PAN EUROPA FOODS S.A
C. Opitz and R.F. Bruner
Table of Contents
1. Executive Summary
2. Problem Statement
3. Data Analysis
4. Alternative Analysis
5. Key Decisions Criteria
7. Action & Implementation Plan
The report summarizes Pan-Euorpa Food’s capital resource allocation budget for 1993 to present to stockholders. The board has presented 11 projects providing different needs and opportunities to grow the business. Exhibit 3 of the case analysis presents the project proposed, free cash flow, and statistical analysis of the projects.
Pan Europa Foods is facing a number of issues to be addressed. The company’s sales remain flat while net profits decrease. This is due to marketing strategy, operational inefficiencies, and minimal organic growth. There are a total of 11 project proposals with a capital investment budget of 80M (euro’s). The projects cover several aspects of the business including new product addition, market expansion, acquisitions, production & distribution improvements, and environmental enhancements.
Since ‘winning’ the price war, the company has lost stock value and dipped below the average multiples of peer companies. It has amasses debt and needs to regain positive momentum to avoid being a target of a hostile takeover.
These problems are evident in Pan Europa’s financial statement over the past 3 years. They have maxed out current market demand and operational inefficiencies continue to grow cutting into shrinking margins.
The board should consider expansion of product offerings and organic growth through existing distributors to add new growth in sales. With production operations cost continually rising despite the large investment capital built in the past 3 years, there is a need to expand into new markets, create new products, and grow sales organically while improving production and distribution efficiencies. The fiscal