Factors affecting the expansion of Maggi Noodles in Nepal

Instant noodles are one of the popular snacks all around the world and its market is growing each
year. Instant noodle market in Nepal is an emerging market with few international and national
brands. Nepalese noodles are some of the fast growing market in Nepal and has shown positive
sign of International growth. Wai Wai is one of the good example of successful noodle in Nepal
produced by CG group. Some other national brands like 2pm, Hurray, Ruchee, etc. have some
market share in the noodle industry. Nepalese noodle market is not like other market, the market
here is a very traditional and consumers prefer to shop in the local market. Nepalese market is a
slowly growing, from importing Nepalese market has grown to exporting the noodles in various
countries. However the Nepalese market lags the raw materials required for the industries. Most
of the raw materials are imported from neighboring country India and China.

The Maggi noodle is one of the popular brand in India brought by FMCG Company “Nestle”.
Maggi is a Switzerland product and is known for its nutrition-oriented noodle. Maggi was
established in late 19th century. Nestle acquired Maggi in 1947. It is a popular snack in India
preferred by various age group ranging from children, youngster and middle aged people of
India. The ease of cooking and savior taste has made Maggie one of the popular brand in India.
In 1982, Nestle launched Maggi in India with slogan two minutes, which instantly became hit in
India. The Maggi has redefined the food industry India and still growing.

The advancement of technology has turned the world in a global village market with everyone’s
reach. Many multinational companies are working all around the world and the markets are not
bound by the boundary of any country. A new product produced in any country can be imported
or exported to any part of the world. World Trade Organization has been working to oversee and
control the market trade without any barriers. The manufacturing industry are growing rapidly
due to ease in access of market by any country without country boundary barriers.

Fast food industry is also growing like other industry. Time is important for everyone which
makes packaged food very good for saving time for the people. The noodle does not take much
time to cook and can be ready within short period of time, so they are becoming popular all
around the world as well as in Nepal. The Nepalese noodle market has room to grow and it’s
increasing in Cities like Kathmandu, Pokhara, Butwal, and so on. The market of junk food in
Nepal is growing and has opportunity for new product to take market share. As Maggi has
successfully occupied good market share in India, the Nepalese market can be an expansion
opportunity for Maggi to enter the noodle market in Nepal since the Nepalese market has the
opportunity to grow.
Literature Review

Budget is the plan, goal and objective in the management of a company. It provides the direction
to the company to move ahead. It controls the financial aspect of the company. It allocates the
finance of the company to achieve the target outcome. It may be short or long term planning of
company to achieve its goal.

Capital is the total investment of the company either money, tangible or intangible assets of the
firm. On the other hand, budget is the quantity expressed as plan and action. According to
definition of Charles T. Hrongreen, “Capital budgeting is the proposed capital out lays for
making long term financial planning.” G.C Philippatos defined capital budgeting as the
allocation of company’s resources either human or monetary resources among several
investment opportunities of the firm. Investment opportunities of the firm includes the stream of
future earnings from different projects and comparing them with the immediate or future stream
of expenditure from them. Whereas Lyrich explained capital budgeting as a planning
development of available capital of the firm to maximize the long term profitability. According
to Gitman, capital budgeting is a complex investment fund process with several process.

Based on the presented definition of capital budgeting, it is certain that firm has a limited
financial resources and they should utilize them at the optimum level to grab maximum profit
from the available opportunity with minimum expenditure of cost. Therefore, for any project or
planning to be successful, capital budgeting analysis is essential.

Capital budgeting involves several steps. Identification of investment proposal, screening,

evaluation, approval, implementing, review and feedback. Evaluation of proposal can be carried
out different methods like Net present value, Internal Rate of Return, Profitability Index,
Payback Period, Discounted Payback, and so on.