Caribbean Brewers Study Essay

“The beer industry in the United States generates $75 Billion in annual sales.” (Abelli, 4)

Q.1) Compute the following quantities for the current production process as well as for Mike’s and Ike’s plans, assuming the plans are implemented as described in the case.

It is stressed in the Goal that there is a massive difference between throughput and efficiency. The novel makes the case that having an efficient operation does not equate to profitability. What does equate to profitability is to increase the throughput of any given operations system. Jonah tells Alex, “Throughput, is the rate in which the system generates money through sales.” (Goldratt, E.M. (2014), The Goal, pg. 60). Jonah goes on to explain to Alex that inventory is all the money that was invested in purchasing things that the system intends to sell. (Id). Furthermore, operational expenses are those costs that are required to turn inventory into throughput. (Id, at pg. 61). The definitions of these three measurements are not standard definitions for an MBA student. It is an interesting perspective on how to view operations.

Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.

This case is about Amsterdam Brewery, which produced over 20 different craft brews, each with its own brand name. Jeff Carefoote was the owner and president of Amsterdam Brewery wanted to decide on promotional strategies that would increase its profitability and grow company’s brand. The company was also experiencing operational capacity issues due to continuously increasing demands. As a result, Carefoote had decided to invest in capital expansion to increase Amsterdam’s brewing capacity. Several problems were created like The Ontario Craft Brewers Organisation didn’t promote craft breweries because its laws were not supportive for craft breweries. After that, in order to increase brewing capacity, Amsterdam moved operations to midtown Toronto and the high capital costs for expansion made Carefoote hesitate. Moreover, the brewing time was also connected to the beer’s retail selling price because some beers required more complex processes that resulted in higher costs and higher selling prices.

The Caribbean is a vastly diverse area representing the effects of colonialism, slavery, and the combination of many cultures.

Antigua already had a successful brewery that produced Tigua beer, a popular brand in Antigua and throughout the eastern Caribbean. In 2000, the Antiguan brewery had negotiated a 15-year income tax holiday with the government of Antigua on income earned from sales of Tigua beer. The combination of the central location of Antigua in the eastern Caribbean, the success of the Tigua beer line, and the tax concession on Tigua beer made Antigua a good choice for Gera International; it purchased 75% of the Antiguan brewery, Caribbean Brewers Inc., in 2005. The remaining 25% of the common shares of Caribbean Brewers remained held by senior management and other employees. Caribbean Brewers is one of the many subsidiaries of varying sizes under Gera International’s control. The production facilities of Caribbean Brewers were expanded in 2008, thereby effectively doubling the productive capacity. This expansion was funded through a 10-year amortized loan from Gera International at a fixed interest rate of 10%. All of the production of Gera beer for the eastern Caribbean region was transferred to Caribbean Brewers after the plant expansion. The resulting production figures for Caribbean Brewers are provided in Figure 1.

6.) The Wilkerson Company original case is not effective and accurate without including an ABC analysis. ABC allowed us to assess the business performance of each of its businesses including: Valves, Pumps and Flow Controllers. This enabled us to realize that the Flow Controllers business is not profitable with a Gross Margin of -11.31%. I recommend specifically solving the problem of pre-tax margin going from 10% to less than 3%. The strategic decisions that need to be made are improving the unprofitable Flow Controllers business unit, while simultaneously increasing the sales of the more profitable Valves and Pumps business units. I would capitalize on the highest margin business of the Valves. Specifically, I would develop marketing strategies on how to grow market share in this business. I would assess what we are doing in this business and I would reapply it to our other businesses. This would include evaluating and eliminating costs in the other business units,

1. What is the competitive situation faced by Wilkerson? The critical product in term of market competition is the pumps of Wilkerson Company. The pumps are Wilkersons major product line with a production of about 12,500 units per month. Pumps currently have the lowest gross margin among all products, because competitors had been reducing prices on pumps and Wilkerson adopted its prices in order to remain competitive and to maintain the volume. 2. Given some apparent problems with Wilkersons cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Our conclusion is, that they should not adopt

• This cost method does not provide the best system for JDCW’s cost allocation. By using only three overhead rates the present system grossly undermines the true production costs since other activities of the production process are not acknowledged.

Increase in the profits above the actual budget can be attributed to 20% increase in sales in 2009. Although Jean’s profits were above the actual budget, French Division’s earnings were much lower than what it could have been, had they budgeted for the actual volume of sales that they ended up selling. We can partly attribute this decrease in earnings to the fact

The recipe is designed for a family comprising of three adults: 50 years old female, 59 years old male and 24 years old female. The Black Caribbean family, lives in Social Housing, and receive income support benefits. The family does not eat red meat but will only eat chicken or turkey. The income of the family will be around £500 per week. The 50 years old with hypothyroid problems works at a call-centre on a minimum wage salary. The thyroid problem can lead to high blood pressure that monitored by medication. Health professionals have advised the 50-year-old female to reduce the stress levels and implement exercise into the schedule for improving the activity of thyroxine in the body. The Male, 59 years old is physically active and does not have any health concerns and runs twice a week. *59 years old is healthier than older adulthood

WMC’s accounting practices incorrectly attribute fixed manufacturing costs to the three Detroit groups in a proportional manner, leading to Group 3’s lack of profitability. Discontinuation of Group 3 pushes a greater percentage of the fixed costs to the other groups impacting their ability to be profitable. Additionally, WMC does not consider the degree to which production at the Detroit plant contributes to the operations and

Although, managers should have some basic knowledge of the above components, filtering this information down to subordinates, will help them understand the importance of their positions within the firm. Furthermore, employees’ understanding this concept will have a positive impact on profits within a firm. The efficiency of the production unit is an internal factor, as with external factors such as inflation and cost increase for raw materials, both can affect the production cost in one way or another (Khataie et al, 2010). They also added that manufacturers can benefit from a dynamic approach of how the productions are treated.

Based on the divisional performance of France, Italy and Spain for 2009 Jacques Trumen has to revaluate his traditional method of bonus payouts to each manager. He needs to determine a method that accurately assesses the regional manager’s performance in respect to their own divisional profit and loss. Following the evaluation of manager performance he must then find a suitable system to allocate the reward payouts to each manager. Apart from the compensation problem Compagnie du froid is moving into new ventures, like using their delivery trucks as a source of distributing perishable on behalf of other business, which is straying from core objectives.