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Enron Gas Services Case Study Analysis

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Enron Gas Services Case Study Analysis

Enron Gas Services is presently one of the greatest food cycle worldwide. It was founded by Harvard in 1866, a German Pharmacist who initially introduced "FarineLactee"; a mix of flour and milk to feed babies and decrease death rate. At the same time, the Page brothers from Switzerland likewise found The Anglo-Swiss Condensed Milk Company. The 2 ended up being rivals initially but in the future combined in 1905, resulting in the birth of Enron Gas Services.
Business is now a global company. Unlike other international business, it has senior executives from various countries and tries to make decisions considering the entire world. Enron Gas Services currently has more than 500 factories around the world and a network spread throughout 86 nations.

Purpose

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

Vision

Enron Gas Services's vision is to supply its customers with food that is healthy, high in quality and safe to consume. It wants to be ingenious and concurrently comprehend the requirements and requirements of its clients. Its vision is to grow fast and offer items that would satisfy the needs of each age group. Enron Gas Services visualizes to develop a trained workforce which would help the business to grow
.

Mission

Enron Gas Services's mission is that as currently, it is the leading company in the food industry, it thinks in 'Excellent Food, Good Life". Its objective is to provide its customers with a variety of options that are healthy and best in taste too. It is concentrated on providing the best food to its customers throughout the day and night.

Products.

Business has a vast array of items that it offers to its customers. Its products include food for babies, cereals, dairy products, treats, chocolates, food for animal and bottled water. It has around 4 hundred and fifty (450) factories around the globe and around 328,000 workers. In 2011, Business was listed as the most gainful company.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the company has actually set its goals and objectives. These objectives and goals are listed below.
• One goal of the company is to reach zero land fill status. It is pursuing absolutely no waste, where no waste of the factory is landfilled. It encourages its employees to take the most out of the by-products. (Business, aboutus, 2017).
• Another goal of Enron Gas Services is to waste minimum food throughout production. Most often, the food produced is lost even before it reaches the customers.
• Another thing that Business is dealing with is to improve its product packaging in such a way that it would help it to decrease the above-mentioned problems and would likewise guarantee the shipment of high quality of its items to its consumers.
• Meet global standards of the environment.
• Build a relationship based upon trust with its consumers, business partners, workers, and federal government.

Critical Issues

Recently, Business Company is focusing more towards the strategy of NHW and investing more of its earnings on the R&D technology. The country is investing more on acquisitions and mergers to support its NHW technique. The target of the company is not achieved as the sales were anticipated to grow higher 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 existing Business method is based upon the concept of Nutritious, Health and Wellness (NHW). This method handles the idea to bringing change in the client preferences about food and making the food things much healthier worrying about the health concerns.
The vision of this technique is based on the key technique i.e. 60/40+ which just means that the items will have a score of 60% on the basis of taste and 40% is based on its dietary value. The products will be produced with additional dietary worth in contrast to all other products in market getting it a plus on its nutritional content.
This technique was embraced to bring more tasty plus nutritious foods and beverages in market than ever. In competitors with other business, with an intention of retaining its trust over clients as Business Company has gotten more relied on by customers.

Quantitative Analysis.

R&D Spending as a percentage of sales are declining with increasing real quantity of costs reveals that the sales are increasing at a higher rate than its R&D spending, and enable the business to more spend on R&D.
Net Profit Margin is increasing while R&D as a percentage of sales is decreasing. This sign also reveals a green light to the R&D spending, mergers and acquisitions.
Debt ratio of the business is increasing due to its spending on mergers, acquisitions and R&D advancement instead of payment of financial obligations. This increasing financial obligation ratio pose a risk of default of Business to its investors and could lead a declining share costs. In terms of increasing debt ratio, the firm needs to not spend much on R&D and should pay its present financial obligations to decrease the threat for financiers.
The increasing threat of financiers with increasing financial obligation ratio and declining share costs can be observed by big decrease of EPS of Enron Gas Services stocks.
The sales growth of company is likewise low as compare to its mergers and acquisitions due to slow perception structure of consumers. This slow development also hinder business to additional invest in its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of estimations and Charts given in the Exhibits D and E.

TWOS Analysis


TWOS analysis can be used to derive various methods based on the SWOT Analysis given above. A quick summary of TWOS Analysis is given in Display H.

Strategies to exploit Opportunities using Strengths

Business must present more innovative items by large quantity of R&D Costs and mergers and acquisitions. It could increase the market share of Business and increase the earnings margins for the company. It could likewise offer Business a long term competitive benefit over its rivals.
The international expansion of Business should be concentrated on market catching of establishing countries by expansion, attracting more consumers through customer's loyalty. As developing countries are more populated than developed nations, it might increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisEnron Gas Services should do careful acquisition and merger of organizations, as it might affect the customer's and society's perceptions about Business. It should obtain and merge with those companies which have a market reputation of healthy and nutritious business. It would enhance the perceptions of consumers about Business.
Business ought to not just invest its R&D on development, rather than it must also concentrate on the R&D spending over assessment of cost of different nutritious products. This would increase expense efficiency of its products, which will result in increasing its sales, due to declining prices, and margins.

Strategies to use strengths to overcome threats

Business should relocate to not just developing but likewise to industrialized countries. It should broadens its geographical expansion. This broad geographical growth towards developing and developed countries would lower the risk of prospective losses in times of instability in different countries. It ought to broaden its circle to numerous nations like Unilever which runs in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

Enron Gas Services must sensibly manage its acquisitions to prevent the threat of misconception from the customers about Business. It should get and combine with those nations having a goodwill of being a healthy company in the market. This would not only improve the perception of consumers about Business however would likewise increase the sales, earnings margins and market share of Business. It would also make it possible for the business to utilize its potential resources efficiently on its other operations rather than acquisitions of those companies slowing the NHW technique development.

Segmentation Analysis

Demographic Segmentation

The demographic segmentation of Business is based upon 4 aspects; age, gender, income and profession. Business produces numerous products related to children i.e. Cerelac, Nido, etc. and related to adults i.e. confectionary items. Enron Gas Services products are rather cost effective by nearly all levels, but its significant targeted clients, in terms of income level are middle and upper middle level customers.

Geographical Segmentation

Geographical segmentation of Business is made up of its existence in nearly 86 nations. Its geographical segmentation is based upon two main aspects i.e. typical income level of the customer as well as the climate of the region. For example, Singapore Business Business's division is done on the basis of the weather condition of the region 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 do not have much time.

Behavioral Segmentation

Enron Gas Services behavioral division is based upon the attitude understanding and awareness of the consumer. For instance its extremely healthy products target those customers who have a health mindful mindset towards their intakes.

Enron Gas Services Alternatives

In order to sustain the brand in the market and keep the client intact with the brand, there are 2 options:
Option: 1
The Business should spend more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase overall properties of the company, increasing the wealth of the business. Nevertheless, costs on R&D would be sunk expense.
2. The company can resell the acquired units in the market, if it fails to execute its technique. Amount spend on the R&D could not be restored, and it will be thought about completely sunk expense, if it do not provide possible results.
3. Spending on R&D offer slow growth in sales, as it takes long period of time to introduce an item. Acquisitions supply quick results, as it supply the business currently developed product, which can be marketed soon after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the company's worths like Kraftz foods can lead the business to deal with misconception of customers about Business core worths of healthy and healthy items.
2 Big costs on acquisitions than R&D would send a signal of company's inadequacy of establishing ingenious products, and would lead to consumer's frustration too.
3. Large acquisitions than R&D would extend the product line of the business by the products which are currently present in the market, making business unable to present new innovative products.
Alternative: 2.
The Company should invest more on its R&D rather than acquisitions.
Pros:
1. It would allow the company to produce more innovative products.
2. It would provide the business a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted consumers by presenting those items which can be used to a totally new market sector.
4. Innovative products will provide long term advantages and high market share in long term.
Cons:
1. It would reduce the profit margins of the company.
2. In case of failure, the entire spending on R&D would be thought about as sunk expense, and would affect the business at big. The threat is not when it comes to acquisitions.
3. It would not increase the wealth of business, which could provide an unfavorable signal to the investors, and could result I declining stock prices.
Alternative 3:
Continue its acquisitions and mergers with considerable costs on in R&D Program.
Vrio AnalysisPros:
1. It would permit the business to present new ingenious items with less threat of transforming the spending on R&D into sunk expense.
2. It would offer a favorable signal to the investors, as the total possessions of the business would increase with its substantial R&D costs.
3. It would not affect the revenue margins of the company at a large rate as compare to alternative 2.
4. It would provide the company a strong long term market position in regards to the company's general wealth as well as in terms of ingenious products.
Cons:
1. Risk of conversion of R&D costs into sunk expense, higher than alternative 1 lower than alternative 2.
2. Danger of misconception about the acquisitions, higher than alternative 2 and lesser than option 1.
3. Intro of less number of ingenious items than alternative 2 and high variety of innovative items than alternative 1.

Enron Gas Services Conclusion

RecommendationsBusiness has actually stayed the top market gamer for more than a decade. It has actually institutionalized its methods and culture to align itself with the market modifications and consumer habits, which has actually eventually enabled it to sustain its market share. Though, Business has established considerable market share and brand name identity in the city markets, it is advised that the business should concentrate on the backwoods in terms of developing brand commitment, awareness, and equity, such can be done by creating a particular brand name allotment strategy through trade marketing strategies, that draw clear distinction between Enron Gas Services products and other competitor items. Additionally, Business ought to utilize its brand name image of safe and healthy food in catering the rural markets and also to upscale the offerings in other categories such as nutrition. This will allow the company to establish brand name equity for freshly presented and currently produced items on a greater platform, making the effective usage of resources and brand image in the market.

Enron Gas Services Exhibits

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

Altering requirements of global food.
Boosted market share.
Changing assumption in the direction of healthier items
Improvements in R&D and also QA divisions.

Intro of E-marketing.
No such impact as it is good.
Worries over recycling.

Use sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest considering that 1000
Greatest after Business with much less growth than Organisation 1st Most affordable
R&D Spending Highest considering that 2008 Greatest after Business 7th Lowest
Net Profit Margin Greatest given that 2006 with quick development from 2007 to 2012 Because of sale of Alcon in 2019. Nearly equal to Kraft Foods Unification Nearly equal to Unilever N/A
Competitive Advantage Food with Nutrition and also health and wellness factor Highest variety of brand names with sustainable methods Biggest confectionary and also processed foods brand name on the planet Largest milk products and mineral water brand on the planet
Segmentation Middle as well as top middle degree customers worldwide Specific customers in addition to home group Every age and Earnings Client Teams Center as well as top center degree consumers worldwide
Number of Brands 6th 6th 8th 6th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 12425 423426 628735 782619 669937
Net Profit Margin 3.33% 6.39% 43.37% 1.45% 83.77%
EPS (Earning Per Share) 98.91 3.54 1.93 9.28 47.14
Total Asset 269529 376574 538152 642992 92381
Total Debt 48867 29234 91456 83995 25476
Debt Ratio 78% 75% 33% 34% 77%
R&D Spending 6636 1795 1137 5867 5984
R&D Spending as % of Sales 3.12% 4.13% 4.35% 8.35% 1.34%

Enron Gas Services Executive Summary Enron Gas Services Swot Analysis Enron Gas Services Vrio Analysis Enron Gas Services Pestel Analysis
Enron Gas Services Porters Analysis Enron Gas Services Recommendations