Hartmann - From value proposition to finance

Résumé du document

Due to the orientation of the project, it does not include elaborations on any other matters of the company but the financials and consideration on Hartmann's value proposition. Given the statements provided, we have worked with numbers from year 2006 to 2012 H1, which have also been used to provide a comparison and financial analysis of Huhtamaki and Hartmann. Other competitors than Huhtamaki have not been included. The calculations are strictly based on accurate numbers given by both companies. Hartmann's operations were identified and placed within industrial and egg packaging market, hence the project does not take other markets under consideration. Due to the limitations of the current paper, no shareholder analysis is provided considering Question 2.

Models and theories used

Question 1: Hartmann's value proposition within its business strategy had been investigated along with a determination of USP/ESP concepts. Question 2: Financial analysis and comparison of Huhtamaki and Hartmann by applying solvency and liquidity ratios calculations. Question 3: Analysis of profitability in a certain production group using ABC output. Question 4: Allocation of the overhead cost as well as mark-up, cost-based and market-based pricing had been provided for Hartmann.

Extraits

[...] Answers to the Questions 1 Question 1 At the very beginning of the following paper, is important to make clear the key position of value proposition within any business. To begin with, a value proposition is what spreads directly to your target audience and it tells them exactly why they should purchase your products and services. Hartmann's value proposition for that matter is related to its capability to offer quality products of massive quantity at low, comparing to the European market, price. This is possible as a result of the company's production process, which uses cheap recycled raw materials to produce Hartmann's packaging products. [...]

[...] In order to analyse the situation, the proportion between fixed and variable costs is used, VC are 50% of total cost, FC are 50% too. The income statement shows that revenue from Egg 3 is more than VC, but less than the total cost, revenue from Egg 7 covers the variable costs, but cannot cover the fixed costs, in the same time net sales of Egg 10 cannot even cover the variable costs. This means that Egg 10 should be dropped not only in short term, but also in long-term plan, so that the company costs decrease and higher profit margin is generated. [...]

[...] However, this is not the right decision in every situation. The management needs information about the contribution of each product to the profitability. Such information shows whether dropping one or all of these products will actually increase or decrease the group profitability. Information about what is the proportion of the fixed costs, connected to the product, which can be avoided if the product is dropped, and the general fixed costs of the group is not provided, so such analysis cannot be made. [...]

[...] As the internal price is a cost in formation of the market price, it has to be accurately calculated, so that some products are not under-priced, while others are over-priced. There is a possibility that different products have also different cost drivers and support activities. An allocation model of the overhead costs, based on actual labour hours might be more appropriate for the complex product, as more complex production processes will lead to more labour hours. This way a possible under-pricing of the very complex product might be avoided, caused by calculating the overhead based on equally allocated labour hours. [...]

[...] Thus, Hartmann has been able to remain stable on the market. The biodegradable materials used for the creation of the products are also seen as part of the value adding chain. It is also worth mentioning the design of the boxes, giving maximum space for advertising. The slogan, „Choose Fabric, Save Nature”, points out the approach to sustainability the firm is going after. It is often seen that the USP/ESP is included in the slogan as it is the case with Hartmann. [...]