CASE STUDY

CHICORY
CASE HISTORY:
Chicory operates a chain of depots in Deeland, supplying and fitting tyres and other vehicle
parts to Lorries, buses and agricultural vehicles. Chicory’s objective is to maximize shareholder
wealth. The board has commissioned a benchmarking exercise to help improve Chicory’s
performance. This exercise will involve comparison of a range of financial and other operational
performance indicators against Fennel, a similar business in Veeland. Fennel has agreed to
share some recently available performance data with Chicory as they operate in different
countries. The reason Fennel was chosen as a benchmark is that as well as supplying and fitting
tyres and parts to heavy vehicles, a large part of Fennel’s business involves supplying electricity
to charging points to recharge electric cars. Fennel installs and operates the charging points in
public places, and users pay Fennel for the electricity they use.

ISSUES AT HAND:
Chicories dilemma is that they work in a world in which the economy has slowed down and the
chicory production has been affected. In fact, they had a botched takeover and 24.7 M
impacted their reputation.

 In terms of assets and sales, the benchmarking with the business is very high.

 They could have more to provide charging points and they need to wait until they earn a
return.

 The credibility of the business has diminished in recent years owing to the poor output
of pipes and automotive components.

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FACTS AND FIGURES:

ALTERNATIVES:
• The company will take a stance against its rival which is as large as chicory and not the
business above the heavens.
• The benchmarked organization will have specific government and economic
circumstances in the same region as each nation.
• They will remain in business and then reinforce their main market, not diversify on a
different business path.
• They will provide their consumers with high standard services.
• Discount and offers to draw new consumers should be offered.

RECOMMENDATIONS:
By reviewing the facts and statistics, the chicory will recover the credibility (goodwill) of its
clients. The company should also focus on good deals and offer some discount packages to its
customers. The vehicles performed are also to be operated consistently. Chicory's main
financial performance indicator is the return on the average capital employed (ROCE), which is
to be compared to Fennel. EBITDA (earnings previous to taxation, taxes, depletion, and
amortization), which might have certain drawbacks, may have advantages over current policies,
which should therefore be included in the benchmarking.

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