Pan Europa Is-Pm

Preventing Hostile Takeover: 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. 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.

Humboldt and Morin should be leading the charge on this strategy since these folks are the ones initiating the innovative changes in the company.

Financial Analysis: Considering the turnaround time and economic limitations it would be wise to use the annuity & NVP as the factors for project consideration. Using this analysis the preferred project would be 11, the Strategic Acquisition. Then following in order would be: # Eastward Expansion # Southward Expansion # Snack Foods # 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 NVP it can be considered an investment of € 4 million now to save a cost of € 10 million in 4 years.

Invalidate Rankings: The ranking that we have derived is only based on annuity & NVP, thus result would give us the expected cash flows from the project and time taken to implement.

* It doesn’t take into account the nonmonetary factors other than risk

* Payback period model ignores the cash flows beyond the payback period which might be higher

* NPV has been estimated by using the cash flows in the initial stages which might change when project starts. Thus the inputs in the initial stages are sensitive to errors

To avoid these limitations we can use:

* Profitability index which takes into account the size of the...