Acquisition of Great Eastern Premium Pet Foods by Greg Mazur Harvard Case Solution & Analysis

Acquisition of Great Eastern Premium Pet Foods by Greg Mazur Case Study Solution

Cost saving projection analysis:

The cost saving of the salary of the owners, general manager and the benefits of owners seems to be reasonable since Greg Mazur would handle their position by himself. Therefore, it posit challenge in determining the rationale for the savings relative to the personal spending of owner, Outside Admin Contractor and SBT Service Contract.

In addition to this, the sales are increased with high growth rate since the business has been operating in the highly competitive and lucrative market. Also, the bargaining power of the buyer is substantially high since the company is depending on one manufacturer, it is to highlight that the reliance of the company on one manufacturer is risky strategy. As a result, the cost of sales that is 80.5 percent is reasonable, therefore it can be justified that it would be decreasing as it is shown in the projections.  The company should reduce the risk of over dependency on one manufacturer.

Taking into consideration the inflation, it has to increase. Also in the estimations, the depreciation is decreasing this seems unreasonable because of the fact that the increase in net sales demonstrates the high use of the fixed assets which in turn tend to result in high cost of depreciation for the company.

Furthermore, the cost of capital is the required rate of return that the company needs in order to make the capital budgeting project. It contains both equity and debt portion. It is to identify that the calculation of the cost of capital or weighted average cost of capital is not provided. It is significantly important for Mazur to justify the cost of capital of 15% in the risky business........

 

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Acquisition of Great Eastern Premium Pet Foods by Greg Mazur

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