TAYLOR CHEMICAL COMPANY do BRAZIL, Ltd.

In the fall of 1997, the Board of Taylor Chemical Company, Inc. (headquartered in the United States) is concerned about the performance of its Brazilian subsidiary, Taylor Chemical Company do Brazil. With the entry of Brazil into a South American free trade association (Mercosur), the Brazilian subsidiary must improve its productivity to meet the increased competition. The Board has established a goal of a 14 percent return on assets for the Brazilian subsidiary to assure that the subsidiary's performance meets the parent company's expectations. This goal, however, indicates that either the Board of Taylor Chemical Company or the writers of this case do not know how to read financial statements.

The case writers indicate that the overall company earnings in fiscal 1996 were US$79 million on sales of US$538.2 million. This performance equated to a 14.7 percent return on sales, and equated to a 39.5 percent return on total company assets of $200.1 million (refer to Case Exhibit 2). In fiscal 1996, the operating profit of the company was $111.9 million, a 55.9 percent return on total assets at the operating performance level.

As the focus of this case is on improving the operating performance at the Brazilian subsidiary, the focus must be on operating income/loss at the subsidiary. In fiscal 1996, the Brazilian subsidiary, according to the case writers, earned an operating profit

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assessed in this cases analysis. These questions are as follows: What factors does Mr. Madden have to analyze to develop a plan to improve Taylor's operational situation? What are the characteristics of the Brazilian economic environment that may be directly influencing Taylor's performance? From a management perspective, which would be the areas of resistance to the implementation of a new materials flow plan? What should be the central elements of a new materials flow plan? How should improvements in materials flow be measured? Successful implementation will depend on Madden's ability to mobilize the shop floor in support of the approach. How should Madden develop such support? What actions are recommended for the implementation of Madden's plan for materials flow improvement? Stakeholders There are many stakeholders and stakeholder groups associated with the issue of improving operational performance at the company's Brazilian subsidiary. First, there is the Board of the parent company. Second, there is the relatively new general manager at the Brazilian subsidiary, Robb McGregor. Third, there is John Madden, the new Operations manager at the Brazilian subsidiary. Fourth, there are the members of the management
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Approximate Word count = 1568
Approximate Pages = 6 (250 words per page)