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Assignment 2: Operations and Long –Term Investment Decision
Assignment 2: Operations and
Long –Term Investment Decision
Eco 550
March 20, 2014
Professor Jae – Kwang Hwang
Operations and Long –Term Investment Decision
Introduction
The grocery market is filled with various options for microwavable food depending on the preferences of the consumers. Instead of the traditional use of the oven many families now use the microwave because of their busy lifestyles. The variety of healthy low calorie -microwave food has made shopping much easier for today’s busy consumer. Low calorie labels are regulated by the Food and Drug Administration (FDA) and require food “labels claiming low-calories must not have more than 40 calories for a given reference amount (except sugar substitutes)”. (The Calorie Control Council, 2014)
Healthy low-calorie microwave foods have come a long way since the first Swanson pre-packaged TV dinner in the 1950’s. The meal tray was heated in the oven and consisted of a small portion of meat, two vegetables and dessert. The top two competing manufacturers of microwavable low-calorie foods are Lean Cuisine owned by Nestle and Healthy Choice owned by ConAgra. Both leaders in the frozen food market began in the 80’s. Healthy Choice works rigorously with the FDA to assure foods qualify under government health standards for healthy low calorie foods. Like all businesses these two businesses need a financial business plan that allows them to assess the company’s results and set targets for future growth. Marketing is a vital part of the business plan.
Healthy low calorie microwave food as a health option is a concept which has gained enormous interest. The previous assignment discussed the background and the introduction of the company which caters to this segment. The purpose of this paper is to discuss the long term capital budgeting decisions that a company needs to make to determine the market structure operates in and to provide a...