Monte Bianco case
Cafes Monte Bianco was born as a manufacturer and distributor of premium coffee and thanks to this strategy, achieved a competitive advantage throughout Europe. Managers are considering to produce only private brand and leave production of premium coffee. Each of them entails some important aspect linked to the objective of Giacomo Salvetti to expand the capacity of business: produce premium brand was the strength point of company since the beginning ; manufacturing private brand had saved Cafes Monte Bianco when the market of premium brand was very volatile and it can guarantee a stability of sales volume ( at least while the contract is operative). In according to the analysis of profit plan there are some negative …show more content…
With a initially cash of 1 121 450 thousand of liras, the projections announce a cash shortfall for most of the year, as shown in Figure 2.
Figura 2
At the end of the year, cash presents a huge deficit, about -4 051 791 thousands of liras.
In the analysis has been considered that bank could give to the company the possibility to extend the credit line, which already amount to 25 billion of liras at the end of 2000, at an additional 5 billion liras, at an annual rate of 10%. Thanks this finance funding company could implement the strategy with a positive cash but on the other side, the interests expenses grow about 500 thousands of liras with a consequent decrease of profit.
The evaluation of the strategy was completed by analyzing the change in ROE between 2000 and 2001: this would rise from 21,23% to 9,46%; using Du Pont method, decomposing the ROE into three variables of Profitability ratio, asset turnover and Financial leverage ratio the variation of the index is more
Cafes Monte Bianco was born as a manufacturer and distributor of premium coffee and thanks to this strategy, achieved a competitive advantage throughout Europe. Managers are considering to produce only private brand and leave production of premium coffee. Each of them entails some important aspect linked to the objective of Giacomo Salvetti to expand the capacity of business: produce premium brand was the strength point of company since the beginning ; manufacturing private brand had saved Cafes Monte Bianco when the market of premium brand was very volatile and it can guarantee a stability of sales volume ( at least while the contract is operative). In according to the analysis of profit plan there are some negative …show more content…
With a initially cash of 1 121 450 thousand of liras, the projections announce a cash shortfall for most of the year, as shown in Figure 2.
Figura 2
At the end of the year, cash presents a huge deficit, about -4 051 791 thousands of liras.
In the analysis has been considered that bank could give to the company the possibility to extend the credit line, which already amount to 25 billion of liras at the end of 2000, at an additional 5 billion liras, at an annual rate of 10%. Thanks this finance funding company could implement the strategy with a positive cash but on the other side, the interests expenses grow about 500 thousands of liras with a consequent decrease of profit.
The evaluation of the strategy was completed by analyzing the change in ROE between 2000 and 2001: this would rise from 21,23% to 9,46%; using Du Pont method, decomposing the ROE into three variables of Profitability ratio, asset turnover and Financial leverage ratio the variation of the index is more