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The Jia Wu Expansion Case Study Analysis

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The Jia Wu Expansion Case Study Solution

The Jia Wu Expansion is currently among the most significant food chains worldwide. It was established by Ivey in 1866, a German Pharmacist who first launched "FarineLactee"; a combination of flour and milk to feed babies and decrease mortality rate. At the same time, the Page brothers from Switzerland also found The Anglo-Swiss Condensed Milk Company. The 2 ended up being rivals initially however in the future combined in 1905, leading to the birth of The Jia Wu Expansion.
Business is now a global business. Unlike other multinational business, it has senior executives from various countries and tries to make choices considering the whole world. The Jia Wu Expansion currently has more than 500 factories worldwide and a network spread throughout 86 nations.

Purpose

The function of The Jia Wu Expansion Corporation is to improve the lifestyle of individuals by playing its part and offering healthy food. It wants to help the world in shaping a healthy and much better future for it. It also wishes to encourage individuals to live a healthy life. While making sure that the business is succeeding in the long run, that's how it plays its part for a much better and healthy future

Vision

The Jia Wu Expansion's vision is to supply its consumers with food that is healthy, high in quality and safe to consume. Business pictures to develop a trained labor force which would help the business to grow
.

Mission

The Jia Wu Expansion's objective is that as currently, it is the leading business in the food industry, it believes in 'Great Food, Great Life". Its objective is to offer its consumers with a range of choices that are healthy and finest in taste as well. It is focused on supplying the best food to its clients throughout the day and night.

Products.

The Jia Wu Expansion has a broad variety of items that it offers to its customers. In 2011, Business was noted as the most gainful organization.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the company has laid down its goals and objectives. These goals and objectives are noted below.
• One goal of the company is to reach zero land fill status. (Business, aboutus, 2017).
• Another objective of The Jia Wu Expansion is to waste minimum food during production. Usually, the food produced is lost even before it reaches the consumers.
• Another thing that Business is dealing with is to improve its packaging in such a way that it would help it to reduce those complications and would likewise guarantee the shipment of high quality of its products to its customers.
• Meet global requirements of the environment.
• Build a relationship based on trust with its consumers, organisation partners, employees, and government.

Critical Issues

Recently, Business Company is focusing more towards the method of NHW and investing more of its profits on the R&D innovation. The country is investing more on acquisitions and mergers to support its NHW method. 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%, given in Exhibit H. There is a requirement to focus more on the sales then the innovation technology. Otherwise, it might result in the decreased earnings rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The existing Business technique is based upon the idea of Nutritious, Health and Health (NHW). This strategy deals with the idea to bringing change in the customer choices about food and making the food stuff healthier concerning about the health issues.
The vision of this technique is based on the secret approach i.e. 60/40+ which just means that the items will have a rating of 60% on the basis of taste and 40% is based on its nutritional value. The products will be made with additional dietary value in contrast to all other items in market gaining it a plus on its nutritional content.
This strategy was embraced to bring more tasty plus nutritious foods and drinks in market than ever. In competition with other business, with an intent of retaining its trust over consumers as Business Business has acquired more relied on by costumers.

Quantitative Analysis.

R&D Costs as a percentage of sales are declining with increasing actual amount of spending shows that the sales are increasing at a higher rate than its R&D costs, and permit the company to more invest in R&D.
Net Earnings Margin is increasing while R&D as a percentage of sales is decreasing. This indication also shows a thumbs-up to the R&D costs, 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 pose a risk of default of Business to its financiers and could lead a declining share costs. In terms of increasing debt ratio, the company ought to not spend much on R&D and must pay its current debts to decrease the risk for financiers.
The increasing danger of investors with increasing financial obligation ratio and decreasing share prices can be observed by huge decline of EPS of The Jia Wu Expansion stocks.
The sales development of business is also low as compare to its mergers and acquisitions due to slow perception structure of customers. This slow development also impede company 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 computations and Graphs given up the Exhibits D and E.

TWOS Analysis


2 analysis can be utilized to obtain different techniques based upon the SWOT Analysis given above. A short summary of TWOS Analysis is given up Exhibition H.

Strategies to exploit Opportunities using Strengths

Business ought to introduce more innovative items by big amount 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 could also supply Business a long term competitive advantage over its rivals.
The international growth of Business ought to be concentrated on market catching of developing countries by growth, bring in more customers through consumer's commitment. As establishing countries are more populated than developed countries, it might increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisThe Jia Wu Expansion needs to do careful acquisition and merger of organizations, as it might impact the client's and society's perceptions about Business. It should acquire and combine with those business which have a market reputation of healthy and nutritious business. It would enhance the understandings of customers about Business.
Business needs to not just spend its R&D on innovation, instead of it should also concentrate on the R&D costs over examination of cost of numerous nutritious products. This would increase cost performance of its items, 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 only developing however likewise to developed countries. It must expand its circle to numerous countries like Unilever which runs in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

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

Segmentation Analysis

Demographic Segmentation

The demographic division of Business is based upon 4 factors; age, gender, income and profession. For example, Business produces numerous items related to babies i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary items. The Jia Wu Expansion products are rather cost effective by almost all levels, however its significant targeted customers, in regards to earnings level are middle and upper middle level clients.

Geographical Segmentation

Geographical division of Business is composed of its presence in almost 86 countries. Its geographical division is based upon two primary 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 client. Business 3 in 1 Coffee target those clients whose life design is quite hectic and do not have much time.

Behavioral Segmentation

The Jia Wu Expansion behavioral division is based upon the attitude understanding and awareness of the customer. Its extremely nutritious products target those customers who have a health conscious mindset towards their consumptions.

The Jia Wu Expansion Alternatives

In order to sustain the brand in the market and keep the client undamaged with the brand name, there are two alternatives:
Alternative: 1
The Business needs to spend more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase overall possessions of the company, increasing the wealth of the company. However, costs on R&D would be sunk cost.
2. The business can resell the gotten systems in the market, if it stops working to implement its technique. Nevertheless, quantity invest in the R&D might not be revived, and it will be thought about entirely sunk cost, if it do not give prospective outcomes.
3. Investing in R&D supply slow development in sales, as it takes long period of time to introduce a product. Nevertheless, acquisitions provide fast results, as it offer the business currently established item, which can be marketed soon after the acquisition.
Cons:
1. Acquisition of business's which do not fit with the company's worths like Kraftz foods can lead the business to deal with misunderstanding of customers about Business core worths of healthy and healthy items.
2 Large costs on acquisitions than R&D would send a signal of company's inefficiency of developing ingenious products, and would results in consumer's discontentment.
3. Large acquisitions than R&D would extend the product line of the company by the items which are currently present in the market, making business unable to present new innovative products.
Alternative: 2.
The Company needs to spend more on its R&D rather than acquisitions.
Pros:
1. It would allow the company 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 presenting those items which can be offered to a totally brand-new market section.
4. Ingenious products will supply long term advantages and high market share in long term.
Cons:
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 cost, and would impact the company at big. The danger is not in the case of acquisitions.
3. It would not increase the wealth of business, which might offer an unfavorable signal to the financiers, and might 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 allow the business to present brand-new innovative items with less threat of transforming the costs on R&D into sunk cost.
2. It would supply a favorable signal to the financiers, as the overall possessions of the company would increase with its substantial R&D spending.
3. It would not affect the revenue margins of the company at a large rate as compare to alternative 2.
4. It would offer the business a strong long term market position in terms of the business's total wealth in addition to in regards to innovative items.
Cons:
1. Danger of conversion of R&D costs into sunk expense, greater than option 1 lower than alternative 2.
2. Threat of misunderstanding about the acquisitions, greater than alternative 2 and lesser than alternative 1.
3. Intro of less number of ingenious products than alternative 2 and high variety of ingenious items than alternative 1.

The Jia Wu Expansion Conclusion

RecommendationsBusiness has actually stayed the top market player for more than a decade. It has institutionalised its methods and culture to align itself with the market changes and customer behavior, which has eventually allowed it to sustain its market share. Business has actually established substantial market share and brand name identity in the metropolitan markets, it is advised that the company must focus on the rural locations in terms of developing brand name loyalty, awareness, and equity, such can be done by creating a particular brand allowance technique through trade marketing tactics, that draw clear difference in between The Jia Wu Expansion products and other rival products. The Jia Wu Expansion should 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 classifications such as nutrition. This will enable the business to establish brand name equity for freshly presented and already produced items on a higher platform, making the reliable use of resources and brand name image in the market.

The Jia Wu Expansion Exhibits

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

Altering criteria of international food.
Enhanced market share.
Altering assumption in the direction of healthier products
Improvements in R&D and also QA divisions.

Intro of E-marketing.
No such influence as it is beneficial.
Issues over recycling.

Use resources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Greatest considering that 9000
Greatest after Service with much less growth than Company 8th Lowest
R&D Spending Highest considering that 2008 Highest possible after Business 8th Least expensive
Net Profit Margin Highest considering that 2006 with quick growth from 2001 to 2019 As a result of sale of Alcon in 2012. Almost equal to Kraft Foods Consolidation Virtually equal to Unilever N/A
Competitive Advantage Food with Nutrition and also health variable Greatest variety of brand names with lasting methods Biggest confectionary and also processed foods brand name worldwide Largest dairy products and also bottled water brand name worldwide
Segmentation Middle and upper middle level customers worldwide Individual clients together with house team Any age as well as Earnings Consumer Groups Middle and upper center degree customers worldwide
Number of Brands 4th 4th 4th 5th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 87734 671223 378489 195171 942838
Net Profit Margin 6.61% 9.45% 35.55% 3.47% 69.43%
EPS (Earning Per Share) 61.13 1.63 2.24 6.75 24.84
Total Asset 112823 292442 476521 487612 61975
Total Debt 74518 41398 81448 63741 62266
Debt Ratio 41% 56% 88% 28% 83%
R&D Spending 4895 6123 9291 8175 8163
R&D Spending as % of Sales 2.85% 5.33% 5.98% 6.49% 7.54%

The Jia Wu Expansion Executive Summary The Jia Wu Expansion Swot Analysis The Jia Wu Expansion Vrio Analysis The Jia Wu Expansion Pestel Analysis
The Jia Wu Expansion Porters Analysis The Jia Wu Expansion Recommendations