Menu

Log On America Case Study Analysis

Case Study Solution And Analysis


Home >> Chicago Booth >> Log On America >>

Log On America Case Study Help

Log On America is currently among the most significant food chains worldwide. It was established by Chicago Booth in 1866, a German Pharmacist who first introduced "FarineLactee"; a mix of flour and milk to feed infants and reduce death rate. At the same time, the Page siblings from Switzerland also discovered The Anglo-Swiss Condensed Milk Company. The two ended up being competitors at first but later combined in 1905, resulting in the birth of Log On America.
Business is now a multinational company. Unlike other international companies, it has senior executives from various countries and attempts to make decisions thinking about the entire world. Log On America currently has more than 500 factories worldwide and a network spread across 86 nations.

Purpose

The function of Business Corporation is to boost the quality of life of people by playing its part and supplying healthy food. While making sure that the company is succeeding in the long run, that's how it plays its part for a much better and healthy future

Vision

Log On America's vision is to offer its consumers with food that is healthy, high in quality and safe to consume. It wants to be innovative and concurrently comprehend the requirements and requirements of its consumers. Its vision is to grow fast and supply products that would satisfy the needs of each age group. Log On America pictures to develop a trained workforce which would help the business to grow
.

Mission

Log On America's mission is that as presently, it is the leading business in the food market, it believes in 'Excellent Food, Great Life". Its mission is to supply its customers with a range of choices that are healthy and best in taste. It is focused on supplying the very best food to its clients throughout the day and night.

Products.

Business has a vast array of items that it provides to its consumers. Its products include food for babies, cereals, dairy products, treats, chocolates, food for family pet and mineral water. It has around 4 hundred and fifty (450) factories all over the world and around 328,000 workers. In 2011, Business was noted as the most rewarding organization.

Goals and Objectives

• Keeping in mind the vision and mission of the corporation, the company has laid down its goals and objectives. These goals and objectives are listed below.
• One objective of the business is to reach absolutely no land fill status. It is pursuing zero waste, where no waste of the factory is landfilled. It motivates its employees to take the most out of the spin-offs. (Business, aboutus, 2017).
• Another objective of Log On America is to lose minimum food throughout production. Most often, the food produced is squandered even before it reaches the customers.
• Another thing that Business is working on is to enhance its product packaging in such a way that it would help it to lower those complications and would likewise guarantee the delivery of high quality of its items to its customers.
• Meet worldwide requirements of the environment.
• Develop a relationship based on trust with its consumers, service partners, employees, and federal government.

Critical Issues

Just Recently, Business Company is focusing more towards the strategy of NHW and investing more of its revenues on the R&D technology. The country is investing more on acquisitions and mergers to support its NHW technique. Nevertheless, the target of the business is not accomplished as the sales were anticipated to grow greater at the rate of 10% per year and the operating margins to increase by 20%, given up Display H. There is a requirement to focus more on the sales then the innovation technology. Otherwise, it might lead to the decreased income rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business method is based on the idea of Nutritious, Health and Wellness (NHW). This method deals with the idea to bringing change in the customer preferences about food and making the food stuff much healthier concerning about the health issues.
The vision of this strategy is based on the secret technique i.e. 60/40+ which just implies that the products will have a score of 60% on the basis of taste and 40% is based on its nutritional worth. The items will be manufactured with extra nutritional value in contrast to all other products in market acquiring it a plus on its nutritional material.
This technique was embraced to bring more delicious plus nutritious foods and drinks in market than ever. In competition with other business, with an intent of keeping its trust over customers as Business Business has actually gotten more trusted by costumers.

Quantitative Analysis.

R&D Costs as a percentage of sales are declining with increasing actual quantity of costs shows that the sales are increasing at a greater rate than its R&D costs, and allow the business to more spend on R&D.
Net Earnings Margin is increasing while R&D as a percentage of sales is declining. This indication also reveals a green light to the R&D costs, mergers and acquisitions.
Debt ratio of the company is increasing due to its spending on mergers, acquisitions and R&D development rather than payment of financial obligations. This increasing debt ratio pose a risk of default of Business to its financiers and might lead a declining share costs. Therefore, in terms of increasing financial obligation ratio, the company needs to not invest much on R&D and must pay its current debts to reduce the risk for investors.
The increasing danger of financiers with increasing financial obligation ratio and decreasing share prices can be observed by big decline of EPS of Log On America stocks.
The sales growth of business is likewise low as compare to its mergers and acquisitions due to slow perception structure of customers. This slow growth likewise prevent company to more invest in 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 Charts given up the Exhibits D and E.

TWOS Analysis


2 analysis can be utilized to derive numerous strategies based upon the SWOT Analysis offered above. A quick summary of TWOS Analysis is given up Exhibition H.

Strategies to exploit Opportunities using Strengths

Business should present more ingenious items by big amount of R&D Costs and mergers and acquisitions. It might increase the market share of Business and increase the profit margins for the company. It might likewise supply Business a long term competitive benefit over its competitors.
The global expansion of Business must be focused on market catching of establishing countries by expansion, bring in more consumers through consumer's commitment. As developing nations are more populated than industrialized countries, it might increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisLog On America ought to do mindful acquisition and merger of organizations, as it could impact the customer's and society's understandings about Business. It must get and merge with those business which have a market reputation of healthy and healthy business. It would enhance the perceptions of customers about Business.
Business must not just spend its R&D on development, instead of it must likewise focus on the R&D costs over evaluation of expense of different healthy items. This would increase cost performance of its items, which will result in increasing its sales, due to decreasing rates, and margins.

Strategies to use strengths to overcome threats

Business needs to move to not only developing however likewise to developed countries. It must expands its geographical growth. This broad geographical growth towards developing and established nations would reduce the danger of potential losses in times of instability in different countries. It should broaden its circle to various nations like Unilever which runs in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Log On America should sensibly manage its acquisitions to prevent the threat of mistaken belief from the consumers about Business. It ought to obtain and merge with those nations having a goodwill of being a healthy company in the market. This would not only improve the understanding of customers about Business but would likewise increase the sales, revenue margins and market share of Business. It would likewise 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 group segmentation of Business is based on four factors; age, gender, earnings and profession. For example, Business produces a number of products connected to babies i.e. Cerelac, Nido, etc. and related to adults i.e. confectionary products. Log On America products are quite affordable by almost all levels, but its major targeted clients, in regards to earnings level are middle and upper middle level clients.

Geographical Segmentation

Geographical division of Business is made up of its presence in almost 86 nations. Its geographical division is based upon two primary elements i.e. average income level of the consumer along with the environment of the area. Singapore Business Company's division 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 personality and lifestyle of the customer. Business 3 in 1 Coffee target those consumers whose life style is quite hectic and don't have much time.

Behavioral Segmentation

Log On America behavioral segmentation is based upon the attitude knowledge and awareness of the customer. Its highly nutritious products target those clients who have a health conscious attitude towards their usages.

Log On America Alternatives

In order to sustain the brand name in the market and keep the customer undamaged with the brand name, there are 2 options:
Option: 1
The Business ought to spend more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase total possessions of the business, increasing the wealth of the company. Spending on R&D would be sunk cost.
2. The company can resell the obtained units in the market, if it stops working to implement its method. Nevertheless, quantity spend on the R&D might not be restored, and it will be thought about totally sunk cost, if it do not provide prospective results.
3. Investing in R&D provide slow growth in sales, as it takes long time to introduce an item. Acquisitions supply quick results, as it offer the company currently developed item, which can be marketed quickly after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the company's values like Kraftz foods can lead the company to face misunderstanding of consumers about Business core values of healthy and nutritious products.
2 Large spending on acquisitions than R&D would send a signal of company's inadequacy of establishing ingenious items, and would results in consumer's frustration.
3. Big acquisitions than R&D would extend the line of product of the company by the items which are already present in the market, making company unable to introduce new innovative items.
Option: 2.
The Business ought to invest more on its R&D rather than acquisitions.
Pros:
1. It would allow the business to produce more innovative items.
2. It would provide the company a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted clients by introducing those items which can be provided to a completely new market sector.
4. Ingenious products will offer long term benefits and high market share in long run.
Cons:
1. It would reduce the earnings margins of the company.
2. In case of failure, the whole spending on R&D would be considered as sunk cost, and would affect the business at big. The threat is not when it comes to acquisitions.
3. It would not increase the wealth of company, which could provide an unfavorable signal to the investors, and might result I declining stock rates.
Alternative 3:
Continue its acquisitions and mergers with considerable costs on in R&D Program.
Vrio AnalysisPros:
1. It would allow the business to present brand-new ingenious items with less danger of converting the spending on R&D into sunk cost.
2. It would supply a favorable signal to the financiers, as the total properties of the company would increase with its significant R&D costs.
3. It would not impact the earnings margins of the company at a big rate as compare to alternative 2.
4. It would offer the business a strong long term market position in regards to the business's total wealth as well as in regards to innovative products.
Cons:
1. Danger of conversion of R&D spending into sunk cost, greater than alternative 1 lower than alternative 2.
2. Danger of mistaken belief about the acquisitions, higher than alternative 2 and lower than alternative 1.
3. Introduction of less variety of innovative products than alternative 2 and high variety of innovative items than alternative 1.

Log On America Conclusion

RecommendationsIt has actually institutionalized its techniques and culture to align itself with the market modifications and customer habits, which has actually ultimately permitted it to sustain its market share. Business has actually developed significant market share and brand identity in the urban markets, it is suggested that the business needs to focus on the rural locations in terms of establishing brand name loyalty, awareness, and equity, such can be done by developing a particular brand allowance method through trade marketing methods, that draw clear distinction in between Log On America products and other competitor items.

Log On America Exhibits

PESTEL Analysis
P
Political
E
Economic
S
Social
T
Technology
L
Legal
E
Environment
Governmental assistance

Transforming standards of worldwide food.
Improved market share.
Altering assumption in the direction of healthier items
Improvements in R&D as well as QA departments.

Intro of E-marketing.
No such effect as it is beneficial.
Problems over recycling.

Use of sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Greatest considering that 2000
Greatest after Business with less growth than Business 8th Most affordable
R&D Spending Highest possible considering that 2007 Highest after Organisation 3rd Lowest
Net Profit Margin Highest possible considering that 2001 with rapid growth from 2004 to 2016 Due to sale of Alcon in 2013. Nearly equal to Kraft Foods Unification Almost equal to Unilever N/A
Competitive Advantage Food with Nutrition and also health and wellness factor Greatest number of brands with lasting techniques Largest confectionary and refined foods brand in the world Largest dairy items as well as mineral water brand in the world
Segmentation Middle and also upper middle degree consumers worldwide Individual customers along with family team All age and also Earnings Consumer Teams Center and upper center level customers worldwide
Number of Brands 2nd 1st 8th 4th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 15267 615167 855681 778741 266618
Net Profit Margin 6.42% 8.18% 15.75% 3.77% 78.35%
EPS (Earning Per Share) 93.33 1.94 9.68 1.31 82.89
Total Asset 863737 414345 112191 163556 78389
Total Debt 84812 53696 33719 32673 92376
Debt Ratio 28% 35% 58% 58% 33%
R&D Spending 3923 9545 2459 7342 5686
R&D Spending as % of Sales 9.42% 8.19% 9.14% 8.86% 9.46%

Log On America Executive Summary Log On America Swot Analysis Log On America Vrio Analysis Log On America Pestel Analysis
Log On America Porters Analysis Log On America Recommendations