Diamond Chemicals PLC B Financial Man
CASE REPORT OF FINANCIAL MANAGEMENT
Diamond Chemicals PLC (B)
Merseyside and Rotterdam Projects
Table of content
Key Issues 3
Analysis 3
Recommendations 8
Appendix 9
Appendix 1: Company Description 7
Appendix 2: Calculation on Merseyside Project Revision 7
Appendix 3: Calculation on Rotterdam Project without Right-of-way 7
KEY ISSUES
The Diamond Chemical PLC as the producer of polypropylene has two production plants which are in Merseyside and Rotterdam. Both factories have similar size and have same production output but their system is already outdated since it is established in 1967 and therefore the costs to produce the polypropylene escalate as the plants are not running efficiently anymore thus its cost is higher than the competitor. To maintain the competitive advantage the Diamond Chemical PLC develops the project to reduce the cost and increase the production capacity of the plant in Merseyside and Rotterdam.
The project is mutually exclusive means that only one project that can be accepted by the executive vice president of the intermediate Chemicals Group (ICG) James Fawn. Lucy Morris is a plant manager in Merseyside. She proposed to reduce the cost and increase the production capacity through (1) relocating and modernizing tank-car unloading areas which would enable the process flow to be streamlined, (2) refurbishing the polymerization tank to achieve higher pressures and thus greater throughput and (3) renovating the compounding plant to increase extrusion through obtain energy saving. The overall strategies of Morris are to redesign the plant and renewing the existing asset so the plant will produce just like when the plant is new and the cost of initial investment is 9 million pound. It will quicken the process of unloading raw material and increase the energy saving.
The second plant which is in Rotterdam and Elizabeth Eustace as the plant manager proposed different strategy to reduce the cost of production. Her
Diamond Chemicals PLC (B)
Merseyside and Rotterdam Projects
Table of content
Key Issues 3
Analysis 3
Recommendations 8
Appendix 9
Appendix 1: Company Description 7
Appendix 2: Calculation on Merseyside Project Revision 7
Appendix 3: Calculation on Rotterdam Project without Right-of-way 7
KEY ISSUES
The Diamond Chemical PLC as the producer of polypropylene has two production plants which are in Merseyside and Rotterdam. Both factories have similar size and have same production output but their system is already outdated since it is established in 1967 and therefore the costs to produce the polypropylene escalate as the plants are not running efficiently anymore thus its cost is higher than the competitor. To maintain the competitive advantage the Diamond Chemical PLC develops the project to reduce the cost and increase the production capacity of the plant in Merseyside and Rotterdam.
The project is mutually exclusive means that only one project that can be accepted by the executive vice president of the intermediate Chemicals Group (ICG) James Fawn. Lucy Morris is a plant manager in Merseyside. She proposed to reduce the cost and increase the production capacity through (1) relocating and modernizing tank-car unloading areas which would enable the process flow to be streamlined, (2) refurbishing the polymerization tank to achieve higher pressures and thus greater throughput and (3) renovating the compounding plant to increase extrusion through obtain energy saving. The overall strategies of Morris are to redesign the plant and renewing the existing asset so the plant will produce just like when the plant is new and the cost of initial investment is 9 million pound. It will quicken the process of unloading raw material and increase the energy saving.
The second plant which is in Rotterdam and Elizabeth Eustace as the plant manager proposed different strategy to reduce the cost of production. Her