The Farm

Problem Definition

What should Georg suggest his father to do about the farming business in view of the sudden, substantial change?

Criteria Selection

Four criteria are used as benchmarks for analyzing the possible alternatives.

1. Von Petersen family’s capacity to be more involved into the business.

* For the time being, the Petersen family seems to have limited capacity and interest to get directly involved into the business because 1) Friedrich, a doctor in Munich, has adopted a hands-off approach as his intension to join the farm business was originally to help his aunt, Alexandra; 2) Friedrich’s son, Georg just started his second term in MBA and is pursuing an investment banking career.

2. Conflict of interest.

* Now that Erich’s father-in-law has purchased Agees, a conflict of interest emerges if Erich continues to work for the Petersen’s farm as he is in charge of the farm management, especially the cost allocation of the workers.

3. Immediate impact on the profitability of the business.

* Adoption of any alternative should take into consideration the immediate subsequent impact on the profitability as it seems that the current cooperation model has cost-saving advantages.

4. Future business opportunities.

* The agriculture business is getting more and more valued as a result of development of China, introduction of biofuels and volatile weather.

Alternative Development

Georg could suggest his father to take one of the following four alternatives

1. Do nothing

* Keep the cooperation as it has been in view of the success in the past.

2. Change the “cooperation model with Agees”

* Continue the cooperation of procurement with Agees.

* Stop the sharing of the tractor and workers.

* Terminate the employment relationship with Erich as now Erich could work for his father-in-law in Agees.

3. Stop the “cooperation with Agees” and the “employment relationship with Erich.”

* Stop all the...