New Songdo City Chinese Version Case Study Solution

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Business is currently one of the biggest food chains worldwide. It was established by Henri New Songdo City Chinese Version in 1866, a German Pharmacist who initially introduced "FarineLactee"; a combination of flour and milk to feed infants and reduce death rate.
Business is now a multinational company. Unlike other international companies, it has senior executives from various countries and tries to make choices thinking about the entire world. New Songdo City Chinese Version currently has more than 500 factories worldwide and a network spread throughout 86 countries.


The function of New Songdo City Chinese Version Corporation is to improve the lifestyle of people by playing its part and offering healthy food. It wishes to help the world in forming a healthy and better future for it. It likewise wishes to encourage individuals to live a healthy life. While ensuring that the company is succeeding in the long run, that's how it plays its part for a much better and healthy future


New Songdo City Chinese Version's vision is to offer its clients with food that is healthy, high in quality and safe to eat. It wishes to be ingenious and all at once comprehend the requirements and requirements of its consumers. Its vision is to grow fast and offer products that would satisfy the needs of each age. New Songdo City Chinese Version pictures to develop a trained labor force which would help the company to grow


New Songdo City Chinese Version's mission is that as presently, it is the leading company in the food market, it believes in 'Great Food, Great Life". Its objective is to offer its customers with a variety of options that are healthy and finest in taste also. It is concentrated on providing the best food to its customers throughout the day and night.


New Songdo City Chinese Version has a large variety of items that it uses to its clients. In 2011, Business was noted as the most rewarding organization.

Goals and Objectives

• Keeping in mind the vision and objective of the corporation, the business has actually laid down its goals and objectives. These objectives and objectives are noted below.
• One goal of the company is to reach no garbage dump status. It is working toward no waste, where no waste of the factory is landfilled. It motivates its employees to take the most out of the by-products. (Business, aboutus, 2017).
• Another goal of New Songdo City Chinese Version is to lose minimum food throughout production. Frequently, the food produced is squandered even before it reaches the consumers.
• Another thing that Business is working on is to enhance its packaging in such a method that it would help it to minimize the above-mentioned problems and would likewise ensure the shipment of high quality of its products to its customers.
• Meet global requirements of the environment.
• Develop a relationship based upon trust with its consumers, business partners, workers, and government.

Critical Issues

Just Recently, Business Company is focusing more towards the method of NHW and investing more of its profits on the R&D technology. 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 Exhibit H. There is a requirement to focus more on the sales then the development technology. Otherwise, it may lead to the declined earnings rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business method is based on the principle of Nutritious, Health and Wellness (NHW). This technique handles the concept to bringing change in the customer choices about food and making the food stuff healthier concerning about the health concerns.
The vision of this strategy is based on the secret approach i.e. 60/40+ which just implies that the items will have a rating of 60% on the basis of taste and 40% is based on its dietary worth. The products will be manufactured with additional nutritional worth in contrast to all other products in market acquiring it a plus on its nutritional material.
This method was adopted to bring more delicious plus nutritious foods and drinks in market than ever. In competition with other business, with an intention of maintaining its trust over consumers as Business Company has acquired more relied on by costumers.

Quantitative Analysis.

R&D Costs as a percentage of sales are decreasing with increasing real amount of spending shows that the sales are increasing at a greater rate than its R&D spending, and permit the company to more invest in R&D.
Net Earnings Margin is increasing while R&D as a portion of sales is decreasing. This indicator also shows a thumbs-up to the R&D costs, mergers and acquisitions.
Financial obligation ratio of the company is increasing due to its spending on mergers, acquisitions and R&D advancement instead of payment of debts. This increasing financial obligation ratio pose a hazard of default of Business to its financiers and might lead a decreasing share costs. For that reason, in regards to increasing debt ratio, the firm needs to not spend much on R&D and should pay its present financial obligations to decrease the danger for investors.
The increasing risk of financiers with increasing financial obligation ratio and decreasing share prices can be observed by big decline of EPS of New Songdo City Chinese Version stocks.
The sales growth of company is likewise low as compare to its mergers and acquisitions due to slow understanding structure of consumers. This sluggish growth likewise hinder business to further spend on its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of calculations and Graphs given up the Exhibitions D and E.

TWOS Analysis

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

Strategies to exploit Opportunities using Strengths

Business should introduce more ingenious products by big quantity of R&D Spending and mergers and acquisitions. It might increase the market share of Business and increase the profit margins for the business. It could likewise supply Business a long term competitive benefit over its rivals.
The international expansion of Business must be focused on market capturing of developing countries by expansion, bring in more consumers through client's loyalty. As establishing nations are more populous than industrialized nations, it could increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisNew Songdo City Chinese Version needs to do mindful acquisition and merger of organizations, as it might affect the consumer's and society's perceptions about Business. It must obtain and combine with those companies which have a market reputation of healthy and healthy companies. It would enhance the understandings of customers about Business.
Business needs to not just spend its R&D on innovation, rather than it should also concentrate on the R&D spending over assessment of cost of various healthy products. This would increase cost effectiveness of its items, which will result in increasing its sales, due to declining costs, and margins.

Strategies to use strengths to overcome threats

Business needs to move to not only developing however also to industrialized countries. It ought to broadens its geographical expansion. This wide geographical growth towards developing and developed countries would reduce the danger of potential losses in times of instability in numerous countries. It should expand its circle to numerous nations like Unilever which runs in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

It must get and merge with those nations having a goodwill of being a healthy company in the market. It would also enable the company to utilize its prospective resources efficiently on its other operations rather than acquisitions of those companies slowing the NHW method growth.

Segmentation Analysis

Demographic Segmentation

The market segmentation of Business is based upon four factors; age, gender, income and profession. Business produces a number of items related to children i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary products. New Songdo City Chinese Version products are rather budget friendly by practically all levels, but its significant targeted customers, in regards to earnings level are middle and upper middle level clients.

Geographical Segmentation

Geographical segmentation of Business is made up of its existence in practically 86 countries. Its geographical segmentation is based upon 2 primary aspects i.e. average earnings level of the consumer along with the climate of the area. Singapore Business Business's segmentation is done on the basis of the weather of the region i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic segmentation of Business is based upon the character and life style of the client. Business 3 in 1 Coffee target those consumers whose life style is quite hectic and do not have much time.

Behavioral Segmentation

New Songdo City Chinese Version behavioral division is based upon the mindset understanding and awareness of the client. Its extremely nutritious products target those clients who have a health mindful attitude towards their consumptions.

New Songdo City Chinese Version Alternatives

In order to sustain the brand name in the market and keep the consumer undamaged with the brand name, there are two alternatives:
Alternative: 1
The Company should spend more on acquisitions than on the R&D.
1. Acquisitions would increase overall assets of the business, increasing the wealth of the business. However, costs on R&D would be sunk expense.
2. The business can resell the gotten units in the market, if it stops working to execute its method. Amount spend on the R&D could not be revived, and it will be considered completely sunk cost, if it do not give possible results.
3. Spending on R&D provide sluggish growth in sales, as it takes very long time to introduce an item. Acquisitions provide quick results, as it supply the company currently developed product, which can be marketed soon after the acquisition.
1. Acquisition of company's which do not fit with the business's worths like Kraftz foods can lead the company to face misconception of customers about Business core values of healthy and healthy items.
2 Big spending on acquisitions than R&D would send out a signal of business's inefficiency of establishing innovative items, and would outcomes in customer's frustration.
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 company not able to present new ingenious products.
Option: 2.
The Company needs to spend more on its R&D rather than acquisitions.
1. It would allow the company to produce more innovative products.
2. It would supply the business a strong competitive position in the market.
3. It would allow the business to increase its targeted consumers by presenting those products which can be offered to a totally new market segment.
4. Innovative items will provide long term advantages and high market share in long run.
1. It would decrease the revenue margins of the business.
2. In case of failure, the entire spending on R&D would be thought about as sunk cost, and would impact the company at large. The danger is not in the case of acquisitions.
3. It would not increase the wealth of business, which might 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 enable the company to introduce brand-new ingenious items with less danger of transforming the spending on R&D into sunk expense.
2. It would supply a positive signal to the financiers, as the total properties of the company would increase with its considerable 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 provide the business a strong long term market position in regards to the business's general wealth as well as in terms of ingenious products.
1. Threat of conversion of R&D costs into sunk cost, higher than alternative 1 lesser than alternative 2.
2. Threat of misconception about the acquisitions, higher than alternative 2 and lesser than alternative 1.
3. Intro of less variety of innovative products than alternative 2 and high variety of ingenious products than alternative 1.

New Songdo City Chinese Version Conclusion

RecommendationsBusiness has actually remained the leading market gamer for more than a decade. It has institutionalised its techniques and culture to align itself with the marketplace changes and client behavior, which has actually ultimately enabled it to sustain its market share. Business has actually developed significant market share and brand name identity in the metropolitan markets, it is suggested that the business must focus on the rural areas in terms of developing brand name commitment, awareness, and equity, such can be done by developing a specific brand name allocation method through trade marketing tactics, that draw clear distinction between New Songdo City Chinese Version products and other rival products. New Songdo City Chinese Version must 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 business to develop brand equity for recently presented and already produced products on a greater platform, making the effective use of resources and brand image in the market.

New Songdo City Chinese Version Exhibits

PESTEL Analysis
Governmental support

Altering requirements of international food.
Enhanced market share. Transforming understanding in the direction of healthier products Improvements in R&D and QA departments.

Introduction of E-marketing.
No such impact as it is favourable. Issues over recycling.

Use of sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest possible considering that 8000 Highest possible after Business with less development than Business 7th Most affordable
R&D Spending Greatest considering that 2006 Greatest after Service 9th Least expensive
Net Profit Margin Greatest because 2008 with rapid growth from 2009 to 2014 As a result of sale of Alcon in 2019. Practically equal to Kraft Foods Consolidation Virtually equal to Unilever N/A
Competitive Advantage Food with Nutrition as well as wellness variable Highest possible number of brands with sustainable practices Biggest confectionary as well as refined foods brand name in the world Biggest milk items as well as bottled water brand on the planet
Segmentation Center and top middle level customers worldwide Private consumers together with house team All age and also Income Consumer Groups Middle as well as top middle degree consumers worldwide
Number of Brands 5th 3rd 1st 7th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 29799 551659 169597 281514 767993
Net Profit Margin 9.59% 9.65% 62.82% 2.61% 86.47%
EPS (Earning Per Share) 73.51 9.33 3.77 7.22 56.48
Total Asset 296425 353296 655644 494499 29587
Total Debt 19314 98953 96466 45897 65149
Debt Ratio 64% 51% 82% 76% 16%
R&D Spending 9674 1845 7299 2175 1653
R&D Spending as % of Sales 8.49% 9.97% 2.14% 8.48% 2.24%

Executive Summary Swot Analysis Vrio Analysis Pestel Analysis
Porters Analysis Recommendations