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.
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