Victoria Chemicals Plc(a)
Case 22: Victoria Chemicals
The Merseyside Project
Table of Contents
Executive Summary 3
Problem Statement 3
Key Decision Criteria 4-5
Data Analysis 5-6
Alternatives Analysis 6-7
Recommendations 8
Action and Implementation Plan 8-9
Exhibits 10
References 11
Executive Summary
Victoria Chemicals is a major competitor in the worldwide chemicals industry. They are a leading producer of polypropylene, which is a polymer used in products such as: medical products and carpet fibers. Victoria Chemicals purchases the propylene from four refineries in England, as it is a byproduct of the refining of crude oil into gasoline. Two divisions compose Victoria Chemicals: Intermediate Chemicals Group (ICG) and the Transport Division. Intermediate Chemicals Group is divided into two plants, Merseyside Works and Rotterdam. James Fawn, the Vice President and Manager of Intermediate Chemicals Group, is in charge of both plants. Merseyside Works is located in Liverpool, England, and the second plant is located in Rotterdam, Holland. Both plants were constructed in 1967 and the production process has since slowed compared to competitors with newer and updated equipment. These plants supply to both Europe and the Middle East. The Transport Division is a cost center that oversees the transporting of raw, intermediate, and finished materials throughout the company. The Division is also responsible for the managing of the company’s tank cars.
Due to the outdated production process of polypropylene at Victoria Chemicals, the production costs are some of the highest in the industry. This has placed Victoria Chemicals under heavy pressure from investors to improve their financial performance. Recently, a well-known corporate raider, Sir David Benjamin, accumulated all of the firm’s common shares. (Bruner, 2008)
Problem Statement
Should Victoria Chemicals make an investment into the renovation of the polypropylene production line at the Merseyside
The Merseyside Project
Table of Contents
Executive Summary 3
Problem Statement 3
Key Decision Criteria 4-5
Data Analysis 5-6
Alternatives Analysis 6-7
Recommendations 8
Action and Implementation Plan 8-9
Exhibits 10
References 11
Executive Summary
Victoria Chemicals is a major competitor in the worldwide chemicals industry. They are a leading producer of polypropylene, which is a polymer used in products such as: medical products and carpet fibers. Victoria Chemicals purchases the propylene from four refineries in England, as it is a byproduct of the refining of crude oil into gasoline. Two divisions compose Victoria Chemicals: Intermediate Chemicals Group (ICG) and the Transport Division. Intermediate Chemicals Group is divided into two plants, Merseyside Works and Rotterdam. James Fawn, the Vice President and Manager of Intermediate Chemicals Group, is in charge of both plants. Merseyside Works is located in Liverpool, England, and the second plant is located in Rotterdam, Holland. Both plants were constructed in 1967 and the production process has since slowed compared to competitors with newer and updated equipment. These plants supply to both Europe and the Middle East. The Transport Division is a cost center that oversees the transporting of raw, intermediate, and finished materials throughout the company. The Division is also responsible for the managing of the company’s tank cars.
Due to the outdated production process of polypropylene at Victoria Chemicals, the production costs are some of the highest in the industry. This has placed Victoria Chemicals under heavy pressure from investors to improve their financial performance. Recently, a well-known corporate raider, Sir David Benjamin, accumulated all of the firm’s common shares. (Bruner, 2008)
Problem Statement
Should Victoria Chemicals make an investment into the renovation of the polypropylene production line at the Merseyside