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EUROLAND FOODS H. A.
In early January 2001, the senior-management committee of Euroland Food was to meet to draw up the firm's capital plan for the new year. Up for consideration had been 11 significant projects that totaled more than в‚¬316 mil. Unfortunately, the board of directors got imposed a spending limit on capital projects of only в‚¬120 million; nevertheless, investment in which rate would represent a major increase in the firm's current asset bottom of в‚¬965 million. As a result, the challenge intended for the older managers of Euroland Foods was to designate funds among a range of compelling assignments: new-product advantages, acquisition, marketplace expansion, efficiency improvements, preventive maintenance, basic safety, and polluting of the environment control.
Euroland Food, headquartered in Brussels, Athens, was a international producer of high-quality goodies, yogurt, water in bottles, and fresh fruit juices. Its products had been sold throughout Scandinavia, Britain, Belgium, holland, Luxembourg, european Germany, and northern France. (See Display 1 for the map from the company's advertising region. ) The company begun in 1924 by Theo Verdin, a Belgian character, as an offshoot of his dairy products business. Through keen awareness of product development and shrewd advertising, the business grew steadily over the years. The company proceeded to go public in 1979, and, by simply 1993, was listed intended for trading around the London, Frankfurt, and Brussels exchanges. In 2000, Euroland Foods experienced sales of almost в‚¬1. six billion.
Your favorite ice cream accounted for 70 percent with the company's income; yogurt, that has been introduced in 1982, contributed regarding 20 percent. The remaining 20 percent of sales was divided equally between bottled water and fresh fruit juices. Euroland Foods' flagship brand was " Rolly, вЂќ which was showed by a body fat dancing within farmer's clothing. Ice cream, you’re able to send leading merchandise, had a devoted base of customers who searched for its high-butterfat content, significant chunks of chocolate, fruits, and nuts, and wide range of original flavors.
This case was prepared by Casey Opitz and Robert Farreneheit. Bruner and draws selected elements from an predecessor case by simply them. Most names are fictitious. The financial support of the Batten Institute is gratefully acknowledged. The case was written as being a basis pertaining to class discussion instead of to demonstrate effective or ineffective controlling of an management situation. Copyright laws пЈ© 2001 by the School of Va Darden University Foundation, Charlottesville, VA. All rights reserved. To order copies, mail an email to [email protected] edu. Simply no part of this publication can be reproduced, stored in a retrieval system, found in a schedule, or sent in any contact form or simply by any meansвЂ”electronic, mechanical, copying, recording, or perhaps otherwiseвЂ”without the permission of the Darden Institution Foundation. в—Љ
Euroland Foods' sales had been static since 1998 (see Exhibit 2), which management attributed to low population expansion in northern Europe and market vividness in some areas. Outside experts, however , faulted recent failures in new-product introductions. The majority of members of management wanted to expand the company's market existence and bring in more new products to boost sales. These managers hoped that increased industry presence and sales will improve the company's market value. Euroland Foods' share was at present at 16 times revenue, just below publication value. This kind of price/earnings ratio was below the trading many of equivalent companies, and it offered little value to the provider's brands.
The main city budget by Euroland Food was ready annually by a committee of senior managers, who in that case presented that for approval to the table of company directors. The committee consisted of five managing owners, the prГ©sident directeur-gГ©nГ©ral (PDG), and the financing director. Typically, the PDG solicited investment proposals from the managing directors. The proposals included a quick project information, a...