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Ukraine

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Submitted By sophia118
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1. Financial Budget

Based on the analyses, Pinchunk proposed a financial plan includes a EUR 7 million investment in new plant and equipment in 2001 as well as a EUR 6.8 million investment in warehouse and distribution center for 2002.

There are several aspects suggesting that they need to improve their financial budget. a) Asset-utilization ratios
As we can see from the Exhibit 4 of the case, Ratio Analyses of Historical and Projected Financial Statements, the sales growth rate and the assets growth rate are not change consistently. As the ratio in Table 1 shows, from 1997 to 2000, when the sales growth rate increased significantly, the assets growth rate declined or maintained stable. Therefore, there is an urgent need to increase the investment to meet their sales growth goal. Table [ 1 ] Asset Utilization | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | | Actual | Actual | Actual | Actual | Proj'd | Proj'd | Sales growth rate % | 4.0% | 7.9% | 22.2% | 12.6% | 14.8% | 12.6% | Assets growth rate % | 6.0% | -0.9% | 6.0% | 4.5% | 10.9% | 8.4% |

b) Investment environment in Ukraine i) Ukraine has a relatively large population of 52 million and strategic location within Central and Eastern Europe, making it particularly attractive. ii) From 1995, the Ukrainian government supported the privatizations and market reforms, which suggested a valuable chance to expand, since their privatizations and market reforms were still continuing. iii) Since their beer was very popular for its full-bodied, malty taste, the fragmented nature of the Ukrainian beer industry provided opportunities for Deutsche Brauerei to get more sales.

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