Strategic investment appraisal via decision-making construct: a case study in food manufacturing industry
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Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
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Author
Date
2020
Department
Major/Subject
Mcode
Degree programme
International Design Business Management
Language
en
Pages
97
Series
Abstract
Valio is known as an innovative food industry company, whose R&D efforts cover the entire dairy value chain. As a response to trends in the dairy industry, Valio entered the vegan dairy replacements market with its Oddlygood® products in 2018 and sees that the significance of vegan products in its business will grow in the following years. To support its vegan dairy replacements business, Valio could establish production capacity for plant-based ingredient processing to benefit from increased vertical integration. In this thesis the establishment of such production capacity is referred to as the investment project. This thesis studies the strategic and financial aspects related to the investment project in the field of plant-based ingredient processing with a focus on decision-making. This study is conducted with constructive research approach in the context of Valio, a large and integrated Finnish dairy and food manufacturing company. Constructive research begins with a practical problem and aims to solve it by innovating and implementing a solution. The solution is anchored in both theory and practice. This research provides a practical contribution by addressing the initial problem, and a theoretical contribution by reflecting on the process and findings in relation to theory. This thesis proposes a decision-making construct which combines strategic and financial analysis. Strategic aspects of the investment project are addressed through a make-or-buy decision-making framework, while the financial aspects are addressed with a constructed cash flow-based Excel tool that models the operation of the proposed plant-based ingredient production facility. The use of the decision-making construct is also demonstrated using a hypothetical data set.Description
Thesis advisor
Eloranta, VilleKeywords
investment appraisal, strategic investment, strategic investment decision-making, make-or-buy decision
