Polysar Case
ACTG 2020B Case Study
Polysar Limited
To: Board of Directors
From: North American South American (NASA) Managerial Accounting Team
RE: NASA Performance Relative to EROW and Strategic Differences In the Rubber Industry
Executive Summary
This report seeks to explain the key differences between the NASA (North American South American) and EROW (Europe and rest of world) sales performance over the past nine months. There are several reasons causing the sales performance figures currently stemming from NASA to be incomparable with the EROW numbers, including the current practice of transferring large quantities of regular butyl rubber from the Sarnia to the Antwerp production facilities. As Polysar operates globally, it is also important to consider certain international aspects and specific risks. These include, foreign currency exchange fluctuations, potentially creating gains or losses, as well as international taxes and tariffs. The decisions made regarding allocation of profits between the two geographic centers will directly impact the taxes paid in either location. ADD ON WITH SPECIFICS
Introduction
A high-level overview of Polysar Limited provides an all-encompassing image of the nature of this case, necessary to later effectively focus in on specific financial details and problems. Polysar is Canada’s largest chemical company, with the North American production facility located in Sarnia Ontario. The company splits into 3 main groups including petrochemicals, diversified products, and rubber, of which the latter is the largest representing 46% of sales. This rubber division is the core of the report, as its success is vital to Polysar. The rubber division is split into two geographic centers, in Sarnia Ontario and Antwerp Belgium respectively. (See Appendix 1 for graphical representation). Both geographic centers produce both regular butyl and halobutyl rubbers. In 1985, Sarnia opened a second production facility that has not
Polysar Limited
To: Board of Directors
From: North American South American (NASA) Managerial Accounting Team
RE: NASA Performance Relative to EROW and Strategic Differences In the Rubber Industry
Executive Summary
This report seeks to explain the key differences between the NASA (North American South American) and EROW (Europe and rest of world) sales performance over the past nine months. There are several reasons causing the sales performance figures currently stemming from NASA to be incomparable with the EROW numbers, including the current practice of transferring large quantities of regular butyl rubber from the Sarnia to the Antwerp production facilities. As Polysar operates globally, it is also important to consider certain international aspects and specific risks. These include, foreign currency exchange fluctuations, potentially creating gains or losses, as well as international taxes and tariffs. The decisions made regarding allocation of profits between the two geographic centers will directly impact the taxes paid in either location. ADD ON WITH SPECIFICS
Introduction
A high-level overview of Polysar Limited provides an all-encompassing image of the nature of this case, necessary to later effectively focus in on specific financial details and problems. Polysar is Canada’s largest chemical company, with the North American production facility located in Sarnia Ontario. The company splits into 3 main groups including petrochemicals, diversified products, and rubber, of which the latter is the largest representing 46% of sales. This rubber division is the core of the report, as its success is vital to Polysar. The rubber division is split into two geographic centers, in Sarnia Ontario and Antwerp Belgium respectively. (See Appendix 1 for graphical representation). Both geographic centers produce both regular butyl and halobutyl rubbers. In 1985, Sarnia opened a second production facility that has not