International Development and Strategy: Danone

Résumé du document

The mission provided by the group is to accentuate health through the food industry to the largest number of people From a strategic point of view, Danone's situation is unique. Danone created the Danone Research Institute which tries to find new products which benefit health. In fact, this laboratory is very active, and its research had led to the development of numerous products, especially in the dairy products field.

Moreover, we can notice that the group has key positions in three areas, and two of them are very profitable compared to the general food market (bottled water and biscuits). It is a positive element because operational margins are thus very high and it serves as an engine of growth for the whole company.

Marketing is a key function for Danone, in order to make the products known to the public and thus increase sales. The company is very well considered by the sector, and students from business schools rank the group as the most attractive one in the sector .

Lastly, the sponsoring activity is very important for the group. Indeed, Danone is active in the sports field, with a soccer cup organized by the group, by instance. This element also contributes to the positive image of the group.

Extraits

[...] Today these five countries represent 25% of the global turnover. Moreover, those markets are in a fast growing development: more than 18% of organic growth. More than associates are based there. The Groupe Danone is also interested in North Africa and Middle-East countries where partnerships represent important turnovers. During the last few years, investments realised in those countries associated with dozen of external growth operations outside of Europe allow Danone to build a geographical equilibrium which gives the advantage of making Danone less dependant of its initial market. [...]

[...] The relation between the two firms has been worse and worse. The disagreement has occurred with the fact that Wahaha has created those last few years, subsidiaries that were taking advantage of the marketing and the distribution network. Danone believes that Wahaha has violated the agreement by creating those new subsidiaries with new brands which products are in direct competition with brands commercialized by Danone. The French group wants to by those subsidiaries for 4 billion yuans (384 million euros). [...]

[...] International development strategies of the group are diverse and are adapted to the difficulties of penetrating new markets: -The main strategy is acquisition of other firms in other countries. For instance, MC Kesson Water Products in the USA which lead Danone to be number 2 in the water in this country. Another strategy is interfirm linkages in other firms that are key firms in their own country. For instance, Danone took a participation in Bonafont in Mexico which is number one for mineral water in bottle. [...]

[...] CONCLUSION Danone is a famous international group. We first analysed its strategy and methods of settling in foreign countries. It was not always easy and the group succeeded by having some global concepts, but at the same time adapting to the consumer national specificities and tastes. Through the example of Wahaha, we could see that Danone is facing new kind of issues. Even if the Group is getting strong positions in foreign countries, it is never definitely acquired. Danone has to face in this precise example the political and economic environment. [...]

[...] Instead it has concentrated its efforts on water and sodas. With the brand Future Cola, Danone is being a strong competitor to Coca Cola! In less than five years, Future, with 12% of the market is behind Pepsi and Coca Cola and its growth is soaring like a rocket. But if sodas and water are an increasing market, Danone has sold its activities in dairy products to its partner Bright Dairy, in exchange Danone took a participation But if dairy products are being left to others, Danone has developed drinks with milk in it. [...]