StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Managing Capability of Danone Company - Case Study Example

Cite this document
Summary
The paper 'Managing Capability of Danone Company" is a good example of a management case study. Founded by Isaac Carasso, the Danone Company was established in 1919 in Barcelona. Carassointended to introduce products that would help children who were suffering from intestinal problems, and one such product was Yoghurt…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.2% of users find it useful

Extract of sample "Managing Capability of Danone Company"

Managing Capability of Danone Company Students’ name: Institution: Date: Introduction Founded by Isaac Carasso, Danone Company was established in 1919 in Barcelona. Carassointended to introduce products that would help children who were suffering from intestinal problems, and one such product was Yoghurt. The Balkans was much aware of the health benefits that accrued to the use of yoghurt. The doctors in Barcelona often gave a prescription of the yoghurt to their patients after consideration that a research had proven it to effective in treatment of intestinal disorders (Obesity & Diabetes Week 2010, July 5). Therefore, the company was formed based on ensuring healthy living among the populations, and Carasso named the very first company product brand after his son Daniel. After ten years, Daniel introduced the company brand to France, and during this time, he ensured that it had great taste and he emphasized on the health benefits that were attributed to this product. As a result, many people were prompted to purchase this item and it found a large market in France. The product also competed fairly well in the market and earned one of the greatest market shares in the region. During the World War II when Germans occupied France, Daniel shifted to the United States where he introduced another brand known as Dannon in 1942 (Barney 2010). The three companies in the three countries, therefore, grew rapidly and emerged to be among the greatest competitors in the markets in terms of provision of dairy products. Danon France emerged to be the leading dairy products company in France and held the largest market share. The competition in the dairy industry is high and various market segments have been developed to enhance the levels of competitiveness of the products. It, therefore, a must for a company to implement strategies that will ensure the targeted customers are reached and company products used efficiently (States News Service 2010, December 15). It also requires a company to study the market and develop various customer profiles that will help in coming up with products that will satisfy the needs of the customer. This study focuses on the Danone company strategies and the manner in which these strategies have been used in achieving the success of the company. More focus will be put on the company’s competitive advantages as well as the manner in which the company has used these to achieve the high levels of success. The study will also look into various aspects such as values, rareness, imitability and substitutability among others. Consequently, the study will take into account the benchmark and the financial ratios for the company to offer an in depth analysis of the facts therein. Using these levels of analysis, the company’s resource management can easily be analyzed and conclusions made in regards to the level of market competition. Danon company strategies As indicated above, Isaac opened the company with the intention of providing the solution to people that suffered from intestinal disorders. The company, therefore, operated under the slogan of providing health solution to individuals; the product, therefore, not only emerged for its great taste, but also for its health benefits which the population sought at large. The company has been using this competitive advantage since its commencement in 1919. The ability to meet the customers need in terms of both refreshment and health became their strong point against their competitors in the market (Weinstein 2008). Another competitive advantage that the company prides in is the establishment of branches in the major countries, Spain, France, and USA in the early years of operation, which constitutes the greatest consumers of these products. To date, Danon Company is the leading company in distribution of yoghurt worldwide and produces over 100 flavors of yoghurt. A recently published report revealed that Danone USA produces and sell over 6 million cups of yoghurt per day, and these cups come in different tastes, flavors and size (Weekly News. 2010, July 24). The company also has established several production plants within the regions of operations, for instance, the US region comprises of Fort Worth, Ohio, Texas, Minster and the west Jordan plant. The minster plant is the largest in the US region. The presence of these plants ensures constant production of yoghurts to satisfy the needs of people within the respective segments. The availability of a proper supply chain process in the company ensures that the product reaches the customers within the fastest means possible. Scheduling of activities and deliveries has been greatly enhanced in all the company branches hence making it easy for them to coordinate sales based activities. The initial outbound and inbound scheduling process operated manually and engaged a lot of time-consuming calls and emails that delayed the entire process. The introduction of supply chain management has enhanced the distribution process and customers can enjoy quick levels of service provisions. Implementation of the Lean Logistics strategy has equally ensured efficiency in production by minimizing the levels of wastages within the system. Through this, the company strives to provide customer tailored products using the minimum cost possible. Due to diversification and expansion of the company, and the market environment, Lean logistics has been the dynamic key towards ensuring that the respective customer profile needs within the business environments are provided according to the desired tastes (Obesity & Diabetes Week 2008, September 29). This system has greatly helped in management of inventory within the system and as well as facilitation of activities that occur within the organization. The market environment for this business operation is equally dynamic with many changes occurring each day. As a result, the business has to adjust to a number of issues that come its way during the process of business operation. Invention of new strategies as well as implementation of social media practices is among the key issues that have largely helped the business in establishing and meeting the demands of people operating within its environment. The above capabilities have been the major strengths that the Dannon business has relied upon over the years to compete favorably in the market. Most of these have been its major strengths that have enabled it to ensure that as high levels of production increases, the expenses used over the production period are equally reduced to significant levels. The market entry strategy is among the key concepts that established the business on the market and led to increased demand for its products in the market. Moreover, the idea of market segmentation and profiling has greatly helped the business to address the needs of its customers sufficiently throughout the world in an efficient manner. Resource management at Dannon Company With a myriad of branches around the world, Dannon has been very keen in terms of resource management, with each step of production closely monitored to ensure that no wastages are incurred. The organizational resources, both the human and the material resources have been given consideration in terms of providing sufficient means to maintain and monitor the manner in which they are used. The company has hired a group of qualified staff in each of the branches and this helps in decision-making as well as coordination of activities within the organization (Schnabel 2010). One of the greatest things that the company has been keen on is guarding their resource management secrets and their organizational strategies. These are the key strengths of the company that has enabled it to have the market lead for a long time. Guarding these trade secrets helps the company in remaining relevant and competitive within the context of ever changing market scene. The company has equally made strategic choices that have been useful in helping the organization achieve its goals and objectives. Most of these choices revolve around resource management and company operations within the region. The strategic choices can thus be categorized into the following categories depending on their applicability in the company paradigms. Strategic choices Value The firm has sustained resources that have great capabilities that enable it meet the market needs efficiently and promptly. The value of these resources is often determined in regards to their ability to enable the firm achieve its competitive advantage and implement the company strategies that are meant to keep it afloat the business environment. The DannonCompany has a series of values, and these may include its large stores, production materials and plants, and finally a large management team to help in the implementation process. The human resource in place is highly trained and capable of providing and sustaining human needs within the business environment. Similarly, the group consists of professionals with experience that enable them make valid decisions regarding the implementation of certain marketing strategies. The values that the company holds are also largely dependent on the strategies that the firm is implementing. For instance, the implementation of lean logistics is very important in ensuring that the business minimizes wastages as possible. Certain level of wastages may be dangerous to the life of the organization; hence applying a production concept that will help in reducing these wastages can help in boosting the levels of production. The Lean Logistics concept is normally applied in cases where the company only produces what a given market segment demands, ensuring that quality of the product is maintained and production levels done at minimum levels. With this concept, the organization minimizes production expenses while bringing customer tailored products into the market. There are also the differentiation values; the values that make the organization distinct from the others. These strategies encompass uniqueness in a product and help in ensuring that customers can identify the company products through a logo or a given packaging. In this perspective, the Dannon company has ensured that it has a logo for all its products to enable the customer identify and differentiate their products from the others in the market (O'shannassy 2008). Apart from the logo, the company has improved product packaging for people within different market segments. Upon the determination of customer profiles in the market of operation, the company has developed a tendency of ensuring that all the customer needs for each profile and segment are availed in the market. The great product packaging is also enhanced in production of different tastes and flavors. The company has greatly worked on the tastes of each brand, ensuring that the packaging and price reflects the taste quality and the health benefits to the customers. Rareness The resources that the company uses are normally not shared among many firms and are equally rare. The various plants used in production and flavoring of the yoghurt products are often unique and other competing firms in the same niche cannot easily access them. This attribute is important tin ensuring that the company has unique products, which the other market competitors cannot easily gain access to. For this reason, the Dannon Company has been well positioned to compete fairly well in the market and achieve the targeted market share. Moreover, this strategy has been the main cause for the company’s ability to gain access to newer markets with great force. Imitability Having products that can easily be imitated by other players in the market is a great threat to any organizational development. Therefore, it the Dannon Company has laid down strategies to ensure that other competitors cannot easily imitate the items brought into the market. The dairy products industry has a great competition regarding the various products that are introduced into the market scene. Therefore having items that cannot be easily imitated by other businesses is a key to development. In the case of Danon Company, the product packages are unique and the competitors cannot easily imitate them. The uniqueness applies in tasted as well as the nature of packaging and the company logo. The company logo is equally unique and cannot be easily imitated by the other players in the industry. This aspect has been the major cause of customer loyalty that the company has achieved over the many years of its existence. The customers have been able to identify these products through the unique taste and company logo that is embedding on the product's packaging. Substitutability The products used by the company in developing the flavors in the dairy industry are often different, and each of these flavors is invented depending on the tastes and preferences of the customer profile. One of the issues that the Dannon Company has greatly emphasized on is the aspect of substitutability. The yoghurt flavors that the company has introduced are unique and the other key players cannot easily find alternatives that are similar or close to this. This aspect ensures stiff market competition and the ability of the company to develop unique products that other competitors cannot imitate in the market (Foods & Beverage Close-Up. 2009, January 14). As well, finding alternatives to these products is not easy for these companies since the items used are unique and cannot be easily differentiated from the others. This is one of the major choices that the company made that has boosted its level of performance over the many years of operations. With the expanding markets towards the international borders, the company has maintained this aspect and has used it largely towards its advantage. In the lieu of these company properties; it is evident that the company has anumber of competitive advantages over its competitors in the market. These have become the major strengths of the company to compete favorably in the market. A commendation of these strategies as well as the resources available has made it possible for the company to achieve great outcomes in terms of development and market computation Knowledge of the Resource Based The resources used by this firm are mainly of distinctive capabilities; this implies that they are unique and offer high levels of customer satisfactions in a manner that the other competitors cannot reach (Klein 2012). The main idea behind development of this is the creation of customer profiles within the market segment and the creating customer tailored product’s that will perfectly suit the customer demands. Moreover, division of the market into segments is another great contributor to the distinct resources that the company uses. These strategies are valid and offer high levels of customer satisfaction hence offering great capabilities to the company. The above competitive advantages, namely values, rareness, imitability and substitutability are long term company strategies. These are the strategies that the company seeks to achieve over the long run period of its operation. Formation of long-term competitive advantages is important in ensuring that the company does not run short of ideas and production means during the course of its operation. At the same time, these long term objectives are important in ensuring consistency in production and making the best use of available resources within the company (Eraqi 2007). Resource utilization is important in this case in ensuring that the company products are utilized efficiently and considerably without wastages. What help’s the Dannon firm is that only a few of the companies have managed to develop products that are nearly of the same tastes as them. This has enabled the company to compete favorably in the market and ensure that the designated goals are achieved within the specified time. This has helped the company expand to various foreign markets and overcome the challenges that are likely to come during operation. These unique resources are enabling the company to work and achieve the intended goals. These resources have also depicted great competitive power in regards to fulfilling customer demands and supplying adequately the required products in the market. The strategy of developing market segments and profiles have enabled the company understand the customer needs and then then tailor them towards fulfilling their needs (Hinterhuber 2013). The teams of professionals in the company are equally competent and capable of making decisions that will help in upward mobility of the company. The skills to translate the products and strategist into a company’s competitive advantage is not easy, however, the Dannon company has a team of professional who help in the development of products that will retain the desired tastes and preferences of the customers. Strategy implications There are a number of strategies that the company can use to achieve the intended purposes. These strategies are important in ensuring that the business remains relevant and on top of the market competition to compete favorably in the market. One of the main strategies that can be applied is the social media strategy; the company uses this to advertise its products and services to the potential customers. The online platform offers a wide range of options, which can be used in marketing the company ideas and concepts (Foods 2009, May 1). Application of these strategies helps in the development of more products that suite customer needs. The original aim of the company was formation of products that will ensure quality health to the customers; this should not be diverted since it is the basis through which customers get attracted to the mentioned products. The top management should also seek to explore deeper markets that other firms have not yet analyzed and define their tastes and preferences and then introduce a product that will satisfy their needs. The main advantage of these dairy products is that they are used all over the globe hence demand is high. Also, the products used in making various brands can be easily outsourced form various parts of the world; this makes it easy for the Danon Company to outsource their raw materials from the target country and then develop products and services that will satisfy their needs. In addition, competent and skilled staff should be employed in the various company branches. These people can be trusted with the company strategic ideas and can translate the ideas into company success. Such persons should be in the management team and should contribute to the key decision making of the company (Cory 2009). Competent staff are also capable of analyzing the business environment in terms of competitors strengths and weaknesses and then come up with ideas that will help in competing favorably with the products that the company offers to its customers Benchmarking Looking at the benchmarks of both the Danone Company against the Kraft foods company, it is quite evident that the company’s performance is splendid and pleasant. The revenues margin is however not wide, an indication that the company ought to lay more emphasis on its advertising and other marketing strategies to compete favorably among the competitors. The financial rations of both the companies depict a level of competition that can be achieved through implementation of stringent marketing techniques and values. Table representing the company SWOT analysis Strength Weakness Opportunities Threats Leading dairy products company Competent personnel Ranked 2nd and is considered among the companies with large market shares. Competition from big market playerse.g nestle, Uniliver etc. Poor implementations of technological factors lead to low market share. Product line expansion leading to larger market share. Opportunities to form mergers in various parts of the globe hence presenting a viable business opportunity. Emerging economies offer growth potential Acquisition by competitors posing a major threat in the market. Price fluctuations for raw materials causes inconsistency in the production process hence making it difficult for the company to plan effectively with the available resources. Ratio analysis Looking at the financial ratios for the three competing companies, it can be observed that Nestle Company has the largest revenues, followed by the DANONE Company and then the Kraft foods. This is an indication of large market share possession by the nestle company. The high revenues could be attributed to the diverse product brand that the company has engaged in the production of. The gross margin for these companies is nearly averaging to a similar figure, a factor that is quite encouraging and depicts an opportunity for future improvement in marketing approaches. The operating capital and work cash for the two companies also indicate an average rate of activity operations; this is a sign of proper expenditure. The figures have also been noticed to fluctuate in certain years to an extent of registering negative figures. The ratio analysis depicts a strict competition between the three companies; and DANONE only need to improve o its marketing techniques to achieve the targeted market level. Conclusion From the above analysis, it is quite evident that the success of Dannon Company is largely attributed to its competitive advantages that it has applied since its formation. Consistency in taste and supply chain management is the major issues that have made the company become the greatest in the region. Good leadership is important in achieving the desired levels of outcome; this is the only way through which the resources within the company can be managed efficiently and effectively to achieve the target results. Good leadership should be observed throughout the entire organizational structure and processes to ensure high levels of responsibility. The human resource and the production plants are equally striving to ensure that the company resources are well utilized. It is worth noting that the major point of focus for this company was developing customer segments for the markets they explored to enable them apply the lean concept effectively (Pediatrics Week 2009). The lean concept ensures that the quality products are brought into the market using the lowest means possible. This benefits the organization in terms of development of unique products in the market. Note: Can you please edited information on Ratio analysis and discuss more on critical analysis by making sure its related to this report. Please see the section on Ratio analysis on page 13. Please try to write at least one page. FINANCIAL RATIOS FOR NESTLE SA ADR   2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue CHF Mil 86,769 91,075 98,458 107,552 109,908 107,618 109,722 83,642 92,324 92,373 92,373 Gross Margin % 58.3 58.3 58.6 58.1 56.9 58 58.2 47.2 47.6 47.9 47.9 Operating Income CHF Mil 8,672 10,800 13,302 15,024 15,676 14,970 16,194 12,471 13,932 13,068 13,068 Operating Margin % 10 11.9 13.5 14 14.3 13.9 14.8 14.9 15.1 14.1 14.1 Net Income CHF Mil 6,717 8,518 9,197 10,649 18,039 10,428 34,233 9,487 10,611 10,015 10,015 Earnings Per Share CHF 1.7 2.04 2.36 2.76 4.84 2.91 10.12 2.96 3.32 3.13 3.13 Dividends CHF 0.71 0.8 0.59 0.66 0.78 1.41 1.26 1.8 1.62 1.7 1.7 Payout Ratio % 42.8 37.6 25.3 24.1 16.1 48.5 12.5 60.9 48.8 54.4 54.4 Shares Mil 4,035 3,999 3,931 3,868 3,725 3,584 3,382 3,205 3,195 3,200 3,200 Book Value Per Share USD 8.53 8.95 10.44 1.23 13.12 13.61 20.32 19.53 21.29 22.66 22.57 Operating Cash Flow CHF Mil 10,412 10,205 11,676 13,439 10,763 17,934 13,608 9,763 15,772 14,992 14,992 Cap Spending CHF Mil -4,031 -4,133 -4,889 -5,590 -5,454 -5,041 -4,984 -5,026 -343 -5,330 -5,330 Free Cash Flow CHF Mil 6,381 6,072 6,787 7,849 5,309 12,893 8,624 4,737 15,429 9,662 9,662 Free Cash Flow Per Share USD 1.39 1.15 1.42 1.79 1.33 3.48 2.73 1.57 5.29 3.4   Working Capital CHF Mil 6,168 5,947 2,826 -7,556 -175 3,787 8,851 -1,908 -3,548 -2,851   FINANCIAL RATIOS FOR KRAFT FOODS GROUP INC.   2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue USD Mil             17,797 18,655 18,339 18,218 18,218 Gross Margin %             33.8 31.6 31.8 37.5 37.5 Operating Income USD Mil             2,965 2,923 2,670 4,591 4,591 Operating Margin %             16.7 15.7 14.6 25.2 25.2 Net Income USD Mil             3,534 1,839 1,642 2,715 2,715 Earnings Per Share USD             5.98   2.75 4.51 4.51 Dividends USD                 0.5 2.05 2.05 Payout Ratio %                 18.2 45.2 45.2 Shares Mil             591   596 599 599 Book Value Per Share USD                 6.03 8.7 8.7 Operating Cash Flow USD Mil             828 2,664 3,035 2,043 2,043 Cap Spending USD Mil             -448 -401 -440 -557 -557 Free Cash Flow USD Mil             380 2,263 2,595 1,486 1,486 Free Cash Flow Per Share USD                 4.35 2.48   Working Capital USD Mil               700 1,217 1,498   Table 3: Financial ratios of Kraft foods (Morningstar, 2014) FINANCIAL RATIOS FOR DANONE ADR   2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue EUR Mil 13,690 13,014 14,073 12,776 15,220 14,982 17,010 19,318 20,869 21,298 21,298 Gross Margin % 53.5 49 48.7 50.1 52.9 55 53.2 50.6 50.1 48.5 48.5 Operating Income EUR Mil 1,704 1,705 1,874 1,546 2,187 2,511 2,578 2,729 2,747 2,128 2,128 Operating Margin % 12.4 13.1 13.3 12.1 14.4 16.8 15.2 14.1 13.2 10 10 Net Income EUR Mil 316 1,669 1,353 4,180 1,313 1,361 1,870 1,671 1,672 1,422 1,422 Earnings Per Share EUR 0.13 0.58 0.55 1.74 0.55 0.5 0.61 0.55 0.55 0.48 0.48 Dividends EUR 0.24 0.14 0.16 0.2 0.22 0.2 0.15 0.25 0.21 0.23 0.23 Payout Ratio % 197.5 30.5 32.7 53.7 50 35.7 25.1 46.1 39.4 47 47 Shares Mil 2,579 2,503 2,447 2,399 2,393 2,472 3,080 3,020 3,016 2,942 2,942 Book Value Per Share USD 2.31 2.36 2.95 5.13 4.68 4.93 5.13 5.26 5.4 5.05 5.02 Operating Cash Flow EUR Mil 1,784 1,846 2,169 1,611 1,754 2,000 2,476 2,605 2,858 2,356 2,356 Cap Spending EUR Mil -623 -606 -692 -726 -706 -699 -832 -885       Free Cash Flow EUR Mil 1,161 1,239 1,477 885 1,048 1,301 1,644 1,720       Free Cash Flow Per Share USD 0.61 0.59 0.8 0.54 0.61 0.75 0.71 0.74       Working Capital EUR Mil 1,014 1,557 1,906 -2,419 -15 -1,449 -1,308 -850 -1,630 -2,757   Table 4:Danone’s financial ratios (Morningstar, 2014) References Barney, J, 2010, Firm Resources And Sustained Competitive Advantage. Journal of Management, 17(1), 99-120. Cleveland, 2013, March 4, Dannon agrees to pay up to $45 million in damages for false advertising of its Activia and DanActive yogurt products. cleveland.com. Retrieved May 6, 2014, from http://blog.cleveland.com/metro/2010/02/post_222.html Cory, H. D, 2009, Can competitive intelligence lead to a sustainable competitive advantage?.Competitive Intelligence Review, 7(3), 45-55. Eraqi, M. I., 2007, IT as a Means for Enhancing Competitive Advantage. Anatolia, 17(1), 25-42. Foods & Beverage Close-Up. , 2009, January 14, Research and Markets Adds: Breakfast Foods: The Consumer in the United States 2008.Food & Beverage Close-Up, 6, 9. Foods, 2009, May 1, The Dannon Co. and Danone Inc. in Canada hosted several business partners to award the second annual Dannon/Danone Supplier of the Year Awards.(SUPPLIER NEWS). Dairy Foods, 3, 7. Hinterhuber, A, 2013, Can competitive advantage be predicted?: Towards a predictive definition of competitive advantage in the resource-based view of the firm. Management Decision, 51(4), 795-812. Klein, J, 2012, Beyond competitive advantage. Strategic Change, 11(6), 317-327. Obesity & Diabetes Week, 2008, September 29, TheDannon Company Sponsors the West Jordan Safety and Health Fair. Obesity & Diabetes Week, p. 5. Obesity & Diabetes Week, 2010, July 5, The Dannon Company Awards Open Door Family Medical Centers of Westchester County the Fifth Annual Dannon Next Generation Nutrition[R] Grant. Obesity & Diabetes Week, p. 6. O'shannassy, T, 2008, Sustainable competitive advantage or temporary competitive advantage: Improving understanding of an important strategy construct. Journal of Strategy and Management, 1(2), 168-180. Pediatrics Week, 2009, September 19, The Dannon Company Returns as West Jordan Health and Preparedness Expo Sponsor.. Pediatrics Week, p. 4. Schnabel, J. A, 2010, Productivity, exchange rates, and competitive advantage. International Journal of Commerce and Management , 20(1), 41-48. States News Service, 2010, December 15, DANNON SETTLES ATTORNEY GENERAL CHARGES OF DECEPTIVE ADVERTISING OF YOGURT PRODUCTS.. States News Service, p. 12. Weekly News, 2014, March 27, IRI Announces Most Successful Consumer Packaged Goods Brands of 2013. Food Weekly News, 7, 13. Weekly News., 2010, July 24, M-Factor Awarded Patent for Core Technology of Predictive Analytics Platform.. Marketing Weekly News, 6, 5. Weekly News., 2013, May 28, The Dannon Company Utilizes IBM Smarter Commerce. Marketing Weekly News, 3, 6. Weinstein, A, 2008, Segment Markets To Gain A Competitive Advantage. Journal of Segmentation in Marketing, 2(1), 1-4. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Managing Capability of Danone Company Case Study Example | Topics and Well Written Essays - 4000 words, n.d.)
Managing Capability of Danone Company Case Study Example | Topics and Well Written Essays - 4000 words. https://studentshare.org/management/2069863-mc-nayif
(Managing Capability of Danone Company Case Study Example | Topics and Well Written Essays - 4000 Words)
Managing Capability of Danone Company Case Study Example | Topics and Well Written Essays - 4000 Words. https://studentshare.org/management/2069863-mc-nayif.
“Managing Capability of Danone Company Case Study Example | Topics and Well Written Essays - 4000 Words”. https://studentshare.org/management/2069863-mc-nayif.
  • Cited: 0 times
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us