a. Using NPV, conduct a straight ﬁnancial analysis of the investment alternatives
and rank the projects. Which NPV of the three should be used?
Due to the duration of the project it would be wise to use the Annuity instead since itcorrects discrepancies project durations unlike the NPV. Using this analysis thepreferred project would be 11, the Strategic Acquisition. Then following in order wouldbe:
Inventory Control System
Automation and Conveyor System
Expand Truck Fleet
Effluent Treatment Program (which has no NPV)While the Effluent Treatment Program has no formal NPV it can be considered aninvestment of 4M now to save a cost of 10M in 4 years.
Question 3a. Whataspects of the projects might invalidate the ranking you just derived?
There are many aspects that could invalidate the simple NPV analysis of the projects.They include
Regulatory issues including health, safety and environmental
Incompatibility with corporate strategy
Strategic Management Whole Foods Case Analysis
... Running Head: WHOLE FOODS CASE ANALYSIS 1 Whole Foods Case Analysis Thomas Edison State College WHOLE FOODS CASE ANALYSIS 2 The Whole Foods company mission is whole foods, whole people, whole planet. The Whole Foods company strategy reflects the company mission. Their whole foods mission is achieved by offering a wide variety of food and non-food items that are organic or natural. They source their products locally and usually have stricter store guidelines for the definition of “local” requiring a shorter maximum distance for traveling. “Locally grown” n.d. Their standards of quality are high and they strive to provide products that are fresh, safe and support well being. They have a list of unacceptable ingredients for food and quality standards for other products. “Quality standards” n.d. Their mission of whole people is achieved through the formation of teams at the store level. The teams manage themselves and are encouraged to make decisions about their department they are responsible for. Compensation is in part from stock options so they are invested in the profitability of the store. Fortune magazine has listed them as on the top 100 companies to work for for 13 years in a row now. Team members can go on field trips......
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Brannigan Foods Case Analysis
... BRANNIGAN FOODS: STRATEGIC MARKETING PLAN Mitchell Lunde University of Maryland University College MRKT 495 21/10/2013 Table of Contents Executive Summary Company/Product Analysis Problem Statement and Underlying Symptoms Bert Clark faces many challenges as vice-president and general manager of Brannigan Foods’ Soup Division, but nothing could have prepared him for what he recently read. A critical analysis of the entire soup industry indicated the situation as dismal and with no end in sight. Because of the increased health concerns amongst American consumers and the perception of most soups as being high in sodium and full of preservatives, many consumers have either stopped buying soup entirely, or have moved to fresher, healthier soups. Not only is the report slightly negative, but the company’s own market share, sales, and profitability has been slipping for the past three consecutive years indicating only one thing: new strategies had to be implemented in order to subside the downward spiral. The people he depended most on in his division had all provided their own careful analysis and recommendations, but despite their efforts, there was no comprehensive solution amongst any of the recommendations. There was however one point which Clark felt was his division’s most pressing need: in order for the company to grow, it had to target products to a younger audience despite the fact older segments consumed a majority of condensed and ready to eat...
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Case Analysis – Whole Foods Market
...Introduction: By 2006, Whole Foods Market had evolved into the “world’s largest retail chain of natural and organic foods supermarkets.” Their rapid growth and success is primarily due to being highly selective about what they sell, as well as being dedicated quality standards and core values. Whole Food’s stated mission statement was to “promote vitality and well-being for all individuals by offering the highest quality, least processed, most flavorful natural and naturally preserved foods available.” II. Situational Analysis a. Firm Analysis (Internal Strengths and Weaknesses) (Based on Appendix A). i. Current strategy and strategic position in industry: Whole Food’s strategy since 2002 has been to open its own large stores, 50,000 square feet and larger, rather than acquiring small chain stores ranging from 5,000- 20,000 square feet. The driving concept behind their merchandising strategy was to create and “inviting and interactive store atmosphere that turned shopping for food into a fun, pleasurable experience.” Whole Food’s wanted customers to think of the store as a “third place” outside of home and work, where they could relax as well as interact with others in a colorful environment. Financials Analysis: After reading the case and reporting the financial numbers the profit margins from year 2005 have been decreasing each year. The costs of goods sold are on the rise over the past three years and debt over the past three......
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...Answer #1: Pan-Europa must strategically plan projects that can reduce its debt, improve its price-to-earnings ratio, increase profitability and regain its significant market share. In reference to Exhibit #2, the financial results that are important for the coming year are (Net income, Earnings per share, and Shareholder’s equity – market value). The price war has concluded and it is time for the members of the senior management committee to use the approved capital spending amount to implement strategically planned projects and to rally around a leader. Based on his experience, leadership traits, and vision in expanding the company’s core business, Nigel Humbolt should be considered the top candidate to lead Pan-Europa. Answer #2: After reviewing Exhibit #3 and the data that is represented, NPV was calculated using a 10.5% estimated weighted average cost of capital for Pan-Europa’s proposed projects. Taking this data into consideration, the ‘Strategic Acquisition’ project scored the highest ranking above all other projects due to its 47.97 WACC rating, NPV at minimum rate of return of 41.43 and an IRR of 28.7%. Project No. 11 7 8 9 4 10 2 3 5 1 6 Project Name Strategic Acquisition Eastward Expansion Southward Expansion Snack Foods Artificial Sweetener Inventory Control System New Plant Expanded Plant Automation & Conveyor System Expand Truck Fleet Effluent Treatment Program NPV at Corp. WACC (10.5%) 47.97 11.99 9.00 8.95 5.21 1.16 0.99 0.28 -0.87 -1.92 NPV not given Rank 1...
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Pan Europa Foods
...Question 1: Pan-Europa must strengthen the right hand side of the balance sheet now that the price war is over. Summary of the financial figures in Table Exhibit 2 show that the gross sales are almost stagnant over the 3-year period, earnings per share have steadily declined during the same time period, and the market value of shareholder’s equity is at the moment lower than its actual book value. Furthermore, the net income is also down over this 3-year period, and this is where Pan-Europa needs to focus its efforts (capital projects should assist in this effort). Earnings per share, dividends, and shareholders’ equity all fuelled by increase in net income will become critically important to the company and its shareholders in this coming year. Increase in net income would in turn strengthen the shareholders’ equity, earnings per share and dividends, and this would discourage buying shares by those considering a hostile takeover. Trudi Lauf as a proponent of reducing leverage on the balance sheet and understanding the shareholders anxiety should lead the way of Pan-Europa. ___________________________________________________________________________ Question 2: There are three NPV – NPV at Corp WACC (10,5%), NPV at minimum ROR and equivalent annuity. Ranking all projects against each of this category provides slightly different results. However, I used NPV at Corp WACC (10,5%) as this includes the most recent estimated weighted-average cost of capital for Pan-Europa. The......
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Whole Foods Case Study Analysis
...Unit 5 Whole Foods Case Study Analysis Kaplan University School of Business MT460 Management Policy and Strategy Author: Jonelle Newman Professor: Dr. Norris Date: March 29, 2014 Whole Foods Market Case Study Analysis Introduction Whole Foods Market began with a vision from entrepreneur John Mackey and his chain of stores has been successful for 30 years. Whole Foods Market focuses on natural and organic food items. One of the reasons why Whole Foods has been so successful is because their stores are different than its competition and the differentiation “allows them to charge a premium price for premium products.” (Pearce & Robinson, 2013, p. 29-1). Whole Foods focuses on natural and organic foods which is a definite plus as more people become focused on wellness and eating healthier. This leading supermarket chain does not waiver on its core values and mission and their mission statement which has also become their motto is simple: “Whole Foods, Whole People, Whole Planet.” (Farfan, 2014). Synopsis of the Situation Whole Foods has grown drastically over the years. The growth of the supermarket chain has been credited to store openings, acquisitions, and mergers. It is necessary to note that although the company’s total sales continue to increase; the operating margin and stocks have declined. (Pearce & Robinson, 2013). Key Issues There are key issues that have been attributed to the decline of the company. The recession caused...
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Whole Foods Case Analysis
...technologies like VOD. In this case study, we first address the pertinent problem faced by Netflix which is arriving at a decision regarding the optimal mode of entry into the VOD market. This decision in question will inevitably impact Netflix’s current position in the DVD rental industry as well as its existing business model and thus a thorough analysis of the corporation and the video market need to be made. A SWOT analysis was done on Netflix and its strengths and weaknesses, in particular view reveal its survival in the hyper competition of video industry where dynamic and complex uncertainties render competitive advantages not sustainable. Some strengths of Netflix’s current business model include its no late fee subscription model and proprietary recommendation system where customers can be recommended movies based on their preferences as well as the availability of the movies. The main weakness of Netflix remains to be delivery time as customers do not get to enjoy the instantaneous effect of receiving the DVD upon rental as compared to a brick and mortar store. The opportunities which Netflix could capitalize include leveraging on existing strengths such as, its brand, its recommendation system and its large market share of online customers to increase penetration of the young VOD market. Threats or risks faced by Netflix will be the huge capital outlay Netflix have to invest in to enter the relative young VOD market. The SWOT analysis done on Netflix......
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...Strategically, what must Pan-Europa do to keep from becoming the victim of a hostile takeover? What rows/categories in Exhibit 2 will become critically important in 1993? What should Pan-Europa do now that they have won the price war? Who should lead the way for Pan-Europa? Pan-Europa’s ball and chain is its debt. With a debt-to-equity ratio of 125%, the company is leveraged more than its competitors. Pan-Europa’s bankers have become unwilling to provide additional credit, which is unfavorable if conditions call for the purchase of a large block of common stock to prevent a hostile takeover. As a preventative measure, Pan-Europa must bolster shareholder confidence by continuing to pay the dividend and driving up earnings, which should drive stock price up. Showing annual revenue growth through wise capital investment is crucial in 1993. Exhibit 2 below shows the company’s flat trend in gross sales, declining net income and earnings per share. Clearly these are signs of an overleveraged organization. Investment firms are already recommending selling Pan-Europa stock, driving the market price down. Fiscal Year Ending December 31 | | 1990 | 1991 | 1992 | Gross sales | 1,076 | 1,072 | 1,074 | Net income | 51 | 49 | 37 | Earnings per share | 0.75 | 0.72 | 0.54 | Dividends | 20 | 20 | 20 | Total assets | 477 | 580 | 656 | Shareholders' equity (book value) | 182 | 206 | 235 | Shareholders' equity (market value) | 453 | 400 | 229 | To remedy this situation, Pan-Europa......
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Whole Foods Case Analysis
...Whole Foods printed mission statement is to “promote vitality and well-being for all individuals by offering the highest quality, least processed, and most flavorful natural and naturally preserved foods available.” These values have established Whole Foods Market in to the world’s largest retail chain of natural and organic food super markets; founded in Austin, Texas by John Mackey in 1980 the company has experienced rapid growth based on their impeccable business plan, that focuses on selection of products and being dedicated to high quality standards and core values embedded throughout the corporation (“Whole Foods Market”). The company’s core values are as follows: • Selling the Highest Quality Natural and Organic Products Available • Satisfying and Delighting Our Customers • Supporting Team Member Happiness and Excellence • Creating Wealth through Profits and Growth • Caring about Our Communities and Environment • Creating ongoing win-win partnerships with our suppliers Whole Foods structure varies differently from most other retail grocery stores. At Whole Foods innovation and experimentation are implemented at the store level as managers are allowed to stock 10% of products that they see will benefit and or cater the surrounding community (Lubove, 102). Whole Foods also structures their employee’s salaries differently than other Fortune 500 companies. Fortune 500 companies pay......
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Pan Europa Foods Case Study
... | Pan-Europa Foods Corporate Strategy Analysis Prathibha Vemulapalli Cleary University 1. Pan-Europa should not cut the dividends as it might signal a lack of faith in future to its investors and shareholders. Selling new stocks at the current low price to raise the capital is also a bad idea that can potentially put the shareholders in dilemma. They must improve the performance to make the investors come forward to invest in the business. They should concentrate in decreasing the capital spending and increasing the stock price and should decrease their debt by avoiding over spending. They should not increase their assets by debt financing as their debt –to-equity ratio is extremely high after the price war thus making them highly leveraged. Fabienne Morin and Nigel Humbolt should be leading these strategic improvement projects since they encouraged growth and increased market share. 2. While we have three different ways to calculate NPV from the exhibit, NPV at the minimum accepted Rate of Return includes a risk premium so it stays constant even with varying project durations. WACC on the other hand has difficulties in maintaining the capital structure therefore Equivalent Annuity should be used in this case. The order of the projects would be 1. Strategic Acquisition 2. Eastward Expansion 3. Snack Foods 4. Southward Expansion 5. Inventory Control System 6. Artificial Sweeteners 7. New Plant 8. Expanded Plant 9. Automation and Conveyor System...
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Pan-Europa Foods Case Analysis
...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 acceptable payback years. Considering these and other non-quantitative tools, the management committee will decide between these 11 projects proposed by various upper level managers within the firm. 1.) Strategically, in order for Pan Europa foods to not become victim of a hostile takeover, it must take steps to increase their stock price. In order to do so, they have to focus on becoming more profitable, which would mean increasing their sales and gaining more market share. Critically Important Categories in Exhibit 2: * Net Income * Earnings per Share * Market Value of Shareholder’s Equity After winning the price war, Pan Europa foods made serious gains in their market share. After doing so, it should now be......
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Whole Foods Company Case Analysis
...|o| |d| |t| |o| |s| |a| |t| |i| |s| |f| |y| |a| |g| |r| |o| |w| |i| |n| |g| |d| |e| |m| |a| |n| |d| | | |N| |a| |ï| |m| |a| |F| |a| |k| |i| |r| |5| |/| |1| |5| |/| |2| |0| |1| |0| Supervisor: Dr. Brahim Allali | | Will there be enough organic food to satisfy a growing demand? Will Whole Foods Market (WFM) be able to meet this need? John Mackey, Chairman and CEO of the firm is facing this challenge of meeting the company's aggressive growth targets. Whole Foods Market is an Austin, Texas single natural food market. This joint venture was created in 1980, between “Clarksville Natural Grocery” and “Safer Way natural” grocery stores. WFM was the leading retailer with 172 stores in North America and the United Kingdom that offer a wide variety of both natural and organic food, including produce, grocery, seafood, meat and poultry, prepared foods and catering, bakery, beer, wine, floral, cheese, in addition to whole body, household products and animal products. In addition to the strict quality standards practices from its opening, WFM has outlined some core values. For instance, delighting and satisfying their customers, selling the highest organic and natural products, supporting team members, caring about communities and the environment, committed to sustainable agriculture......
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Pan- Europa Foods
...and Root Case Analysis 4 4. Alternatives and Options 6 5. Recommendations 10 6. Implementation 11 7. Monitor and Control 14 8. Appendix 17 1. Executive Summary This report provides an analysis on the company Pan Europa Foods and gives insight into the strategies and projects that the company should complete to get out of the current situation it faces. Pan Europa Foods is facing financial trouble because a long use of debt financing, product issues when faced with outdated production lines and factories as well as failed new products. Their business environment isn’t helping either with sales becoming saturated and population growth slowing down. When looking at alternatives Pan Europa Foods uses two financial tests IRR and payback period to decide on projects. The company is also unsure about high risk projects and usually turns them down. When looking at the 11 proposals only 6 pass the initial financial tests that deem them acceptable. The accepted proposals are an eastward and southward expansion, new snack foods......
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Whole Foods Case Analysis
...Whole Foods Market: Case Study DeMarcus J. Roberts Keller Graduate School of Management INTRODUCTION Whole Foods Market, Inc is the largest chain of natural foods supermarkets operating in the United States. The company enjoys strong brand name recognition in the fast-growing niche market for natural foods. The company operates under SIC Code 5411, Grocery Stores. Whole Foods defines natural foods as foods that are not processed or are processed to a very small extent and almost free of artificial ingredients, preservatives and other non-naturally occurring chemicals. The company operates stores in 26 states of the US and in the District of Columbia (Whole Foods Market, 2010). The company’s growth strategy focuses on internal expansion, acquisitions and increasing same store sales. Whole Foods offers a range of products such as bakery items, catering menus in stores, coffee, grocery, meat and poultry, prepared foods, seafoods, liquor, and nutritional dairy foods (Datamonitor, 2004). Food products stocked in Whole Foods stores are designed to appeal to both gourmet and natural foods shoppers (Datamonitor, 2004). The point method system strategic evaluates each job by breaking them down into compensable factors and evaluating them each separately. Whole Foods Market (WFM) has in total six core values that drive company operations daily. Using these values, four compensable factors can be derived that can be used when evaluating jobs within the company. These four......
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Case Analysis Wegmans Food Market
...CASE ANALYSIS OF WEGMANS FOOD MARKET Balmes, Jennylyn C. De Guzman, Marlene A. Endozo, Lyka M. Esguerra, Michelle Carmel B. Espiritu, Janelle Rajen S. Fajiculay, Joanna Marie T. Lopez, Evangeline Porto, Maria Lyn Sarmiento, Kris Jeine Laizl Kaez Tobeo, Baby Jane I. Point of View The group used the point of view of Wegmans Food Market’s management. II. Time Frame The case happened during the maturity of Wegmans Food Market. III. SWOT (Strength, Weaknesses, Opportunities, and Threats) Analysis Strengths 1. Wegmans Food Market is a well-known premier grocery chain as it offers high product quality and excellent service to customers. 2. It is positioned in good locations in United States where it does its business. 3. It offers variety of products and extended additional features wherein customers can choose from. 4. The company's produce department employs specialized way of transferring produce to reduce bruising 5. It maintains a strict control on its suppliers considering the quality and timeliness of deliveries. 6. It involves the coordination of departments in verification of inventory count. 7. It has good people who are well-trained, knowledgeable, and committed to the organization. 8. It continues to adopt technological processes and systems to maintain its competitiveness. Weaknesses 1. Because of too much emphasis on satisfying customers, high cost of improving the products and service is......
Words: 2059 - Pages: 9