CEO of Compagnie du Froid: Jacques Trumen
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Compagnie du Froid S A
Case ID - 197085 Solution ID - 24104 1487 Words
Abstract
CEO of Compagnie du Froid Jacques Trumen after reviewing the performance of three regions of business: France Italy and Spain concluded that performance of Spanish region had been extremely poor and had made the company’s overall profitability to its lowest level in 10 years. This conclusion challenged the traditional way of granting bonus to the regional managers which gives each regional manager 2% of corporate profit. Hence a new way of evaluating regional manager’s performance has to be devised in order to grant bonus according to their efforts. There are different ways discussed in analysis which can be used for evaluating the performance of managers and the way bonus should be granted.
Excel Sheet
Italian Region, French Region, Spanish Region 2009 Results
Profit Plan, Actual, Variance
Sales Data
Cost of Goods Sold
Cost specialties
Contribution Margin
Operating Margin
Profit before Interest and Taxes
Questions Covered
1. How would you explain the difference between the Italian region’s expected and actual profit?
a) What was the impact of the change in sales volume?
b) What was the impact of the change in the prices charged for ice-cream and specialties?
c) What was the impact of the changes in the cost of raw materials, labor, and fixed costs?
d) How much of the changes in the cost of raw material and labor are due to changes in the prices of the raw materials and wages of labor, and how much are due to manufacturing efficiencies?
2. How would you evaluate the performance of the manager of the Italian Region?
3. How would you evaluate the performance of the French and Spanish managers? How would you account for the ice-cream transfer from France to Spain?
4. What problems is Jacques Trumen facing?
5. What would you recommend to him?
Keywords
Return on investment, Profitability analysis, Variance analysis,
Compagnie du Froid S A
Case ID - 197085 Solution ID - 24104 1487 Words
Abstract
CEO of Compagnie du Froid Jacques Trumen after reviewing the performance of three regions of business: France Italy and Spain concluded that performance of Spanish region had been extremely poor and had made the company’s overall profitability to its lowest level in 10 years. This conclusion challenged the traditional way of granting bonus to the regional managers which gives each regional manager 2% of corporate profit. Hence a new way of evaluating regional manager’s performance has to be devised in order to grant bonus according to their efforts. There are different ways discussed in analysis which can be used for evaluating the performance of managers and the way bonus should be granted.
Excel Sheet
Italian Region, French Region, Spanish Region 2009 Results
Profit Plan, Actual, Variance
Sales Data
Cost of Goods Sold
Cost specialties
Contribution Margin
Operating Margin
Profit before Interest and Taxes
Questions Covered
1. How would you explain the difference between the Italian region’s expected and actual profit?
a) What was the impact of the change in sales volume?
b) What was the impact of the change in the prices charged for ice-cream and specialties?
c) What was the impact of the changes in the cost of raw materials, labor, and fixed costs?
d) How much of the changes in the cost of raw material and labor are due to changes in the prices of the raw materials and wages of labor, and how much are due to manufacturing efficiencies?
2. How would you evaluate the performance of the manager of the Italian Region?
3. How would you evaluate the performance of the French and Spanish managers? How would you account for the ice-cream transfer from France to Spain?
4. What problems is Jacques Trumen facing?
5. What would you recommend to him?
Keywords
Return on investment, Profitability analysis, Variance analysis,