Deutsche Brauerei Case

Deutsche Brauerei Case

I. As you read and prepare for this case, think about these broad questions that will be addressed this weekend. The supporting Excel workbook is included for your use, Case_11.xls in addressing these issues

1. What accounts for Deutsche Brauerei’s rapid growth in recent years? Specifically, what policy choices account for this success?

2. What is Deutsche Brauerei’s credit policy toward its distributors in Ukraine? Why is it different from the policy toward its other distributors? Is the company’s credit policy appropriate? Is it profitable? If not, how would you change it? If so, what arguments would you offer to the board of directors in its defense?

3. Why does this profitable firm need increasing amounts of bank debt?

4. As a member of the board of directors, how would you vote on:

a. The proposed raise for Oleg Pinchuk?

b. The quarterly dividend declaration of EUR698,000?

c. Adoption of the financial plan for 2001?

II. I plan to cover the case by focusing on the following for class discussion (you!) purposes

1. As Greta Schweitzer, how would you vote on your Uncle Lukas’s proposals regarding(1) the financing plan for 2001, (2) the dividend declaration, and (3) compensation for Pinchuk?

2. How does this company make money? What is its strategy? How has the company been doing?

3. What does the break-even chart tell us?

4. What do the financial forecast and the sources-and-uses-of-funds statement tell us? How about the financial ratios?

5. Why does this profitable firm need to borrow?

6. What do you conclude from case Exhibit 7 about Deutsche’s distributors in Ukraine?

7. Are the credit and inventory policies in Ukraine sensible? What risks is the company assuming? What returns are possible?

8. Let us return to the issues at hand: financial plan, dividend declaration, compensation. What should Greta Schweitzer propose instead?