Hill Country Snack Foods Co. Case Study - Management Assignment Help

Assignment Task:

Task:

Hill Country Snack Foods Co. 
The Chief Executive Officer of Hill Country Snack Foods had never enjoyed analyst conference calls, but in late January of 2012, Howard Keener was yet again asked about the company's cash balances, capital structure, and performance measures. One analyst complained that Hill Country's growing cash position, absence of debt finance, and large equity balance made it difficult for a company in a mature industry to earn a high rate of return on equity, and recommended a more aggressive capital structure. "Maybe I don't fully understand capital structure theory and practice," replied Keener, "but I have observed that companies don't get into trouble because they have too much cash; they get into trouble because they have too much debt." Hill Country had seen its sales and profits grow at a steady rate during Keener's tenure as CEO, and at the end of 2011 the company had zero debt and cash balances equal to 18% of total assets and 13% of market capitalization. Having just celebrated his 62" birthday, Keener was approaching retirement, creating speculation by investors and analysts that the company might change to a more aggressive capital structure in the near future. 

Company Background

Hill Country Snack Foods, located in Austin, Texas, manufactured, marketed, and distributed a variety of snacks, including churros, tortilla chips, salsa, pretzels, popcorn, crackers, pita chips, and frozen treats. Although many of its products had a Southwestern flair, it also offered more traditional snack foods, which were purchased by end consumers thousands of times every day in supermarkets, wholesale clubs, convenience stores, and other distribution outlets. The company's growth and success was driven by its efficient operations; quality products; strong position in a region that was experiencing both population and economic growth; and its ability to expand its presence beyond the aisle into sporting events, movie theaters, and other leisure venues where consumers were more likely to purchase snack foods. Many of Hill Country's products were also sold through school systems, which required the company to reduce the fat and sugar content of its products. This was just one example of the company's continual work to solicit, collect, analyze, and internally distribute customer feedback so the company could quickly react to customer requirements or preferences, and reinvent and expand its products as required to succeed in the rapidly changing marketplace. 
 

Hill Country's Corporate Culture

Hill Country was a well-managed company, where all decisions were made according to one criterion: will this action build shareholder value? This singular management focus came directly from Howard Keener, the company's CEO for over fifteen years, who strongly believed that management's job was to maximize shareholder value. This philosophy was applied at every level of the organization and in all operating decisions. Many managers talk about shareholder value, but Keener was proud of the fact that, at Hill Country, shareholder value was a way of life, not just a talking point. Keener and other management insiders also held a significant proportion of the company's common stock, approximately one-sixth of the 33.9 million shares outstanding, so this focus on building shareholder value was also personally beneficial to the members of the management team. Another important component of company culture was a strong commitment to efficiency and controlling costs. The snack foods industry was very competitive, with Hill Country facing off against industry giant PepsiCo and smaller companies like Snyder's-Lance every day. Efficient operations and tight cost controls were necessary conditions for success; the company could not rely on price increases in this high rivalry industry. Operating and capital budgets were lean and aggressive, and Keener himself was actively involved in both the budget approval process and in ensuring the business was managed to the numbers in the budget. Unfavorable cost variances resulted in management action to bring costs back into line with plans, even when the cost increases were due to external factors. Management didn't always have a solution to unfavorable variances, but they did all they could to keep costs under control. The final component of Hill Country's culture and managerial philosophy was caution and risk-aversion. The company invested in new capacity and new products when attractive opportunities were identified, but it did not make high-risk bets in its product markets. Growth was low-risk and incremental, driven by extensions of existing products and the acquisition of smaller specialty companies. This strategy produced sales growth rates that were steady, if unspectacular, but also increased the likelihood that customers would respond favorably to the company's new products. Management avoided great leaps in its product markets, instead believing a series of small but successful product launches, combined with the company's operating and cost efficiencies, would quickly contribute positive operating profits. 
 

This Management Assignment has been solved by our Management Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment Experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.