4-1 Milestone Four: Financial Analyses and Funding Assignment

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The company is Coca-Cola, the product is ready to drink drinks and green tea. The previous papers are attached and please provide as much detail as possible.

Using your learning from MBA 520 and MBA 640, analyze the projected costs, revenue streams, and net present value for the concept from launch until two years after the breakeven point. Be sure to include a budget, an assessment of assets and liabilities, your anticipated sources of funding, and the associated costs of attaining that capital as part of the analysis. Justify the analysis with relevant primary and secondary data in an appendix, specifying any relevant assumptions and limitations. You should include, among other support, sales forecasts, cash flow statements, income projections, and any other relevant calculations or financial reports.

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COCA-COLA COMPANY IN CARRYING OUT PROJECTS Suitability of Coca-Cola Company in Carrying out Projects Stephanie Kimber December 9, 2017 1 COCACOLA COMPANY IN CARRYING OUT PROJECTS 2 Suitability of Coca-Cola Company in Carrying out Projects With the resurgence of marketing in Coca-Cola Company, the proposition and their values on the satisfaction of the customers has underpinned the formidable brands. Most soft drink organizations face competition since their competitive advantages neutralized as a result of the use of modern technology that erodes production and productivity. Most customers using ready to drink products, prefer using Coca-Cola products, other than using products from other companies competing with Coca-Cola, giving Coca-Cola company opportunity to create customer value and new ways to improve their customer’s satisfaction and demand (Dawar, 2013). Most firms spend their time on improving and marketing their products since they believe that business structures around the products. However, companies that have product managers and product division measure their profits through their products sold. Better outcomes and conventional wisdom are built, as the best path in ensuring there is a competitive future that is less priced (Dawar, 2013). Most customers prefer buying soft drinks from Coca-Cola Company because of their trust, their service, and their reliability to deliver and supply their drink even at the local and most interior parts. Coca-Cola Company is knowledgeable about business issues and has a good reputation with customers, which gives them an advantage over other soft drink companies. Customers buy most Coca-Cola soft drink products, due to the marketplace interactions between the company workers and consumers of their products. The company builds its trust, reputation, knowledge, and experience not through selling their product, but through systems and processes that are a specific center. Reducing customers risk and reducing business costs such as delivery costs of soft drinks to the sellers where most businesses are spending their resources (Lundin & Hartman, 2012). COCACOLA COMPANY IN CARRYING OUT PROJECTS 3 Meaningful goals are defined relative to competitors. Most soft drink companies adopt mechanisms that outline firms procedures for creating customer value and successfully outshine their rivals companies to accomplish its task and objectives set. The firm limits the product to the company’s value, including emotional feelings, comfort, peace of mind and emotional feelings. A unique and different value created in an organization targets some sections of customers who buy more and are willing to pay more (Lundin & Hartman, 2012). Companies should put in place consistent and reliable systems, in order to deliver customers value system which their rival competitors don’t have. The best advantage that is competitive does not match with sustainable kind since a competitive position is difficult and impossible for competitors to replicate. However, no benefit last forever when more companies invest in innovative areas, since this enhances new strategies of customer values that makes competition sustainable (Lundin & Hartman, 2012). The competition seeks advantage from companies through the creation of values and activities related to the production of soft drink products. Soft drink companies succeeded to big businesses by taking advantage of inventions and innovations in technology, cheap raw material, cheap labor, and through the invention of exciting products to the disadvantage of their competitors (Lundin & Hartman, 2012). Project management refers to the ability and task undertaking to ensure that the company’s operations and activities run smoothly, effective and efficient. The critical aspect of control of a project lies in the company’s position which is highly competitive viewed as organizations essential function in business, where plans are successfully institutionalized (Lundin & Hartman, 2012). Management of projects permeate the entire companies though need justification, to ensure that policies of the company and its plans put into practice, due to its apparent COCACOLA COMPANY IN CARRYING OUT PROJECTS 4 outcome. Organisational changes, company’s improvement and marketing requiring buyers, and to ensure that projects are carried out, efficiently, the company positions itself well. With the focus on improving processes and systems of companies, most organizations turn into project management as a competent core of their businesses. With set up procedures that are of standard, companies tremendously rectify its mistakes and make efficient processes as well as developing people’s talents and skill to improve their efficiency and efficacy. Corporations experiencing difficulties in gaining acceptance level and challenge in the achievement of success should undertake various measures that integrate disciplines of project management, and ways of managing and expanding their business. Soft drink companies tasked with project implementation should be structured at the top level of the company, since it is crucial that both managers and workers see without hesitation, the support spearheaded by the high level of management (Lundin & Hartman, 2012). Coca colas competence in managing ready to drink projects Classification of companies’ intangible assets into several units such as external structure, internal structure, and employees’ competence, helps in positioning a company into successfully carrying out projects. The franchise network of the company both internally and externally, the company’s brand name like Coca-Cola Company and the market value of Coca-Cola Company consists of numerous tangible assets and experienced management capable of organizing and accomplishing production of soft drinks that are so complex. CocaCola Company is well positioned to carry out projects that suit soft drink companies, since it has extensive and long-established managerial experience tasked with the production of sophisticated drinks, hence making the leading company conglomerate (Sveiby, 1997). Coca-Cola Company is best tasked to carry out the project since it has staffs that are competent in carrying out the organizational mandate. The team, as well as workers of Coca- COCACOLA COMPANY IN CARRYING OUT PROJECTS 5 Cola Company, have good relationship ties with their customers who are consumers of their ready to drink products such as Fanta, sprite, stony, and Krest. The advertisement which is Coca-Cola’s main intangible asset is of immense value, such that if the management fails to manage the adverts efficiently, then the likelihood of occurrence of a disaster is possible. A collection of customers of high profile, by professional advertisers, makes Coca-Cola company one amongst the few organizations that can successfully position it in carrying out ready to drink products, as it supports extensive record of accumulated profits. The accumulated gain gives them enormous rates of share that the company utilizes in its strategy of acquisition. Better services and production, with the use of technology increases market shares, profits and reduces costs, hence improving the company’s profits. Coca-Cola seeks betters ways of strengthening the market quality, market cost, and market time thus competent to carry out projects that ensure customer satisfaction (Sveiby, 1997). Coca-Colas Concept and Organisations Competencies Coca-Cola soft drink company is among one of the world’s popular drinks. Marketing Coca-Cola ready to drink product increases Company’s success. The missions of the group include: making a difference and creating values, inspiring optimism moments, and refreshing the world. The vision of Coca-Cola Company serves as a guide to business aspects through the description of the objectives to accomplish, and how to achieve quality growth and sustenance. Through the concept of people, Coca-Cola Company becomes an ideal place where people are inspired to work to their level best (Anders, 2011). People’s needs and desires are best satisfied through the vision of portfolio where there is a brand quality beverage. Through a partnership, an enduring mutual value created COCACOLA COMPANY IN CARRYING OUT PROJECTS 6 between suppliers and customers, and a winning network nurtured; hence citizens become responsible for making a difference by building communities for support (Anders, 2011). Successful implementation of Coca-Cola’s corporate culture The market strategy determines successful deployments of company's corporate culture. Marketing strategy consists of correlated and interconnected elements that integrate the goals of a group regarding marketing. Coca-cola Company being one of the prime marketers has successful building up a brand that appeals most people globally (Bodden, 2008). Coca-Cola’s concept of profit fits the type corporate culture that offers the best possibility of successful implementation, through maximising shareowners long-term returns on the one hand, and being mindful of other people. Productivity which is the second tenet of corporate culture offers the best possibility for successful implementations of company’s product through its high effectiveness in an organization that is moving fast (Bodden, 2008). Recommendation, key roles, responsibilities qualification of team responsible for project implementation In a globally competitive and environments natural economy, company’s advantages determined by its employees who are managed through human resource capability rather than in technology or products. It is through the employees that consumers accept and acknowledge the company, since the product cannot sustain the advantages of competition, but the company becomes lively through diversity, creativity and the energy brought to firms. Competitive position in a company based on the creation of ideas which fellow competing companies cannot replicate, although they access same technology and produce similar COCACOLA COMPANY IN CARRYING OUT PROJECTS 7 products, but cannot create a similar condition, which retains human talent and attract customers (Josh, 2013). Rival competing companies are unable to forge organizations intellectual capacity, which develops as a result of efficient and effective management regarding talents that human beings possess. Application of employees’ ability and intellectual capital transforms understanding and knowledge to organizations critical value, which as a result creates organizational wealth. Through rendering of services rather than products, Steers Company’s international economic growth, since in service-based and knowledge-based economy; people are always on the forefront to deliver (Josh, 2013). Marketers in most companies are less respected because of how they spent their time and companies money. Marketers of coca cola Company, focus less on direct business, hence negatively affecting competition. Currently, the marketer’s functions narrowly concentrating on moving points shared needs, which results to double loss. The success of most soft drink companies such as Coca Cola Company is determined by reliability and consistency of its interest in making the profit and outshine its competitors (Dawar, 2013). Powerful marketing strategies constitute an analysis of factors that are relevant concerning research. Customers who share needs or have similarities in requirements, are defined by the market segment. The market segment takes every target of the customer, though the segmentation is based mainly on income age and the size of the family. CocaCola’s success entirely depends on a segmentation that is perfect (Anders, 2011). An essential segment of Coca-Cola is age, whereby it addresses its goods to youthful customers through use celebrities who are well known, to promote their products. Regarding COCACOLA COMPANY IN CARRYING OUT PROJECTS 8 the old, Coca-Cola diet products, addresses segments of the elderly, considering those above 40 years of age with a diabetic condition. Implementation of company’s functions effectively through project management, where planning of work, as crucial elements. Corporations organize themselves as a matrix with departments that are a knowledge-based function, with multiple programmes about the architecture of the product arranged (Anders, 2011). Test programmes of the company's engineer principal manage tasks that the plan identifies, in conformity to the schedule of planned budget and the content of the program. Most of the functions are under the project development team’s responsibility, and some under the group of product development team. The team works together to perform teamwork task that coordinates and tests companies overall activities (Grady, 1997). Specific skills and experience requirement among company staff Project manages should always ensure that within their companies, workers specialize and perform different functions to ensure objectives of the organization attained. It is through specialization that various specific departments such as marketing, advertising, public relations and sale promotion exist. The marketing department is responsible for information sharing, to other departments within the organization and its consumers. It is also responsible for representing large stakeholder group in status meetings of the shareholder; hence it is the responsibility of the shareholders, to ensure that there is a functional framework that spearheads the marketing department. The marketing department must utilize channels of official communication to communicate on the status of the project. It should share information back from the stakeholders, to the project team as well as project managers (Levin, 2015). COCACOLA COMPANY IN CARRYING OUT PROJECTS 9 Public relation skills are a requisite skill, important in the promotion of various purposes, which includes improving the morale of employees, building the best relationships with members of the public and the consumers of their products to attain publicity and promotion of the company (Levin, 2015). Selection of people who spearheads the project is of immense importance in plan building. As a contingency plan coordinator, the cooperation of supervisors and team members should be improved by overcoming internal politics and work together as a team. A better way of starting a project and mentoring people begin by hiring consultants who build plans for company’s business continuity (Wallace & Webber, L. 2017). COCACOLA COMPANY IN CARRYING OUT PROJECTS 10 References Anders, J. (2011). Coca-Cola’s Marketing Strategy: An Analysis of Price, Product and Communication. Bodden, V. (2008). The Story of Coca-Cola. The Creative Company. Dawar, N. (2013). Tilt: shifting your strategy from products to customers. Harvard Business Review Press. Grady, J. O. (1997). System validation and verification (Vol. 12). CRC Press. Joshi, M. (2013). Human Resource Management-eBooks and textbooks.Rerieved from bookboon. com. bookboon. com. Levin, G. (2015). Best Practices for Managing BPI Projects: Six Steps to Success. Project Management Journal, 46(6). Lundin, R. A., & Hartman, F. (2012). Projects as business constituents and guiding motives. Springer Science & Business Media. Sveiby, K. E. (1997). The new organizational wealth: Managing & measuring knowledgebased assets. Berrett-Koehler Publishers. Wallace, M., & Webber, L. (2017). The disaster recovery handbook: A step-by-step plan to ensure business continuity and protect vital operations, facilities, and assets. AMACOM Div American Mgmt Assn.
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Running head: MILESTONE 4: FINANCIAL ANALYSIS AND FUNDING PLAN

Milestone 4: Financial Analysis and Funding Plan
Name
Institution
Date

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MILESTONE 4: FINANCIAL ANALYSIS AND FUNDING PLAN

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Introduction
Financial analysis and funding plan is a critical aspect of a product implementation.
Before launching the product, a critical analysis of the expected costs and revenues must be
done. This gives the company vision and helps in remaining on track as far achieving objectives
is concerned. This section will, therefore, discuss Coca cola’s budget for launching two of its
products namely ready to drink and green tea. The paper also discusses the sources of funding,
the costs associated with these funding and final an assessment of the company’s assets and
liabilities.
Budget
The launch of these two products will require a total of $ 1,005,317 to launch. A good
percentage of this money will be used to acquire fixed assets whereas the remaining small
portion will be used in the pre-launch operating costs. This is well illustrated in the summary
attached in the appendix. The graph below shows the apportionment of this investment.

Operating Budget Allocation
capital
7%

Fixed assets
93%

MILESTONE 4: FINANCIAL ANALYSIS AND FUNDING PLAN

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In addition to the first investment, the budget also includes revenue and cost projections
for three years. The estimated revenue for the first year as shown in Appendix II is $1,084,807.
This is made up of 125,503 units of ready to drink at $ 3.65 per unit and 107,132 unit of green
tea at $ 5.85 per unit. This amount is projected to increase based on an assumption of a 10%
growth rate both in year two and year three. The growth is expected because within three years
the brand awareness among consumers will have increased thereby leading to increased demand
(Ciccone, 2005; Marsh, 2013). The expenses for the three year period have also been forecasted.
Unlike the revenue, not all the expenses are expected to increase at the same rate. The growth
rate is different with some of the expenses having negative growth rate as shown in Appendix
III. Even so the total operating has increased throughout the period. The projected operating
expenses for the three years are $112,520, $113,106 and $113,861 for year 1, 2 and 3
respectively.
Based on this projected budget, the company is expected to break-even during the first
year of operations as shown by positive net income in the projected income statement under
Appendix I. The projected income for the first year is $ 6,799. In the second year, high growth in
sales and low growth in expenses are expected to lead to a net income of $ 50,233. However
comes year three, this is expected to drop significantly as the product demand starts to normalize
thereby leading to a forecasted income of $ 12,571.
The break-even point for these products was reached before the end of year one. The
yearly and monthly break-even values are 443,149 and 36,929 respectively for the first year. The
break-even analysis is clearly outlined in appendix VIII. These two figures further support the
argument that the break-even point was reached before the end of the first year of operations.

MILESTONE 4: FINANCIAL ANALYSIS AND FUNDING PLAN

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Net Present Value (NPV)
In addition to forecasting the revenues and costs, the project NPV have also been
determined to evaluate whether the whole project is a good one. To calculate the net present
value, the projected cash flow has been calculated by adding depreciation to the net income. This
is because depreciation is a non-cash item and not included when calculating cash flows
(Brealey, Myers, Allen, & Sandri, 2011). An assumption has been made concerning the discount
rate. A discount rate of 105 has been used to discount the projected cash flows. The NPV has
been calculated as shown in the table below.

Discount rate
Net Income
Add back depreciation
Projected cash flow
NPV

Determination of NPV
10.00%
Year 0
$ (1,005,317)

Year 1
$ 6,799
0 $ 430,750
$ (1,005,317)
$ 437,549

Year 2
$ 50,233
$ 430,750
$ 480,983

Year 3
$ 12,571
$ 430,750
$ 443,321

$111,850.04

The NPV above is positive meaning the project is viable and therefore can be launched
(Goel, 2015).
Assets and Liabilities Assessment
Furthermore, the financial analysis includes the assessment of the company’s projected
assets and liabilities to determine the company’s going concern and liquidity status (Helfert &
Helfert, 2001; Marsh, 2013). The company’s projected balance sheet shows in detail the
company’s total assets and liabilities. As outlined in Appendix VI, the company’s estimated
assets are more than the liabilities. This shows that the company’s going concern is not

MILESTONE 4: FINANCIAL ANALYSIS AND FUNDING PLAN

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threatened. Moreover, the current assets are way more than the current liabilities indicating a
high liquidity level.
The company’s total assets for the year first amounted to $ 1,102,781 compared to
liabilities value of $ 397,276. The reason behind this big margin is because the product is still at
its infant stage and the company does not have many supplies or creditors. As time progresses,
this variance is bound to change. The variance between the two values will definitely reduce.
Even so, it is advisable that the liabilities always remain below the assets (Ciccone, 2005; Helfert
& Helfert, 2001; Marsh, 2013). Otherwise, the company’s going concern, as well as liquidity,
may be threatened and this will affect the company’s day to day operations. Therefore as it
stands, the company’s going concern and liquidity level is good.
Funding Sources
The main source for this product launch is the owners followed by commercial loan and
lastly by outside investors as clearly outlined in Appendix I. The owner equity alone was not
enough to fund this project and therefore the need to source for outside investors. The outside
invested an amount totaling to $ 201,707 through the issue of ordinary shares. This funding
source accounted for 20.06% of the total funding needed. The owners’ equity, on the other hand,
accounted for 49.44% of the funding. This clearly shows that the company still needed additional
capital. And therefore a third source of funding- commercial loan was sorted. This accounted for
the remaining 30.5%.
The total loan taken amounted to $ 306,611 which attracted an interest rate of 9% per
annum with a repayment period of 84 months meaning it was a long-term loan. Starting the first
year of operation, the company is expected to pay a total of $ 26,258 and $ 32,939 as interest and

MILESTONE 4: FINANCIAL ANALYSIS AND FUNDING PLAN

6

principal amount for the first year as indicated in the amortization schedule under appendix V.
The second year interest will reduce to $ 23,168 while the principal repayment will increase to $
36,029. The final loan balance after three years will be $ 198,235. This will be after an interest
payment of $ 19,789 and the principal amount of $ 39,408 for the third year.
Cost of Capital
Both the equity and debt funding used by the company has associated costs. However,
currently, the main cost being felt is the costs associated with the commercial loan (Brealey,
Myers, Allen, & Sandri, 2011). This is because the company has not yet started giving out
dividends to its shareholders. The main cost of the debt capital is the monthly interest payment
which leads to an increase in the company’s finance costs. However, there are other costs
associated with this kind of funding. This cost includes the loan agreement contract costs and
other costs associated with looking for and applying for the loan.
As the company grows and start making more profits, it will expect to start paying
dividends to its shareholders. This will form the main cost of equity capital. However, there are
other costs like the cost of floating the shares to the public and the ...


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