Case Study

PAN EUROPA FOODS S.A

C. Opitz and R.F. Bruner

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Table of Contents

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Executive Summary:

The report is to provide the shareholders with the firm’s capital budget for the new year, 1993. 11 projects will be examined and discussed. Projects will be chosen based on the most needed and urgent projects and based on budget. Exhibit3 of the case analysis provides the free cash flow and analysis of the proposed projects.

Problem Statement:

The problem with Pan Europa Foods, according to the case, is that the company is beginning to lose market share due
The development and introduction of new artificial yogurt should be considered. The company is already losing its market share and it hasn’t successfully developed a new product recently to match demand and the company does not have any competitive advantage. Once a new product is developed; sales will increase, market share will increase and return on investment will also increase. ECU 15 million has been estimated for this project.

Water treatment at four plants should also be considered because leaving it untreated is detrimental to the environment. If the water is left untreated, it will cause pollution. Considering this project will improve corporate image, it will also improve employees’ morale, minimize environmental impact, the environment will be safer for all citizens and the company will also be complying with the regulatory board’s decision. It is estimated that the project will cost ECU 4 million now compared to if done in 4 years time, when it’s estimated to cost ECU10 million. There is also the possibility that the regulators might shorten the compliance time. So now is a good time to execute this project.

The company should also consider expanding eastward and southward of Europe so as to make its presence known in those areas and to gain market share. It is estimated that ECU20 million will be spent on this project.

The company should also consider automating its plant and conveyor systems so as