Business Finance Week 5 Discussion

This is a narration of my personal experience while working for Perfetti Van Melle. The
organization aimed at venturing into a new product category of snacks in from their traditional
gum and confectionary section. The initial outlaw for the new venture was $1,250,000. For the
next two consecutive years, the cash flow for the investment was $50,000, with an average
growth rate of 25%. Also, the actual sales that were anticipated during the two years were not per
the estimations. Thus, the project was a complete failure and was shut down, and there was a
tentative loss worth $1,100,000.
The reason for the failure was because the organization assumed the management of the
confectionary and gums sections. The assumption was a replication of the brand in the sacks
market. Still, the dynamics of the sales, on the other hand, were different from their traditional
market in addition to the distribution networks (Gupta et al., 2018). Also, the organization priced
the products higher than had the innovative flavor. However, the consumers only purchased the
products once and never repurchased them. Such resulted in a decrease in sales, and the
alternative costing of the products was carried out in three shifts. The costing was operating at a
90% level that went haywire.
From the assignment, I have learned that the high pricing of products is not an assurance
that the organization will make profits. A company should focus more on strategies that will
allow then to successfully venture into new markets in case they have a new product and have to
undergo a transition (Gupta et al., 2018). I will apply what I have learned in the workplace by
creating models that can be used to predict market trends and sales in the future to set up
effective and efficient strategies.

BUSINESS FINANCE WEEK 5 DISCUSSION 3

References

Gupta, S., Gunasekaran, A., Antony, J. & Gupta, S. (2018). Systematic Literature Review of
Project Failures: Current Trends and Scope for Future Research. Journal of Computers
and Industrial Engineering, 127(14): 26-56.