Deutsche Brauerei - Deutsche Brauerei was founded in 1737...

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Deutsche Brauerei was founded in 1737 by the Schweitzer family in Germany. Capable of producing 1.2 million hectolitres of beer per year. Deutsche Brauerei produces 2 quality varieties of beer: Dark and Light. In 1998, the company expands to Ukraine because of : Excess production capacity in Germany Large Population Strategic location within central and Eastern europe Easy entry opportunities By 2001, Ukrainian consumers accounted for 28% of DB’s Sales The Beer-distribution in Ukraine was nonexistent and the terms applied in Germany couldn’t be beared by the distributors in Ukraine. The sales manager organized 5 distributorships, 211 customer accounts and warehousing arrangements in Ukraine in 30 months on a small budget The sales manager extended credits to Ukrainian distributors and relaxed payment deadlines to 80 days instead of 40 days as applied in Germany. The sales manager also forecasts a 2% bad debts for 2001 and 2002 and projects to relax further the payment deadline to 90 days. His marketing strategy also involves carrying in the company’s books a large part of the distributors’ inventories. ROI= Marginal after-tax profit contribution Required Marginal Investment Assumptions made by the sales manager : The marginal after-tax profit contribution is the profits earned on incremental sales each year The required marginal investment is the company’s investment in receivables (cash outlay for the product in the AR) Investment in AR = (Variable Costs/ Sales) * Change in AR
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