Transcript Title

CONFIDENTIAL
DANONE MERCADOR
3-year Strategy Planning
Infinity SJTU
Apr 10, 2004
0
EXECUTIVE SUMMARY
Strategy Analysis
Strategic Decisions & Action Plans
Workstream Timeline
Summary & Next Step
1
EXECUTIVE SUMMARY
Strategy Analysis
–5 Forces
–PEST
–SWOT
–BCG Matrix
 Our Strategic decisions and Action Plans
 Workstream Timeline
 Summary & Next Step
2
5 FORCES AND PEST ANALYSIS
5 Forces
-Competitors
-Suppliers
Key Success Factors
- Competitiveness
- Innovation
- Positive relationship
with stakeholders
PEST
-Technology
-Satisfaction of
stakeholders
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EXECUTIVE SUMMARY
 Strategy Analysis
–5 Forces
–PEST
–SWOT
–BCG Matrix
 Our Strategic decisions and Action Plan
 Workstream Timeline
 Summary & Next Step
4
SWOT Analysis
PRELIMINARY
High
Low
Assessment criteria Assessment
Active
marketing
 Brand awareness
 Market share
Favorable
relationship
 Labor union
 Sales channel
 Suppliers
Opportunity
• Market growth
-Cream desserts
-Yogurt
• Emerging
 Cost structure
 Capacity not fully exploited
 Old facility, safety problem
 Innovation
production
Stable region
• Reorganization
Restructure
 Overstaffed
 Real managers
 Age pyramid, loyalty
HR
 Internal information exchange
 IT system
IT
Source: Team Analysis
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EXECUTIVE SUMMARY
 Strategy Analysis
–5 Forces
–PEST
–SWOT
–BCG Matrix
 Our Strategic decisions and Action Plans
 Workstream Timeline
 Summary & Next Step
6
BCG Matrix Analysis
High
Star
Question Mark
Cash Cow
Dog
Market
Growth
Low
Strong
Weak
Relative Market Share
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REORGANIZE BUSINESS PORTFOLIO
++
Star
Question Mark
Build
Market
Growth
Cream
Dessert
Yogurt
Hold
Cash Cow
+
Mercalac
Dog
Harvest
Milk
Cream
Juice
2
1.0
Relative Market Share
Source: Danone Mercador Company Report; Team Analysis
8
Sell off for
the cash flow
.1
EXECUTIVE SUMMARY
 Strategy Analysis
Strategic decisions & Action Plans
 Workstream Timeline
 Summary & Next Step
9
STRATEGIC DECISIONS
• Reorganize the business portfolio: Consolidation and Expansion
• Restructure and modernization of the production sites
• Cultivate Enterprise culture based on Danone Way
• Achieve the profitable growth
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FIVE ACTION PLANS BASED ON DANONE WAY
Finance
Human
Resource
R&D
Danone Way
Marketing
Sales
Operation
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Marketing and Sales
Market Expansion & Brand Building
Danone Mercador
National Competitor
Int’l Competitor
Other Competitor
Market Share
Yogurt
35%
+ 6% per year
Cream Dessert
0%
+10% per year
Action Plans
• Acceptability
Product
Yogurt
55%
• Affordability
Pricing
Cream
Dessert
30%
->Perferred
Place
->Price relative to value
• Availability
->Pervasive
＊ Wherever you are, we think of you
Promotion
• Advertisements
& Promotion campaigns
Brand Building
Sponsor public activities
“Danone Babies” Selection
good taste, healthy & innovative
Source: Literature search; Team analysis
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Operation Management
Aspects
Action Plans
• Select suppliers as strategic partners
Procurement
Produce
New production line in the plant of South
＊ Restructure the plant in North
＊ Automation in procedures
Quality
Control
• Quality control system, regular inspection and alert system
• Reduce the packaging size and weight
• Renew the water treatment plant
＊
Food
Security
Logistics
• Risk management
• Efficient logistics network
• Outsourcing to the 3rd party logistics companies
Source: Literature search; Team analysis
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R&D
• Innovation in different segment
• Cooperate with Dep.
＊
Marketing
->define sensory
targets
– Aroma
– Texture
– Taste
– Natural health segment
– Diet segment
– Children segment
• Technical co-operations with institutions and universities
‘Our strategy is to widen product
lines to take into consideration the
different tastes and habits in the
local market’
– Franck Riboud, CEO
Source: Literature search; Team analysis
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Human Resource
Action Plans
• Personnel Competence
• Recruit
• Promote Within
• Training system
• Based on performance
• KPI system
• Internal Communication
• Intranet & internal journal
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Finance
Increased
Reduced
Du Pont Finance Analysis
ROE
x
ROI
Net Profit/
Revenue
Net Profit
Revenue
－
• Operating income:
11.8% (average)
÷
x
Asset Turnover
• Improve logistics
AR turnover
Inventory turnover
Fixed Assets turnover
Revenue
Cost
Milk +
Industrial Costs Logistics Costs Advertising +
Overheads and Misc -
• Total 3-year sales revenue:
476 million Mercas
Source: Team analysis
Equity Multiplier
16
ability and supply
chain management
• Launch of cream dessert product
• Modernization of the production
site
• Efficiently construction of
logistics network
• Three-year advertising
campaigns
• Employee training
Financial Results
ESTIMATED
Cost structure
Sales Revenue
M.Mercas
M.Mercas
100%=103
Op. result
Overheads
Ad
7.4%
CAGR
=26%
100%=205
13.4%
103
205
152
120
12%
12%
8.7%
5.4%
Logistics
Industrial
10%
9.5%
2004
11.4%
10.5%
2005
2006
Net Operating Profit
M.Mercas
Raw&pack
26.8%
2007
22.4%
CAGR
=55%
20.6
13.5
9.1
Milk
23.7%
2004
Source: Team analysis
5.5
26.8%
2007
2004
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2005
2006
2007
EXECUTIVE SUMMARY
 Strategy Analysis
 Our Strategic decisions and Action Plans
Workstream Timeline
 Summary & Next Step
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ILLUSTRATIVE
WORKSTREAM
likely to prolong
Kick-off
Oct 2005
1Q
2006
2Q
2006
3Q
2006
Wave 1
• Divest the fruit juice business
• Invest in a new product line for
the cream dessert business
• Renew the water treatment plant
• Develop the sales and distribution
networks
• Select the competitive suppliers
Wave 2
• Establish a training system
• Set up quality control system and
risk management, regularly
inspection and alert system
• Launch the promotion campaigns
• Restructure to production sites
• Integration of IT system to
improve internal communication
Wave 3
• Recruit the real managers
• Set up KPI system
• Sponsor some sports games and
public activities
• Conduct technical co-operations
with local institutions and
universities
* Timing depends on Mercader/Partners resources committed
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4Q
2006
1Q
2007
2Q
2007
3Q
2007
4Q
2007
EXECUTIVE SUMMARY
 Strategy Analysis
 Our Strategic decisions and Action Plans
 Workstream Timeline
Summary & Next Step
20
Trust Brand
Shareholder
• Implement Group Danone
values
• Positive relationship with
stakeholders
Supplier
Employee
Danone Way
Consumer
/Customer
Authority
21
NEXT STEP
• Further consolidate leadership position
• Adopt E-Commerce to complement the traditional
channels
• Introduce Danone brand locally
• Improve the ratio of debt to equity
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Thank you!
Q&A
23