Budgeting for an expansion programme within a family-run ice cream business

Abstract

The main objective underlying this dissertation is to see whether it is feasible for a local family-run business, which produces and distributes ice cream products under the Granola brand banner, to further increase its investments and expand its present activities. Two sets of questionnaires have been addresses to the general public and to the owners of retail sales outlets to gauge the overall standing and popularity of the Granola brand among the Maltese market, and to get some indication on the probability of further increases in demand justifying further expansion. According to the results, the entity as currently positioned in its sector enjoys such a high degree of popularity such that expansion is simply a further natural step forward in the evolution of this business entity. In fact the need for expansion results to be entirely triggered off by an unprecedented surge in demand within the local market. The expansion programme would call for a bigger and a more automated plant as well as enhances distribution facilities. A discounted cash flow analysis, based on the NPV method, was made at the end of the dissertation, showing that the project's future cash flows are sufficient to cover all costs associated with financing the project and to provide an adequate return to the shareholders.