Lundberg Systems 3 Vignettes Case Study Solution

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Lundberg Systems 3 Vignettes Case Study Analysis

Business is presently one of the most significant food chains worldwide. It was founded by Henri Lundberg Systems 3 Vignettes in 1866, a German Pharmacist who first launched "FarineLactee"; a mix of flour and milk to feed babies and decrease death rate.
Business is now a global business. Unlike other multinational companies, it has senior executives from different nations and attempts to make choices considering the whole world. Lundberg Systems 3 Vignettes currently has more than 500 factories worldwide and a network spread throughout 86 countries.


The function of Lundberg Systems 3 Vignettes Corporation is to improve the lifestyle of individuals by playing its part and offering healthy food. It wants to help the world in forming a healthy and much better future for it. It likewise wants to encourage people 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


Lundberg Systems 3 Vignettes's vision is to offer its clients with food that is healthy, high in quality and safe to eat. It wants to be ingenious and at the same time comprehend the requirements and requirements of its consumers. Its vision is to grow quick and supply products that would satisfy the needs of each age. Lundberg Systems 3 Vignettes pictures to establish a well-trained workforce which would help the company to grow


Lundberg Systems 3 Vignettes's mission is that as currently, it is the leading company in the food market, it thinks in 'Excellent Food, Great Life". Its objective is to provide its consumers with a range of options that are healthy and best in taste as well. It is concentrated on supplying the very best food to its clients throughout the day and night.


Lundberg Systems 3 Vignettes has a large range of items that it uses to its clients. In 2011, Business was listed 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 business is to reach absolutely no landfill status. (Business, aboutus, 2017).
• Another objective of Lundberg Systems 3 Vignettes is to waste minimum food throughout production. Usually, 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 method that it would help it to reduce those issues and would likewise guarantee the delivery of high quality of its items to its customers.
• Meet international standards of the environment.
• Build a relationship based upon trust with its customers, organisation partners, workers, and federal government.

Critical Issues

Recently, Business Business is focusing more towards the method of NHW and investing more of its profits on the R&D innovation. The nation is investing more on acquisitions and mergers to support its NHW technique. The target of the business is not attained 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.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The existing Business method is based upon the concept of Nutritious, Health and Health (NHW). This method handles the concept to bringing change in the client preferences about food and making the food stuff much healthier concerning about the health concerns.
The vision of this method is based on the secret technique 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 upon its dietary worth. The products will be made with additional nutritional value in contrast to all other products in market acquiring it a plus on its dietary material.
This technique was adopted to bring more yummy plus healthy foods and beverages in market than ever. In competitors with other business, with an intent of keeping its trust over clients as Business Company has gained more relied on by costumers.

Quantitative Analysis.

R&D Spending as a percentage of sales are decreasing with increasing actual quantity of spending reveals that the sales are increasing at a higher rate than its R&D spending, and enable the company to more spend on R&D.
Net Earnings Margin is increasing while R&D as a portion of sales is declining. This indication likewise shows a thumbs-up 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 financial obligations. This increasing financial obligation ratio posture a hazard of default of Business to its financiers and could lead a declining share costs. Therefore, in terms of increasing financial obligation ratio, the company should not spend much on R&D and should pay its present debts to reduce the threat for investors.
The increasing risk of investors with increasing financial obligation ratio and decreasing share rates can be observed by big decline of EPS of Lundberg Systems 3 Vignettes stocks.
The sales development of company is also low as compare to its mergers and acquisitions due to slow perception structure of customers. This sluggish development likewise impede business to further invest in its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of calculations and Charts given up the Displays D and E.

TWOS Analysis

TWOS analysis can be used to derive various strategies based on the SWOT Analysis offered above. A brief summary of TWOS Analysis is given up Exhibition H.

Strategies to exploit Opportunities using Strengths

Business should introduce more innovative items by large quantity of R&D Spending and mergers and acquisitions. It might increase the marketplace share of Business and increase the earnings margins for the company. It might likewise provide Business a long term competitive benefit over its rivals.
The international expansion of Business ought to be concentrated on market catching of establishing nations by expansion, drawing in more consumers through customer's commitment. As establishing countries are more populated than industrialized countries, it could increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisLundberg Systems 3 Vignettes should do cautious acquisition and merger of companies, as it could impact the customer's and society's perceptions about Business. It should get and combine with those companies which have a market track record of healthy and nutritious business. It would enhance the understandings of consumers about Business.
Business should not only invest its R&D on innovation, instead of it ought to likewise concentrate on the R&D spending over assessment of expense of different nutritious products. This would increase expense performance of its items, which will result in increasing its sales, due to decreasing rates, and margins.

Strategies to use strengths to overcome threats

Business should move to not just developing but likewise to developed countries. It must expands its geographical expansion. This large geographical growth towards establishing and developed countries would reduce the risk of potential losses in times of instability in various countries. It ought to broaden its circle to different countries like Unilever which operates in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

It ought to get and combine with those countries having a goodwill of being a healthy company in the market. It would likewise allow the company to utilize its potential resources efficiently on its other operations rather than acquisitions of those companies slowing the NHW method development.

Segmentation Analysis

Demographic Segmentation

The demographic division of Business is based upon four factors; age, gender, income and profession. For instance, Business produces a number of items connected to children i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary items. Lundberg Systems 3 Vignettes items are rather inexpensive by practically all levels, however its major targeted customers, in terms of earnings level are middle and upper middle level clients.

Geographical Segmentation

Geographical division of Business is made up of its presence in nearly 86 nations. Its geographical division is based upon 2 main aspects i.e. average income level of the customer as well as the climate of the region. For example, Singapore Business Company's division 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 life style of the customer. Business 3 in 1 Coffee target those customers whose life design is quite busy and do not have much time.

Behavioral Segmentation

Lundberg Systems 3 Vignettes behavioral segmentation is based upon the mindset understanding and awareness of the client. Its highly healthy items target those customers who have a health mindful attitude towards their consumptions.

Lundberg Systems 3 Vignettes Alternatives

In order to sustain the brand in the market and keep the client undamaged with the brand, there are two choices:
Alternative: 1
The Business ought to invest more on acquisitions than on the R&D.
1. Acquisitions would increase total properties of the business, increasing the wealth of the business. Nevertheless, spending on R&D would be sunk expense.
2. The business can resell the gotten systems in the market, if it stops working to execute its method. Quantity spend on the R&D could not be revived, and it will be considered entirely sunk expense, if it do not provide possible results.
3. Investing in R&D provide slow development in sales, as it takes long time to introduce a product. Nevertheless, acquisitions supply fast outcomes, as it supply the company already developed item, which can be marketed soon after the acquisition.
1. Acquisition of company's which do not fit with the company's worths like Kraftz foods can lead the company to deal with mistaken belief of customers about Business core worths of healthy and nutritious items.
2 Large costs on acquisitions than R&D would send out a signal of business's ineffectiveness of developing innovative products, and would lead to customer's discontentment too.
3. Big acquisitions than R&D would extend the product line of the company by the items which are currently present in the market, making company unable to present brand-new innovative products.
Alternative: 2.
The Company ought to invest more on its R&D instead of acquisitions.
1. It would allow the company to produce more innovative products.
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 customers by introducing those products which can be offered to a completely new market section.
4. Innovative items will supply long term benefits and high market share in long run.
1. It would decrease the earnings margins of the business.
2. In case of failure, the whole spending on R&D would be thought about as sunk cost, and would impact the business at big. The risk is not when it comes to acquisitions.
3. It would not increase the wealth of company, which might offer a negative signal to the investors, and could result I declining stock costs.
Alternative 3:
Continue its acquisitions and mergers with substantial spending on in R&D Program.
Vrio AnalysisPros:
1. It would enable the company to introduce new innovative products with less danger of converting the costs on R&D into sunk cost.
2. It would supply a favorable signal to the investors, as the general possessions of the company would increase with its significant 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 company's overall wealth along with in regards to innovative items.
1. Danger of conversion of R&D spending into sunk cost, higher than option 1 lower than alternative 2.
2. Threat of misunderstanding about the acquisitions, greater than alternative 2 and lesser than alternative 1.
3. Introduction of less number of innovative products than alternative 2 and high variety of ingenious items than alternative 1.

Lundberg Systems 3 Vignettes Conclusion

RecommendationsIt has actually institutionalized its methods and culture to align itself with the market changes and customer habits, which has actually eventually permitted it to sustain its market share. Business has actually established significant market share and brand name identity in the metropolitan markets, it is suggested that the company should focus on the rural locations in terms of developing brand commitment, awareness, and equity, such can be done by developing a particular brand allocation technique through trade marketing tactics, that draw clear difference in between Lundberg Systems 3 Vignettes items and other competitor products.

Lundberg Systems 3 Vignettes Exhibits

PESTEL Analysis
Governmental support

Transforming criteria of global food.
Improved market share. Altering perception in the direction of much healthier products Improvements in R&D and also QA departments.

Introduction of E-marketing.
No such influence as it is good. Problems over recycling.

Use sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest because 3000 Greatest after Business with much less development than Service 8th Lowest
R&D Spending Greatest given that 2005 Highest after Organisation 9th Least expensive
Net Profit Margin Highest possible considering that 2008 with fast growth from 2002 to 2016 Due to sale of Alcon in 2012. Nearly equal to Kraft Foods Incorporation Almost equal to Unilever N/A
Competitive Advantage Food with Nutrition and also health and wellness factor Greatest variety of brand names with sustainable practices Largest confectionary and refined foods brand worldwide Biggest dairy products as well as bottled water brand on the planet
Segmentation Center as well as upper center degree customers worldwide Specific clients along with household group Any age as well as Earnings Consumer Groups Center and upper middle level consumers worldwide
Number of Brands 9th 5th 1st 3rd

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 19224 856831 489519 579297 498158
Net Profit Margin 9.77% 3.68% 53.18% 8.28% 73.33%
EPS (Earning Per Share) 31.52 3.95 5.62 2.11 72.85
Total Asset 985338 946969 783332 648156 39251
Total Debt 39458 78821 96791 83234 73516
Debt Ratio 93% 91% 69% 81% 17%
R&D Spending 9323 2647 5188 9625 9335
R&D Spending as % of Sales 1.49% 8.45% 5.47% 6.79% 7.96%

Executive Summary Swot Analysis Vrio Analysis Pestel Analysis
Porters Analysis Recommendations