Mr. Bauer doesn’t want to buy the displays at prices above market levels. The divisions are profit centers and the problem is caused by the performance evaluation system based on financial targets. Considering the fact that my criteria is to maximize the profitability of Zumland as a whole, the issues at stake in this case are: - The lack of cooperation between the divisions to make decisions...
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... 2nd April, 2014 ZUMWALD CASE ANALYSIS On analysis of Zumwald’s structure, it can be concluded that it is partly vertically integrated with conflicts of interest with in divisions regarding supply. To provide a solution to this scenario we need to look at the contribution margin since fixed costs are irrelevant and also at the most profitable option for the company as a whole. Also considering the suppliers here, Zumwald has no relationship with Display Technologies Plc previously and we have no idea about the quality since it is trying to aggressively compete with prices. Relatively, Bogardus NV has a good relationship with Zumwald and is known for its quality products. BUT to come across a cost based benefit scenario for Zumwald let us consider Display Technologies, which provides low...
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...Zumwald case – session 4 The case is about a pricing dispute between the managers of two divisions of Zumwald AG, a german firm that produces and sells medical diagnostic imaging systems and biomedical test equipment. The company is very decentralized with large autonomy for each division. For instance, division managers are allowed to source their components from external suppliers. The case is rightly about the autonomy concerning sourcing, especially between ISD’s managing director Conrac Bauer and Paul Halperin, Heildelberg’s general manager. Indeed, the dispute was caused by ISD’s choice to buy from an external supplier and not Heildelberg for some components of its new product the X73. Conrac Bauer chose the external firm because its price was lower than Heildeber in order to ensure a decent Return on investment. Arguments of the main actors: * Conrac Bauer (ISD): * Heildeberg price are not aligned on the market * Conract Bauer thinks only about his ROI * Paul Halperin (Heildeberg) : * Solidarity in the company * Heildeberg engineers participated in the design of X73 with no-mark-up over costs * Heildeberg also needs to earn a decent ROI In short terms, if Zumwald wants to make profits, ISD needs to buy its components from Display Technologies PLC in order to maximize its ROI. Nevertheless, in a long-term analysis, we can consider that Display Technologies PLC prices will increase in the future (its aggressive pricing strategy...
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...Zumwald Case Analyse Taochang LIU S51023 Brief In company Zumwald, because of the high decentralization policy, there is a dispute for product X73 mainly between two divisions—ISD and Heidelberg. ISD designed a new system which need a display, and ISD can source it internally from Heidelberg or externally. Finally ISD decided to buy displays externally which made Heidelberg livid. Analyse 1. As ISD intended to buy from Display Technologies Plc(TDP), and Bogardus NV’s price is higher than TDP, I mainly compare Heidelberg with TDP. To make the decision, we should see the problem in the company’s level, thus I compare the contribution margin of two choice. | Internal | External | € | ISD | Heidelberg | ECD | ISD | Revenue | 340000 | 140000 | 21600 | 340000 | Fixed cost | 117000 | 55000 | 9000 | 117700 | Variable cost | 26300 | 50000 | 9000 | 26300 | Cost of component | 72000+140000 | | | 72000+100500 | Contribution margin | 101700 | 90000 | 12600 | 141200 | Contribution margin to Zumwald | 204300 | 141200 | It is obvious that although contribution margin to ISD division is much more when sourcing externally, the contribution margin to Zumwald is more when sourcing internally. 2. TDP is a company who just entered the market and have no relationship with Zumwald before, we should concern about its quality issue. And also, after the aggressive price strategy to obtain the market share, TDP may increase the price in the future. Solution ...
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...The starting point of the analysis it to find out what is best for the single divisions and what is best for Zumwald AG as a whole instead. In order to do so, I examined the cost structure of the various divisions and made a contribution analysis under the two possible scenarios: 1) ISD outsourcing from Display Technologies Plc; 2) ISD sourcing internally from Heidelberg. As shown below in exhibits 1, 2 & 3, Zumwald AG clearly benefits from internal sourcing. The difference is €63100 of lost contribution in case of outsourcing. Heidelberg’s and ECD’s orders would be lost under this scenario. On the other hand, ISD is better off with the outsourcing option, achieving €39500 in savings. Alternatively, the same outcome can be found analyzing the cash outflows for Zumwald AG under the two viable options (see exhibit 4 below). If sourcing internally, the cash outflow is given by the combined VC for Heidelberg and ECD, which amount to €37400. Conversely, if outsourcing, the cash outflow is simply given by the price offered by the supplier. Any transfer price greater than €37400 would lead to a positive contribution for Heidelberg and/or ECD. Different total contribution allocations would depend by the internal transfer prices for the divisions. Therefore, Mr. Fettinger must deal with the dispute and be sure that the interests of the various managers are aligned towards the common wellbeing of the firm. Given the current organizational structure and the responsibilities...
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...With these developments, it is obvious that conflicts between parties of different nationalities occur and liability to tax on income of foreigners especially among those engaging in trading venture. Whilst the laws affecting domicile and residence may be sufficiently settled, it is paramount for courts to pursue a detailed analysis to ascertain specific preliminary issues so as to avoid controversial rulings. Courts often handle numerous financial cases that involve what can be best described as foreign or international elements. In such cases, court must decide whether it has the jurisdiction under the Family Law Act 1975 to make a decision on such cases. In the event that it is determined that the court is invested with the jurisdiction to determine the case, the court has to consider whether there is a system of law in foreign country that also has the jurisdiction to handle the case. As it was addressed in the case Attorney General of New Zealand v Ortiz [1984] AC 1, these benefits and costs to either party if the case resolution is made in foreign country as compared with the apparent country should also be a subject of concern. [1] Legal systems in most countries around the world adopt community property regime, which takes effect at the inception of marriage or at the time of divorce. For instance, California and Massachusetts in the United States have adopted community property regimes that support equal division of assets upon divorce. However, this provision...
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...Adapted from Bernhardt & Kinnear (1988). Cases in marketing management, pp. 6-16. Plano, TX: Business Publications, Inc. Pay careful attention to the following points. They are often used by instructors to evaluate either a written or oral analysis. 1. Be complete. Each area of the situation analysis must be discussed, problems and opportunities identified, alternative presented and evaluated using the situation analysis and relevant financial analysis, and a decision must be made. An analysis that omits part of the situation analysis or only recognizes one alternative is not a good analysis. Second, each area must be covered in-depth and within insight. 2. Avoid rehashing case facts. Every case has a lot of factual information. A good analysis uses facts that are relevant to the situation at hand to make summary points of analysis. A poor analysis just restates or rehashes theses facts without making relevant summary comments. 3. Make reasonable assumptions. Every case is incomplete in terms of some piece of information that you would like to have. A good case analysis must make realistic assumptions to fill in the gaps of information in the case. For example, the case may not describe the purchase decision process for the product of interest. A poor analysis would either omit mentioning this or just state that no information is available. A good analysis would attempt to present this purchase decision process by classifying the product and drawing upon real life...
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...are given. It is understandable then that we should seek out more opportunities to apply our skills and make more positive impacts within our jurisdictions. It is this general attitude that led us to get involved in investigating cold cases. How We Got Started Mark had, for several years, been consulting with our Coroner’s Division as a forensic anthropologist. During this time he came to learn that there were numerous coroners’ cases in which the identity of the decedent was unknown. These cases were kept in three-ring binders on a shelf in the Sergeant’s office. Over the years, in the course of this forensic work, we would discuss these cases and the progress that was being made on them. The conversation usually ran along the lines of us asking “any luck with that 1980 homicide victim?” and the sergeant answering “well, we’ve gotten so many new cases that I haven’t been able to even look at it yet.” This went on for a few years and through two different sergeants. One day we, as a crime analysis unit, were brainstorming about how we could broaden our “client base”, as it were. We had been successful in integrating ourselves into our Investigations Bureau and had been involved in numerous major cases. And, of course, we had always been active in producing tactical and strategic analyses for our patrol personnel. But we knew that we could be doing more, particularly given the size and responsibilities of our agency. It was during...
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...BUSINESS CASE Presented to the Accountancy Department De La Salle University In partial fulfillment Of the course requirements In ACCTBA2 (C33) March 2, 2015 A stakeholder is typically concerned with an organization delivering intended results and meeting its financial objectives. In general, a stakeholder can be one of two types: internal (from within an organization) or external (outside of an organization). The stakeholders in this situation are Lanie Marquez and Tim Rodriguez who are also partners in the retail distribution business and their capital contributions are as follows P500,000 and P300,000 respectively they are an internal stakeholder since they are also the owners. The total Capital of both stakeholders is P800,000 and with a monthly salary for both partners at P15,000 on the assumption that both of them will contribute to manage the business equally. Assuming that both managed the business equally the total salary for the year for Lanie and Tim are P180,000 each. They share profit and loss equally and no interest will be given on capital contributed. The problem for this situation is that Lanie is starting to get concerned with the behavior of her other partner Tim. He only manages the business 50% of the time, which will mean that his salary of P15,000 will need to decrease by also 50% since he does not manage the business equally with his partner. The business has seen a downturn in the profit outcome and for the current financial...
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...Ralph’s Grocery and United Food and Commercial Workers Union The case that I chose for the week 6 critical thinking assignment concerns Ralph’s Grocery Company, located in California. It applies to this week’s material due to the fact that the case involves unlawful suspension and discharge of an employee, as reviewed by the National Labor Relations Board. Background In May 2011, Vittorio Razi was an employee at Ralph’s Grocery and was suspended and terminated after he refused to take a drug test without first consulting with his UFCW Local 324 representative. The company (Respondent) says that on the day in question, Razi’s behavior was in question, acting nervous, anxious, agitated, and slurred speech. After a couple managers discussed the...
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... Many people wonder why their own teeth stain so easily. The enamel on your teeth and chromogens are what stains your teeth, but what exact beverage stains teeth the most? I chose this topic because I was curious to know what stains teeth the most. It affects us daily because it could rot your teeth or you can’t pick up hot chicks anymore. So what causes teeth to stain? The temperature causes teeth to expand or contract making it easier for stains. So hot and cold drinks affect that. Color in foods and beverages come from chromogens. Chromogens are intensely pigmented compounds that stick to teeth enamel. Chromogens cause a lot of trouble when they mix and react with other stain causing and stain promoting factors. Tannis may be natural or synthetic tannis is another factor that stains teeth. Tooth enamel is porous making it extremely susceptible to stains. The darker the liquid the darker the stain. There are some examples that stain teeth. Not only sodas bad but also Gatorade. Beets are bad for you also. Mostly cause they’re concentrated. Berries dark skins stain teeth. Ketchup is also really bad because of its bright red color and high levels of acid. Dark liquids and sauces you put on your foods also stain teeth. Colored candy and popsicles both contain colorants that will transfer to the teeth and embed in the porous enamel. Fruit juices, especially grape and cranberry, leave a colorful tinge on the teeth and tongue. Colored sodas instantly discolor teeth. The citric acids...
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