...make the best business decisions for his division, which means taking the lowest legitimate and reasonable bid. By accepting the West bid, the division will save 10.4% compared to the bid of the Thompson division. If the Thompson bid were within a few dollars of the low bid, as the one from Eire Paper, it would be more reasonable to accept the bid. Also, it is at least nominally the policy of the Birch Company to accept the lowest bid, since the vice president knows the Kenton will accept the lowest bid barring any outside intervention. It is also the policy of the company to expect that inter-division bids meet the going market rate. By rejecting the Thompson division bid, Mr. Kenton shows Mr. Brunner that he will abide by both policies, and that he won’t accept unreasonably high bids. Mr. Brunner will thus be more likely to make lower bids in the future. 2. Which bid is in the best interest of Birch Paper Company? Although accepting the lowest bid would not be advantageous for the Thompson division, accepting the lowest bid is in best interest of the company. This case does not state the fixed costs that would become sunk costs if the Thompson division were to not produce the boxes, however, the division will not lose profit margin on boxes where production has not even started. Similarly, the Northern Division cannot afford to carry the cost burden of the mark up into sales. Mr. Kenton stated, “We sell in a very competitive market, where higher costs cannot be passed...
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...Birch Case--summary Background: Birch Paper Company is a large and vertically integrated paper company. It has three products: white paper, Kraft paper and paperboard. The company has four producing divisions and a timberland division (supplies pulp). Each division is operated by its manager independently, and each of them is assessed based on its profit and return on investment. A decentralizing policy has been applied by top management, which has increase corporate profits and competitive position. Situation: Thompson division designed a box for Northern division. Each box includes three parts: an inside linerboard, an outside linerboard, and the corrugating medium. Northern division paid for Thompson only the out of pocket cost of its design and development work. After that, Northern has three offers from Thompson and other two outside companies West and Erie. Usually, managers have rights to choose suppliers of materials freely, and may get sales price inside Birch. There are three bids: 1) The bid from Thompson is $480. If Thompson gets the offer, it will buy most of materials from inside Birch. These materials will cost 70% of out-of-pocket costs of $400, and is equivalent to 60% of selling price. 2) The bid from Eire Paper is $430. If Eire gets the offer, it will purchase the outside linerboard from Birch and use its own inside linerboard and corrugating medium. The outside linerboard will cost $120 a gross ($90 is the material from Southern division and $30 is...
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...set up as to benefit the Thompson Division, since their profits will be lower. The bid from the Thompson division is in the best interest of Birch Paper Co. Since the Thompson division is a part of the Birch Paper Co., buying from them leads to less money coming from out of their pocket. Even though the price is technically higher, the actual cost is lower because a portion of the money stays in the company and is not part of their out of pocket costs. As a result, the company as a whole is more profitable. Lead time is also a factor to acknowledge, as Birch Paper Co would be able to purchase the products sooner, track the products easier, and receive the products in a timely fashion. If they were to outsource, this would not be the case. The VP should intervene in the situation because the company’s profitability is at stake. If the VP would not intervene then top management would accept the lowest bid, although the lowest bid does not benefit the company as a whole. While this example is less than 5% of total volume, the reason the VP needs to intervene is because it could have adverse effects in the future if similar issues arise between division profits versus company profits. By hiring the Thompson division, the company as a whole saves money even though the profits in the Thompson division will be smaller. Without the Birch Paper Co. there are no divisions, thus what’s best for the company is best for each...
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...OBJECTIVE : To evaluate present organizational structure and management control system of Birch Paper Company particularly on the decentralized operations of its divisions with respect to its overall performance. PROBLEM : What effective management control system or systems should the Company adopt to attain maximum profitability not only of its divisions’ respective operations but that of the Company as a whole? AREAS OF CONSIDERATION 1. Company Background Birch Paper Company is a medium-sized, vertically integrated paper company, producing white and kraft papers and paperboard. It has four producing divisions and a timberland division which supplied part of the company’s pulp requirement; each division is operating independently headed by its respective division managers. Birch’s division managers normally were free to buy materials or inputs from whichever supplier they wished, and even on sales within the company; so divisions were expected to meet the going market price if they wanted the business. Early in the year, its Northern Division designed a special retail display box in conjunction with the Thompson Division, which was equipped to make the box. Thompson, as one of Birch’s four producing divisions converted paperboard output into corrugated boxes. It also printed and colored the outside surface of the boxes. Birch’s Southern Division will supply the lineboard and corrugating medium to Thompson Division in the event the latter got...
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...democratic countries that currently employ an enforced compulsory voting system include Australia, Argentina, and Brazil. This paper will argue that voting should not be made compulsory in Canada, on the principles that there is no proof that increasing voter turnout will legitimize our representational democracy, and that we have the right to abstention. I will prove this argument by examining the political scholarship produced by Sara Birch, Justine Lacroix, and Annabelle Lever. The first academic journal I will be examining will be that of Sara Birch in her 2009 paper The Case for Compulsory Voting. In this paper, Birch is advocating that all democratic countries should implement a compulsory voting system. Birch’s primary point of reasoning behind this notion is that the electoral process has become illegitimate as a result of an unbalanced voter turnout in relation to age and class (Birch, 2009). Furthermore, she believes that by making voting a mandatory practice, it will increase “social, political, and procedural fairness.” (Birch, p.21). These three constituents form the basis for her argument. Political...
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...O’Brien Criminal Law Prof. Toni Starcher Drunk driver, Brent Birch struck pedestrian, Leah Russell with his car causing severe life-threatening injuries; he was on probation from a prior DUI case at the time. Ms. Russell lived long enough to refuse blood transfusions at the hospital citing a religious conflict; she was a Jehovah’s Witness. Ultimately, she succumbed to her injuries at the hospital a short time later. Jehovah’s Witnesses see blood transfusions as one of many barriers that could keep them out of heaven when they pass away. Because of this fact, many Jehovah’s Witnesses carry a card in their wallet that states this fact and that they fully understand their decision could have irreprehensible consequences to their potential quality of life. They do this so medical professionals do not deem their decision to be one made under extreme duress and under the influence of extreme pain (C. Miyoshi, personal communication, December 13, 2013). This case was a driving under the influence case that was complicated by the fact that Ms. Russell’s religious beliefs kept her from medical treatment that could have possibly saved her life. During the trial of Mr. Birch, prosecution witnesses testified that the blood transfusions might have saved her, but that they couldn’t be sure, though. If convicted of his charge of second-degree murder, according to the California Penal Code section 190, Mr. Birch would face 15 years to life in prison plus a fine of up to $10,000...
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...Homework – Birch Paper Company 1) Fill in the missing prices and costs on the “Diagram of the alternatives” and “Costs of the alternatives” which are attached. On the “Diagram of the alternatives”, fill in the amounts indicated in the nine dotted ovals. Some amounts may be easy to find in the case, some will need to be computed from case information, and some you will not be able to ascertain from case data; for the latter, write “don’t know”. On the “Costs of the alternatives”, complete the table using relevant amounts from the “Diagram of the alternatives”, and compute the net cost to Birch for each of the three choices. NOTE: In the case, the term “out-of-pocket costs” means variable costs. 2) On your completed “Diagram of the alternatives”, indicate which bid Mr. Kenton (Northern Division) will accept (based purely on economic considerations) by circling it and labeling it accordingly. 3) On your completed “Costs of the alternatives”, indicate which alternative is in the best interest of Birch Paper as a whole (based purely on economic considerations) by circling it and labeling it accordingly. Section: D Name: Amanda Wang Section: D Name: Amanda Wang 9) 9) 8) 8) 6) 6) 5) 5) 4) 4) 2) 2) 1) 1) 7) 7) 3) 3) 280 120 280 120 90 don’t know 90 don’t know 30 25 30 25 480 480 TP: $ (market price) TP: $ (full cost) Price: $ Price: $ Price: $ VC: $ NORTHERN (William...
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...Birch Paper Company Relevant Information & Equations 1) Birch Paper Company is a producer of paper, paperboard, and corrugated boxes. The company is integrated, consisting of four separate production divisions. One of its divisions, Northern Division, asked for bids on a special corrugated box. It requested bids from one of its sister division (Thompson Division) and from two outside companies. The issue at hand is whether Northern should accept a bid from its sister division or from one of the outside companies. It should be noted that Thompsons bid is substantially higher than the bids received from the outside company. Relevant information pertaining to the three bids are provided below. 2) Thompson Division a) Bid $510 per 1000 boxes b) Thompson is marking the product up by 24.5% for a profit of $100. - $410 x 24.5% = $510 per 1000 boxes c) Thompson’s out of pocket expenses per 1000 boxes amount to $410 - 75% or $307.50 of the $410 represents the cost of linerboard and corrugating medium which will be purchased from its sister division Southern. That leaves $102.50 remaining and designated to other out of pocket costs per 1000 boxes. - $410 x 75% = $307.50; $410 - $307.50 = $102.50 out of pocket costs per 1000 boxes. d) If Thompson gets the order from Northern it will buy its linerboard and corrugating medium from the Southern Division of Birch. - Southern’s out of pocket costs for both liner and corrugating medium were about 65% of its...
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...Abstract Pollution of waterways from land use and urbanisation has been identified as one of the key pressures on estuaries and their associated biodiversity. The accumulation of heavy metals and bioavailable pollutants in sediments jeopardises the health of the waterways and associated biodiversity and aquaculture. Sydney Harbor is one of the most polluted in the world due to the intense urbanisation around its tributaries and historical pollution that gets reintroduced with anthropogenic activities like dredging- with our findings showing highest proportions of sediment along the river being of adequate size to form aggregates with pollutants. The dynamic nature of estuaries is also in jeopardy due to global warming caused rises in mean water levels, flooding areas and reducing viable habitat- supported by lower levels of copepods and other macroinvertebrates and zooplankton, and shifts in mangrove populations. Estuaries are a significant coastal feature in that they represent the interface between freshwater rivers and the saline ocean (Statham, 2012). The mixing of the two due to differing densities creates a unique environment in which to support many organisms, some of which are dependent upon the unique tide dictated salinity regimes of the area. These interfaces are areas of high production, as inland nutrients are washed down in the river and mix with nutrient laden sea water, creating a virile and protected section of water which provides habitat...
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...CASE STUDY Chapter SIX CASE 6-1 Case Study on “Transfer Pricing Problems” Case SUMMARY Division A of Lambda Company manufactures product X, which is sold to Division B as a component of product Y. Product Y is sold to Division C, which uses it as a component of Product Z. Product Z is also sold to customers outside of the Company. The intracompany pricing rule is that product are transferred between divisions as standard cost plus 10 percent return on inventories and fixed assets. Case Questions Question a: with transfer price calculated in Problem 1, is Division C better advised to maintain its price at $28 or follow competition in each of the instances above? Answer: Under possible competitive price $27.00 If company maintain the price at $28, the profit=(28-23.6) ×9,000=39,600 If company follow the possible competitive price at $27, the profit= (27-23.6) ×10,000=34,000 Under possible competitive price $26.00 If company maintain the price at $28, the profit=(28-23.6) ×7,000=30,800 If company follow the possible competitive price at $26, the profit= (26-23.6) ×10,000=24,000 Under possible competitive price $25.00 If company maintain the price at $28, the profit=(28-23.6) ×5,000=22,000 If company follow the possible competitive price at $25, the profit= (25-23.6) ×10,000=14,000 Under possible competitive...
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...political debates (Demetrious, 2012). It gives individuals in the society has the right and freedom to speak, to challenge, to provoke awareness through participation in public debate. ‘Democracy’ is the conceptual provenance of ‘community engagement’ (Demetrious, 2012). In other words, community engagement plays an important role in our democracy system. As Birch and Glazebrook (2000, p.41) state that corporate is under a great pressure to increase its profit, to keep a good relationship with its investors. Without doubt that ‘spin’ is a strategy for corporate in common use to frame information in a way that can be easily accepted by public who are related tosw. Gare also state that ‘The business community is becoming more isolated from the community at large and looking after its own interests’ (cited in Birch and Glazebrook 2000, p.41). Using the theories of the citizenship (Hudson & Kane 2000) and the communication (Habermas 1989) this essay will discuss the role and relationship of ‘community engagement’ to society and how ‘community engagement’ can be a solution to ethical problems associated with spin. The case study “The Wrribee toxic dump” will be used to demonstrate the arguments. Community engagement is a big theory that included both citizenship theory and communication theory. Hudson and kane (cited in Demetrious 2012, p.2) define citizenship theory as member who belongs to the community and are required to fulfill the community responsibilities, “belonging...
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...Birch Paper Company Question 1 Which bid should Northern Division on accept that is in the best interests of Birch paper company? Answer: Thompson division even through the bid from west paper seems at first to be the best choice. In you calculate out the cost you find that Thompson actually has the lowest costs associated with them. Cost involved: ✓ Costs for Thompson are a:Linearboard and corrugating medium: cost $ 400x 70% * 60% - $168 plus out of pocket: $400x 30% = 120, for a total cost of $ 288. ✓ Cost for west papers would be a total of $ 430. ✓ Cost for Eire papers would be $ 90x 60% - $ 54 (Southern) plus $ 25 (Thompson), and their supplies of $ 432 – 5 - 432 = $ 312 for a total of $ 391. Question 2 Should Mr. Kenton accept this bid? Why or why not? Answer: Mr. Kenton should not accept the bid from west because it isn’t in the best interest of the company, but at the same time with the transfer policy that exists, it is really up to him what is in the best interests of his division. I believe he should accept the bid from Thompson because not only will it result in the lowest cost, but also it will encourage buying from within the company. Question 3 Should the vice president of Birch paper company take any action? Answer: Yes. As if no orders come from top management Kenton would accept the lowest bid. The vice president of Birch should take action in order to remedy the overall problems associated with this transfer pricing...
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...Birch Paper Company - ( Pg. No. 254 ) ( Transfer Pricing ) Basics: Quotes per 1000 boxes: Thompson - $480/- West Paper - $432/- Eire Papers - $430/- So prima facie Eire’s quote is the lowest Details of Thompson’s Quote: Thompson’s Outof Pocket Exp.: $400.00 (Less) Supply from Southern Div, @70%: $280.00 Hence, Cost of Thompson: $120.00 Add: 20% OH + Profit: $80.00 Total Quote $480.00 However taking Birch Paper Company as a whole, the costing will be: Supply from Southern @ cost (ie less 40%): $168.00 Thomsons own supply w/o markup: $120.00 Total cost to the co.: $288.00 So in the best interest of the co. The offer from Thomson has to be accepted. Q2. If the Transfer price however remains the same, ie $480, and as the divisions are at full liberty to choose their suppliers either from inside or outside based on the Market price, Kenton should not accept the offer of Thompson for obvious reasons as their quote is higher by $ 50.00 than the most competitive Market price. Due to decentralisation policy of the co. and each departments profits are calculated and judged individually, then it is very much acceptable that Northern div. Will not increase its purchase cost due to the hidden inefficiencies of Thomson & Southern div. Which are not capable of meeting the marker prices. Q3. Should the vice president of Birch paper Co. Take any action. Ans. Though the case suggest that the qty. Involved in the subject transaction is less than 5% of any...
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...TITRE DU LIVRE LO R E M I P S U M 1 CASE STUDY: A TAKEOVER CROSS-CULTURAL COMMUNICATIONS 1 To benefit from this takeover, I recommend to Swiss Foods the following. Buying an existing business, means often an old one, in this case the company bought is traditional. I advise to invest large amounts in updating the production processes. On the one hand, that will help to convince your team that, the takeover is not a disaster, but it could actually lead to a brighter future. But I advise to wait at least three years before making any major changes and give the time to everybody to get used to the new organization. The key during a transition is to ensure that everyone feels included in the new organization. I recommend to promote a local manager to a position of authority in the company. The goal here is to manage expectations as with most strategies in business, the key is managing expectations in order to avoid an immediate drop in morale. As Swiss Foods will involve locals in the takeover, They will feel more secure. After, they have to make sure local managers have as much contact as possible with your head office. To maintain the communication, apply the right strategy and also make them feel that tey are a part of a team. I will also recommend to begin to use the brand names in the international product range, to promote internationally the takeover and to give a legitimacy to Birch Co. The other recommendations that I consider less important are: - Keep the...
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...GOA INSTITUTE OF MANAGEMENT Birch Paper Company Submitted by, Chandra Mouli Kavi Section C Roll no. 2010132 1. What is the immediate economic impact to the company of sourcing the product to either WEST PAPER or EIRE? Mr. William Kenton, manager of the Northern Division, should be permitted to choose the alternative that is in Northern division's own interests. The transfer price policy gives him the right to deal with either insiders or outsiders at his discretion. If he is unable to get a satisfactory price from the inside source, which is Thompson division, he should be free to buy from outside. The three bids from Thompson division, West Paper Company and Eire Paper Company are $480, $430 and $432 respectively. Below mentioned are the costs involved while taking Thompson division, West Paper Company and Eire Paper Company into consideration. a) Costs for Thompson division Linearboard and corrugating medium : $400 x 70% x 60% = $168 Out of Pocket Total Cost : $400x30%=120 : $288 b) Costs for West Papers = $430 c) Costs for Eire Papers Outside Linear (Southern) Printing (Thompson division) Own Supplies Total Cost : $90x60%= $54 : $25 : $312 : $391 Since all the transfer prices in the company are calculated at costs, the Northern Division should accept the bid for Thompson division as it has the lowest costs. Accepting the bid based on lowest costs would also enable Birch Paper Company to earn the highest profits available. 2. What are the possible...
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