Pan Europa Project Management Case Study
Pan Europa Foods
* Question 1 * a. Strategically, what must Pan-Europa do to keep from becoming the victim of a hostile takeover?
Answer: Pan Europa should not decrease the dividends of the shareholders to not devalue the stock price of the company. Instead should just decrease capital spending as what they board of directors have decided. In short, they should adopt strategies that should increase stock price not push it down to discourage buyout.
b. What rows categories in Exhibit 2 will thus become critically important in 1993? What should Pan-Europa do now that they have won the price war?
Answer: As suggested by their bank they should reduce their debt due to the high debt to equity ratio incurred during the price wars and use their competitive market reach to attain this. * c. Who should lead the way for Pan-Europa?
Answer: Humboldt and Morin should be leading the charge on this strategy since these folks are the ones initiating the innovative changes in the company. * Question 2:
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 it corrects discrepancies project durations unlike the NPV. Using this analysis the preferred project would be 11, the Strategic Acquisition. Then following in order would be:
* Eastward Expansion * Snack Foods * Southward Expansion * Inventory Control System * Artificial Sweeteners * New Plant * Expanded Plant * 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 an investment of 4M now to save a cost of 10M in 4 years.
* Question 3
a. What aspects of the projects might invalidate the ranking you just derived?
There are many aspects that could invalidate the simple NPV
* Question 1 * a. Strategically, what must Pan-Europa do to keep from becoming the victim of a hostile takeover?
Answer: Pan Europa should not decrease the dividends of the shareholders to not devalue the stock price of the company. Instead should just decrease capital spending as what they board of directors have decided. In short, they should adopt strategies that should increase stock price not push it down to discourage buyout.
b. What rows categories in Exhibit 2 will thus become critically important in 1993? What should Pan-Europa do now that they have won the price war?
Answer: As suggested by their bank they should reduce their debt due to the high debt to equity ratio incurred during the price wars and use their competitive market reach to attain this. * c. Who should lead the way for Pan-Europa?
Answer: Humboldt and Morin should be leading the charge on this strategy since these folks are the ones initiating the innovative changes in the company. * Question 2:
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 it corrects discrepancies project durations unlike the NPV. Using this analysis the preferred project would be 11, the Strategic Acquisition. Then following in order would be:
* Eastward Expansion * Snack Foods * Southward Expansion * Inventory Control System * Artificial Sweeteners * New Plant * Expanded Plant * 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 an investment of 4M now to save a cost of 10M in 4 years.
* Question 3
a. What aspects of the projects might invalidate the ranking you just derived?
There are many aspects that could invalidate the simple NPV