FI.Chapter11 - D6 _ E*;3*; ! ,o. t tt !l:TE ;_t*g...

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D6 ! ,o. . t _ E*;;- 3*; tt !l:TE ;_t*g "illie [*as;'*s ii,r r$*p*teE #aeeige* j ' . ,,.,r::; :.. '. . 4:,i: ii'.l,'ir-- Tr' l.'7, rhF Adolph a, \'r. a ' rllt'.,r! \\'d- n I rr.rll h us, r .un inc .r rr',rron rl marlr l, ILrr l\c.rLr- ,J ri. qu.rlii) frodu,l' arrd aggrcssivc marketing,by 19t)0Coors had risen to lhe numb€r three br.1nd ir1 the U.S. beer n1;lfket. Dufing this high-gr(\vth phase, th€ (0rporate cnphasis $as or1 mnrketing, tech Iolot\,rBrr(urirt, .,nd,.,fr,irv dd lilinr-. Ifhcr r."c.lrr16 ir ne\, e(tuiFrr,rl ,- L,.l'- '$ r.,.r.,)l\ r). s{rl lh, (-.,d 11.,( ruure Nith litlle scrutiny of p(rPoscd projects. In dfect, thcir notto (,as "lF voLr builc:t it, thei' .-l. . r. .'rd rdccd, fur rw.,'lp.idF-'^n sumcrs did come to Coors. Ho\\'e\,er the breNing irrdustry beBan to e\perien.e najor problcms in ihe 1990s. \{any consumcrs {,ere dra{, to wine, caus rrttr. \rl, i , t'1.,, -.'1. . L,' f.)llhFlow l . p, f \pdr. In .rddrtron. .-rr,e rLrrnt'cr. .f rri.r'- brer.rries opened, prov ing beer drinkers sill .,n .rll.rn"l ve lo lh, n.rtr,'n.rl br"nJ. lhese elcnis proled particularl,v painful to Coor. \h,^, ld,( .l lirdr crrl di. .iplir., Ird l,J t,' .r In\olnu- u{ ,'f Ldpiln J rd thrs tu a high cost infrastructurc. In 1995 Coors hired a ncvv CFO, Timothv blf, i(ho soon lcarned ihat Coors had a low return on inlcsicLl capiial, a negati\.c frco cash florv, and an unreliablc'planning/forc- casting process. \ /olf quickly created an xr- h,. .e Fdu.".ion frnEr.rr,r l,\ ler.l, n-d|ld,_cr- .r. .1 -nciIFF,- h,'\^ r,' .,'Idu.r rdrrun,,l pr,t ect nnalyses. Evcn mofc important, hc bcgan to shilt ihe corporate clrltlre from a focus on urdisciphred gro\rth anLl high'icchnology c'ngineerbg to creatjng shnrehdder value. This nerv focus put to the tesi whcrr Coors reexamhcd it$ plins for a major ncw boLLlc-washnlg facility in Virtinia. Ushg thc cipiial budgethg processcs established bv Woit, th€ project iean ivas able io reduce the cost of ihe inYestmcnt by 257' even as thev iDrplementcd dcsign chinges that led h) rcwcr oPcranng cosrs. In 2005, Coors merged i{|iih Molson Inc. to fffIn CooIS Molson Brewnrg Company, ard Wolt became the Global CFO of ihe combnred brervefy.
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378 The Bosics of Cop |ol Budgeiing Evoluorlng Cosh F ows C.rpiial bu.lgcting is thc procoss of cvalurting a company's potential inveshnenis and deciding $4rich olcs n).ccept. This chapter provides an ovcrvielv of thr crpiial budgciing proccss nDd eaplanls the basic icchni(lues uscd to e\.al!atc
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This note was uploaded on 06/08/2009 for the course FI 601-602 FI601-602 taught by Professor Prof.geary during the Spring '09 term at New Haven.

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FI.Chapter11 - D6 _ E*;3*; ! ,o. t tt !l:TE ;_t*g...

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