Harvard Management Co 1994 Case Study Solution

Harvard Management Co 1994 is currently one of the biggest food chains worldwide. It was founded by Harvard in 1866, a German Pharmacist who initially released "FarineLactee"; a combination of flour and milk to feed infants and reduce mortality rate. At the very same time, the Page siblings from Switzerland likewise found The Anglo-Swiss Condensed Milk Business. The two ended up being competitors in the beginning but later on merged in 1905, resulting in the birth of Harvard Management Co 1994.
Business is now a transnational company. Unlike other international companies, it has senior executives from various countries and tries to make choices thinking about the entire world. Harvard Management Co 1994 currently has more than 500 factories around the world and a network spread across 86 countries.

Purpose

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

Vision

Harvard Management Co 1994's vision is to provide its clients with food that is healthy, high in quality and safe to consume. Business imagines to develop a well-trained labor force which would help the company to grow
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Mission

Harvard Management Co 1994's objective is that as currently, it is the leading business in the food industry, it believes in 'Great Food, Great Life". Its mission is to provide its consumers with a variety of options that are healthy and finest in taste. It is focused on providing the best food to its customers throughout the day and night.

Products.

Business has a vast array of items that it provides to its clients. Its items consist of food for babies, cereals, dairy items, snacks, chocolates, food for family pet and bottled water. It has around four hundred and fifty (450) factories around the world and around 328,000 employees. In 2011, Business was noted as the most rewarding organization.

Goals and Objectives

• Keeping in mind the vision and objective of the corporation, the company has set its objectives and goals. These goals and objectives are listed below.
• One objective of the company is to reach no landfill status. It is working toward no waste, where no waste of the factory is landfilled. It encourages its staff members to take the most out of the spin-offs. (Business, aboutus, 2017).
• Another objective of Harvard Management Co 1994 is to waste minimum food throughout production. Most often, the food produced is squandered even prior to it reaches the consumers.
• Another thing that Business is working on is to improve its packaging in such a method that it would help it to minimize the above-mentioned issues and would likewise ensure the shipment of high quality of its items to its consumers.
• Meet worldwide requirements of the environment.
• Build a relationship based upon trust with its customers, service partners, workers, and federal government.

Critical Issues

Recently, Business Company is focusing more towards the strategy 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 company is not accomplished as the sales were anticipated to grow higher at the rate of 10% per year and the operating margins to increase by 20%, given in Display H.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business strategy is based on the concept of Nutritious, Health and Health (NHW). This technique deals with the concept to bringing change in the consumer preferences about food and making the food things healthier concerning about the health issues.
The vision of this strategy is based on the secret method i.e. 60/40+ which just means that the items will have a rating of 60% on the basis of taste and 40% is based upon its dietary value. The products will be manufactured with extra dietary value in contrast to all other items in market gaining it a plus on its dietary material.
This technique was adopted to bring more tasty plus nutritious foods and drinks in market than ever. In competition with other business, with an intention of retaining its trust over customers as Business Business has actually acquired more relied on by clients.

Quantitative Analysis.

R&D Spending as a percentage of sales are decreasing with increasing actual amount 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 portion of sales is declining. This sign also shows a green light to the R&D spending, mergers and acquisitions.
Financial obligation ratio of the company is increasing due to its costs on mergers, acquisitions and R&D development instead of payment of debts. This increasing financial obligation ratio pose a danger of default of Business to its investors and might lead a decreasing share rates. In terms of increasing financial obligation ratio, the company should not invest much on R&D and ought to pay its existing debts to decrease the risk for financiers.
The increasing risk of investors with increasing financial obligation ratio and declining share costs can be observed by huge decrease of EPS of Harvard Management Co 1994 stocks.
The sales development of business is also low as compare to its mergers and acquisitions due to slow understanding structure of consumers. This slow development likewise prevent business 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 calculations and Charts given in the Exhibits D and E.

TWOS Analysis

TWOS analysis can be utilized to derive numerous techniques based on the SWOT Analysis provided above. A brief summary of TWOS Analysis is given in Exhibit H.

Strategies to exploit Opportunities using Strengths

Business ought to 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 business. It could also supply Business a long term competitive advantage over its rivals.
The global expansion of Business must be concentrated on market catching of developing countries by expansion, drawing in more consumers through customer's commitment. As developing nations are more populous than developed nations, it might increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Harvard Management Co 1994 should do cautious acquisition and merger of companies, as it could affect the customer's and society's understandings about Business. It needs to get and merge with those business which have a market credibility of healthy and nutritious business. It would enhance the perceptions of customers about Business.
Business needs to not just spend its R&D on innovation, instead of it ought to also focus on the R&D costs over evaluation of cost of different nutritious items. This would increase cost performance of its items, which will lead to increasing its sales, due to declining rates, and margins.

Strategies to use strengths to overcome threats

Business needs to transfer to not only developing however likewise to industrialized nations. It should broadens its geographical growth. This broad geographical expansion towards establishing and established countries would lower the danger of potential losses in times of instability in various countries. It needs to expand its circle to numerous nations like Unilever which runs in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

Harvard Management Co 1994 should carefully control its acquisitions to prevent the risk of misconception from the customers about Business. It must acquire and merge with those countries having a goodwill of being a healthy business in the market. This would not only enhance the understanding of customers 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 effectively on its other operations instead of acquisitions of those organizations slowing the NHW strategy growth.

Segmentation Analysis

Demographic Segmentation

The market division of Business is based upon four aspects; age, gender, income and occupation. Business produces numerous products related to children i.e. Cerelac, Nido, and so on and associated to grownups i.e. confectionary products. Harvard Management Co 1994 items are rather economical by almost all levels, but its major targeted clients, in regards to income level are middle and upper middle level consumers.

Geographical Segmentation

Geographical segmentation of Business is composed of its presence in almost 86 nations. Its geographical segmentation is based upon 2 main factors i.e. typical earnings level of the consumer as well as the climate of the region. Singapore Business Company's segmentation is done on the basis of the weather condition of the region i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic division of Business is based upon the personality and lifestyle of the consumer. For instance, Business 3 in 1 Coffee target those customers whose life style is rather hectic and don't have much time.

Behavioral Segmentation

Harvard Management Co 1994 behavioral division is based upon the attitude understanding and awareness of the consumer. For instance its highly healthy products target those customers who have a health mindful attitude towards their intakes.

Harvard Management Co 1994 Alternatives

In order to sustain the brand name in the market and keep the consumer undamaged with the brand name, there are 2 choices:
Alternative: 1
The Business needs to invest more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase overall assets of the business, increasing the wealth of the company. Costs on R&D would be sunk cost.
2. The company can resell the gotten systems in the market, if it fails to execute its strategy. Quantity spend on the R&D might not be revived, and it will be considered entirely sunk cost, if it do not provide possible results.
3. Spending on R&D provide sluggish growth in sales, as it takes very long time to present an item. Nevertheless, acquisitions provide fast outcomes, as it supply the company currently developed product, which can be marketed not long after the acquisition.
Cons:
1. Acquisition of business's which do not fit with the company's values like Kraftz foods can lead the business to face misconception of consumers about Business core worths of healthy and healthy items.
2 Large spending on acquisitions than R&D would send a signal of business's ineffectiveness of establishing ingenious products, and would outcomes in customer's dissatisfaction.
3. Large acquisitions than R&D would extend the line of product of the business by the products which are already present in the market, making company not able to present new innovative products.
Option: 2.
The Business needs to spend more on its R&D rather than acquisitions.
Pros:
1. It would make it possible for the company to produce more ingenious products.
2. It would supply the company a strong competitive position in the market.
3. It would enable the company to increase its targeted consumers by introducing those items which can be used to a completely new market section.
4. Ingenious items will offer long term benefits and high market share in long run.
Cons:
1. It would decrease the earnings margins of the company.
2. In case of failure, the whole spending on R&D would be considered as sunk expense, and would impact the business at large. The risk is not in the case of acquisitions.
3. It would not increase the wealth of company, which might provide an unfavorable signal to the investors, and could result I declining stock prices.
Alternative 3:
Continue its acquisitions and mergers with considerable spending on in R&D Program.
Pros:
1. It would allow the company to introduce brand-new innovative items with less risk of converting the spending on R&D into sunk cost.
2. It would provide a favorable signal to the financiers, as the total possessions of the company would increase with its substantial R&D costs.
3. It would not impact the profit margins of the business at a large rate as compare to alternative 2.
4. It would supply the business a strong long term market position in regards to the company's overall wealth in addition to in terms of innovative items.
Cons:
1. Threat of conversion of R&D spending into sunk cost, higher than alternative 1 lower than alternative 2.
2. Danger of mistaken belief about the acquisitions, greater than alternative 2 and lower than option 1.
3. Intro of less variety of innovative products than alternative 2 and high variety of innovative products than alternative 1.

Harvard Management Co 1994 Conclusion

It has institutionalised its methods and culture to align itself with the market modifications and customer behavior, which has actually ultimately permitted it to sustain its market share. Business has established considerable market share and brand name identity in the metropolitan markets, it is suggested that the business ought to focus on the rural areas in terms of establishing brand commitment, awareness, and equity, such can be done by developing a specific brand allocation strategy through trade marketing techniques, that draw clear difference in between Harvard Management Co 1994 items and other rival products.

Harvard Management Co 1994 Exhibits