Case Analysis

Case Analysis Mini-Case KAVAG GmbH. Hitting the Ground Runnind. 5 points. Individual Effort. 1,115 words. 5 page max. You have been appointed Geschaftsfuhrer of KAVAG GmbH outside of Frankfurt, Germany, by the Vice President International of a large US engineering/manufacturing corporation. KAVAG has been struggling for years, mainly due to the neglect by the parent company. Morale is poor.  The demand for oil and natural gas is expanding, there are tighter air pollution control laws, and manufacturing companies in Eastern Europe and the Central Asia countries (newly formed after breaking with the Soviet Union) are looking for business. Some of the factors that face KAVAG: •             Poor morale in the engineering, sales and shop. •             Restrictive laws that make it difficult to lay off employees. •             Increasing competition from old time suppliers of air-pollution control equipment. In addition companies in Eastern Europe, who have operated under a license from Western European companies, and, with the expiration of the license, are now direct competitors in the Common Market. •             The parent company has assumed all of the debt and needs for working capital of KAVAG, but they have tired of transferring funds on a monthly basis to make up the negative cash flow. You do not have to worry about new sources of cash (such as loans or capital), but you should be cognizant of the cash drain through the operation part of the balance sheet. •             If you do not solve the KAVAG problem, then you and the VP International should up-date your resumes. •             The new VP-International terminated the past Geschaftsfuhrer and promoted you as the new manager. You started as an engineer at KAVAG and then transferred to the UK subsidiary of the parent company, which specialized in gas scrubbers and separators. You know all of the KAVAG employees. Your assignment: Hitting the Ground Running.  Individual Effort.  5 points. What will do during Week #1?  Respond to ‘Hitting the Ground Running’ to these questions, and then proceed with the rest of the Mini-Case #3 at your own pace. Label your response as “Hitting the Ground at KAVAG’. 5 points for ‘Hitting the Ground Running’. •    Identify 5 topics that you will focus on within the first week. •    Describe the areas that you will ask the CFO to identify for immediate action. •    What is going to be your priority in the various cost areas? •    What balance sheet items interest you? •    What is the status of the Cash Flow? •    Your spouse has never been to Germany before and he/she wants to go on a romantic cruise (with you) on the Rhine (on Wednesday). How will you handle this?