Ciba-Geigy

Ciba-Geigy founded in 1750s has contend to many changes in their business scheme from case-by-case decisively to be one of proactive planning for the future with corporate portfolio planning which allowed Ciba to decentralize into diversified businesses. At their latest reorganization, Ciba had five categories Development, Growth, Pillar, Niche and Core allocated from 14 divisions with 33 sub-business units.Each division in each year has unwrap responsibility to the whole portfolio, for example, the Pigment division in Core category had the role of notes provider. Therefore, it was difficult for this division to access to capital, major institutionalisement would violate their mandate, and payback period was set at two to threesome years. However, the Pigments division head recently proposed the plan for major enthronement in comprehensive modernization of a manufacturing plant in Newport which was the only world-wide source for Sfr 130 million in sales of Quinacridone (HPP ) pigments.Ciba needed to find out whether or not to enclothe in Newport and choose among three pickaxs invest fully, invest partially in Newport or close it. Recommendation ground on Lippuners two questions in corporate planning portfolio dodge on new business, there are two reasons for Ciba to treat the investing in Newport as exception to invest. Besides, they should choose preference one which act a full investment funds of around US $140 million.Firstly, this investment improved Newport plant from high maintenance costs and frequent alike-ran in production to become the plant with the leading-edge standards for productivity, safety, and friendly to environment. This investment also opened opportunity for Ciba to produce DPP, which protected Cibas leading commercialize position in HPP pigment when DPP pigments patent safeguard was set to expire in 2000 2002.Limited investment in option two did not bring Cibas Pigment division the leading-edge cognition and maintained the capability for innovative edge therefore, it was out of Cibas strategy for new business. Secondly, this investment reinforced synergistic efforts between Pigment and former(a) division in current portfolio. Although it was huge investment in nub category, the pigment division still maintained to have a corroborative cash flow and payback period was within 3 years.Besides, Ciba should regulate from the lesson of the pharmaceutical business which uelled other categories and came under difficulty in the recession. The aforementioned(prenominal) problem would happen in Pigment segment if Ciba did not invest in Pigment. However, we did not know how much Pigment contributed in the cash flow of the portfolio, so we could not evaluate if the whole portfolio could handle the investment period when there was a short of cash from Pigment. If not, Ciba should choose option three close Newport and move it to Alabama or Louisiana as a less risky plan.