Diamond Chemicals

Diamond Chemicals - INCREASE OUR BOTTOM LINE To ECP Or to...

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Click to edit Master subtitle style 6/7/11 Diamond Chemicals Mercyside By:Darrell Bostick, Jianjun Ren, Joo Sik Kim, and Regan Ruhl
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6/7/11 Background Diamond Chemicals Problem How do we stay relevant in a mature market? l Mercyside Project Yes/No?
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6/7/11 Five Forces New Entrants l Substitutes to product l Customers Bargaining power l Bargaining Power of Suppliers l Competition within Industry
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6/7/11 SWOT Analysis Strengths Large Plant Capacity – 250,000 output Worldwide Customers Capital Budgeting l Weaknesses Labor Cost Overhead Expense Out of Date production
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6/7/11 SWOT Continued Opportunity New Technology Increase plant capacity & downsize labor l Threat Recession and economy Plant shutdown for 45 days
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6/7/11 Obligations to Stakeholders Consumers Quality product in timely fashion l Employees and Managers Incentive for doing the job right l Shareholders
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Unformatted text preview: INCREASE OUR BOTTOM LINE!!!!! 6/7/11 To ECP, Or to not ECP Minimal Profit l Large Amount of Substitutes l Renovation holds Negative NPV -750,000 l Manager wants to make separate from line Mutually Exclusive project – ECP occurs separate from actual propylene products – look to NPV 6/7/11 Transportation Should we take on another 2 million? What does transportation mean to firm 6/7/11 Recommendations Incentive Program “We get our bonuses from the size of our plant!”. We get the behavior we reward. l New technology Cut labor costs and overhead costs 6/7/11 Recommendations Cont. Rotating schedule Factory does not need to be shut down for 45 days. l Go Ahead with regular Project Project With transportation 6/7/11 Final Recommendation ??? 6/7/11 Questions?...
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