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A Costly Train Journey B Case Study Solution

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A Costly Train Journey B Case Study Solution

A Costly Train Journey B is presently among the greatest food cycle worldwide. It was established by Ivey in 1866, a German Pharmacist who first introduced "FarineLactee"; a combination of flour and milk to feed babies and decrease death rate. At the very same time, the Page brothers from Switzerland likewise found The Anglo-Swiss Condensed Milk Company. The two ended up being rivals at first but later combined in 1905, leading to the birth of A Costly Train Journey B.
Business is now a multinational company. Unlike other international business, it has senior executives from various nations and attempts to make decisions thinking about the whole world. A Costly Train Journey B presently has more than 500 factories around the world and a network spread throughout 86 nations.

Purpose

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

Vision

A Costly Train Journey B'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 understand the needs and requirements of its customers. Its vision is to grow quick and offer items that would satisfy the needs of each age group. A Costly Train Journey B imagines to establish a trained labor force which would help the company to grow
.

Mission

A Costly Train Journey B's objective is that as presently, it is the leading business in the food market, it thinks in 'Excellent Food, Good Life". Its objective is to provide its customers with a variety of choices that are healthy and finest in taste. It is concentrated on offering the very best food to its consumers throughout the day and night.

Products.

Business has a vast array of products that it provides to its customers. Its products consist of food for babies, cereals, dairy items, treats, chocolates, food for pet and bottled water. It has around four hundred and fifty (450) factories around the globe and around 328,000 staff members. In 2011, Business was noted as the most rewarding company.

Goals and Objectives

• Remembering the vision and mission of the corporation, the business has actually put down its goals and objectives. These goals and objectives are listed below.
• One goal of the company is to reach zero land fill status. (Business, aboutus, 2017).
• Another objective of A Costly Train Journey B is to lose minimum food during production. Frequently, the food produced is squandered even before it reaches the consumers.
• Another thing that Business is dealing with is to enhance its product packaging in such a method that it would help it to decrease the above-mentioned problems and would likewise guarantee the delivery of high quality of its items to its clients.
• Meet international standards of the environment.
• Build a relationship based upon trust with its consumers, business partners, staff members, and government.

Critical Issues

Just Recently, Business Company is focusing more towards the strategy 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 strategy. Nevertheless, the target of the company is not achieved as the sales were expected to grow greater at the rate of 10% annually and the operating margins to increase by 20%, given up Exhibit H. There is a need to focus more on the sales then the innovation technology. Otherwise, it may lead to the decreased profits rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The current Business technique is based upon the idea of Nutritious, Health and Wellness (NHW). This technique deals with the idea to bringing change in the client choices about food and making the food stuff much healthier worrying about the health problems.
The vision of this technique is based on the key technique i.e. 60/40+ which just suggests that the items will have a rating of 60% on the basis of taste and 40% is based on its nutritional worth. The products will be manufactured with additional dietary worth in contrast to all other items in market gaining it a plus on its dietary material.
This strategy was embraced to bring more yummy plus nutritious foods and beverages in market than ever. In competitors with other companies, with an intent of keeping its trust over customers as Business Business has actually gotten more trusted by costumers.

Quantitative Analysis.

R&D Costs as a percentage of sales are decreasing with increasing real quantity of costs reveals that the sales are increasing at a higher rate than its R&D costs, and allow the business to more invest in R&D.
Net Profit Margin is increasing while R&D as a percentage of sales is declining. This indicator likewise 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 development instead of payment of financial obligations. This increasing financial obligation ratio present 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 invest much on R&D and must pay its present financial obligations to reduce the risk for investors.
The increasing danger of investors with increasing financial obligation ratio and decreasing share costs can be observed by substantial decline of EPS of A Costly Train Journey B stocks.
The sales growth of business is likewise low as compare to its mergers and acquisitions due to slow perception structure of consumers. This sluggish growth also hinder 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 different strategies based on the SWOT Analysis provided above. A brief summary of TWOS Analysis is given up Exhibit H.

Strategies to exploit Opportunities using Strengths

Business must introduce more innovative products by big amount of R&D Costs and mergers and acquisitions. It might increase the market share of Business and increase the earnings margins for the company. It could likewise offer Business a long term competitive advantage over its rivals.
The global expansion of Business should be concentrated on market capturing of establishing countries by growth, bring in more consumers through consumer's loyalty. As establishing nations are more populous than developed countries, it could increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisA Costly Train Journey B needs to do cautious acquisition and merger of organizations, as it might impact the consumer's and society's perceptions about Business. It ought to acquire and merge with those companies which have a market credibility of healthy and healthy companies. It would improve the understandings of consumers about Business.
Business should not only invest its R&D on development, rather than it should likewise concentrate on the R&D costs over assessment of expense of different healthy products. This would increase expense effectiveness of its products, which will result in increasing its sales, due to declining costs, and margins.

Strategies to use strengths to overcome threats

Business should move to not just establishing however also to developed nations. It should expands its geographical expansion. This wide geographical growth towards developing and established countries would reduce the danger of possible losses in times of instability in numerous nations. It must broaden its circle to different nations like Unilever which runs in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

It must get and combine with those nations having a goodwill of being a healthy business in the market. It would likewise allow the business to use its possible resources effectively on its other operations rather than acquisitions of those companies slowing the NHW strategy development.

Segmentation Analysis

Demographic Segmentation

The demographic division of Business is based on four elements; age, gender, earnings and profession. Business produces numerous items related to infants i.e. Cerelac, Nido, etc. and associated to adults i.e. confectionary items. A Costly Train Journey B items are rather budget friendly by nearly all levels, however its significant targeted clients, in regards to income level are middle and upper middle level clients.

Geographical Segmentation

Geographical division of Business is composed of its existence in nearly 86 nations. Its geographical segmentation is based upon 2 main factors i.e. average income level of the consumer along with the environment of the area. For example, Singapore Business Company's division 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 personality and lifestyle of the client. Business 3 in 1 Coffee target those clients whose life design is quite busy and don't have much time.

Behavioral Segmentation

A Costly Train Journey B behavioral division is based upon the mindset knowledge and awareness of the customer. For example its extremely healthy products target those clients who have a health conscious attitude towards their intakes.

A Costly Train Journey B Alternatives

In order to sustain the brand in the market and keep the consumer undamaged with the brand name, there are 2 alternatives:
Option: 1
The Company should invest more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase total possessions of the business, increasing the wealth of the business. However, costs on R&D would be sunk cost.
2. The business can resell the acquired units in the market, if it stops working to execute its strategy. Amount spend on the R&D might not be revived, and it will be thought about completely sunk expense, if it do not provide prospective results.
3. Investing in R&D provide sluggish growth in sales, as it takes long time to introduce an item. However, acquisitions supply quick outcomes, as it provide the business already established item, which can be marketed right after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the business's worths like Kraftz foods can lead the company to face misunderstanding of customers about Business core values of healthy and nutritious products.
2 Big spending on acquisitions than R&D would send out a signal of company's inadequacy of establishing innovative products, and would results in consumer's dissatisfaction too.
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 business not able to introduce brand-new innovative items.
Alternative: 2.
The Company ought to invest more on its R&D instead of acquisitions.
Pros:
1. It would make it possible for the business to produce more innovative items.
2. It would provide 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 items which can be used to an entirely new market segment.
4. Innovative items will provide long term benefits and high market share in long term.
Cons:
1. It would reduce the earnings margins of the company.
2. In case of failure, the whole costs on R&D would be considered as sunk cost, and would affect the business at big. The threat is not in the case of acquisitions.
3. It would not increase the wealth of business, which could supply a negative signal to the investors, and might result I declining stock prices.
Alternative 3:
Continue its acquisitions and mergers with substantial spending on in R&D Program.
Vrio AnalysisPros:
1. It would allow the company to present new innovative products with less risk of transforming the spending on R&D into sunk cost.
2. It would provide a positive signal to the financiers, as the total possessions of the business would increase with its considerable 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 supply the business a strong long term market position in terms of the company's overall wealth in addition to in terms of ingenious items.
Cons:
1. Risk of conversion of R&D costs into sunk cost, higher than option 1 lesser than alternative 2.
2. Threat of misconception about the acquisitions, greater than alternative 2 and lower than alternative 1.
3. Introduction of less number of innovative products than alternative 2 and high number of innovative items than alternative 1.

A Costly Train Journey B Conclusion

RecommendationsIt has institutionalised its techniques and culture to align itself with the market changes and consumer behavior, 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 must focus on the rural areas in terms of establishing brand loyalty, awareness, and equity, such can be done by creating a particular brand allocation technique through trade marketing techniques, that draw clear distinction in between A Costly Train Journey B products and other competitor items.

A Costly Train Journey B Exhibits

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

Changing criteria of international food.
Enhanced market share.
Changing understanding towards healthier products
Improvements in R&D and also QA divisions.

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

Use sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest possible considering that 9000
Highest after Organisation with less development than Service 9th Least expensive
R&D Spending Highest possible given that 2004 Highest after Business 2nd Most affordable
Net Profit Margin Highest since 2008 with rapid growth from 2009 to 2016 As a result of sale of Alcon in 2016. Nearly equal to Kraft Foods Consolidation Practically equal to Unilever N/A
Competitive Advantage Food with Nourishment as well as health element Highest number of brand names with sustainable practices Largest confectionary and processed foods brand name in the world Biggest milk items as well as bottled water brand on the planet
Segmentation Middle and also upper middle degree customers worldwide Individual customers along with home team Any age and Revenue Consumer Groups Middle as well as upper center degree consumers worldwide
Number of Brands 9th 4th 9th 3rd

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 31381 424766 256463 396829 734973
Net Profit Margin 8.54% 9.42% 94.87% 7.14% 53.59%
EPS (Earning Per Share) 43.69 4.16 4.65 2.51 75.16
Total Asset 978176 145523 521211 547989 85268
Total Debt 87479 26412 79753 74796 66821
Debt Ratio 76% 75% 19% 44% 87%
R&D Spending 5644 8763 4663 1384 1838
R&D Spending as % of Sales 3.88% 7.75% 2.96% 6.78% 9.64%

A Costly Train Journey B Executive Summary A Costly Train Journey B Swot Analysis A Costly Train Journey B Vrio Analysis A Costly Train Journey B Pestel Analysis
A Costly Train Journey B Porters Analysis A Costly Train Journey B Recommendations