I selected Case 1 Thomas Food and I have been employed by Thomas Foods to plan and execute a supporting methodology that will insulate the organization from the dangers that are related with obtaining harvested crops from neighborhood crops. The main key terms I should use to help encourage my assessment procedure are in climate weather or potentially disastrous events, operating income, and free market activity. Clearly, with regards to working with farmers and their products, the climate as well as catastrophic events can majorly affect the prices of the harvests, which can essentially help or mischief Thomas Foods' association with their suppliers. Another key term to remember all through my study is "operating income," in which …show more content…
Since the company goal is to create a way to prevent a financial loss in the company's operating income. The major concern is increasing in prices, in which cause maybe due to the in climate weather on the farmers crops and produces that Thomas buy and sell to their customers. I will create a hedging strategy that will benefit both Thomas and the farmer by decreasing the middle man and buy directly from local farmers and suppliers to help cut the cost of some products with in …show more content…
What could cause the large increases in pricing is the uncertainty of future weather conditions and how the weather conditions will affect the suppliers’ produce, which will in turn affect the price of the produce sold to Thomas Foods. Thomas Foods believes that applying a hedge strategy towards their accounting practices would be the best answer to preserve the company’s operating income. With the implementation of a possible hedge accounting program at the company, the controller must be informed of both the cash flow and fair value hedge accounting strategies and how accounting will happen with the implementation process. Issues: 1. By implementing a hedging strategy at Thomas Foods, will the implementation of a strategy mitigate the risks of price increases from local suppliers and vendors and benefit Thomas Foods financially? 2. Between cash flow and fair value hedging strategies, which strategy would benefit Thomas Foods the most in ensuring minimal losses in operating income? 3. Due to the inexperience of the controller in hedging strategies, what would be the best way to explain how the strategies work and how to implement the new strategy so the controller can understand it?
If it can be determined that the depressed prices for lean hogs are only temporary, inventories could and should be kept at cost basis. In this case, adjusting prices to match current market prices would not be necessary. Future prices indicate a recovery before the end of the fiscal year. Futures prices will surpass cost in February and remain above cost for the remainder of the fiscal year. The future prices support claims that the price fluctuations are only temporary in nature, and do not reflect a permanent downward shift in hog prices. Since inventories once impaired cannot be marked up to reflect changes in market conditions, this strategy could be beneficial to the company later on. In this case inventory would not be shown on the books at an unfairly low value.
Rocket-Blast, LLC, a beverage maker, has seen its profit margins reduced which presents a real problem for the company going forward (Precord & Macdonald, nd). Management has decided that operating costs must be reduced in order to increase profit margins to
The experiment that was performed consisted of prices being manipulated on a set of 72 grocery products over a six week period. The products were classified as stock-up goods or non stock-up goods.
For Piura, price changes in cowpea, maize, sheep and goat meat were considered. In Campo Verde, the analysis focused on production of cassava, rice, maize, plantain, palm oil, cacao and cattle meat. These scenarios were employed in order to see what happens if the price increased or decreased. For the analysis, five levels of the factor (price change) were considered 0.5, 0.7, 1, 1.3 and 1.5.
The Panera Bread Company began in 1981 as Au Bon Pain Co., Inc. Founded by Ron Shaich and Louis Kane, the company thrived along the east coast of the United States and internationally throughout the 1980’s and 1990’s and became the dominant operator within the bakery-café category. In the early 1990’s, Saint Louis Bread company, a chain of 20 bakery-cafes were acquired by the Au Bon Pain Co. Following this purchase, the company redesigned the newly acquired company and increased unit volumes by 75%. This new concept was named Panera Bread. Top management chose to sell their previous bakery-café known as Au Bon Pain Co. due to the financial and managerial needs of Panera. In order for Panera to become the success top management visualized all resources needed to become available for Panera. Panera Bread is now the most successful bakery-café in the category in which there are currently 1,777 bakery-cafes in 45 states and in Ontario Canada (Panera Bread).
Pennings, Joost M.E. Research in Agricultural Futures Markets: Past Present and Future. Presentation Paper: Wageningen Agricultural University: Netherlands. 8 June 2001.
This highlights that a core principal of economics is the decisions and choices to be made in order to manage limited resources. Furthermore, that microeconomics pertains to the behaviours that affect these decisions and choices made at an individual level. As demonstrated by the avocado industry recently, motives and variable factors for increases/decreases in supply and demand will not always be transparent to the consumer. Therefore, to have an understanding of the concepts of microeconomics and the market can elucidate the individual consumer’s decision making rationale rather than making
Dean Foods is a food and beverage company that specializes in dairy products, based out of Dallas, Texas. Dean Foods manufactures and distributes a wide variety of branded and private label dairy products. The products include milk, ice cream, creamers, and cultured dairy products. The Company is one of the nation's largest processors and distributors of fluid milk with about 75 plants located throughout the United States. They are made up of about 19,000 employees and in 2012 their nets sales reached 11.4 billion dollars. The company was founded by Dean R. Honas who owned an evaporated milk processing plant in Illinois back in the 1920s. Dean purchased other Illinois dairy plants and developed his enterprise from a small regional dairy distributor to a successful food company. The company is also known for their sustainability efforts over the past 8 years.
Caterpillar Inc. also faces the risk of its cash flow and earnings being affected by fluctuations in the exchange rates of currency, commodity prices, and interest rates. To control for this, the company’s Risk Management Policy ensures prudent management of interest rates, commodity prices, and exchange rates of foreign currency by allowing the use of derivative financial instruments. According to the policy, the derivative financial instruments are not supposed to be used for the purpose of speculation. In its pricing strategy, Caterpillar Inc. faces the risk of difficult shipping of its products. This risk can be encountered by offering its products on instalments and lease to its loyal customers (Caterpillar, Inc. (CAT), 2011).
The banana industry is a highly profitable business for large companies such as Chiquita, Dole, and Del Monte. In order to reduce the volatility of the business and control costs of the natural product banana the companies take various actions. First, ...
Like other convenience stores around the East Vancouver area, Best Foods Grocery is experiencing a serious problem with petty thefts and crimes. This has been cited as a problem and the lack of security needs to be addressed. Currently, Best Foods Grocery does not have a good functioning security camera system throughout the store. The store needs to update its camera system to have a decrease in crime and better understanding of who commits them. Best foods Grocery does not have the necessary resources installed to achieve a higher level of security within the store, but can be implemented to increase security. Security is an important part of a business everyday responsibilities to its staff and customers. Many small stores
This plan alleviates many of the firm’s current uncertainties. With the price reduction and more public relations, there may be an improvement in the public perception of the company. The implemented plan supports continual profits and reduces the possible increase in regulatory constraints.
This case examines issues of asset control for Ben & Jerry’s Homemade, Inc., in light of the outstanding takeover offers by Chartwell Investments, Dreyer‘s Grand, Unilever, and Meadowbrook Lane Capital in January 2000.
...ting in hedging activities in the financial futures market companies are able to reduce the future risk of rising interest rates. By participating in the financial futures market companies are able to trade financial instruments now for a future date (Block & Hirt, 2005).
2. SEVEN-ELEVEN'S SUPPLY CHAIN STRATEGY IN JAPAN CAN BE DESCRIBED AS ATTEMPTING TO MICRO-MATCH SUPPLY AND DEMAND USING RAPID REPLENISHMENT. WHAT ARE SOME RISKS ASSOCIATED WITH THIS CHOICE?