The Merger of Danone and the Bolshevik Biscuit Factory

Résumé du document

In this essay we will try to analyze the environment in which DANONE is competing. We will discover the strategic choices that the company has made since its creation, and the way in which it has grown to became a world leader. After presenting a quick history of the group, we will carry out a study of its strengths and weaknesses, and the opportunities offered by the market. We will consider the place of DANONE's products in the market and base our analysis on the figures that emerge. We will then take a closer look at the biscuit market which is going to be the focus of this essay. Subsequently, the strategy and the choices adopted by DANONE to accomplish the takeover of the Russian company BOLSHEVIK (in 1993). The situation of DANONE and the point of view of BOLSHEVIK will be analyzed, and the cultural differences between these two distinct kinds of organization will be studied. We will discuss the implications of this take over, and analyze how long it will take to import a new management into the company.

Extraits

[...] Thanks to the fact that the biscuit market is local, it didn't affect BOLCHEVIK. According to what have been said on DANONE website, is primarily of Russia that the dynamism comes. Bolshevik, the local brand of the group, posts there a growth rate close to on a market whose development is very promising.” We can already speak here about the dominant role the acquisition of BOLSHEVIK played for DANONE: at the beginning of 2004, the company acquired the Russian company CHOK AND ROLLS 18 (producing soft cakes), which belonged to Spanish confectionery company CHUPPA CHUPS . [...]

[...] It means that the operating margin passed from 1.604 million to 1.705 million. We can break up this operating margin by the business lines or by regions. By business lines, the most profitable line is the fresh dairy products section with of the operating margin, the beverage sections counts for the biscuits and cereal products counts for 17%. The remainder are coming from the other activities of the group. By regions of the operating margin comes from Europe from Asia-Pacifique and 13% from the rest of the world. [...]

[...] This first step has been very important and shouldn't be passed over; since it exists a large ditch between occidental culture and communism, not only with the managing process but also with the personal achievement and recognition, the take over could have failed. Indeed, BOLSHEVIK grew most of her lifetime in a communist environment where competition did not exist. The company had just to produce the quota imposed by the government. The orders were passed down form the Party to the ministries to the company. [...]

[...] The importance of the buyers and the power they can exercise is going to vary with their size. It's important to see that some international retailers as METRO or AUCHAN announced aggressive 34 expansion strategies for the Russian market . As positive consequence, DANONE may profit of these European supermarkets to sale its products. Note that the negotiation between the industry (DANONE) and the clients (AUCHAN, CARREFOUR, etc.) are very strong. Each of them wants to maximize their profit. The maximization of the profit is not balancing between the two actors. [...]

[...] It's on account of the communist party's empowerment that the firm took his current name in 1903. It has been nationalized in 1917 after the revolution; in fact it became the leader on the Russian market at that time. In the 1950s, thanks to a new wave of scientific and technical progresses, a whole series of the technical inventions were established by the workers of the company such as: dough-mixing station, sponge cake rotary machine, mechanism for the output of the baked pastry. Ten years later the firm was one of the largest factories in Europe. [...]