Red Star Furniture Group Co Ltd Case Study Analysis

Red Star Furniture Group Co Ltd is presently one of the biggest food cycle worldwide. It was founded by Harvard in 1866, a German Pharmacist who initially released "FarineLactee"; a mix of flour and milk to feed infants and decrease death rate. At the very same time, the Page siblings from Switzerland likewise found The Anglo-Swiss Condensed Milk Business. The 2 ended up being rivals initially however later merged in 1905, resulting in the birth of Red Star Furniture Group Co Ltd.
Business is now a global business. Unlike other multinational companies, it has senior executives from various countries and attempts to make decisions thinking about the whole world. Red Star Furniture Group Co Ltd currently has more than 500 factories around the world and a network spread across 86 nations.

Purpose

The purpose of Red Star Furniture Group Co Ltd Corporation is to enhance 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 also wants to motivate 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 better and healthy future

Vision

Red Star Furniture Group Co Ltd's vision is to provide its customers with food that is healthy, high in quality and safe to consume. It wishes to be ingenious and concurrently comprehend the needs and requirements of its consumers. Its vision is to grow quickly and offer items that would satisfy the requirements of each age group. Red Star Furniture Group Co Ltd imagines to establish a well-trained labor force which would help the company to grow
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Mission

Red Star Furniture Group Co Ltd's objective is that as presently, it is the leading business in the food market, it believes in 'Good Food, Good Life". Its mission is to supply its customers with a range of choices that are healthy and best in taste. It is concentrated on offering the very best food to its consumers throughout the day and night.

Products.

Business has a wide range of items that it provides to its customers. Its items include food for infants, cereals, dairy products, treats, chocolates, food for family pet and mineral water. It has around four hundred and fifty (450) factories around the world and around 328,000 workers. In 2011, Business was listed as the most rewarding organization.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the business has put down its objectives and goals. These objectives and objectives are listed below.
• One goal of the business is to reach no landfill status. It is pursuing no waste, where no waste of the factory is landfilled. It encourages its staff members to take the most out of the by-products. (Business, aboutus, 2017).
• Another goal of Red Star Furniture Group Co Ltd is to lose minimum food during production. Frequently, the food produced is squandered even before it reaches the customers.
• Another thing that Business is dealing with is to improve its packaging in such a way that it would help it to reduce the above-mentioned problems and would also guarantee the shipment of high quality of its items to its consumers.
• Meet global standards of the environment.
• Develop a relationship based upon trust with its consumers, company partners, workers, and federal government.

Critical Issues

Just Recently, Business Company is focusing more towards the strategy of NHW and investing more of its revenues on the R&D innovation. The country is investing more on acquisitions and mergers to support its NHW technique. The target of the company 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 strategy is based upon the idea of Nutritious, Health and Wellness (NHW). This method handles the concept to bringing modification in the customer preferences about food and making the food stuff healthier worrying about the health problems.
The vision of this technique is based on the secret method i.e. 60/40+ which merely means that the products will have a score of 60% on the basis of taste and 40% is based on its dietary value. The items will be produced with additional dietary value in contrast to all other products in market acquiring it a plus on its dietary material.
This strategy was adopted to bring more tasty plus healthy foods and drinks in market than ever. In competitors with other companies, with an intent of keeping its trust over customers as Business Business has acquired more trusted by costumers.

Quantitative Analysis.

R&D Costs as a portion of sales are decreasing with increasing actual quantity of costs reveals that the sales are increasing at a higher rate than its R&D costs, and allow the company to more invest in R&D.
Net Profit Margin is increasing while R&D as a percentage of sales is declining. This indicator also reveals a thumbs-up to the R&D costs, mergers and acquisitions.
Debt ratio of the company is increasing due to its spending 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 declining share prices. In terms of increasing debt ratio, the company ought to not spend much on R&D and ought to pay its current financial obligations to decrease the danger for investors.
The increasing danger of financiers with increasing debt ratio and declining share prices can be observed by huge decrease of EPS of Red Star Furniture Group Co Ltd stocks.
The sales development of business is likewise low as compare to its mergers and acquisitions due to slow perception structure of consumers. This slow growth likewise impede company to additional 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 Graphs given up the Exhibits D and E.

TWOS Analysis

2 analysis can be utilized to obtain different strategies based upon the SWOT Analysis given above. A quick summary of TWOS Analysis is given in Exhibition H.

Strategies to exploit Opportunities using Strengths

Business ought to present more ingenious products by big quantity of R&D Spending and mergers and acquisitions. It could increase the market share of Business and increase the profit margins for the business. It might also offer Business a long term competitive benefit over its competitors.
The global expansion of Business need to be focused on market recording of establishing countries by growth, drawing in more customers through client's commitment. As establishing countries are more populous than developed nations, it might increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Red Star Furniture Group Co Ltd should do cautious acquisition and merger of companies, as it might affect the client's and society's understandings about Business. It must get and merge with those companies which have a market credibility of healthy and nutritious business. It would improve the understandings of consumers about Business.
Business must not just spend its R&D on innovation, rather than it needs to also focus on the R&D costs over assessment of expense of numerous nutritious items. This would increase expense performance of its items, which will result in increasing its sales, due to declining prices, and margins.

Strategies to use strengths to overcome threats

Business must move to not just developing but likewise to developed nations. It needs to expand its circle to different countries like Unilever which runs in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

It should obtain and merge with those countries having a goodwill of being a healthy company in the market. It would also make it possible for the company to use its possible resources efficiently on its other operations rather than acquisitions of those organizations slowing the NHW method growth.

Segmentation Analysis

Demographic Segmentation

The demographic segmentation of Business is based on 4 aspects; age, gender, income and profession. For instance, Business produces several products related to babies i.e. Cerelac, Nido, and so on and associated to grownups i.e. confectionary items. Red Star Furniture Group Co Ltd products are quite budget friendly by almost all levels, however its significant targeted customers, in regards to income level are middle and upper middle level consumers.

Geographical Segmentation

Geographical segmentation of Business is composed of its existence in almost 86 countries. Its geographical segmentation is based upon 2 main elements i.e. average earnings level of the consumer along with the environment of the region. Singapore Business Business's segmentation is done on the basis of the weather condition of the area i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic division of Business is based upon the character and lifestyle of the consumer. For instance, Business 3 in 1 Coffee target those clients whose life style is rather hectic and do not have much time.

Behavioral Segmentation

Red Star Furniture Group Co Ltd behavioral segmentation is based upon the mindset understanding and awareness of the customer. For instance its extremely nutritious items target those consumers who have a health mindful mindset towards their intakes.

Red Star Furniture Group Co Ltd Alternatives

In order to sustain the brand name in the market and keep the consumer undamaged with the brand, there are 2 alternatives:
Alternative: 1
The Business should invest more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase total possessions of the company, increasing the wealth of the business. Costs on R&D would be sunk cost.
2. The business can resell the acquired systems in the market, if it stops working to execute its technique. Nevertheless, amount invest in the R&D could not be revived, and it will be thought about completely sunk expense, if it do not offer prospective outcomes.
3. Spending on R&D supply sluggish development in sales, as it takes long period of time to present an item. Acquisitions provide fast results, as it provide the business already developed item, which can be marketed soon after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the business's values like Kraftz foods can lead the business to face mistaken belief of customers about Business core values of healthy and nutritious products.
2 Big spending on acquisitions than R&D would send a signal of company's ineffectiveness of establishing ingenious products, and would results in consumer's dissatisfaction as well.
3. Big acquisitions than R&D would extend the line of product of the company by the products which are already present in the market, making business not able to introduce new ingenious products.
Option: 2.
The Company needs to spend more on its R&D instead of acquisitions.
Pros:
1. It would enable the company to produce more innovative items.
2. It would offer the company a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted consumers by introducing those products which can be provided to a totally new market sector.
4. Innovative products will offer long term benefits and high market share in long run.
Cons:
1. It would decrease the profit margins of the business.
2. In case of failure, the entire costs on R&D would be considered as sunk expense, and would impact the business at big. The danger is not in the case of acquisitions.
3. It would not increase the wealth of business, which could provide an unfavorable signal to the financiers, and could result I declining stock rates.
Alternative 3:
Continue its acquisitions and mergers with considerable spending on in R&D Program.
Pros:
1. It would allow the business to present brand-new innovative items with less threat of converting the spending on R&D into sunk cost.
2. It would offer a favorable signal to the financiers, as the total properties of the company would increase with its substantial R&D costs.
3. It would not impact the profit margins of the company at a big rate as compare to alternative 2.
4. It would provide the company a strong long term market position in regards to the business's general wealth in addition to in regards to ingenious products.
Cons:
1. Risk of conversion of R&D spending into sunk cost, higher than option 1 lesser than alternative 2.
2. Threat 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 number of innovative products than alternative 1.

Red Star Furniture Group Co Ltd Conclusion

It has institutionalized its strategies and culture to align itself with the market changes and client habits, which has actually ultimately permitted it to sustain its market share. Business has established significant market share and brand identity in the urban markets, it is suggested that the company ought to focus on the rural areas in terms of developing brand name commitment, awareness, and equity, such can be done by developing a specific brand allowance technique through trade marketing tactics, that draw clear difference between Red Star Furniture Group Co Ltd items and other rival items.

Red Star Furniture Group Co Ltd Exhibits