a) Why? Addressing the Issue
This investment proposal is to evaluate options for the diversification of product and service portfolio of Iceland Foods Ltd. It strives to improve the customer engagement, increase in sales, enhance environmental sustainability and give opportunities for possible contribution to the community (Götze et al., 2015). They are in line with the objectives of strategic policy of Iceland Foods Ltd to maintain the competitive market position and to support long term growth.
b) What? Investment Options
Four investment proposals were considered (Jovanovic, 2009)
1) Mobile Retail Outlet
To tap into a large potential market of students and employees, set up shop in a mobile retail unit located in the University of Hertfordshire’s de Havilland campus.
Rationale
- It has flexible setup to cover seasonal demands.
- The opportunity to provide her with the capacity to address unmet demand during term time.
- Lower fixed overheads than those of traditional stores.
- Rapid scalability to other campuses is possible Ltd
2) Baking Kits
Send out a series of seasonal baking kits (e.g. bird nest cupcakes, bunny rabbit biscuits).
Rationale
- The growing home baking market sparks by popular shows such as ‘The Great British Bake Off’.
- Serves to engage customers in the Iceland brand.
- It makes the company look as a baking expert.
- It allows cross selling of related item such as baking tool and decoration
3) Loyalty Card Promotion
Objective: Refreshed social media campaigns and introduction of a digital loyalty card (“Simmons £”).
Rationale
- It encourages repeat purchases, and thus, builds brand loyalty.
- It uses the technology trends such as mobile payment solutions.
- It helps the brand with brand visibility via social media platforms such as Instagram and Twitter.
- It is useful in making targeted marketing campaigns using data insights.
4) Sustainable Sausage Roll
Improve upon a sustainable sausage roll to offer more product without worsening the environmental makeup. It answers growing consumer demand for environmentally friendly food options.
- Will build on the success of similar products like Gregg’s vegan sausage roll.
- Makes the company a leading edge company in sustainability.
- Helps reduce operational waste and is in line with carbon neutral goals.
- It capitalizes on the innovative food technology for sustainable ingredients (e.g., bird nest cupcakes, bunny rabbit biscuits).
c) How? Ideas Generation & Evaluation
1) Idea Generation
Stakeholder consultations, market trend analysis as well as customer feedback were consulted to provide suggestions for the proposals. All proposals match the strategic goals of Iceland Foods Ltd (Shah et al., 2000).
2) Evaluation Criteria
The options were evaluated based on four benefits:
- Business diversification.
- Possibility to enlarge the customer base or increase sales.
- Environmental sustainability improvement.
- A contribution to the Hertfordshire community.
We conducted a cost benefit analysis, assigning benefits (1-5) for every proposal. A final cost per unit of benefit returned was found by dividing the total benefit units by the cost and identifying the best value for money (Berghout & Renkema, 2001).
Benefit | Mobile Unit | Baking Kits | Loyalty Card | Sustainable Sausage Roll |
Diversifies the business | 5 | 4 | 3 | 4 |
Expands customer base | 5 | 4 | 4 | 4 |
Environmental sustainability | 3 | 4 | 3 | 5 |
Community contribution | 4 | 3 | 4 | 4 |
Total Benefit Units | 17 | 15 | 14 | 17 |
Cost | £100,000 | £85,500 | £100,000 | £72,700 |
Cost per Benefit Unit | £5,882 | £5,700 | £7,143 | £4,276 |
The Sustainable Sausage Roll provided the best value for money, with most value for money having the lowest cost per benefit unit.
3) Insights:
Q- Were your initial judgment of which proposal is best true to the results?
The most cost effective option, the Sustainable Sausage Roll, was eclipsed early by the Secondary Global Ranking (the Mobile Unit), which placed a greater emphasis on the three month ability to generate revenue and integrate with a community. However, it was also revealed that the Sustainability Sausage Roll is, actually, a stronger investment from a long term perspective, since it is fully aligned to environmental sustainability and profitability (Higgins, 2000).
Q- How does this type of assessment improve over traditional assessments?
- Comparison of Proposals: It allows you to compare value for money across all proposals clearly.
- Alignment with Strategic Goals: Gives each proposal benefits which match with business goals like sustainability, diversification, and expansion of the customer base.
- Resource Allocation: It helps to allocate resources to proposals that generate the greatest return for investment (Fox, 2008).
Q- Is there a more effective way to evaluate investment proposals?
- Net Present Value (NPV) Method: Calculate the present value of the cash flows, reflecting the time value of money and evaluate the proposals based on these results.
- Risk-Weighted Scoring Model: Include the benefits and costs, and then risk factors, to evaluate feasibility and maximize/ reduce risk (Higgins, 2000).
- Scenario Analysis: -calculate best case, worst case and most likely scenarios for each proposal to understand what the possibilities are.
d) Implementation Plan of the Preferred Proposal
Selected Proposal: Sustainable Sausage Roll
How:
- Baseline Data Collection (January 2024): In order to begin the current sausage roll development process, critical information must first be gathered and assessed using life cycle assessment (LCA) methodologies in order to analyze the current sausage roll carbon footprint.
- Supplier Collaboration (February 2024): Sourcing and selecting sustainable ingredients, with heir focus on such farming methods like regenerative agriculture.
- Recipe Development (March 2024): Prepare samples for sensory evaluation for last testing and balancing of recipes for flavour, nutritional value and shelf life.
- Pilot Launch (July 2024): Start targeting some selected areas to get feedback from customers through a combination of structured and unstructured surveys.
- Full Rollout (October 2024): Mass production and marketing and staff training for all stores and releasing the products in all stores.
Budget:
- Total estimated cost: £72,700.
- Initial revenue from pilot: £17,500.
- Anticipated long-term profitability based on customer demand, improved margins, and operational efficiency.
Timeline:
- January 2024 to October 2024.
- Full production by Q4 2024.
e) Recommendations
The Sustainable Sausage Roll is the preferred investment proposal because:
- It meets increasing consumers’ expectations for the environmentally friendly products, backed up by market analysis and trends.
- Has tremendous revenue implication, comes at very low cost of implementation and is highly scalable.
- It can show that Iceland Foods Ltd is a company that is sustainable, and sustainability can be used as a unique selling proposition (USP).
- It Shows capitalism’s willingness to cut carbon emissions, while also appealing to those consumers who want to purchase goods that reflect their environmental responsibility.
- It integrates with current levels of production and requires few additional production changes on the company’s facilities (DUGAR & NATHAN, 1995).
f) Reference
- Berghout, E. and Renkema, T.-J. (2001) ‘Methodologies for investment evaluation’, Information Technology Evaluation Methods and Management, pp. 78–97. doi:10.4018/978-1-878289-90-2.ch005.
- DUGAR, A. and NATHAN, S. (1995) ‘The effect of investment banking relationships on financial analysts’ earnings forecasts and investment recommendations*’, Contemporary Accounting Research, 12(1), pp. 131–160. doi:10.1111/j.1911-3846.1995.tb00484.x.
- Fox, S. (2008) ‘Evaluating potential investments in new technologies: Balancing assessments of potential benefits with assessments of potential disbenefits, reliability and utilization’, Critical Perspectives on Accounting, 19(8), pp. 1197–1218. doi:10.1016/j.cpa.2007.11.002.
- Götze, U., Northcott, D. and Schuster, P. (2015) ‘Investment appraisal’, Springer Texts in Business and Economics [Preprint]. doi:10.1007/978-3-662-45851-8.
- Higgins, E.T. (2000) ‘Making a good decision: Value from fit.’, American Psychologist, 55(11), pp. 1217–1230. doi:10.1037/0003-066x.55.11.1217.
- Jovanovic, B. (2009) ‘Investment options and the business cycle’, Journal of Economic Theory, 144(6), pp. 2247–2265. doi:10.1016/j.jet.2008.05.003.
- Shah, J.J., Kulkarni, S.V. and Vargas-Hernandez, N. (2000) ‘Evaluation of idea generation methods for conceptual design: Effectiveness Metrics and design of experiments’, Journal of Mechanical Design, 122(4), pp. 377–384. doi:10.1115/1.1315592.
g) Declaration on the use of Generative Artificial Intelligence
Use Type | Description of use, including prompts used. | Tool(s) used, e.g. Chat GPT, etc. |
Idea exploration, generating options, etc. | Idea discussed for comments only | Chat GPT |
Creation of content, e.g. images, graphs, text, etc. | Content created by own knowledge | Not Applicable |
Refinement of text, e.g. proof reading, grammatical corrections and compressing text. | Grammatical mistake removed | Grammarly.com |
Other | Not Applicable | |
