Changan Automobile Co Ltd Case Study Analysis

Changan Automobile Co Ltd is presently one of the most significant food cycle worldwide. It was founded by Chicago Booth in 1866, a German Pharmacist who initially released "FarineLactee"; a combination of flour and milk to feed babies and decrease death rate. At the same time, the Page brothers from Switzerland also found The Anglo-Swiss Condensed Milk Company. The two became competitors at first but later on combined in 1905, resulting in the birth of Changan Automobile Co Ltd.
Business is now a multinational business. Unlike other multinational business, it has senior executives from different nations and tries to make decisions considering the whole world. Changan Automobile Co Ltd currently has more than 500 factories worldwide and a network spread across 86 nations.

Purpose

The purpose of Changan Automobile Co Ltd Corporation is to improve the lifestyle of individuals by playing its part and providing healthy food. It wants to help the world in shaping a healthy and better future for it. It likewise wishes to motivate people to live a healthy life. While making certain that the company is being successful in the long run, that's how it plays its part for a better and healthy future

Vision

Changan Automobile Co Ltd's vision is to offer its consumers with food that is healthy, high in quality and safe to eat. Business envisions to establish a well-trained labor force which would help the company to grow
.

Mission

Changan Automobile Co Ltd's mission is that as currently, it is the leading business in the food market, it thinks in 'Good Food, Excellent Life". Its objective is to provide its customers with a variety of choices that are healthy and finest in taste. It is focused on providing the very best food to its customers throughout the day and night.

Products.

Business has a wide range of items that it offers to its customers. Its items consist of food for babies, cereals, dairy products, snacks, chocolates, food for animal and bottled water. It has around 4 hundred and fifty (450) factories all over the world and around 328,000 employees. In 2011, Business was listed as the most rewarding company.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the company has put down its objectives and goals. These objectives and objectives are noted below.
• One goal of the business is to reach absolutely no landfill status. It is working toward zero waste, where no waste of the factory is landfilled. It encourages its workers to take the most out of the spin-offs. (Business, aboutus, 2017).
• Another goal of Changan Automobile Co Ltd is to lose minimum food throughout production. Usually, the food produced is squandered even prior to it reaches the customers.
• Another thing that Business is working on is to enhance its packaging in such a method that it would help it to minimize those complications and would likewise guarantee the shipment of high quality of its items to its clients.
• Meet worldwide standards of the environment.
• Develop a relationship based on trust with its consumers, company partners, employees, and government.

Critical Issues

Just Recently, Business Company is focusing more towards the technique of NHW and investing more of its profits on the R&D innovation. The country is investing more on acquisitions and mergers to support its NHW method. The target of the business is not achieved as the sales were expected to grow greater at the rate of 10% per year and the operating margins to increase by 20%, provided in Exhibition H. There is a need to focus more on the sales then the innovation technology. Otherwise, it may result in the declined income rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The current Business method is based on the principle of Nutritious, Health and Health (NHW). This method deals with the idea to bringing modification in the client choices about food and making the food things healthier concerning about the health problems.
The vision of this method is based on the secret method i.e. 60/40+ which merely suggests that the items will have a score of 60% on the basis of taste and 40% is based on its dietary worth. The products will be produced with extra nutritional worth in contrast to all other products in market acquiring it a plus on its nutritional content.
This method was adopted to bring more tasty plus nutritious foods and beverages in market than ever. In competitors with other companies, with an objective of maintaining its trust over clients as Business Company has actually acquired more trusted by customers.

Quantitative Analysis.

R&D Spending as a percentage of sales are declining with increasing actual amount of spending reveals that the sales are increasing at a greater rate than its R&D spending, and permit the business to more spend on R&D.
Net Revenue Margin is increasing while R&D as a portion of sales is decreasing. This sign likewise shows a thumbs-up to the R&D costs, mergers and acquisitions.
Debt ratio of the company is increasing due to its costs on mergers, acquisitions and R&D development rather than payment of debts. This increasing financial obligation ratio present a risk of default of Business to its financiers and could lead a declining share rates. Therefore, in terms of increasing financial obligation ratio, the company needs to not spend much on R&D and should pay its present financial obligations to decrease the danger for financiers.
The increasing risk of investors with increasing debt ratio and decreasing share rates can be observed by substantial decline of EPS of Changan Automobile Co Ltd stocks.
The sales development of company is likewise low as compare to its mergers and acquisitions due to slow understanding building of consumers. This sluggish growth likewise impede company to more spend on its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Keep in mind: All the above analysis is done on the basis of computations and Graphs given in the Displays D and E.

TWOS Analysis

2 analysis can be used to derive various techniques based on the SWOT Analysis provided above. A quick summary of TWOS Analysis is given up Display H.

Strategies to exploit Opportunities using Strengths

Business ought to introduce more innovative products by big amount of R&D Spending and mergers and acquisitions. It might increase the market share of Business and increase the profit margins for the business. It could also provide Business a long term competitive benefit over its competitors.
The worldwide expansion of Business need to be focused on market catching of establishing nations by expansion, attracting more clients through client's loyalty. As developing countries are more populous than industrialized nations, it might increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Changan Automobile Co Ltd must do careful acquisition and merger of organizations, as it could impact the customer's and society's perceptions about Business. It needs to obtain and merge with those companies which have a market track record of healthy and healthy business. It would enhance the understandings of consumers about Business.
Business should not only spend its R&D on innovation, rather than it must likewise focus on the R&D spending over examination of expense of numerous healthy products. This would increase expense efficiency of its products, which will lead to increasing its sales, due to decreasing rates, and margins.

Strategies to use strengths to overcome threats

Business ought to move to not just developing but likewise to developed countries. It should widen its circle to numerous nations like Unilever which runs in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Changan Automobile Co Ltd needs to wisely control its acquisitions to avoid the risk of mistaken belief from the consumers about Business. It needs to acquire and merge with those nations having a goodwill of being a healthy business in the market. This would not only enhance the perception of customers about Business however would likewise increase the sales, profit margins and market share of Business. It would also allow the company to use its possible resources effectively on its other operations rather than acquisitions of those organizations slowing the NHW technique development.

Segmentation Analysis

Demographic Segmentation

The demographic division of Business is based upon four aspects; age, gender, earnings and occupation. Business produces several items related to infants i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary products. Changan Automobile Co Ltd products are rather inexpensive by nearly all levels, however its major targeted customers, in terms of earnings level are middle and upper middle level consumers.

Geographical Segmentation

Geographical division of Business is composed of its existence in almost 86 countries. Its geographical segmentation is based upon two main elements i.e. typical income level of the customer along with the climate of the area. For example, Singapore Business Company's segmentation is done on the basis of the weather condition of the area i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic segmentation of Business is based upon the character and life style of the customer. For example, Business 3 in 1 Coffee target those clients whose lifestyle is rather busy and don't have much time.

Behavioral Segmentation

Changan Automobile Co Ltd behavioral division is based upon the mindset understanding and awareness of the customer. For example its highly nutritious products target those consumers who have a health conscious attitude towards their consumptions.

Changan Automobile Co Ltd Alternatives

In order to sustain the brand in the market and keep the customer intact with the brand name, there are two alternatives:
Alternative: 1
The Business ought to invest more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase total properties of the company, increasing the wealth of the company. Nevertheless, costs on R&D would be sunk expense.
2. The company can resell the acquired units in the market, if it stops working to execute its method. Quantity spend on the R&D might not be revived, and it will be thought about totally sunk cost, if it do not provide prospective results.
3. Investing in R&D offer sluggish development in sales, as it takes long period of time to present a product. Nevertheless, acquisitions provide quick outcomes, as it supply the company currently established item, which can be marketed soon after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the company's values like Kraftz foods can lead the business to deal with misconception of consumers about Business core worths of healthy and nutritious products.
2 Big spending on acquisitions than R&D would send out a signal of business's inefficiency of establishing ingenious products, and would lead to consumer's dissatisfaction too.
3. Big acquisitions than R&D would extend the product line of the company by the products which are already present in the market, making company not able to present new innovative products.
Alternative: 2.
The Company should spend more on its R&D instead of acquisitions.
Pros:
1. It would allow the company to produce more ingenious products.
2. It would offer the business a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted consumers by introducing those products which can be used to a completely brand-new market sector.
4. Ingenious products will supply long term advantages and high market share in long term.
Cons:
1. It would decrease the revenue margins of the business.
2. In case of failure, the whole spending on R&D would be considered as sunk expense, and would impact the company at big. The threat is not in the case of acquisitions.
3. It would not increase the wealth of company, which might provide an unfavorable signal to the financiers, and could result I decreasing stock rates.
Alternative 3:
Continue its acquisitions and mergers with substantial costs on in R&D Program.
Pros:
1. It would allow the company to present new ingenious products with less risk of transforming the spending on R&D into sunk cost.
2. It would supply a positive signal to the investors, as the total properties of the business would increase with its considerable R&D costs.
3. It would not affect the earnings margins of the business at a large rate as compare to alternative 2.
4. It would provide the business a strong long term market position in terms of the company's overall wealth as well as in terms of ingenious products.
Cons:
1. Danger of conversion of R&D spending into sunk cost, greater than option 1 lower than alternative 2.
2. Risk of misunderstanding about the acquisitions, higher than alternative 2 and lesser than option 1.
3. Introduction of less variety of innovative items than alternative 2 and high number of innovative items than alternative 1.

Changan Automobile Co Ltd Conclusion

Business has actually stayed the top market gamer for more than a years. It has institutionalized its strategies and culture to align itself with the marketplace changes and customer behavior, which has actually ultimately allowed it to sustain its market share. Though, Business has developed considerable market share and brand name identity in the urban markets, it is suggested that the business must concentrate on the backwoods in terms of developing brand commitment, awareness, and equity, such can be done by creating a specific brand name allocation method through trade marketing strategies, that draw clear distinction between Changan Automobile Co Ltd products and other competitor items. Changan Automobile Co Ltd should leverage its brand image of safe and healthy food in catering the rural markets and likewise to upscale the offerings in other categories such as nutrition. This will enable the company to develop brand equity for freshly presented and already produced products on a higher platform, making the reliable usage of resources and brand image in the market.

Changan Automobile Co Ltd Exhibits