Victoria Chemicals Case Study Example | Topics and Well Written Essays - 1250 words

capital of Seychelles Chemicals - Case Study ExampleEarnings per Share are a character of sugar for the caller-up which is allocated to each outstanding share of common stock. The company had been under pressure from its investors for it to alter its financial performance because of the accumulation of the firms common shares by a well cognize corporate raider. The Earnings per Share had fallen from 180 pence per share by the end of 2007 from 250 pence per share by the end of 2006. To increase its earnings per share, the company required to modernize the Merseyside production process which was old. Lucy Morris, the position autobus at Liverpool believes that the funds for the modernization of the Merseyside Works upchuck could be obtained from the corporate headquarters until several headsprings were raised. It is thus quite important for the plant manager and Frank Greystock the controller to address and analyze each question keenly. Based on these issues, Morris will dete rmine the way forward towards modernizing the Merseyside Works project. This way forward includes the analytic thinking of the project in different aspects to determine whether its implementation will be for the good of the overall company. The plant manager will perk up to choose which category the product lies on based on whether it is a new product or market, market or product extension, engineering efficiency and safety or the environment. The Merseyside Works project is on the engineering efficiency category and will analyzed based on the concerns below. 1. apotheosis division concerns Victoria Chemicals produces its polypropylene at the Merseyside and Rotterdam works. The transportation system Division in the company oversees the ecstasy of all raw, intermediate and finished materials throughout the company. The Merseyside modernization capital project is part and parcel of Victoria Chemicals, and this sum that all transport needs should be addressed by the companys Tran sport Division. Just as Greystock said, reinforcement from the corporate headquarters in regard to transport is baseless as the project should make use of the companys excess capacity. All allocations done on the company, and its subsidiaries go to the Transport Division and hence the division should carry the allocation of the rolling stock required for the project. Transport issues will be dealt by the Transport Division of the company hence no need for funding on this sector. 2. ICG Sales and marketing department concerns Modernizing the Merseyside means improved productivity and increased outputs and with lower be which enable the company to take business from competitors due to the low prices of polypropylene. The added output will help the company in obtaining full efficiencies. Modernization of the Merseyside plant will help Victoria Chemicals in maintaining its cost competitiveness, and this means that the capital project is a worthy course for the sales and marketing depa rtment since it would not crown to cannibalization of the other plants. Below is the analysis provided by Greystock on the financial performance of Merseyside works 2008 2009 2010 2011 2012 Output 267,500 267,500 267,500 267,500 267,500 youthful Gross Profit 21.72 24.83 24.83 24.83 24.93 Old output 250,000 250,000 250,000 250,000 250,000 Free cash flow 1.27 3.92 3.86 3.77 3.08 Incremental gross profit 2.32 5.42 5.42 5.42 5.42 The above table clearly shows how the project will perform. Based on the table above, it is evident that the project at Merseyside works will be of great help to Victoria Chemicals plc. Though it may have its share of disadvantages, the advantages of the project under this concern outweigh the negative ones. 3. Concerns of the assistant plant manager sooner proceeding with the capital projec