Market Growth
Low
Cash Cow
Question Mark Dog
Strong
Relative Market Share
Weak
8
REORGANIZE BUSINESS PORTFOLIO
++
Star
Market Growth
Hold
Yogurt
Question Mark Cream
• Risk management
• Efficient logistics network • Outsourcing to the 3rd party logistics companies
Source: Literature search; Team analysis
14
R&D
• Innovation in different segment ＊
－
• Operating income:
11.8% (average)
• Total 3-year sales revenue:
476 million Mercas
Cost
Milk + Industrial Costs Logistics Costs Advertising + Overheads and Misc -
Market Share
Danone Mercador
National Competitor Int’l Competitor Other Competitor
Yogurt
35%
+ 6% per year
Yogurt 55%
Action Plans
Product
• Acceptability
->Perferred
9
EXECUTIVE SUMMARY
➢ Strategy Analysis
➢Strategic decisions & Action Plans
➢ Workstream Timeline ➢ Summary & Next Step
10
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
Quality Control
Food Security
Logistics
• Quality control system, regular inspection and alert system • Reduce the packaging size and weight • Renew the water treatment plant
CONFIDENTIAL
DANONE MERCADOR 3-year Strategy Planning
Infinity SJTU
Apr 10, 2004
1
EXECUTIVE SUMMARY
➢Strategy Analysis ➢Strategic Decisions & Action Plans ➢Workstream Timeline ➢Summary & Next Step
• Launch of cream dessert product • Modernization of the production
site
• Efficiently construction of
logistics network
• Three-year advertising campaigns • Employee training
11
FIVE ACTION PLANS BASED ON DANONE WAY
Finance
Human Resource
Danone Way
R&D
Operation
Marketing Sales
12
Marketing and Sales
Market Expansion & Brand Building
Pricing
• Affordability
->Price relative to value
Cream Dessert 0%
+10% per year
Brand Building
Cream Dessert 30%
good taste, healthy & innovative
Source: Literature search; Team analysis
– Aroma – Texture – Taste
‘Our strategy is to widen product lines to take into consideration the different tastes and habits in the
local market’ – Franck Riboud, CEO
• Recruit • Training system • KPI system • Intranet & internal journal
16
Finance
Du Pont Finance Analysis
ROE
Increased Reduced
ROI
x
Equity Multiplier
Net Profit/
Place Promotion
• Availability
->Pervasive
＊ Wherever you are, we think of you
• Advertisements
& Promotion campaigns
Sponsor public activities “Danone Babies” Selection
HR
Overstaffed Real managers
☺ Age pyramid, loyalty
IT
Source: Team Analysis
Internal information exchange IT system
6
EXECUTIVE SUMMARY
➢ Strategy Analysis
Source: Literature search; Team analysis
15
Human Resource
• Personnel Competence • Promote Within • Based on performance • Internal Communication
Action Plans
x
Revenue
Net Profit ÷ Revenue
Asset Turnover
• Improve logistics
ability and supply
AR turnover
chain management
Inventory turnover
Fixed Assets turnover
Revenue
Raw&pack 26.8%
22.4%
Milk
23.7%
2004
Source: Team analysis
26.8%
2007
Sales Revenue
M.Mercas
103
CAGR =26%
152
120
ESTIMATED
205
2004 2005
2006
Net Operating Profit
M.Mercas
19
WORKSTREAM
likely to prolong
Kick-off Oct 2005
1Q 2006
2Q 2006
3Q 2006
4Q 2006
ILLUSTRATIVE
1Q 2007
2Q 2007
3Q 2007
4Q 2007
Wave 1
• Divest the fruit juice business • Invest in a new product line for the
– Natural health segment – Diet segment – Children segment
• Technical co-operations with institutions and universities
• Cooperate with Dep.
Marketing ->define sensory targets
Source: Team analysis
17
Financial Results
Cost structure
M.Mercas
100%=103
Op. result
7.4%
Overheads 12%
Ad Logistics
8.7% 10%
Industrial 11.4%
100%=205
13.4%
12% 5.4% 9.5% 10.5%
5.5
CAGR =55% 13.5 9.1
2007 20.6
2004
18
2005
2006
2007
EXECUTIVE SUMMARY