Global Fragrances Ltd Modern Flavours Limited Case Study – Accounting Assignment Help

Assignment Task

Task
 Accounting and Financial ManagementAssessment –  Your client Global Holdings Ltd was pleased with the quality of the advocated improvements you provided (Assessment 1). As a result, your client has engaged you further as a consultant to advise them on a proposed acquisition. A division of your client, located in Thailand, whose business is involved in manufacturing flavours for the food industry is considering merging with a competitor whose business is involved in manufacturing perfumes for the personal care industry. Details of the merger are in the attached case data below.

You must evaluate the benefits of the merger and quantify the financial impacts.

• Evaluate the revenue and profit profiles of the product range of the combined group and place the products into the relevant sectors of a BCG matrix. (equivalent to 200 words)
• Investigate the market position of each of the products of the combined group and formulate their current status on a product life cycle diagram. (equivalent to 200 words)
• Prepare a profit budget for the combined business, incorporating the identified cost savings and synergies. (equivalent to 800 words)
• Quantify the significant impact on the products and business at large if the projected budgets did occur. (400 words)
• Rationalise how KPIs can assist with measuring the performance for this new operation after the merger. (200 words)
• Explain some of the alternatives to the traditional annual budget preparation process. In your response, consider the type of organisation, management style, and organisation structure more suited to the traditional budgeting process, and the type of organisation that is more suited to the alternative more flexible budget preparation styles. (200 words)

Case Material
Profit performance of Global Fragrances Limited in the year December 2019 (this data is relevant for tasks 1 and 2 of your assessment)Global Fragrances Ltd (GFL) is a fully owned subsidiary of Global Holdings Ltd. The business is domiciled in Switzerland and operates a business manufacturing and marketing fragrances. The business has a global footprint with sales offices in all major international cities and two strategically located manufacturing plants, one in the USA and the other in Thailand. The business sells 3 products HC1, PC1, and FC1. HC1 is used to fragrance shampoos, PC1 is used to fragrance hand wash and FC1 is used to fragrance fabric conditioner.The 3 products made by GFL are long established products. Sales volumes are stable with the exception of the emerging markets in Africa and South America, where sales are growing by around 10% a year. GFL has invested in trying to develop new products but has not had much success.As a result, at the end of December 2019 GFL made a takeover offer for Modern Flavours Ltd (MFL), a business based in Italy which also has a global manufacturing and marketing footprint. The takeover was successful and GFL acquired the business of MFL with effect from 1st January 2020.MFL makes 3 products, RF99, SF99 and IF99. RF99 is used to flavour energy drinks, SF99 is used to flavour low calorie sweets and IF99 is used to flavour foods with exotic international tastes.Profit performance of Global Fragrances Limited and for Modern Flavours Limited in the year December 2019 (this data is relevant for tasks 1 and 2 of your assessment)
The summary profit statements for Global Fragrances Ltd and for Modern Flavours Ltd for the year ended December 2019 is detailed below.
Global Fragrances Limited Modern Flavours Limited

• $ Million $ million
• Sales 688 400
• Material cost (200) (100)
• Wage costs (150) (40)
• Variable overheads (100) (80)
• Fixed overheads (200) (50)
• Profit 38 130
• Relevant information on sales volumes, selling prices and the cost of manufacture of each of the 3 products sold by GFL as well as for the 3 products sold by MFL are detailed below.
• Global Fragrances Ltd Modern Flavours Limited
• Product HC1 PC1 FC1 RF99 SF99 IF99
• Quantity sold (Million kg) 12 20 16 10 6 8
• Selling price ($ per kg) 19.00 15.00 10.00 20.00 10.00 17.50
• Material cost ($ per kg) 5.00 3.50 4.375 4.50 3.50 4.25
• Labour hours (Hours per kg) 0.11 0.052 0.04 0.03 0.02005 0.0308
• Wage rate per hour ($) 50.00 50.00 50.00 60.00 60.00 60.00
• Variable overhead Allocated to each product based on labour hours Allocated to each product based on labour hours
• Fixed overhead Allocated to each product based on the number of kilograms sold in the year $20 million in total $20 million in total $10 million in total
• Budget data for preparing the budget for the year 2020.
• (this data is relevant to task 3 of your Assessment)
• After consultation with the staff of the business on a bottom up approach you have agreed with the senior management team the following performance parameters for 2020: