The Super Project

7290 Words Aug 28th, 2011 30 Pages
Finance
MBA − Cases in Corporate Finance The Super Project (HBS) Instructor: Pål E. Korsvold BI Norwegian School of Management

McGraw-Hill/Irwin

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McGraw−Hill Primis ISBN: 0−390−68861−4 Text: Harvard Business School Negotiation Cases

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Harvard Business School Negotiation Cases

The Super Project

Case

© The McGraw−Hill Companies, 2005

112-034

The Super Project

The Market
A Nielsen survey indicated that powdered desserts constituted a significant and growing segment of the total dessert market, as shown in Table A. On the basis of test market experience, General Foods expected Super to capture a 10% share of the total dessert market. Eighty percent of this expected Super volume would come from growth in total market share or growth in the powders segment, and 20% would come from erosion of Jell-O sales.

Production Facilities
Test market volume was packaged on an existing line, inadequate to handle long-run requirements. Filling and packaging equipment to be purchased had a capacity of 1.9 million units on a two-shift, five-day workweek basis. This represented considerable excess capacity, since 1968 requirements were expected to reach 1.1 million units, and the national potential was regarded as 1.6 million units. However, the extra capacity resulted from purchasing standard equipment, and a more economical alternative did not exist.

Capital Budgeting Procedure
The General Foods Accounting and Financial Manual identified four categories of capital investment project proposals: (1) safety and convenience; (2) quality; (3) increase profit; and (4) other.

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