Pan Europa Case

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5426ch02.qxd_jt 9/19/02 10:38 AM Page 97 CASE 97 ment Handbook. New York: Van Nostrand Reinhold, 1983. THOMAS, J., C.L. DELISLE, K. JUGDEV, AND P. BUCKLE. “Mission Possible: Selling Project Management to Senior Executives,” PM Network, January 2001. TOWNSEND, H. W. R., and G. E. WHITEHOUSE. “We Used Risk Analysis to Move Our Computer.” Industrial Engineering, May 1977. TURBAN, E., and J. R. MEREDITH. Fundamentals of Management Science, 6th ed. Homewood, IL: Irwin, 1994. VAN GIGCH, J. P. Applied General Systems Theory, 2nd ed. New York: Harper & Row, 1978. WHEELWRIGHT, S. C., AND K. B. CLARK. “Creating Project Plans to Focus Product Development,” Harvard Business Review, March–April 1992. The following case concerns a European firm trying to choose between almost a dozen capital investment projects being championed by different executives in the firm. However, there are many more projects available for funding than there are funds available to implement them, so the set must be narrowed down to the most valuable and important to the firm. Financial, strategic, and other data are given concerning the projects in order to facilitate the analysis needed to make a final investment recommendation to the Board of Directors. C A S E PAN-EUROPA FOODS S.A.* C. Opitz and R. F. Bruner In early January 1993, the senior-management committee of Pan-Europa Foods was to meet to draw up the firm’s capital budget for the new year. Up for consideration were 11 major projects that totaled over (European Currency Unit) ECU208 million. Unfortunately, the board of directors had imposed a spending limit of only ECU80 million; even so, investment at that rate would represent a major increase in the firm’s asset base of ECU656 million. Thus the challenge for the senior managers of Pan-Europa was to allocate funds among a range of compelling projects:

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