diamond chemicals case study11_final

8/19/2019 Diamond Chemicals Case Study11_Final

1/20


2/20

&4enda

E;ecutive Summary

9ndustry "vervie<

:he 3erseyside $ro=ect $ro=ect>s 7aluation $rocess

$ro=ect>s &ttractiveness

"? N" " &nalysis

3utually e;clusive@

3erseyside vs !otterdam N$7 and E$S

9!! and $aybacA

Strate4ic Comarison

!ecommendations

N"7& SC"" "F B#S9NESS &ND EC"N"39CS 5 &$$9ED C"!$"!&:E F9N&NCE 5!"#$ %&


3/20

E;ecutivesummary

Diamond Chemicals is one of the lar4est rivately o<comanies in the #S 9n terms of roduction cost

olyroylene' the rm is not doin4 better than averaunderstandable 4iven the a4e of its t


4/20

9ndustry "vervie<



5/20

$ro=ect>s 7aluation $rocess


E$C ro=ect Ge;cludeH• 9mact on N$7 IJ0'003• &ction tell the assistant lant mana4er that both ro=ects are

searate and therefore should be analyed indeendently

Cannibaliation GincludeH• 9mact on N$7 KJ)'203• &ction Because of the ro=ect' sales may decrease in the !otte

factory


6/20


En4ineerin4 costs Ge;cludeH• 9mact on N$7 IJ0')23• &ction :he en4ineerin4 costs GJ%00000H should not be included since


7/20



9nLation GincludeH• 9mact on N$7 IJ2'8/3• &ction &cAno


8/20



Initial NPV£9M

E$C $ro=ect

J03

CannibaliationJ)23

En4ineerin4 Costs

J0)23

9nLation


9/20

&4enda

E;ecutive Summary

9ndustry "vervie<

:he 3erseyside $ro=ect $ro=ect>s 7aluation $rocess

$ro=ect>s &ttractiveness

" or N" " &nalysis

3utually e;clusive@

3erseyside vs !otterdam N$7 and E$S

9!! and $aybacA

Strate4ic Comarison

!ecommendations


$ = t>


10/20

$ro=ect>s&ttractiveness

N$7 P IJ%683 9!! P 2-

$aybacA P -08years

E$S P IJ00611 eshare

FinancialView


$ = t>


11/20

$ro=ect>s&ttractiveness

9ncrease roductivityNo learnin4 curve' short

term solution

Fle;ibility in terms of

chan4e in technolo4y

-% day shutdo


12/20

" or N" " &nalysis


Because of

3eetin4 all nancial reOuirements

9ncreasin4 the comany>s roductivity

Bein4 Le;ible to chan4e to a ne< technolo4y

Morris should continue to proote the pro!e"unding

3 t ll


13/20

3utuallyE;clusive@


#$clusi%it& in 'eand(

&ssumin4 that the marAet stays constant for 1% years

Settin4 the annual outut eOual to 2%0000 tons in both

)he NPV is still positi%e in *oth pro!ects there"ore not utuall& e$clusi%e in deand

o


14/20


15/20

N$7 and E$S


3erseyside

N$7 PB$%'68 3

E$S P 0'0611

!otterdamN$7 P B$

1(')1 3

E$S P0'186)

Qhy $ro=ects of diMerent nature' DiMerent initial investments' DiMstrate4ic 4oals' DiMerent investment hases' 'i,erent -ross M


16/20

9!! and $aybacA


3erseyside

9!! P2-'0)

$aybacA P -'08

ears

!otterdam9!! P 1/'0)

$aybacA P 8'1(

years

DiMerent Cash Flo< tiings• 9mlementation taAes -% days at 3erseyside and ) years in !o• !otterdam only reaches full caacity in 200-


17/20

Strate4icComarison


3erseyside

• Fits all the four erformance hurdles• TuicAly imlemented

• No learnin4 curve' short term solution• :he ross 3ar4in starts decreasin4 afteyear %'


18/20

Strate4icComarison


!otterdam

• reater N$7• on4 term horion

• E;lore the learnin4 curve• "nly meets three of the reOuirements• !elies on the analysis of e;ternalconsultants


19/20

!ecommendation


!otterdam

ro=ect

Fle;ibilityof theother

factory

Qe


20/20

Nova School of Business and Economics8th February 2016

Franc *o+o Sa

*

)han &ou "or &our attention.

N"7& SC"" "F B#S9NESS &ND EC"N"39CS 5&$$9ED C"!$"!&:E F9N&NCE 5 !"#$ %&

diamond chemicals case study11_final

Documents