College Essay on Deutsche Brauerei Argumentative
College Essay on Deutsche Brauerei Argumentative

College Essay on Deutsche Brauerei Argumentative

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  • Pages: 2 (441 words)
  • Published: November 13, 2017
  • Type: Analysis
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Located in Munich, Germany, Deutsche Brauerei was a family-owned business that produced two outstanding types of beer, namely dark and light. The brewery was founded by Gustav Schweitzer in 1737 and had been passed down to generations of the Schweitzer family for a total of 12 generations.

Although the members of the board possessed extensive production expertise, their knowledge of the company’s marketing and financial management was minimal. Throughout the company’s lengthy history, the primary business strategy involved creating a superior product to ensure that the entire output could be sold at full price. However, this approach began to change following the dissolution of the Soviet Union when Lukas Schweitzer, the managing director, recognized a significant opportunity for the business within the former Soviet states, specifically Ukraine due to its large population and strategic location in Central and Eastern Europe. Thanks to its full-bod

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ied malty flavor, Deutsche beer quickly became a triumph in Ukraine. Within three years of its launch, Ukrainian consumers comprised 28% of Deutsche’s overall sales.

Moreover, a significant portion of the sales growth during this period was fueled by Ukraine. To enhance the beer's marketing efforts, Lukas enlisted Oleg Pinchuk, a marketing specialist familiar with Ukraine's markets, who previously promoted beer for a major Ukrainian producer.

Deutsche Brauerei operated in Germany through independent distributors who bought and stored the beer in their facilities before selling it to end customers at retail locations. However, when Deutsche beer debuted in Ukraine in 1998, there was no established network for distribution. Consequently, Oleg Pinchuk implemented an alternative distribution strategy that focused on loosening credit policies and carrying inventory on behalf of distributors.

Amidst a potential global economic downturn, should

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Deutsche Brauerei proceed with an aggressive expansion plan in Ukraine? Additionally, despite the company's increased sales growth, it has been borrowing more short-term debt. How does Oleg Pinchuk's distribution strategy differ from Deutsche's in Germany, and what financial implications have arisen as a result? These impacts include potential effects on accounts receivable, inventory, return on equity, return on investment, and breakeven volume. To properly evaluate these factors, a thorough investigation of Oleg Pinchuk's financial plan, ratio analysis, and breakeven chart is necessary to determine if his assumptions are reasonable.

Considering the company's expansion phase in Ukraine, it is necessary to reassess the current or proposed dividend policy. Additionally, should Deutsche Brauerei allocate 7 million Euros towards new plant and equipment? Does Oleg Pinchuk's compensation plan cause agency problems, and if so, what revisions should be made? Lastly, does the Ukrainian expansion project yield a positive Net Present Value and contribute towards the company's economic profits?

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