Introduction The main purpose of the research done in the report is to discover and analyze the strategic intent and various other strategies to evaluate the internal and external influences that the company could go through owing to the dynamic market it operates in. Moreover, the evaluation of these strategies would involve examining the company’s performance in United States, the chosen host country. The performance would be looked upon with the use of the company’s annual reports since financial position of an organization is an important indicator of performance in the market.
The research conducted is based on the secondary research approach considering the fact that the data pertaining to the company’s strategies and performance is available at various sources on internet. From the financial evaluation of the company, key findings extracted indicate that the company is running with fruitful profits and is expected to continue its good financial performance in the coming years. The sales growth rates are high and are expected to remain high.
Moreover, its worldwide presence makes its inevitable for the company to yield high profits. This is cause if the company suffers a loss in one of the host countries, it offsets by the profit earned in other host countries, a benefit of global presence. Limitations of the study being conducted are numerous. Firstly, the research is a secondary research which may not be as useful in evaluating the internal and external strategies that the company adopts.
Moreover, evaluation of the strategic environment may be accurate since the data on their website is authentic, but it may lack the truth which could have been obtained from the company through a qualitative research using the tool f In-Depth interviews with company officials or by gauging consumer perception of their brands, which could have helped in Judging their consumer demand and thus rightful profitability and expectation of future sales. The report would mainly be structured according to the priority of the findings that need to be extracted from the study.
The first thing that would be evaluated is the company’s and the host country’s strategic environment analysis which would first involve the evaluation of various internal and external strategic environmental analytical tools. This would be followed y the analysis of the company’s internal environment. The external strategy would be evaluated of the host country, as it serves as an external source. The next section would be dedicated to discussing the participation strategy of the company, which meaner identifying the initial market entry modes that the company used to enter the US market.
Moreover, the reason for entry modes used in this country will be discussed as well, with the help of identifying the advantages and disadvantages of the entry modes used, internal and external environment the company had at the mime of its entrance in USA and the key influences that persisted in the country and that persuaded the company to expand in this host country. The next section would involve a review of performance of the company. This will be evaluated using financial reports of the company, helping us see the sales growth, profitability, market share and the effort put in for corporate social responsibility activities.
Final section would be a forecast based on the secondary research conducted and the findings future prospects in the host country, by forecasting its sales growth levels it could expect in the US market. The forecast will be of the next five to ten years based on the financial performance, market share, sales growth and Corporate Social Responsibility in the host country. This would also help in identifying the key influencing factors that could have an impact on the company’s future development in the host country and their impact on the company as a whole.
The last section of the report would include certain recommendations based on the findings of the research conducted for this report, thus helping us analytically and practically see whether the suggestions put forth could be implemented and have practicability enough to be used in reality (meaning they are not out of context though they can be hypothetical but must be realistic and implantable). 2. About the Company Deanne, the original company was found in Barcelona, USA in 1919 by Isaac Caracas as a small factory that produced yogurt. He named the organization Deanne which meant “Little Daniel” after his son Daniel Caracas.
The first yogurt began selling in the year 1923 to the pharmacies due to it being recommended by doctors for its therapeutic qualities. Ten years later the company moved to France from USA and the first French factory was built. The company moved to New York later after the World War II and Daniel Caracas employed a Swiss-born Spaniard partner named Joe Metzger. The company name was changed in the USA to Daemon to give it a more American touch. In 1968, Deanne aired its first campaign on TV. In the years, it launched its first diet (low fat) yogurt named Deanne Designated.
In 1992 the company became an official sponsor of the national sports event of Olympics which was held then in Barcelona. Since 1998, the Group of Deanne has been categorized into three business divisions around the globe; Fresh Dairy Products (including courts, desserts and infant foods), Beverages (including mainly packaged water) and Biscuit and Cereal products. Geographically the company is now spread along countries in almost all the continents of the world (Empress, 1998). 3. Company and Host Country Strategic Environment Analysis 3. 1.
Internal Environment Analysis The company aims towards resolving 6 issues as objectives of providing quality products to their customers; Innovation and rethink its achievements, embody approach positive power where the company aims to provide health food so as to embody it as a source of pleasure, connect, contact, conversation (this statement presents the fact that Deanne makes of use of every available meaner of contacting their customers), securing access to its raw materials, adapting the models and build its future (Deanne adopts the strategy of expanding in new markets (different countries) by adapting its models and products and lastly, growing reconciling economic and social ( this statement represents the fact that a company draws on its environment as measured by economic development. The mission of the company is to grow as a leader while working for the health of the consumers. Another part of its session is that it wishes to become a consultative organ for professionals through the various research activities it conducts and the company’s culture.
The reason for the company to be a market leader in the food industry is the fact that the company products, varieties in flavors and healthy pleasures. Considering the organizations situation, the company mainly employs the internal strategy of maintaining a sustainable growth levels based on its corporate philosophy or ideally high growth levels of its shares by taking into account the following criteria; supporting profitable Roth in the business account that is an elementary component for the type of industry the company operates in, privileging the operating margin for enjoying the profitability on investments and accomplishing human and social policies (a particular element helping the firm gain huge success).
For the firm, to achieve these objective mentioned above, it has to develop a global vision which incorporates the core values that the firm operates on, thus displaying the internal environmental attributes of loyalty, customer relationship and customer satisfaction. Namely, the arioso attributes that the company values and is included in the set of its core values are following; Openness: The company quotes and defines this value in the following words “Diversity is a source of wealth and change a constant opportunity’. Curiosity: This refers to an approach towards awareness and forecasting accurately, being in sync with other people, not accepting rigid ideas and models and imagination. Agility: Energy, suppleness, adaptability, vivacity, speed Simplicity: The term simply refers to the attributes of informality and practicality in a management style.
Enthusiasm: Zeal, determination to do something, willingness to achieve goals. Boldness: Willingness to explore new, unconventional ways and take risk. Passion: Conviction, enthusiasm to lead, pleasure of work and the ability to rise above expectations and achieve excellence. Appetite for challenge: Optimistic, zealous and physical desire to grow and take the lead. Humanism: Showing concern for individuals (in this case consumers, employees or citizens). Sharing and Responsibility: Approach emphasizing on dialogue, transparency and teamwork. Responsibility is mainly focused on safety of people and products, thus acting pop- socially and environmentally friendly.
Respect of others: Is sensitive to cultural differences, and aims to treat social and commercial partners with respect. Proximity: Mainly this term represent the idea of staying close to everyone like colleagues, consumers and clients, suppliers, stockholders and society. The company earns about 31 percent of sales from emerging markets, which is close to the target that the company has set for business that is 40 percent of the business on emerging markets and 60 percent in developing nations. About 60 percent of the sales of the brand fall under the following brands, Deanne, Avian, LIZ and WAHOO. These brands thus enable the company to optimize its advertising outlays.
The advertising outlay serves as a key source that provides the company with fruitful rewards in terms of profitable growth based on the core value innovation and closer customer relationships. Moreover this key strategy has merged with the extension and promotion of brands called tag brands like Vitamin for low fat products and Prince for brands pertaining to children. Being a global brand, Deanne consists of various business lines and in each of these branches or lines Deanne is the world market leader. The market leader session that it holds is owing to the factors like marketing expertise, industrial efficiency, the breadth of the product range, and Research and Development (R;D).
The company gained its world position by building upon strong position both the closer customer relationships and balanced long term relationships with major retailers, unrivaled acquaintance with local consumers and a recognized capacity for effective communication. Another value that the company caters to and that defines the company’s internal environment is the steady thirst for innovation to gain optimum consumer satisfaction. His process of developing a new innovative product begins with the identification of the customers’ needs. Since the company attaches great importance to this matter, the brand is built upon recognized marketing expertise, efficient R;D, strong brands and unrivalled experience in the categories of nutrition and health. N order to maintain a sustainable growth, the company has gone all the way to build a dual philosophy unique program that has made the business’ success inseparable from the respect of people and environment. The company’s compassion for excellence has demonstrated its ability o the dynamic market and thus the changing environment it operates in. This the company does so with high potential commitment of their teams and simple structures that promote initiative and past experience they gained (Deanne. Com, 2012). 3. 1. 1 . Value-added Chain analysis Being the largest firm in the food industry, the company has designed its product in such a way so as to differentiate it from its competitors. He strategy to do this is to create the good’s perceived value such as it is indicated as being a premium product, create loyalty of the brand in hearts of the consumers and thus achieve low price insensitivity (lesser magnitude fluctuations in demand owing to the changes in price). This the brand does through its focus on the quality, the health and the real taste of their product. Additional elements that add up to the loyalty are creativity, innovation and customers’ service. The company spends a huge amount of money on R;D to adapt to the dynamic market. So to achieve this differentiation, the company employs an evaluation approach called Value-added Chain analysis. This method thus helps in understanding the part of operations of the company that create value.
It specifies how a product moves from a raw material to its final form which is sold in the market (Annual Report, 2011). For this company, the value chain has been divided into two segments which are namely Primary activities and Secondary activities. 3. 1. 1 . 1. Primary activities The company aims for superior handling of the raw material of its products so as to reduce the damage to the minimum and thus improve the quality of yogurt. As part of this superior handling thus, the company makes yogurts using the best of ferments and fresh products to provide their customers with high quality food. This remarry activity is known as Inbound logistics.
The operations of production along the same lines are aimed to be performed most efficiently. The operational efficiency is achieved by consistent manufacturing of products which they may call attractive and by responding promptly to customers’ specifications thus producing products according to their specifications or preferences. For instance, the quality of yogurt is protected and sustained by its packaging. Furthermore, the label on the packaging has the main purpose of attracting customers and providing them with maximum necessary information about the product. The quality is further maintained by owing to its daily production. This is known as outbound logistics.
Considering the marketing and sale of the function of the company, the company has a strong coordination among its R&D department, marketing department and product development department. According to the corporation, the key to success is product innovation. In the services, the company has the service of client telephone service which responds to the consumers’ queries, doubts and takes into account their opinions regarding various things. The secondary activities that take place in the organization are pertaining to infrastructure where the company has highly efficient and developed information systems helping them better comprehend the customers’ preferences in purchasing. For understanding the customer, the company implements various tools like phone interviews, focused groups and other types of market research.
The company’s human resource department has a compensation program that major aims to compensate employees in order to motivate them to work creatively and productively. Deanne further makes an immense amount of investment in Research and Development by investing in technologies which thus low them to produce products at a consistently high quality. Moreover, the company has certain systems and procedures installed helping them find highest quality raw materials for production (Deanne Sustainability Report, 2011) 4. External Environment analysis There are various external factors or environmental factors that impact the organization on the whole.
One of the major factors that have an impact on the company and can be considered as an external factor is the Demographics of the country in which it is operating. The USA population accounts for approximately 313 million. The median age of the country is 36. Years with the median age of males being 35. 6 years and the median age of females being 38. 2 years. Population growth rate is 0. 899 percent as per 2011, thus indicating a low growth, though the company’s popularity in the country is immense. Highest age demographic is on average 65 years. 82 percent of the country’s population resides in the Urban cities and towns. Annual rate of change of arbitration in the country as of 2010 is 1. 2 percent. The net migration rate in the country is 3. 62 migrants per 1000 population in July 2011.
According to the US law, the articles 4 and 12 state that all yogurts must contain the yogurt” consideration in case they have alive bacterium at high levels. By high levels of alive bacterium the law meaner Yogurt bacterium must not be less than 10 million per gram. The company fulfills this requirement to the highest level and thus faces no breach against law, thus operating efficiently. The country is a Mediterranean country, with people following a Mediterranean diet where yogurt is an essential component of people’s diet and thus displays a huge market for the company’s product. Not only US families, but families in other countries like Greece and Italy also consume yogurt as an essential part of their diet.
The country’s specific segments like children, parent’s and grandparent’s consume the product as a dessert, breakfast and snack or Just for pleasure, thus making the company’s product a success in this host country. Moreover, company’s products like Vitamin are targeted towards people who are self conscious and wish to look good so as to become acceptable in the society. These societal trends and the country’s cultural trend are country’s economy has grown substantially regardless of it being a developed nation beforehand as well and thus the willingness to pay higher for food has increased due o the country’s economic development. The family consumption levels have increased leading to increased demand of the company’s products in the US market.
The US economy being the largest and most technologically powerful country has a per capita GAP of $48,100. GAP according to the Purchasing Power Parity (APP) is $15. 04 trillion in 2011. Real GAP growth of the economy is 1. 5 percent. Population below poverty line amounted to about 15. 1 percent which is very low, thus displaying the company’s high demand in the economy. The composition of the industrial sector in the economy on the other hand is 19. percent as of 2011. Highest household income of the country is 30 percent as of 2007, with the distribution of family income, according to the Gin index amounting to 45 in 2007. Inflation rate is 3 percent, which is quite low compared to other host countries. He country comes under the top ten markets in which Deanne operates with a 7 percent share contributed to the total sales growth. These statistics thus display the ideal situation for the company and has thus shown a significant increase in the Group’s profits owing to its profitable operations in USA (Index mind, 2012). Being a constitution based federal republic, strong democratic traditions are followed kin the country, thus indicating the country’s openness to international participants into the economy. The US government thus divides the country’s food products under three differentiations. First category of food products being taxed is those used by humans or animals for their diet, on which the tax levied is 7 percent.
The second category is that including bread, flour, milk and milky products, fruits, vegetables and other food products related to this category. The tax levied on these products is 4 percent. The third group includes all products that are not included in the two categories above. The tax levied on these products is 16 percent. Deanne being a food producing company thus has to pay almost all three taxes mentioned, owing to its wide portfolio of food products (Mind, 2012). Being a highly technologically advanced nation, the country helped Deanne make use of its various efficient technical tools, thus making it easier for the company to evaluate and perform market research to find the sales potentials among the various food categories it offers.
Looking at the census data, the R&D expenditure allocated by the government to the manufacturing industries as a percentage of net sales has reduced from 0. 7 percent to 0. 4 percent. This has been due to the government’s greater allocation of funds towards the ecological development representing that US nation is an CEO friendly nation working upon sustaining the health of its ecological system (United States Census Bureau, 2012). Considering the geographical location fact Or’s that impact the company in the host country, Deanne is highly affected by the US agricultural market as food industry has a major chunk dedicated to agricultural products in the country.
Generally the climate of the country is temperate. However in the states of Hawaii and Florida, the climate is tropical, in Alaska it is arctic, in the Great Plains which is situated on the west of the Mississippi River, and the climate is semi-arid. Considering these weather conditions, the company has launched food products taking into account these weather conditions so as to attract customers to enjoy summers with chilly yogurt products which account for 58 percent, Baby nutrition accounting for 19 percent, Water accounting for 17 percent and Medical nutrition accounting for 6 percent. Deanne US market is an emerging market for the product Missouri”.
The operations of the firm are running efficiently owing to its developed economy and high living standards, making the population willing to purchase their product higher compared to even the originating nation Spain. However, despite these fruitful rewards there are certain challenges which the company had to face owing to the existence of various international food manufacturing firms and small competitors in the form of restaurants, food stalls on streets and small scale food manufacturing companies. The introduction of the product Yogurt in the US market has brought about a huge boom in the company’s sales. This Greek yogurt had gone through the benefits in the US economy, due to the fact that the economy had highly technologically advanced tools that the company could use for yogurt production.
The one major benefit that helped the company flourish in the US economy due to this particular product is the adoption of a new technology which the company adopted so as to assist them in catering to the consumer demand. This technology helped the organization improve to only the quality of the yogurt being produced, but also enhance the quality of other products in the portfolio. However, like any other business, the company faces certain threats in the economy. 4. 1 . Porter’s Five Forces Model Analysis 4. 1. 1. Threats of entrants The company when entered the US economy faced the threat of new competitors who might enter the economy. These included competitors like frozen yogurt producers like Tutu Fruit.
Apart from that, being the initiator of and identifying the market for yogurt in US, it is probable that the company will face even more new entrants as the time goes by. 4. 1. 2. Power of Suppliers: It might be difficult for the company to operate in the host country owing to its unfamiliarity with the suppliers available and may thus give an opportunity to the suppliers to exploit their power and overcharge for the supplies being provided, thus increasing the company’s cost. 4. 1. 3. Threat of Product substitutes: The company also faced the threat of substitute products of yogurts like the frozen yogurt of Tutu Fruit. However, being the initiator, the company is the market leader in yogurt production in the country. 4. 1. 4. Power of buyers:
Being a market leader and a multinational, the company has the power to bargain its way from suppliers and gain the benefit of lower cost supplies, despite their unfamiliarity with the product since the suppliers in US would want to be a supplier of such a huge organization. 4. 1. 5. Intensity of rivalry among competitors: Despite being a market leader, the company still faces an intense competition in the product yogurt as well as in other product categories launched in the industry (Deanne Sustainability Report, 2011). 5. Participation Strategy After conducting a market research, Deanne identified some of the key success reduce to product and thus elaborate on the success of these products due to these factors. Vitamin, a product category of Deanne, is known for its good taste and low fat.
Other factors were the numerous kinds of products that came under this product line. Vitiating includes products like drinks, mousse and a regular yogurt. This was a star product for the company since the company yielded huge amounts of profits from the sale of this product. The other factors that led the company’s products to yield high profits are the high quality of products, taste and the health factor associated with these products. The company entered the US economy after conducting a comprehensive research to evaluate the potential of the products it offers. The results showed that US is an emerging market for the product Yogurt, and thus have a huge potential to grow in the US industry.
Moreover, the decision of entering the US economy was taken mainly due to its strong economic situation and the availability of advanced infrastructure in terms of the technological tools available their that could help the organization produce its products in high quality. The strategy that it implemented while entering the country is a global strategy the many used while expanding in various countries around all the continents available. The strategy that the company adopted at the time was to achieve high growth rates or maintain a steady growth by establishing itself in the emerging markets of the products in the product portfolio of the company by conducting market research and evaluating the lifestyle trends of the country they target to enter. This is what was done when entering US market.
The emerging markets were evaluated on two parameters by the company, the economic dimensions of product affordability by looking at the country’s income trends and standard of living and alee-addition by evaluating the willingness of buying the product and how much consumers want the product. This the company did in order to stay in closer proximity to the foreign markets they wish to operate in, disperse around the globe to attain higher growth levels and stay more attuned to its market. The major strategy which the company implemented aimed for boosting the company’s market share by achieving global presence in the products it offers. This it attempted to do so by focusing on three fundamental priorities.
The first priority was to reweighs the reduce portfolios in order to ensure that the prices offered in each country are appropriate considering the country’s economic scale of pricing. The second priority was to increasingly focus on the promotion and point of sale events of the company’s products to ensure that the promotional and advertising activities are reaching the right customers and are effective enough to attract their attention. The last priority is to initiate a shift in the advertising of the company’s products to bring into limelight and focus upon the product’s quality so as to ensure the customers get highest value for the money they pay.
Thus the company participation strategy in the host country is mainly to identify the emerging markets in the products they offer and establish in them to attain its broader vision of global presence (Deanne 1 1, 2012). 6. Performance overview The company has been enjoying high profitability and high growth rates since its expansion globally. The company has experienced a solid growth of 7. 7 percent in HI in the first half of 2012 and a 5. 9 percent growth the like-for-like category of the divisions experienced a rising trend in the sales levels in the first half, particularly in the second quarter of the year. In United States, Deanne made 7 percent of its sales in 2011, which amounted to 19. 3 billion Euro ($billion).