Case Study : Diamond Chemicals Plc

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Case 1: Diamond Chemicals Plc Group E10: Rajat Pal ( – 8585010288 Sagar Vatkar ( – 8585010304 Saladi Vinod Kumar ( – 8585010309 Sankalp Dhanvijay ( – 9007974746 Sarthak Agarwal ( – 8585010324 Satya Prakash Dash ( – 8585010325 Introduction: Lucy Morris, plant manager of Diamond Chemicals’ Merseyside Works, proposed a Capital program to improve production and maintenance facilities which in turn boost the throughput and energy savings of the plant. The objective is to analyze the Morris’ plan and suggest the…show more content…
Besides that, Transport Division and Intermediate Chemicals Group reported to separate executive vice presidents who receive an annual incentive bonus based on performance of the respective divisions. Sales Department : As pointed out by the Sales Department, there are demand concerns for the additional supply created but as Greystock pointed out the company should not burden itself with additional charges for cost-reduction projects. The cost reduction along with increased throughput would steal competitor’s share rather than a cannibalization effect as the product, polypropylene, is priced as a commodity. Although Merseyside may outperform Rotterdam, this should be treated as an indication for implementing the same capital program at Rotterdam to increase its efficiency and throughput to achieve the same cost competitiveness Assistant plant manager: The assistant plant manager would like to renovate the EPC production line to achieve the lowest EPC cost base in the world in anticipation of increased demand when recession ends. The proposed project is an ‘engineering efficiency’ project, the same as the capital program proposed by Morris with a negative NPV of -0.75 million pounds which is marginal compared to net positive NPV of 16.51 million pounds of the capital program. The proposed EPC renovation was primarily rejected on economic grounds but it ignores the strategic advantages when recession ends. The proposed renovation

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