CASE STUDY

(Euroland Food S.A.)

Group Members:
Fidel Auditor Liza Natata Sheryl Lobos Maryjane Galit Jercy jane

Euroland Foods S.A.

I. II. III. IV. V. VI.

Problem statement Objective Areas of consideration (SWOT) ACA Recommendation Implementation

I.

Problem statement:

The senior manager of Euroland Foods was to meet to draw up the firms capital budget for the new year. up for consideration were 11 projects that totaled 316.5 M. Unfortunately, the board of directors had imposed the spending limit of capital projects of only 120 M. Thus, the challenge for senior manager of Euroland Foods was to allocate funds among a range of compelling projects

II .

Objective:

To choose a project to be approved that is suited for a capital spending limit of 120 M that is imposed by a board of directors of Euroland Foods

III .

Areas of consideration

STRENGTH: The company was a multinational producer of highquality ice-cream, yogurt, bottled water and fruit juices They had 10 Plants in the different parts of Europe such as France, England, Germany Belgium, Denmark and Sweden

WEAKNESSES:

According to its financial results on a 3 consecutive years 1998-2000 the companys sales was not stable Some plants dont have conveyer and not automated The companys stock was below book value compare to other companies, that gave little value to their brand OPPURTUNITIES The company earned high revenue on their ice cream products

 The company has a product line such as Ice-cream, Bootled water, and Fruit juices THREATS If the competitors carry an artificial sweetened line the brand of the company will suffer Some of Their product is full of calories The company has a pollution record that will impair the company in the eyes of the consumers if they did not comply as an environmental oriented project

ACA

ACA #1. Approved the project (1, 5, 6, 9 & 10) the total project cost is 109.5 M Advantage
will reduce loss of sales cause by stock-outs will improved speed & reduced accidents will reduced water pollution caused by the company Will reduced the fat content of some of their product Shorter delays in ordering and order processing, better control of inventory and etc.

Disadvantage
They need to provide another budget for fuel and maintenance

The natural ingredients of their product will reduce

ACA#2. Approved the four project which classified as market extension (2,3,7,8) the total project cost is 120 M

Advantage
Reduce the shipping cost of delivering packaging and manufacturing materials

Disadvantage
If the company expand eastward it could reach a lot of people who has a great apettite for dairy product. However they will take the risk of having a lot of competitors for their dairy product and did not have purchasing powers If it expand southward more purchasing power and less competition but a smaller apettite for dairy &yogurt products

Limitless production capacity It will open new market throughout another countries in Europe

ACA#3. Approved the project (9, 10, 11 & 6) the total project cost is 115.5 M Advantage
-Significant cost saving to food and beverage -Growing demand for low-calorie products -Protecting of present market share -To prevent of brand suffering -Reduction of spoilage

Disadvantage

-Faster recognition of changes in demand at the customer level The company will aquired new brand Too much expensive for a one project name and a new product will enter in a only company

VI.

Recommendation

We recommend ACA #1. As a solution For gaining higher profit. Cause we believe that if a Euroland company is efficient and consistent in terms of supplying products to its markets the company would get a highest sale. we can see (see exhibit 2) that the companys sale is not consistent VII. Implementation