Critical Report Of Business Case

2569 words - 11 pages

This report evaluates the bailout decision made by the Victorian State Government to prevent SPC Ardmona, the Australia’s largest food packaging company, from closure with a $22 million injection. This report will delve into reasons for the bailout. First of all, a brief background information of this company and summary of the bailout will be presented, followed by a clear illustration of the main reasons behind the Victoria State Government’s financial assistance. The effectiveness of the bailout decision will be critically analyzed, based on the ‘triple bottom line’, from the aspect of both short- and long-term. Finally, the information contained in the previous sections ...view middle of the document...

In addition, it should be noticed that this company had received $4.4 million ‘sustainable’ contribution from Victorian State Government in the year of 2012 to a three-year capital upgrade project for saving it from closure(State Government of Victoria 2012). Therefore, the Victorian State Government has already offered a sum of $26.4 million to this local food processing company(AAP General News Wire 2014).
Reasons for the bailout
There are three main reasons for the Victorian State Government to supply such a huge financial assistance to SPC Ardmona. From the economic realm, SPC Ardmona, as the last remaining fruit and vegetable processor in Australia(MediaNet Press Release Wire 2014), makes a great contribution to the local economy(Bettles 2011). According to Shepparton mayor, it is SPC Ardmona’s closure that would sunk $650 million from region’s economy(AAP Bulletin Wire 2014).
The second reason is the social concern. Although SPC Ardmona directly has only 700 full-time employees, there are thousands of associated industries such as agriculture and transportation industry rely on it(Brown 2014). According to the recent statistics, the city’s unemployment rate would demonstrate a noticeable upward tendency from 8.5% to 12% (Brown 2014), and the number of 5000 people in Goulburn Valley are thus at stake(The Northern Territory News 2014) supposing that SPC Ardmona could not get the financial assistance to sustain its operating. The Victorian State Government’s bailout comes with a commitment from SPC Ardmona to maintain at least 500 full-time equivalent employees(Long 2014).
Last but not least, as a crucial company in the fruits and vegetables processing industry, SPC Ardmona should assume the responsibility of the environmental sustainability. Although the company has a great contribution in the environment protection in the food processing industry, for instance, in the early 2000s, SPC Ardmona developed the preservation of fruits in resealable, transparent plastic fridge-packs(Hattersley, Isaacs and Burch 2013), the scientific research for environment-friendly products requires huge financial support. As a result, the bailout is also important for SPC Ardmona to drive new products and packaging innovation.
Critical evaluation of the bailout
This section makes critical evaluation on the effectiveness of the bailout, from the aspect of both short- and long-term. Additionally, the related stakeholders as more as possible in this bailout might be discussed in the following parts based on the business concept of ‘triple bottom lines’.
Short-term advantages of the bailout
The aspect of profit
In terms of the profits, as private sectors, there is no doubt that the companies of Coca Cola Amatil and SPC Ardmona gain big profits at different extents from this bailout offered by the Victoria State Government. The $22 million rescue package not only assist SPC Ardmona to the continued investment in both marketing and product innovations (Brown 2014)...

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