Groupe Danones Strategy - Case Study Example

Groupe Danone’s Strategy Groupe Danone’s Strategy Groupe Danone’s strategy under Franck Riboud’s leadership is to take advantage of the emerging markets while at the same time optimizing on the local market. This is achieved through mergers and acquisitions in entering new market, either locally or internationally. As Riboud, the CEO of Groupe Danone says, the firm gets forty percent of its revenues from the EU market as and get the rest from the emerging markets. What is special about this strategy is the fact Riboud is counting on emerging markets for growth while holding on the local EU market for stability.

As Cavusgil, Ghauri and Akcal (2012), growing markets come with the risk of uncertainty because there is never a certainty of how things are going to look like in the future. This is probably why Riboud is choosing to not let go of the local market even though the emerging markets have bigger opportunities. The strategy is in line with the environment in which Groupe Danone operates. Groupe Danone strategy is built around the fact that there are new markets emerging around the world due to globalisation.

This is important because the food and beverage industry is a global industry (Wood, 2012). Food and beverage industry is a global industry due to the fact that this kind of products are used everywhere in the world. Food is a basic need for all humans and this means that everywhere where human beings exist; there are is a market for food and beverage (Nedell, 2012). Globalisation of this sector is actually important and has advantages. One such advantage is the fact that all parts of the world can access food items from various parts of the world (Hitt, 2005).

In this regard, since most agricultural products are seasonal and only come once a year, globalisation means that those areas where such items are out of season, people can get this from the places where they are in season. This however doesn’t apply for other non-seasonal products such as dairy products and water products. Groupe Danone has a competitive advantage in the industry which emanates from the fact that Groupe Danone is a major player in the industry. Apart from the huge experience that the firm has in the industry, its size means that it is able to expand and take advantage of growth opportunities.

According to Rasheed (2012), leadership plays a very important role in determining how the firm is able to grow and develop. Riboud’s leadership values and principle are also a major source of the firm’s competitive advantage. For instance, Riboud is committed to corporate responsibility especially with regard to the environment and the relationship between the firm and people. Given the industry in which the firm operates, this is a very strong point for developing a better strategic advantage because firms which have these values seem to be more successful in the long run (Werther & Chandler, 2010).

Danone’s organizational structure is smaller than the average food and beverage firm of its size and magnitude. The firm is very focused on a smaller portion of the market as opposed to having a highly diversified market approach. This focused outlook makes Danone to be able to take advantage of the local market as well as the international because it can benefit from specialisation. Although the firm is doing very well and its strategy is helping it achieve record growth rates, there are a number of things which could be improved.

For instance, Franck Riboud could consider distributing the firm’s operations further such that each market has its own semiautonomous operations. This as Majaro (2012) argues, would help in taking complete advantage of the cross-border markets, which by now, are not being fully taken advantage of. Danone should continue to take advantage of the emerging markets. At the same time, it should still consider the use of mergers and acquisition since this is the best way to enter new markets with limited risks.

Mergers are very useful in the expansion stage of a firm as they offer an environment which has limited risk (Gaughan, 2010). Danone’s decentralized management system and its commitment to social, environmental and employee responsibility are very important in helping the firm to be able to have a unique corporate strategy. This will especially be useful in helping the firm to be able to deal with issues of global expansion because as Kates (2010) says, decentralisation is necessary in order to improve creative and innovation.

As Okpara (2008) says, despite the fact that globalising has been achieved in large scales, different nations and territories still have very different business laws and environments and therefore having a decentralised system is important in making sure that the gradient between international borders will not adversely affect the business. References Cavusgil, S. G. (2012). Doing Business in Emerging Markets. Thousand Oaks, CA: SAGE Publications. Gaughan, P. (2010). Mergers, Acquisitions, and Corporate Restructurings, 5tth Ed.

Hoboken, NJ: John Wiley & Sons. Hitt, A. (2005). Strategic Management: Concepts: Competitiveness and Globalization, 10th ed. London, UK: Cengage Learning. Kates, A. &. (2010). Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges. Hoboken, NJ: John Wiley & Sons. Majaro, S. (2012). International Marketing (RLE International Business): A Strategic Approach to World Markets. London, UK: Routledge. Nedell, J. (2012). Around the World in 80 Years. Bloomington, IN: Xlibris Corporation.

Okpara, J. (2008). Globalisation of Business: Theories and Strategies for Tomorrow's Managers. Abuja, NG: Adonis & Abbey. Rasheed, H. (2012). Innovation Strategy: Seven Keys to Creative Leadership and a Sustainable Business Model. Bloomington, IN: iUniverse. Werther, W. &. (2010). Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. Thousand Oaks, CA: SAGE Publications. Wood, R. (2012). Strategic Questions in Food and Beverage Management. London, Uk: Routledge.