Project Management

Executive Summary

            The present report is aimed at presenting a summary of organic foods allocation budget for capital resources for the year 1993 to the current and then to the shareholders of the corporation.  The director’s board has thus provided a presentation of several projects which provides distinct opportunities and needs in order to develop the corporation. The report will therefore provide an analysis of the presented case issues as well as recommend appropriate solutions on the issue with detailed projects analysis.

            Organic foods are faced with distinct issues which require proper addressing. The corporation’s sales rate is still very flat which has resulted in decreased profits generation.  This has thus ben caused by their operational inefficiency, lowered organic growth as well as poor marketing approaches the proposed projects are purposed to solve the growing issues and they are grounded of different business aspects which includes market expansion, distribution and production, acquisitions as well as product expansion.

            The remedy for the presented issue can be solved through ensuring that organic foods leverage the existing share in the market.  This is mainly because the financial circumstance at the corporation is caused by war of prices which assisted in developing the given market share.  The corporation is necessitated to make the market share to work. Investment in fresh product improvement will help by providing the corporation with the needed opportunity of leveraging fresh gained markets shares.  In order for the corporation to win the customers in the market share the proposed projects must hold the capability of gaining additional opportunities.  This will help in ensuring that the expectations of the shareholders are met adequately and that the opportunities of getting the new consumers are achieved.

Organic foods are not recommended to decrease the shareholder’s dividends in order to be able to devalue the corporation’s stock. However the corporation should decrease the amount of spending based on the decision made by the director’s board. The corporation is thus recommended to adopt strategies that hold the capability of increasing the price of the stock because pushing the prices downwards will discourage the rate of buying out stocks.  In order for the organic foods to escape hostile overtaking they should be able to keep all their stakeholders completely satisfied (Meredith, & Mantel, 2012).  This can thus be achieved through, meeting all the expectations of the stakeholders.  The corporation is therefore necessitate to prove adequately that it holds the capability of remaining competitive and can thus be able to meet both long and short term expectations of their customers  via  improvement of efficiency, product extension and market expansion.  This will ensure that all the shareholders are able to retain all their shares which will help the corporation in maintaining them.  Per share earning can be described as the corporation’s profit that is allocated to every share that is outstanding of mutual serves and market. The per share earnings is thus bound top become very essential in 1993.  On the other hand dividends can be termed as the profit of the corporation that is passed on the periodic grounds of the shareholders.  When the corporation’s market confidence is high the stock prices remain strong and high and therefore the probability of exterior investment for  hostile probable take over is reduced.  Therefore beyond all the financial considerations the corporation is required to develop strategic decisions.

Although corporation ranking process for project that is based on NPV and IRR alone are purposed for short run development a strategy that is purposed for future development is necessary.  The corporation is therefore required to choose on whether it needs to access strong market prices via continuous volume and low prices. This will help in indicating whether the company will work well under diversity of the divided markets.  In order for the future growth to be well developed and set the corporation is required to understand the general strategy that it is required to use.  This will help in avoiding risks that may be developed in launching projects sets which are set for monetary development.

As the bank gave the suggestion that the corporation is required to decrease their rate of debt to higher rate debt in order to achieve an equality ratio. This is the debts that are incurred during the process of wars pricing and utilizes their market that is competitive in attaining everything. The corporation must work to ensure that the cost of production is reduced. This will assist in offsetting losses gotten   through the market price wars.  Since the operation of the company mainly relied on huge debts the corporation should capitalize more on market sections through cutting the costs to become modest as well as developing their marketing strategies. The corporation’s future requires to be led by a good leader with management and marketing experience as this are the major issues that the corporation is facing.

Question 2

            So that the projects can be ranked grounded on the calculations of NPV, the ideal metric will thus be NPV at ROR minimum. The calculations will thus involve the utilization of scale sliding of IRR which is capable of recognizing the dissimilarities in the associated risk with ranges of project kinds.  Therefore when making projects calculations in this form, the ideal ranking is approach acquisition, snack foods, inventory system control, snack foods, fresh plants, eastward expansion, automation and expanded fleet.  The emission project can be examined by making comparison the cost of the project versus the project completion when the conversion is immediate and mandatory.  While the treatment of the program is affluent does not have any formal NPV this can thus be considered as a general investment which will help the corporation in saving the costs in the future.

            The best option that the corporation can utilize is annuity, this is because of the project duration and additionally because the strategy is capable of correcting project’s discrepancies based on the duration of the project. This is contrarily to NPV strategy which may not accomplish both tasks at the same time.  With the use of the presented project analysis the most preferred project for the firm would thus be strategic acquisition.  This would wolf to ensure that product development is accomplished and the expectations of the shareholders and the consumers are achieved fully.  This strategy would additionally work to ensure that market share development becomes effective. Efficiency can only be achieved through developed inventory control and increased market share.  Technological application is additionally required to ensure that the wars that are developed by pricing are avoided. This will help in developing the market strategy to ensure that the project’s efficiency is achieved.

            Question 3

            There are several aspects in which the ranking invalidation may be made. The project’s validation can thus be made based on the following aspects. The features include political considerations, risk issues, regulatory problems such as environmental, health and safety issues, resource adequacy and corporate strategy incapability.  These issues can thus be solved by ensuring that all the regulatory and operational measures are observed.

There are several techniques for the analysis process as well as different assumptions techniques that can be utilized in order to make correction for the different characteristics which affect the organization’s projects in distinct ways (Lowe, & Wiley, 2006). This is for example the value ability of time which can thus be measured by utilization of discounting techniques like NPV or IRR.  On the other hand the issues of risks can be handled through hurdle rate increase and the issues of unequal times of all the projects can be solved by the utilization of annuities that are equivalent. Distinct sizes of projects can be evaluated through NPV multiplication through projects sizes ratio or through the utilization of the ratios that are based on profitability.

            Question 4

 

Number	Project Name	Aggregate	Cost
1	Product expansion	Main departures	22
2	Fresh plant	Main departures	30
3	Plant expansion	incremental	10
4	Sweetener	Long run R&D	15
5	Conveyor and automation		14
		incremental	4
6	Effluent treatment	incremental	20
7	Expansion of the east	Main departures	20
8	Expansion of the south	Main departures	18
9	Food snacks	Main departures	15
10	Strategic acquisition	Platform	40
11	Inventory control	breakthrough	40

Question 5

            The project that should be recommended to the  organization directors  board include, inventory control, snack foods, southward expansion,  the expansion of the eastwards as well as  affluent treatment.  The corporation should utilize projects that are characterized with reduced technological development like product expansion. This is mainly because such projects are associated with lower risks levels. Developing the technology level like automation or the introduction of sweeteners that are artificial to their products with increase the rate of the risks generated during implementation.  Therefore product expansion and development should be done based on low technological development to ensure that less issues and developed.  The attempt of increasing the corporation market share by the utilization of new products is a great risk.  This is because the fresh product may not yield profits directly because brand relation with the consumers is not yet developed.  The targeted consumers may therefore opt to ignore purchasing the products because of uncertainty. Other potential risks may be generated by the size of the project,   period of return length as well as the complexity of the project (Hess, & Liedtka, 2012). The corporation should consider those projects that require less time to develop and those that are additionally simple. The corporation should not therefore develop decisions based on the value that is being generated presently but with considerations of the future.

In conclusion, since the corporation is faced with inventory control issues, marketing as well as project development issues, I would therefore recommend that the corporation makes an immediate inventory control implementation in order to develop the efficiency of the operations.  This project would work in ensuring that the efficiency of the inventory control is achieved, decreased outages, create transparency, improve the relationship between the corporation and the customers as well as develop the orders fulfillment processes.  The increased capacity will help the firm in developing its capability to handle increased expectations as well as demands from the shareholders. This will thus work to ensure that customer satisfaction is achieved fully.

 

 

 

 

 

 

References

            Hess, E. D., & Liedtka, J. (2012). The physics of business growth: Mindsets, system, and processes.

            Lowe, D., Leiringer, R., & Wiley InterScience (Online service). (2006). Commercial management of projects: Defining the discipline. Oxford: Blackwell Pub.

            Meredith, J. R., & Mantel, S. J. (2012). Project management: A managerial approach. Hoboken, NJ: Wiley.