ice cream

Document Sample
ice cream Powered By Docstoc
					                                                                             Jennifer Smith
                          Compagnie du Froid – Ice Cream Case
Issue
Compagnie du Froid is an Ice cream manufacturing company. The company is a major
competitor in the summer ice cream business. It currently has presence in the French,
Italian and Spanish regions, each independently managed with the mandate to make
business decisions on behalf of the main office.


Each regions performance was judged based on the budget provided by the
managers, this budgets was based on an average temperature rate for the summer. If the
regions collectively make their sales goals, each manager will get 2% of the overall
corporate profit that is made. There is no competition between managers, and they are
encouraged to work together to reach this goal.


Analysis
Italy
Italy was able to reach his sales goals, as well as expand his distribution network to the
western Italian coast. The Italian regional manager did well despite challenges faced in
manufacturing its products due to the purchase of old machines from France and the cost
of raw materials. He factored into his budget labor wages and low efficiency of
production as a result of the old machines, by doing this he was able to set a realistic
sales objective and reach goals.


Spain
Business for Spain grew quickly but also lost momentum quickly as well. The
introduction of vending machines proved to be a hindrance to efficiency. Even though
sales and profitability declined, the manager was also forced into a price cut to stay
competitive because of the unfavorable weather condition while keeping the ad/mkt
spend to gain the market share.
Through this, Spain’s performance resulted in being surprisingly good. Although he had
to import product from France at cost in order to stay in business, he was able to turn this
into a profit. He was more innovative in developing products relating to the core business
of the company and promoted them in a manner that was well received by consumers.


France
A cost based transfer price approach was adopted by France. With this the manager’s
profit increased over the previous years but, if you take out the transfer of goods to Spain
out of their sales credits, it shows that they did rather poorly. This division only looks
good because they had the opportunity to sell to Spain at cost, which can’t really be
counted as a sale. Additionally, market share in the region dropped while they put more
focus on expansion to the west coast.


If France had the option of selling the product sold to Spain to the public instead they
would have fared very well.


Solution
Corporate should discard the current 2% corporate profits to each regional manager, each
regional head should be given a percentage of the profits made by its region and not by
the company. In doing this corporate will ensure that regional heads are forced to drive
the business more productively and reduce wastage in their respective regions. Mangers
should be encouraged to find creative ways to enter new markets, introduce new products
and generate revenue.