Financial Management Essay

3590 words - 15 pages

For the exclusive use of I. Randa, 2016.

OCTOBER 22, 2012


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 ...view middle of the document...

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
HBS Professor W. Carl Kester and Babson College Professor Craig Stephenson prepared this case solely as a basis for class discussion and not as
an endorsement, a source of primary data, or an illustration of effective or ineffective management. Although based on real events and despite
occasional references to actual companies, this case is fictitious and any resemblance to actual persons or entities is coincidental.
Copyright © 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

This document is authorized for use only by Isaac Randa in 2016.

For the exclusive use of I. Randa, 2016.
913-517 | Hill Country Snack Foods Co.

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...

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