Pan-Europa Foods Case Analysis Essay

1055 Words Sep 14th, 2015 5 Pages
Pan-Europa Foods Case Analysis

Executive Summary

Pan Europa foods is a European producer of yogurt, ice cream, bottled water, and fruit juice. With stagnant gross sales and decreasing stock value, the company needs to increase its net income and increase confidence in its shareholders to avoid a takeover. With this in mind, the company decides to allocate $80 million Euros out of its $656 million asset base to capital spending in investment projects. There are currently 11 proposals on the table totaling $208 million from which the Senior Management Committee must choose from. Currently the company has two financial measures to determine if projects are economically sufficient for the firm, minimum acceptable IRR and maximum
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Also, changing the way a product is produced can pose riskiness, like in the case of the artificial sweetener. Projects that imply less riskiness are ones involved with small changes or upgrades in efficiency because the outcomes are more predictable.

* Synergies or conflicts – There be conflicts with the expanded plant and new plant projects, as well as the southward and eastward expansions.

* Non-quantitative benefits/costs – The effluent water project could be viewed by consumers as the company being environmentally conscious and have a positive effect on the firm’s image. The acquisition of a schnapps brand could have a negative effect on the brand’s image from more wholesome consumers. Also the opening of a new plant could have negative or positive effects for the company depending on how the local community responds.

5.) Factors to narrow down set of the most desirable projects:

* Must-do to comply with any government regulation – Yes or No * Riskiness – rank each project 1-5 for perceived riskiness, 1 being most risky and 5 being the least risky, factor into weighted matrix * Non-quantitative benefit: effect on brand image rank 1-5, 5 being most positive, factor into weighted matrix * Min. acceptable IRR & max. acceptable payback years both met – Yes or No * Equivalent annuity ranking – previous rank 1-11 (11 being high EA) and factor into matrix

The development of a

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