Logic Of Electronic Markets Case Study Solution

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Logic Of Electronic Markets Case Study Analysis

Business is presently one of the most significant food chains worldwide. It was founded by Henri Logic Of Electronic Markets in 1866, a German Pharmacist who first released "FarineLactee"; a combination of flour and milk to feed infants and reduce death rate.
Business is now a global business. Unlike other multinational companies, it has senior executives from different countries and attempts to make decisions considering the entire world. Logic Of Electronic Markets presently has more than 500 factories worldwide and a network spread throughout 86 nations.


The function of Logic Of Electronic Markets Corporation is to enhance the lifestyle of individuals by playing its part and supplying healthy food. It wants to help the world in forming a healthy and better future for it. It also wishes to encourage people to live a healthy life. While ensuring that the business is succeeding in the long run, that's how it plays its part for a better and healthy future


Logic Of Electronic Markets's vision is to offer its consumers with food that is healthy, high in quality and safe to consume. It wants to be ingenious and simultaneously understand the requirements and requirements of its consumers. Its vision is to grow quickly and supply products that would satisfy the requirements of each age group. Logic Of Electronic Markets envisions to establish a trained workforce which would help the company to grow


Logic Of Electronic Markets's objective is that as presently, it is the leading company in the food industry, it thinks in 'Great Food, Good Life". Its mission is to provide its consumers with a variety of options that are healthy and finest in taste too. It is focused on offering the best food to its clients throughout the day and night.


Logic Of Electronic Markets has a wide variety of items that it provides to its clients. In 2011, Business was noted as the most gainful organization.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the company has laid down its objectives and objectives. These objectives and goals are noted below.
• One goal of the business is to reach no garbage dump status. (Business, aboutus, 2017).
• Another objective of Logic Of Electronic Markets is to squander minimum food throughout production. Most often, the food produced is squandered even prior to it reaches the consumers.
• Another thing that Business is dealing with is to enhance its packaging in such a way that it would help it to decrease the above-mentioned complications and would likewise guarantee the shipment of high quality of its items to its customers.
• Meet international requirements of the environment.
• Develop a relationship based upon trust with its customers, business partners, employees, and federal government.

Critical Issues

Just Recently, Business Company is focusing more towards the strategy of NHW and investing more of its profits on the R&D innovation. The nation is investing more on acquisitions and mergers to support its NHW strategy. The target of the business is not accomplished as the sales were expected to grow higher at the rate of 10% per year and the operating margins to increase by 20%, provided in Exhibition H.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business method is based upon the concept of Nutritious, Health and Wellness (NHW). This strategy deals with the idea to bringing modification in the customer choices about food and making the food things much healthier worrying about the health problems.
The vision of this technique is based upon the key approach i.e. 60/40+ which simply indicates that the items will have a rating of 60% on the basis of taste and 40% is based on its dietary worth. The items will be made with extra nutritional value in contrast to all other products in market gaining it a plus on its nutritional material.
This method was adopted to bring more tasty plus nutritious foods and drinks in market than ever. In competition with other companies, with an intent of keeping its trust over clients as Business Business has gotten more trusted by customers.

Quantitative Analysis.

R&D Costs as a percentage of sales are decreasing with increasing actual amount of spending 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 indicator likewise shows a green light to the R&D spending, mergers and acquisitions.
Financial obligation ratio of the company is increasing due to its spending on mergers, acquisitions and R&D development rather than payment of debts. This increasing debt ratio pose a threat of default of Business to its investors and could lead a declining share costs. In terms of increasing debt ratio, the firm ought to not invest much on R&D and should pay its present debts to decrease the threat for investors.
The increasing danger of financiers with increasing debt ratio and declining share prices can be observed by huge decline of EPS of Logic Of Electronic Markets 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 business to additional 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 Graphs given up the Displays D and E.

TWOS Analysis

TWOS analysis can be utilized to derive various methods based on the SWOT Analysis offered above. A short summary of TWOS Analysis is given up Display H.

Strategies to exploit Opportunities using Strengths

Business needs to present more ingenious items by large quantity of R&D Spending and mergers and acquisitions. It might increase the marketplace share of Business and increase the profit margins for the business. It might likewise supply Business a long term competitive benefit over its rivals.
The worldwide expansion of Business should be focused on market catching of establishing countries by growth, attracting more customers through customer's loyalty. As establishing nations are more populated than developed nations, it might increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisLogic Of Electronic Markets should do careful acquisition and merger of organizations, as it could affect the client's and society's understandings about Business. It must get and merge with those companies which have a market track record of healthy and healthy companies. It would improve the perceptions of customers about Business.
Business ought to not just invest its R&D on development, instead of it should also focus on the R&D costs over examination of cost of different healthy products. This would increase cost performance of its items, which will lead to increasing its sales, due to declining costs, and margins.

Strategies to use strengths to overcome threats

Business must move to not only establishing but likewise to industrialized countries. It needs to widen its circle to different countries like Unilever which operates in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Logic Of Electronic Markets must carefully control its acquisitions to avoid the threat of misconception from the consumers about Business. It ought to get and combine with those nations having a goodwill of being a healthy business in the market. This would not just enhance the perception of consumers about Business but would likewise increase the sales, profit margins and market share of Business. It would likewise make it possible for the business to utilize its potential resources efficiently on its other operations instead of acquisitions of those organizations slowing the NHW technique development.

Segmentation Analysis

Demographic Segmentation

The group segmentation of Business is based upon four factors; age, gender, income and occupation. For example, Business produces a number of items connected to babies i.e. Cerelac, Nido, and so on and associated to grownups i.e. confectionary items. Logic Of Electronic Markets items are rather budget-friendly by almost all levels, but its major targeted consumers, in regards to income level are middle and upper middle level clients.

Geographical Segmentation

Geographical segmentation of Business is made up of its existence in nearly 86 nations. Its geographical division is based upon 2 primary factors i.e. average earnings level of the customer along with the environment of the area. Singapore Business Company's division is done on the basis of the weather of the area i.e. hot, warm or cold.

Psychographic Segmentation

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

Behavioral Segmentation

Logic Of Electronic Markets behavioral division is based upon the attitude understanding and awareness of the client. For example its highly nutritious items target those clients who have a health conscious mindset towards their intakes.

Logic Of Electronic Markets Alternatives

In order to sustain the brand in the market and keep the consumer undamaged with the brand, there are 2 alternatives:
Option: 1
The Company must spend more on acquisitions than on the R&D.
1. Acquisitions would increase total assets of the business, increasing the wealth of the business. However, spending on R&D would be sunk expense.
2. The business can resell the gotten systems in the market, if it fails to execute its strategy. However, amount invest in the R&D might not be restored, and it will be considered totally sunk cost, if it do not provide potential results.
3. Investing in R&D offer slow growth in sales, as it takes long time to present an item. Acquisitions provide fast results, as it offer the company currently established product, which can be marketed soon after the acquisition.
1. Acquisition of company's which do not fit with the company's worths like Kraftz foods can lead the company to face mistaken belief of customers about Business core worths of healthy and nutritious products.
2 Big costs on acquisitions than R&D would send a signal of company's inefficiency of establishing innovative items, and would results in consumer's dissatisfaction.
3. Large acquisitions than R&D would extend the line of product of the company by the items which are currently present in the market, making business not able to introduce new innovative items.
Alternative: 2.
The Business should invest more on its R&D rather than acquisitions.
1. It would allow the business to produce more ingenious items.
2. It would supply the business a strong competitive position in the market.
3. It would allow the company to increase its targeted clients by presenting those items which can be offered to a completely brand-new market sector.
4. Ingenious items will provide long term advantages and high market share in long term.
1. It would decrease the profit 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 large. The danger is not in the case of acquisitions.
3. It would not increase the wealth of company, which might offer a negative signal to the financiers, and might result I declining stock prices.
Alternative 3:
Continue its acquisitions and mergers with substantial costs on in R&D Program.
Vrio AnalysisPros:
1. It would allow the business to introduce brand-new innovative items with less danger of transforming the spending on R&D into sunk expense.
2. It would provide a positive signal to the investors, as the general possessions of the business would increase with its considerable R&D costs.
3. It would not affect the profit margins of the business at a large rate as compare to alternative 2.
4. It would offer the business a strong long term market position in terms of the company's total wealth along with in regards to innovative items.
1. Danger of conversion of R&D costs into sunk expense, greater than option 1 lesser than alternative 2.
2. Risk of misconception about the acquisitions, higher than alternative 2 and lower than option 1.
3. Introduction of less variety of innovative products than alternative 2 and high variety of ingenious products than alternative 1.

Logic Of Electronic Markets Conclusion

RecommendationsBusiness has remained the leading market gamer for more than a decade. It has institutionalised its techniques and culture to align itself with the market modifications and consumer behavior, which has eventually enabled it to sustain its market share. Though, Business has actually established substantial market share and brand identity in the city markets, it is suggested that the company must focus on the rural areas in regards to establishing brand commitment, awareness, and equity, such can be done by creating a particular brand name allowance technique through trade marketing methods, that draw clear difference between Logic Of Electronic Markets items and other rival products. Logic Of Electronic Markets should take advantage of its brand name 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 permit the company to develop brand equity for freshly presented and already produced products on a higher platform, making the effective usage of resources and brand image in the market.

Logic Of Electronic Markets Exhibits

PESTEL Analysis
Governmental support

Transforming criteria of global food.
Boosted market share. Transforming perception towards healthier items Improvements in R&D as well as QA departments.

Intro of E-marketing.
No such impact as it is beneficial. Issues over recycling.

Use of resources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest because 2000 Highest after Organisation with much less development than Company 6th Lowest
R&D Spending Highest since 2009 Greatest after Organisation 5th Cheapest
Net Profit Margin Highest since 2008 with quick development from 2004 to 2013 Due to sale of Alcon in 2013. Almost equal to Kraft Foods Unification Nearly equal to Unilever N/A
Competitive Advantage Food with Nutrition and also health aspect Highest number of brands with sustainable techniques Biggest confectionary as well as refined foods brand on the planet Biggest milk products and also bottled water brand name worldwide
Segmentation Middle and also top center level consumers worldwide Private clients together with family group Any age and also Revenue Client Groups Center and top middle degree consumers worldwide
Number of Brands 8th 7th 4th 4th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 51858 196152 426564 866532 664469
Net Profit Margin 8.94% 6.94% 69.16% 6.42% 95.87%
EPS (Earning Per Share) 62.62 8.49 4.43 4.41 61.94
Total Asset 185714 351979 243529 817332 51388
Total Debt 22795 42419 71842 58121 55664
Debt Ratio 33% 68% 13% 17% 66%
R&D Spending 4759 2525 6361 3868 4233
R&D Spending as % of Sales 8.95% 2.56% 7.98% 5.64% 7.26%

Executive Summary Swot Analysis Vrio Analysis Pestel Analysis
Porters Analysis Recommendations