Premium Essay

Hill Country Snack Foods Co.

In: Business and Management

Submitted By Lydiasickle
Words 605
Pages 3
JetBlue IPO – Case Study

IPO Process
An initial public offering (IPO) is selling traded equity to the public on a securities exchange for the first time. The initial public offerings are used by companied to raise additional capital, and to transform from a private company into a public company. The IPO process is as follows. 1. Selecting an underwriter 2. Due diligence 3. Preliminary registration 4. SEC review 5. Road show and book building 6. The offering settlement
There are many advantages and disadvantages of going public through an IPO.
Advantages
Increased capital from public offering * Increased liquidity * Public market creates shareholders’ value * Facilitates merger & acquisition – shares can be used instead of cash * Accelerates company’s growth * Increased recognition * Employee stock options are valuable
Disadvantages
* Costs and time demands – costs associated with reporting could be significant and more time needed for statements preparations. * Information disclosure – information may be visible to competitors. * Financial reporting and administration burdens of complying with SEC * Control – managements may experience loss of control. * Increased risk of shareholder litigation * Increased restrictions
The issue of JetBlue
The issue is that there is a debate among the JetBlue management about the appropriate pricing of the IPO. The analysts reported that demand exceeded supply, and given such a high demand, some members believed that raising the price would be a good choice. While in management’s view, they believed that discounting the stock price would ensure a successful deal. Therefore, different approaches will be analyzed, and recommendations would be given for JetBlue’s share price.
Approaches to value JetBlue’s shares
Price-to-earnings ratio valuation…...

Similar Documents

Premium Essay

Snack Food Industry

...When performing a five forces model for the snack food industry, I first looked at competition from rival sellers as I felt that this was the strongest threat for manufacturers. Rival sellers can easily try to produce a new line of products, mimic a competitor’s product, and it’s difficult to differentiate a snack food from the competition as there is so much competition. The market isn’t quickly growing, so rivals are competing for the same customer base and there is very little if any cost to switch from one snack food to the next. Many snack foods are very similar and there are hundreds if not thousands of competitors all fighting for the consumer’s purchase. A high competitive pressure exists from the sellers of substitute products as manufacturers can easily mimic existing snack foods. On a recent trip to Hyvee there were a number of snack foods on my list to pick up including potato chips, fruit snacks, and pretzels. For each of these items I had a variety of choices including a Hyvee brand for each which was the lowest price competitor, each product had a healthier option, and some even had a substitute product such as the flat pretzel snack rather than traditional. As consumers become more health conscious increased competition from the health foods industry will start to cross-over into the snack food industry. Competition from new entrants is moderate as it would be quite costly for a new start-up firm to purchase necessary equipment, create the......

Words: 689 - Pages: 3

Premium Essay

Questions for Case Study 3 Hill Country Snack Foods

...QUESTIONS FOR THE ‘HILL COUNTY SNACK CO’ CASE STUDY (TO BE ANSWERED IN THE STUDENT GROUP REPORTS) In your group report, you should attempt to answer the following questions. For each question, a few paragraphs or sentences should be enough; I should stress that I am more interested in understanding the quantitative analysis or reasoning that led you to your answer in the report, than in the numerical accuracy of the answer (not that the latter is not important at all!). It is recommended that you upload to moodle any files that might facilitate me in understanding your answers (e.g. excel worksheets with computations of intermediate steps, etc.) Questions 1. How much business risk does Hill County face? How much financial risk would the company face at each of the three alternative debt-to-capital ratios presented in Exhibit 4? How much value could Hill County create for its shareholders at each of the three alternative debt levels? 2. What debt-to-capital structure would you recommend as optimal for Hill County? What are the advantages of adding debt to the capital structure? How would issuing debt impact the company’s taxes and expected costs of financial distress? How would the financial markets react if the company increased its financial leverage? 3. How could Hill County implement a more aggressive capital structure? What methods could be used to increase debt and decrease equity? 4. Considering Hill County’s corporate culture, what arguments could you use to persuade......

Words: 258 - Pages: 2

Premium Essay

Hill

...Hill Country snack food Co. Case Hill Country’s operating strategy and its impact on business risk & financial strategy The operating strategy is to produce high quality products through efficient, low-cost and aggressive operation as well as singular management. In detail, the company provides several kinds of snacks to satisfy different type’s customers. The company expands its presence into sporting events, movie theaters and other leisure events to attract customers. An efficient and low-cost operation is achieved by strong control of budgets and costs. Customers are satisfied by companies’ quick react to their requirements or preferences and reinvent and expand its products, showing the efficient management for the customer requirement. Also, all decisions are made in order to build shareholders' value, indicating singular management. For the business risk, the snack foods industry was very competitive, facing off against competitors like PepsiCo and Snyder’s-Lance very day. In this high rivalry industry, company could not succeed by price increase. And unfavourable cost due to both internal and external factors is not easy to control. In order to control the business risk, the company is actively involved in the budget approval process, and the operating strategy has very important part to keep the costs under control. For the financial risk, the more debt financed the higher financial risk it is. The company's risk avoidance strategy is manifested in its......

Words: 1122 - Pages: 5

Free Essay

Snack-Food Industry – Driving Factors

...1 Snack-Food Industry – Driving factors The snack food industry benefited from increased demand for several of the industry’s products during the past five years in line with rising household disposable income. In addition the industry has a moderate level of market share concentration. The top four players are accounting 43% of revenue. This revenue depends on numerous reasons and factors. One are the changing eating habits due to less frequent restaurant dining and hurried lifestyles that encourage on-the-go eating and a growing tendency to replace meals with common smaller snacks. Companies and businesses combat the raising obesity by developing healthier snack foods that still taste appealing. The boundaries between meals and snacks are growing ever blurrier, creating consumer consumption habits that will resonate for a long time. The children and kids of today, comfortable with replacing entire meals with snacks, will pass these lifestyle traits on to their children, assuring that eating snacks will remain a big part of life. Nevertheless consumers seek ways to achieve a healthier lifestyle because they become more aware of the negative health effects of eating foods that contain high levels of sodium. Therefore, producers quickly perceived the changing consumer tastes by offering more healthy options. Snack foods that are marked as “it is better for you” or “fatless” will remain popular. After accustomed to a special snack, this becomes a private label snack......

Words: 687 - Pages: 3

Free Essay

Fresh Express Food Truck Co W.L.L.

...Executive Summary Fresh Express food truck Co W.L.L will offers highest quality products and services a menu of all beef hotdogs, hamburgers, cold sandwiches and other items as well as an assortment of chips, candy bars, soda, coffee, and juices. As the business grows and evolves we will continue to add new products for our customers as demand indicates. We believe in customer focused decision making that involves voice of customer feedback in everything we do, ,from the products we offer to the way we reach the market and the community, Fresh Express food truck Co W.L.L number one goal is to make our customer happy, no matter the cost, so that they feel confident and motivated to recommend us to their network of family, friends, and colleagues. Fresh Express food truck Co W.L.Lis a locally owned fast food truck that will be positioned as an international franchise through our creative approach to the company's image and detail presentation. Fresh Express food truck Co W.L.L will provide a combination of excellent food at value pricing, with fun packaging and atmosphere. This plan is prepared to obtain a locations for the initial launch of this concept. Additional financing will need to be secured for the two subsequent outlets, anticipated in month 13 and early in year three. The financing, in addition to the capital contributions from shareholders, will allow Fresh Express food truck Co W.L.L to successfully open and expand through year two. The initial capital......

Words: 3595 - Pages: 15

Free Essay

Patato Chips Adn Snack Foods

...Comparative Test Brand Rank Weight Price (in gm.) (in `) potato Chips Bingo Parle Lays Haldirams Pringles Uncle Chips 1 2 3 4 5 6 7 8 9 1 3 4 66 84 63 66 182 72 200 60 18 130 110 120 150 20 20 20 15 122 20 42 10 5 20 15 20 20 Branded Chips & Snacks Stay within Munching limits! Bikano Balaji Diamond Snack Food Kurkure Bikano Chatex Parle Fulltoss Haldiram’sTakatak 2 Branded chips and snacks have become part of the daily diet for rural and urban kids in india. Working parents prefer to buy the branded chips and snacks as they believe that these are prepared hygienically and will provid some amount of energy and nourishment that the children are deprived of because of their parents busy schedules. Parents tend to forget that chips and snacks are fillers and not a whole meal that provides nutrition in some proportion. Consumer VOiCe did comparative testing of well known chips and snacks brands to find out how well these products perform on health and hygiene parametres . Fortunately all the tested products were endorsed as hygienic and as far as being healthy, the manufacturer were playing with words – ‘no added msg’, ‘edible oil’, ‘iodized salt’. So many different names confusing even educated consumers searching for definition of these words in dictionaries rather than being able to make a quick decision as to which product is most suited for them. Read our report to help you make a better choice next time! F rom being a poor man’s staple......

Words: 4625 - Pages: 19

Premium Essay

Analysis and Recommendation on the Capital Structure of Hill Country Snack Foods Co.

...structure of Hill Country Snack Foods Co. EXECUTIVE SUMMARY This report discusses the current operational and financial strategies of Hill Country Snack Foods Co. and analyses the proposed capital structure for it. Part I of the report reviews the company’s strategies and its latest financial performance. Part II illustrates a detailed valuation of the proposed capital structure. Valuation methods involved includes Dividend Discount Model and Discount Cash Flow valuation (the Hamada approach). It is recommended that the company adopt a 40% debt-to-capital structure to fully use its capital and benefit from the external funding. PART I THE OVERVIEW OF HILL COUNTRY SNACK FOODS CO. Background of Hill Country Snack Foods Co. Hill Country Snack Foods Co. is a middle-size snack food company located in Austin, Texas in the U.S.. The snack food industry is very competitive. The main competitors of Hill Country are industry giant PepsiCo and smaller companies like Synder’s-Lance. The current CEO Howard Keener, who is 62 years old and worked in the company for over 15 years, is approaching retirement. He has a very strong personal influence on the company culture and the way it is operated. He is passionate about maximizing shareholder value, believes in keeping tight control over costs, and is very risk adverse in the operation strategy as well as the financing decisions. Considering his near retirement, many investors think there will be a series of change in Hill Country.......

Words: 2086 - Pages: 9

Free Essay

Snacks Food Industry

... FIRST RESEARCH - HOOVER’S INC., A D&B COMPANY www.firstresearch.com © 2013 Hoover’s, Inc. All Rights Reserved. 1 INDUSTRY PROFILE Snack Foods Manufacturing 12.3.2012 NAICS CODES: 31191 SIC CODES: 2068, 2096 The Industry Overview is an excellent way to ensure you make the right first impression, with minimal time invested. USE IT TO: . Quickly grasp how an industry operates. Adapt your sales process to fit your customer’s buying process. . Understand the competitive environment. . Stay abreast of applicable government regulations. Cite relevant statistics in a targeted letter or email to a prospect . or customer (see sample letter at the end of the report). • Accelerate new hire development time and lower your training costs. Industry Overview Companies in this industry make snack foods such as nuts, chips, and popcorn, as well as peanut butter. Major companies include US-based PepsiCo’s Frito-Lay, Kraft Foods, Diamond Foods, and Snyder’s-Lance; Grupo Bimbo (Mexico), United Biscuits (UK), Calbee Foods (Japan), and Nongshim (South Korea). • • • • • Worldwide, the snack foods manufacturing industry generates about $300 billion in revenue. Europe and the US are the largest markets. Eastern Europe, Latin America, and the Asia/Pacific region are the fastest-growing snack food markets. The US snack foods manufacturing industry includes about 500 companies with combined annual revenue of $27 billion and is expected to grow at a moderate rate over the......

Words: 7090 - Pages: 29

Premium Essay

Hill Country

...Hill Country Snack Food Co is experiencing steady growth and success due to its effective operations and quality products in its industry. It has unique capital structure with zero debt and large cash balance corresponding to its conservative operation strategy and corporate culture and philosophy. Whether to change to a more aggressive capital strategy and what is the optimal level of debt-to-capital ratio for Hill Country is the key issue in this case. * Hill Country’s operation strategy and its corporate culture The company commits to operating and cost efficiency with high quality products and strong distribution management. This strategy enjoys a steady sales growth rate and positive profits. The management of Hill Country strongly believes to maximize shareholder value and the managerial philosophy is caution and risk-avoidance. * Influence on financial performance and capital structure Hill Country’s conservative operation drove strong financial performances with large increases in net income since 2009 and continuous and growing dividends paying out ratio and sufficient cash flow. The company’s risk-aversion culture also brings about a preference of equity finance, large cash balance and avoidance of debt. The ROE of Hill Country (12.5%) is much lower to Pepsi’s (30.8%) in correspondence to its net profit (7.2%) compared to Pepsi’s (9.7%). The reason is because of its 100% reliance on equity finance. * The impact of a more leveraged capital......

Words: 638 - Pages: 3

Premium Essay

Hill Country

...Hill Country Snack Foods Co. Hill Country Snack Foods Co. (HCSF) is an American-based company specializing in snack food industry. Its competitive advantages mainly base on conservative management strategies, cost efficiency, high quality products as well as solid regional position. Despite stable growth over years, one big concern raised among company’s shareholders as well as financial analysts are its capital structure. As HCSF is all-equity funding, many perceived that the company has more potential to increase its financial performance but leverage in the means of introducing debts in its capital structure. This report considers impacts of such suggestion on both HCSF’s future operation and financial performance I. Operating and financial strategies Under the management of the current CEO, HCSF adopts one philosophy in all of its decision- making, which is to maximize shareholder value. This is achieved by employing the efficient cost budgeting, and high level of caution as well as risk aversion * Efficiency management and cost controlling: It is easy to observe that well-managed cost is one of the key strategies for the success of HCSF. In the industry where competition is intense and rise in output is nearly impossible, maintaining input costs at the lowest possible numbers is a way to keep the profit growing. The strategy proves its effectiveness by numbers shown in Exhibition 2 when comparing sales and net income between HCSF and Snyder’s Lance Inc.......

Words: 1698 - Pages: 7

Premium Essay

To Snack or Not to Snack

...To Snack or Not to Snack: That is the Problem “A problem exists when a situation has negative effects. Recognizing that there is a problem–being aware of those effects-is essential before you can begin to solve it” (Carter, Bishop, & Kravits, 2007, p. 94). A very profound statement that is easy to relate to for anyone dealing with a problem in his or her day-to-day life. I find it intriguing how sometimes solving one problem can lead to another. The day-to-day problem I want to solve is snacking during the day. You may be wondering how that can be construed as a problem. It has, unfortunately, turned into a problem I struggle with daily. Here is my story. The Start Prior to some minor oral surgery, the doctor told me that I needed to stop smoking two days before and seven days after surgery. Keeping my health and healing in mind, I complied with the doctors’ directions. After surgery he placed me on medication to decrease the pain so the craving to smoke never surfaced. Once I was off the pain medication, it was apparent that I would need some tips to quit smoking. The Foundation for a Smoke Free America (1982-2002) website suggests several tips to help including deep breathing exercises; increase fluid intake for the first few days; be patient, the urge to smoke will pass; avoid alcohol, sugar, and coffee as it may increase the desire to smoke; and avoid fatty foods as the body’s metabolism may slow down. As I have heard in the past, people who try to...

Words: 919 - Pages: 4

Premium Essay

The Vega Food Co. Case Study

...The Vega Food Company Case five gives us a prime example of a family business that was nearly broken due to poor communication between family members. The Valle family and their business, The Vega Food Company, recovered from the down times with strength and unity; however, it was not without the careful leadership of a few key family members. It is clear that without the intervention of Francisco Valle Jr., the company and family may have suffered a much different outcome. Francisco Valle Jr. dedicated himself to fulfilling his father’s legacy. As the only son he slips smoothly in to his father’s footsteps by investing his time in his father’s company; while his other siblings had invested their lives in other areas. However, his sisters felt entitled to benefits from their father’s work. It is clear how they would get this idea, after learning that Francisco Sr. simply gave one of his daughters 650,000 dollars in order to buy a house. How should this seem fair to Francisco Jr., who has put all of his efforts towards helping the business; yet, his sister receives “something for nothing.” Francisco Jr. later balanced this extreme gesture of generosity by adjusting distributions to equalize the other sisters with a gift of comparable value. Although this may seem to be a bad move from a business stand point, I see it as a vital move that brought the family back together and enabled them to put the past behind so that they may work towards future goals. Francisco Valle Sr...

Words: 557 - Pages: 3

Free Essay

Customer Engagement Co-Operative Food

...Customer Engagement at The Co-operative Food Customer Engagement is going beyond exceptional service and is about delivering more personalized experiences based on authentic relationships with customers. The more the store owner knows about the customer, the more personalized the customer experience will be. This, in turn, leads to repeat sales and having potential loyal customers. Co-operative Food sees new technology as a main factor of improving customer engagement and they put emphasis on consumers to make more ethical choices. Sustaining engaging relationships with hundreds or potentially thousands of customers is an impossible task for Co-operative Food. This is why they focus on engaging marketing efforts with their top customers as defined by repeat sales and word-of-mouth referrals. They use online tools to help them manage all of this information. Co-operative Food want to cultivate stronger relationships with those top customers by providing insider deals and other perks not offered to their larger customer base. social media is an established platform for building good customer relationships. They can effectively engage with their customers both online and offline and comes down to: A passion for their business that comes through in the way they interact with customers, talk about their products and services, and freely share their expertise. Sincere interest in helping customers make the right purchasing decisions based on their particular......

Words: 697 - Pages: 3

Premium Essay

Hill Country Food

...9-913-517 OCTOBER 22, 2012 W. CARL KESTER CRAIG STEPHENSON Hill Country Snack Foods Co. The Chief Executive Officer of Hill Country Snack Foods had never enjoyed analyst conference calls, but in late January of 2012, Howard Keener was yet again asked about the company’s cash balances, capital structure, and performance measures. One analyst complained that Hill Country’s growing cash position, absence of debt finance, and large equity balance made it difficult for a company in a mature industry to earn a high rate of return on equity, and recommended a more aggressive capital structure. “Maybe I don’t fully understand capital structure theory and practice,” replied Keener, “but I have observed that companies don’t get into trouble because they have too much cash; they get into trouble because they have too much debt.” Hill Country had seen its sales and profits grow at a steady rate during Keener’s tenure as CEO, and at the end of 2011 the company had zero debt and cash balances equal to 18% of total assets and 13% of market capitalization. Having just celebrated his 62nd birthday, Keener was approaching retirement, creating speculation by investors and analysts that the company might change to a more aggressive capital structure in the near future. Company Background Hill Country Snack Foods, located in Austin, Texas, manufactured, marketed, and distributed a variety of snacks, including churros, tortilla chips, salsa, pretzels, popcorn, crackers,......

Words: 3614 - Pages: 15

Free Essay

Best Snacks

...Best Snacks Problem Solution Stephanie Curry MMPBL 550-Creativity, Innovation, and Organizational Design May 28, 2012 Sara Garski Best Snacks Problem Solution The snack food industry has become increasingly commodity-based over the past ten years, and while the competition has increased, differentiation among the competitors has decreased. This gradual change in the industry has caused sales to slip, market share to decrease, and stock prices to fall. The unwillingness of the company to change to the needs of the market has put the company in a position to lose its long-held premier standing in the industry. In addition to the financial and economic problems facing the company, the employees are distressed about the upcoming changes that the president of the company has implied will soon occur. Also, the employees believe that the company has done a poor job of promoting innovation in the industry which is why the organization if declining in many areas of the industry. For Best Snack’s to succeed, they must confront the problems they are faced with, and change the corporate culture from top to bottom. Describe the Situation Issue and Opportunity Identification Several issues face Best Snack’s in the increasingly commodity-based snack food industry. In a depressed economy, consumers are more likely to buy snacks based on price rather than brand loyalty (University of Phoenix, 2012). This turn in the economy has presented several problems to......

Words: 3886 - Pages: 16