财务管理案例LAURENTIANBAKERIES.docx
- 文档编号:3365054
- 上传时间:2022-11-22
- 格式:DOCX
- 页数:10
- 大小:26.57KB
财务管理案例LAURENTIANBAKERIES.docx
《财务管理案例LAURENTIANBAKERIES.docx》由会员分享,可在线阅读,更多相关《财务管理案例LAURENTIANBAKERIES.docx(10页珍藏版)》请在冰豆网上搜索。
财务管理案例LAURENTIANBAKERIES
LAURENTIANBAKERIES
Thedecision-makermustmakearemendationonalargeexpansionproject.Discountedcashflowanalysisisrequired.
InlateMay,1995,DanielleKnowles,vice-presidentofoperationsforLaurentianBakeriesInc.,waspreparingacapitalexpenditureproposaltoexpandthepany’sfrozenpizzaplantinWinnipegManitoba.IftheopportunitytoexpandintotheU.S.frozenpizzamarketwastaken,thepanywouldneedextracapacity.Adetailedanalysis,includinganetpresentvaluecalculation,wasrequiredbythepany’sCapitalAllocationPolicyforallcapitalexpendituresinordertoensurethatprojectswerebothprofitableandconsistentwithcorporatestrategies.
PANYBACKGROUHD
Establishedin1984,LaurentianBakeriesInc.(Laurentian)manufacturedavarietyoffrozenbakedfoodproductsatplantsinWinnipeg(pizzas),Toronto(cakes)andMontreal(pies).Whileeachplantoperatedasaprofitcenter,theysharedamonsalesforcelocatedatthepany’headofficeinMontreal.AlthoughtheTorontoplantwasresponsibleforover40%ofcorporaterevenuesinfiscal1994,andtheotherplantswasaccountedforabout30%each,allthreedivisionscontributedequallytoprofits.Thepanyenjoyedstrongpetitivepositionsinallthreemarketsanditwasthelowcostproducerinthepizzamarket.IneStatementsandBalanceSheetsforthe1993to1995fiscalyearsareinExhibits1and2,respectively.
Laurentiansoldmostofitsproductstolargegrocerychains,andinfact,supplyingseveralCanadianchainswithprivatelabelbrandpizzasgeneratedmuchofthesalesgrowth.Othersalesweremadetoinstitutionalfoodservices.
Thepany’ssuccesswas,inpart,theproductofitsmanagement’sphilosophies.ThecornerstoneofLaurentian’soperationswasitsincludingamitmenttoabusinessstrategypromotingcontinuousimprovement;forexampleallemployeeswereempoweredtothinkaboutandmakesuggestionsforwaysofreducingwaste.AsDanielleKnowlessawit:
“ContinuousimprovementisawayoflifeatLauremtian.”Also,thepanywasknownforitsabove–averageconsiderationforthehumanresourceandenvironmentalimpactofitsbusinessdecisions.Thesephilosophiesdroveallpolicy-making,includingthosepoliciesgoverningcapitalallocation.
DanielleKnowles
DanielleKnowles’scareer,whichspanned13yearsinthefoodindustry,hadincludedpositionsinotherfunctionalareassuchasmarketingandfinance.ShehadreceivedanundergraduatedegreeinmechanicalengineeringfromQueen’sUniversityinKingston,Ontario,andamasterofbusinessadministrationfromtheWesternBusinessSchool.
THEPIZZAINDUSTRY
Majorsegmentsinthepizzamarketwerefrozenpizza,deli-freshchilledpizza,restaurantpizzaandtake-outpizza.Ofthesefour,restaurantandtake-outwerethelargest.Whilethesesegmentsconsistedofthousandsofsmall-ownedestablishments,afewlargeNorthAmericanchains,whichincludedDomino’s,PizzaHutandLittleCaesar’s,dominated.
Although12firmsmanufacturedfrozenpizzasinCanada,thefivelargestfirms,includingLaurentian,accountedfor95%ofproduction.McCainFoodswasthemarketleaderwith44%marketshare,whileLaurentianhad21%.PercapitaconsumptionoffrozenproductsinCanadawasone-thirdofthelevelinU.S.whereretailpriceswerelower.
ECONOMICCONDITIONS
TheNorthAmericaneconomyhadenjoyedstronggrowthsince1993,afterhavingsufferedasevererecessionforthetwopreviousyears.Interestratesbottomed-outinmid-1994,afterwhichtheU.S.FederalReserveslowlyincreasedratesuntilearly1995inanattempttofightinflationarypressures.Nevertheless,NorthAmericaninflationwasexpectedtoaverage3%to5%annuallyfortheforeseeablefuture.TheBankofCanadafollowedtheU.S.FederalReserve’sleadandincreasedinterestrates,inparttoprotecttheCanadiandollar’svaluerelativetothevalueoftheU.S.dollar.TheresultwasaNorthAmericangrowthrateofgrossdomesticproductthatwasshowingsignsofslowingdown.
LAURRENTIAN’SPROJECTREVIEWPROCESS
AllcapitalprojectsatLaurentianweresubjecttoreviewbasedonthepany’sCapitalAllocationPolicy.Thelatestpolicy,whichhadbeendevelopedin1989whenthepanybeganconsideringfactorsotherthansimplythecalculatednetpresentvalueforprojectevaluation,wasstrictlyenforcedandmanagersevaluatedeachyearpartiallybytheirdivision’sreturnoninvestment.Thepurposeofthepolicywastoreinforcethemanagementphilosophiesbyachievingcertainobjectives:
thatallprojectsbeconsistentwithbusinessstrategies,supportcontinuousimprovement,considerthehumanresourceandenvironmentalimpact,andprovideasufficientreturnoninvestment.
Priortotheapprovalofanycapitalallocation,eachoperatingdivisionwasrequiredtodevelopbothaStrategicandanOperatingPlan.TheStrategicPlanhadtoidentifyandquantifyeitherinefficienciesorlostopportunitiesandestablishtargetsfortheirelimination,includeathree-yearplanofcapitalrequirements,linkcapitalspendingtobusinessstrategiesandcontinuousimprovementeffort,andachievethepany-widehurdlerates.
ThefirstyearoftheStrategicPlanbecametheAnnualOperatingPlan.Thiswassupportedbyadetailedlistofproposedcapitalprojectswhichbecamethebasisforcapitalallocation.InadditiontomeetingallStrategicPlancriteria,theOperatingPlanhadtoidentifymajorcontinuousimprovementinitiativesandbudgetfortheassociatedbenefits,aswellasdevelopatrainingplanidentifyingspecifictrainingobjectivesfortheyear.
Thesecriteriawereusedbyheadofficetokeepthebehaviorofdivisionalmanagersconsistentwithcorporateobjectives.Forexample,therequirementtodevelopatrainingplanaspartoftheoperationalplanforcedmanagerstobeefficientwithemployeetrainingandtokeepcontinuousimprovementastheultimateobjective.
AllproposedprojectsweresubmittedonanAuthorizationforExpenditure(AFE)Formforreviewandapproval(seeExhibit3).TheAFEhadtopresenttheproject’slinkagetothebusinessstrategies.Inaddition,ithadtoincludespecificdetailsofeconomicsandengineering,involvementandempowerment,humanresource,andtheenvironment.Thisrequirementensuredthatprojectshadbeencarefullythoughtthroughbyforcingmanagerstolisttheitemspurchased,theemployeesinvolvedintheproject,theemployeesadverselyaffectedbytheproject,andtheeffectoftheprojectontheenvironment.
ApprovalofacapitalexpenditureproposalwascontingentonthreerequirementswhichareillustratedinExhibit4.Thefirstoftheserequirementswastheoperatingdivision’sdemonstratedmitmenttocontinuousimprovement(C.I.),thecriteriaofwhicharedescribedinExhibit5.Thesecondrequirementwasthatallprojectsofmorethan$300,000beincludedintheStrategicPlan.Thefinalrequirementwasthatforprojectsgreaterthan$1million,theoperatingdivisionhadtoachieveitsprofittarget.However,ifaprojectfailedtomeetanyoftheserequirements,therewasamechanismthroughwhichemergencyfundsmightbeallocatedsubjecttothecorporateexecutivemittee’sreviewandapproval.Iftheprojectwaslessthan$1millionanditmetallthreerequirements,onlydivisionalreviewandapprovalwasnecessary.Otherwise,approvalwasneededfromtheexecutivemittee.
TheproposedWinnipegplantprojectwasconsideredaclass2projectastheexpendituresweremeanttoincreasecapacityforexistingproductsortoestablishafacilityfornewproducts.Capitalprojectscouldfallintooneofthreeotherclasses:
costreduction(Class1);equipmentorfacilityreplacement(Class3);orothernecessaryexpendituresforR&D,productimprovements,qualitycontrolandconcurrencewithlegal,government,health,safetyorinsurancerequirementsincludingpollutioncontrol(Class4).Aprojectspendingauditwasrequiredforallexpenditures;however,asavingsauditwasalsoneedediftheprojectwasconsideredeither1or2.Eachclassofprojecthadadifferenthurdleratereflectingdifferentlevelsofrisk.Class1projectswereconsideredthemostriskyandhadahurdlerateof20%.Class2andClass3projectshadhurdleratesof18%and15%,respectively.
KnowleswasresponsiblefordevelopingtheWinnipegdivision’sCapitalPlanandpletingallAFEforms.
WINNIPEGPLANT’SEXPANSIONOPTIONS
LaurentianhadmanufacturedfrozenpizzasattheTorontoplantuntil1992.However,afterthepanybecamethesolesupplierofprivate-labelfrozenpizzasforalargegrocerychainandwasforcedtosecureadditionalcapacity,itacquiredtheWinnipegfrozenpizzaplantfromapetitor.Aprogramofregularmaintenanceandequipmentreplacementmadethenewplantthelowcostproducerintheindustry,withanoperatingmarginthataveraged15%.
Theplan,withitsprovenmitmenttocontinuousimprovement,hadsuccessfullymetitsprofitobjectiveforthepastthreeyears.Aftertheshortageofcapacityhadbeenidentifiedastheplant’slargestsourceoflostopportunity,managementwaseagertorectifythisproblemastargetedforintheStrategicPlan.BecausethefacilityhadalsoincludedtheproposedplantexpansioninitsStrategicPlan,itmetallthreerequirementsforconsiderationofapprovalforacapitalproject.
Annualsaleshadmatchedplantcapacityof10.9millionfrozenpizzaswhenLauentianconcludedthatopportunitiessimilartothoseinCanadaexistedintheU.S.AnopportunitysurfacedwherebyLaurentiancouldhaveanexclusivearrangementtosupplyalargeU.S.-basedgrocerychainwithitsprivate-label-brandfrozenpizzasbeginninginApril,1996.Asaresultofthisarrangement,frozenpizzasaleswouldincreaserapidly,adding2.2millionunitsinfiscal19
- 配套讲稿:
如PPT文件的首页显示word图标,表示该PPT已包含配套word讲稿。双击word图标可打开word文档。
- 特殊限制:
部分文档作品中含有的国旗、国徽等图片,仅作为作品整体效果示例展示,禁止商用。设计者仅对作品中独创性部分享有著作权。
- 关 键 词:
- 财务管理案例LAURENTIAN BAKERIES 财务管理 案例 LAURENTIAN
![提示](https://static.bdocx.com/images/bang_tan.gif)