Diamond Chemicals Plc (a): the Merseyside Project

1342 WordsMar 1, 20136 Pages
Diamond Chemicals is a leading producer of polypropylene, the polymer used in a variety of products (ranging from medical products to packaging film, carpet fibers and automotive components) and is known for its strength and elasticity. Diamond Chemicals is producing polypropylene at Merseyside (England) and in Rotterdam (Netherlands). Both factories are identical in size, age and plant-design. They were both built in 1967. Merseyside production process is the production process that are old, the best semi-continuous and therefore has a total workforce of more than the plant competitors. Since its establishment in 1967, Diamond Chemicals failed to jump in on opportunity and enhance their production process; for the way they produced…show more content…
In fact, the director of Sales is right that Greystock should not be so optimistic about that they can sell the added output and obtain the full efficiencies from the project given the market is quite competitive. Morris should ask the vice president of Marketing to provide supportive figures and logical analysis to show what percentage of the lost business volume could return after the market revives. In addition, sensitivity analysis can be done for the elasticity of price and demand tradeoff. Concerns of the Assistant Plan Manager In general Morris should say no to the assistant plant manager, because the project does not look promising. The main reasons for this is the negative NPV, more competitors in the market and increasing development of substitutes. It is also negative that the company has not been able to make significant money on this product, even as they were the first on the market. The way he presents it, by also putting pressure on the way bonuses are paid, and at the same time the personal feeling of maybe to lay workers of at a later point is something which can cause an argument for not recommending taking this project in under “his own”. The one thing which can be interesting to know more about and also ask the assistant plant manager is what kind of “strategic advantages” he see in this

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