Deutsche Brauerei Case

Case Study of Deutsche Brauerei

Highlights of Deutsche Brauerei

Deutsche Brauerei is a family based beer producing company. Previously, the company is mainly target on German beer market since it was located in a village in Germany. In 1998, since the company updated the producing equipment and the Ukrainian government had a strong pull-side effect, Deutsche Brauerei has started to run business in Ukrainian from then. However, Ukrainian hryvna depreciated by 125% within three months due to the Russian debt crisis. The sales of beer looked not so influenced by the depreciation currently.

The company has a large number of account receivable and inventory. That might lie on the manager’s decision that company can get more from credit on distributer. This manager even wants to expand the number of account receivable to get more interests. The manager has another proposal that the company is going to expand more and set up warehouses in two areas, which would costs future investment on new plant and equipment increased up to 6.8 million Euros.

Since the company is a family based company, the dividend policy is to aim for a 75% dividend payout from earnings each year to severe the company’s older relatives. The board of Deutsche Brauerei is also running a proposal that they are going to increase the manager’s salary to both base salary and incentive payment of 0.6% of the annual sales increase.

Greta Schoweitzer who just graduated from MBA program is going to join the board and is going to present existing problems based on the performance of company’s behavior and make certain suggestions.

Problems within Deutsche Brauerei

After my reading of the case study, I generate the following problems within Deutsche Brauerei:

* Liquidity problem caused by heavy account payable and inventory

* Expansion proposal of asset investment

* Overestimated sale growth and company’s performance

* Heavy Dividend burden

* Compensation based on sales performance...