Mexico City Water Shortage Case Study Analysis

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Mexico City Water Shortage Case Study Solution

Mexico City Water Shortage is presently among the biggest food cycle worldwide. It was founded by Harvard in 1866, a German Pharmacist who first introduced "FarineLactee"; a mix of flour and milk to feed babies and decrease mortality rate. At the same time, the Page brothers from Switzerland likewise discovered The Anglo-Swiss Condensed Milk Business. The 2 became rivals at first but later on combined in 1905, leading to the birth of Mexico City Water Shortage.
Business is now a transnational business. Unlike other international business, it has senior executives from different nations and attempts to make choices considering the entire world. Mexico City Water Shortage presently has more than 500 factories around the world and a network spread across 86 countries.


The purpose of Mexico City Water Shortage Corporation is to enhance the quality of life of individuals by playing its part and providing healthy food. It wants to help the world in forming a healthy and much better future for it. It likewise wishes to encourage individuals 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 much better and healthy future


Mexico City Water Shortage's vision is to provide its customers with food that is healthy, high in quality and safe to consume. Business visualizes to establish a trained workforce which would help the business to grow


Mexico City Water Shortage's objective is that as currently, it is the leading company in the food industry, it believes in 'Excellent Food, Great Life". Its mission is to supply its customers with a range of options that are healthy and best in taste too. It is focused on providing the very best food to its clients throughout the day and night.


Mexico City Water Shortage has a broad range of items that it uses to its consumers. In 2011, Business was listed as the most rewarding company.

Goals and Objectives

• Keeping in mind the vision and mission of the corporation, the business has actually put down its goals and objectives. These objectives and goals are listed below.
• One goal of the business is to reach absolutely no garbage dump status. (Business, aboutus, 2017).
• Another goal of Mexico City Water Shortage is to squander minimum food throughout production. Most often, the food produced is squandered even before it reaches the customers.
• Another thing that Business is dealing with is to enhance its packaging in such a method that it would help it to lower those problems and would also ensure the shipment of high quality of its items to its clients.
• Meet international standards of the environment.
• Build a relationship based on trust with its consumers, company partners, employees, and federal government.

Critical Issues

Recently, Business Business is focusing more towards the method of NHW and investing more of its revenues on the R&D technology. The nation is investing more on acquisitions and mergers to support its NHW technique. 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%, provided in Display H.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business method is based on the idea of Nutritious, Health and Health (NHW). This method deals with the concept to bringing modification in the consumer choices about food and making the food things healthier worrying about the health concerns.
The vision of this strategy is based upon the secret approach i.e. 60/40+ which merely suggests 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 additional dietary worth in contrast to all other products in market acquiring it a plus on its nutritional material.
This method was adopted to bring more tasty plus nutritious foods and beverages in market than ever. In competition with other business, with an objective of keeping its trust over customers as Business Company has actually acquired more trusted by clients.

Quantitative Analysis.

R&D Costs as a portion of sales are declining with increasing real quantity of costs shows that the sales are increasing at a greater rate than its R&D spending, and enable the business to more invest in R&D.
Net Revenue Margin is increasing while R&D as a percentage of sales is decreasing. This indication also reveals a green light to the R&D costs, mergers and acquisitions.
Financial obligation ratio of the business is increasing due to its costs on mergers, acquisitions and R&D advancement instead of payment of debts. This increasing debt ratio position a threat of default of Business to its investors and might lead a decreasing share rates. For that reason, in regards to increasing financial obligation ratio, the company must not invest much on R&D and must pay its existing debts to reduce the risk for investors.
The increasing danger of financiers with increasing financial obligation ratio and declining share rates can be observed by substantial decrease of EPS of Mexico City Water Shortage stocks.
The sales development of business is likewise low as compare to its mergers and acquisitions due to slow perception structure of consumers. This sluggish growth likewise prevent company to further 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 up the Displays D and E.

TWOS Analysis

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

Strategies to exploit Opportunities using Strengths

Business needs to introduce more innovative products by big quantity of R&D Spending and mergers and acquisitions. It could increase the market share of Business and increase the revenue margins for the business. It could also offer Business a long term competitive advantage over its rivals.
The global expansion of Business ought to be concentrated on market recording of developing nations by expansion, drawing in more clients through consumer's loyalty. As developing countries are more populous than developed countries, it might increase the consumer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisMexico City Water Shortage should do mindful acquisition and merger of organizations, as it might affect the consumer's and society's understandings about Business. It must obtain and combine 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 innovation, instead of it must also concentrate on the R&D costs over assessment of cost of different nutritious items. This would increase cost efficiency of its items, which will result in increasing its sales, due to decreasing prices, and margins.

Strategies to use strengths to overcome threats

Business ought to move to not only establishing however also to developed nations. It ought to broaden its circle to numerous nations like Unilever which runs in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Mexico City Water Shortage must sensibly manage its acquisitions to avoid the threat of mistaken belief from the consumers about Business. It must obtain and combine with those countries having a goodwill of being a healthy company in the market. This would not just enhance the understanding of consumers about Business however would likewise increase the sales, revenue margins and market share of Business. It would also make it possible for the company to utilize its possible resources effectively on its other operations rather than acquisitions of those organizations slowing the NHW technique development.

Segmentation Analysis

Demographic Segmentation

The market segmentation of Business is based upon 4 aspects; age, gender, income and occupation. For example, Business produces several items associated with infants i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary items. Mexico City Water Shortage products are quite budget-friendly by almost all levels, but its significant targeted customers, in regards to earnings level are middle and upper middle level consumers.

Geographical Segmentation

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

Psychographic Segmentation

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

Behavioral Segmentation

Mexico City Water Shortage behavioral segmentation is based upon the mindset understanding and awareness of the client. Its extremely nutritious items target those consumers who have a health mindful attitude towards their intakes.

Mexico City Water Shortage Alternatives

In order to sustain the brand name in the market and keep the consumer undamaged with the brand name, there are two choices:
Alternative: 1
The Business must invest more on acquisitions than on the R&D.
1. Acquisitions would increase overall possessions of the business, increasing the wealth of the business. Spending on R&D would be sunk cost.
2. The business can resell the obtained systems in the market, if it stops working to implement its method. Amount invest on the R&D might not be restored, and it will be thought about totally sunk cost, if it do not provide prospective outcomes.
3. Spending on R&D supply sluggish growth in sales, as it takes long period of time to introduce a product. However, acquisitions supply quick results, as it provide the company currently established product, which can be marketed not long after the acquisition.
1. Acquisition of business's which do not fit with the business's values like Kraftz foods can lead the business to deal with misconception of consumers about Business core values of healthy and nutritious items.
2 Big costs on acquisitions than R&D would send a signal of company's inadequacy of developing ingenious items, and would results in consumer's frustration.
3. Large 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 not able to present new ingenious products.
Alternative: 2.
The Company needs to invest more on its R&D instead of acquisitions.
1. It would enable the business to produce more ingenious products.
2. It would provide the company a strong competitive position in the market.
3. It would allow the business to increase its targeted customers by introducing those products which can be used to an entirely brand-new market segment.
4. Innovative products will provide long term benefits and high market share in long run.
1. It would reduce the profit margins of the company.
2. In case of failure, the whole 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 a negative signal to the investors, and could result I decreasing stock prices.
Alternative 3:
Continue its acquisitions and mergers with significant spending on in R&D Program.
Vrio AnalysisPros:
1. It would enable the business to introduce brand-new innovative items with less risk of transforming the costs on R&D into sunk cost.
2. It would offer a favorable signal to the financiers, as the total properties of the business would increase with its significant R&D spending.
3. It would not affect the profit margins of the company at a big 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 in addition to in regards to ingenious items.
1. Threat of conversion of R&D spending into sunk cost, greater than alternative 1 lower than alternative 2.
2. Risk of misconception about the acquisitions, higher than alternative 2 and lesser than alternative 1.
3. Introduction of less variety of ingenious products than alternative 2 and high number of ingenious products than alternative 1.

Mexico City Water Shortage Conclusion

RecommendationsBusiness has actually remained the leading market player for more than a years. It has institutionalized its strategies and culture to align itself with the marketplace changes and consumer habits, which has actually ultimately enabled it to sustain its market share. Business has established considerable market share and brand identity in the urban markets, it is suggested that the business needs to focus on the rural areas in terms of developing brand name loyalty, awareness, and equity, such can be done by creating a particular brand name allotment strategy through trade marketing tactics, that draw clear distinction in between Mexico City Water Shortage products and other competitor products. Mexico City Water Shortage must 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 permit the company to develop brand equity for newly introduced and currently produced items on a greater platform, making the effective use of resources and brand name image in the market.

Mexico City Water Shortage Exhibits

PESTEL Analysis
Governmental support

Changing standards of international food.
Boosted market share. Altering understanding towards much healthier products Improvements in R&D as well as QA divisions.

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

Use sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest possible since 5000 Highest possible after Company with less growth than Business 1st Least expensive
R&D Spending Highest because 2006 Highest possible after Organisation 2nd Most affordable
Net Profit Margin Highest considering that 2008 with fast growth from 2004 to 2013 Because of sale of Alcon in 2019. Virtually equal to Kraft Foods Incorporation Almost equal to Unilever N/A
Competitive Advantage Food with Nutrition and also wellness factor Highest possible number of brand names with sustainable techniques Largest confectionary and also refined foods brand in the world Biggest milk items and bottled water brand on the planet
Segmentation Middle as well as top center level customers worldwide Individual consumers in addition to family team Any age and Income Client Teams Middle and upper middle level consumers worldwide
Number of Brands 3rd 7th 4th 8th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 81542 182763 627487 746582 514532
Net Profit Margin 8.27% 4.44% 56.42% 6.27% 45.23%
EPS (Earning Per Share) 83.49 5.67 6.46 8.15 21.36
Total Asset 142723 711416 151346 938682 35993
Total Debt 79419 27145 55841 78127 71879
Debt Ratio 64% 85% 69% 75% 94%
R&D Spending 6392 6668 6917 6695 2433
R&D Spending as % of Sales 8.39% 7.38% 8.15% 8.34% 2.95%

Executive Summary Swot Analysis Vrio Analysis Pestel Analysis
Porters Analysis Recommendations