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Air Miles Canada Case Study Solution

Business is currently one of the greatest food chains worldwide. It was founded by Henri Air Miles Canada in 1866, a German Pharmacist who initially introduced "FarineLactee"; a mix of flour and milk to feed babies and reduce mortality rate.
Business is now a global business. Unlike other international companies, it has senior executives from various countries and tries to make choices thinking about the entire world. Air Miles Canada presently has more than 500 factories around the world and a network spread throughout 86 nations.

Purpose

The function of Business Corporation is to enhance the quality of life of individuals by playing its part and supplying healthy food. While making sure that the company is being successful in the long run, that's how it plays its part for a better and healthy future

Vision

Air Miles Canada's vision is to supply its clients with food that is healthy, high in quality and safe to eat. It wishes to be innovative and all at once understand the needs and requirements of its customers. Its vision is to grow fast and provide products that would please the requirements of each age. Air Miles Canada imagines to develop a trained labor force which would help the company to grow
.

Mission

Air Miles Canada's objective is that as presently, it is the leading business in the food industry, it thinks in 'Great Food, Great Life". Its mission is to offer its customers with a range of options that are healthy and best in taste. It is concentrated on supplying the best food to its customers throughout the day and night.

Products.

Air Miles Canada has a wide variety of products that it offers to its consumers. In 2011, Business was listed as the most rewarding company.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the business has set its goals and goals. These objectives and goals are listed below.
• One goal of the company is to reach no land fill status. (Business, aboutus, 2017).
• Another goal of Air Miles Canada is to lose minimum food during production. Most often, the food produced is squandered even before it reaches the clients.
• Another thing that Business is dealing with is to enhance its product packaging in such a way that it would help it to minimize the above-mentioned problems and would likewise guarantee the delivery of high quality of its items to its clients.
• Meet global requirements of the environment.
• Construct a relationship based on trust with its customers, organisation partners, staff members, and government.

Critical Issues

Just Recently, Business Company is focusing more towards the method of NHW and investing more of its revenues on the R&D technology. The nation is investing more on acquisitions and mergers to support its NHW method. The target of the company is not achieved 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 strategy is based upon the idea of Nutritious, Health and Health (NHW). This method handles the idea to bringing change in the client preferences about food and making the food stuff healthier concerning about the health issues.
The vision of this technique is based upon the key approach i.e. 60/40+ which just means that the products will have a rating of 60% on the basis of taste and 40% is based on its dietary value. The products will be made with additional dietary worth in contrast to all other items in market getting it a plus on its nutritional content.
This strategy was embraced to bring more delicious plus healthy foods and drinks in market than ever. In competitors with other companies, with an objective of maintaining its trust over customers as Business Company has gotten more trusted by customers.

Quantitative Analysis.

R&D Costs as a portion of sales are decreasing with increasing actual quantity of costs shows that the sales are increasing at a higher rate than its R&D spending, and permit the business to more invest in R&D.
Net Revenue Margin is increasing while R&D as a percentage of sales is decreasing. This indication likewise shows a thumbs-up to the R&D costs, mergers and acquisitions.
Debt ratio of the business is increasing due to its costs on mergers, acquisitions and R&D development rather than payment of financial obligations. This increasing debt ratio present a hazard of default of Business to its financiers and might lead a declining share rates. In terms of increasing financial obligation ratio, the firm should not spend much on R&D and ought to pay its existing debts to decrease the threat for financiers.
The increasing danger of financiers with increasing debt ratio and decreasing share rates can be observed by big decline of EPS of Air Miles Canada stocks.
The sales growth of business is likewise low as compare to its mergers and acquisitions due to slow understanding building of customers. This sluggish development also prevent 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 estimations and Graphs given up the Exhibitions D and E.

TWOS Analysis


2 analysis can be used to obtain numerous methods based upon the SWOT Analysis given above. A short summary of TWOS Analysis is given up Display H.

Strategies to exploit Opportunities using Strengths

Business ought to present more ingenious products by big amount of R&D Spending and mergers and acquisitions. It might increase the market share of Business and increase the revenue margins for the business. It could also supply Business a long term competitive advantage over its rivals.
The worldwide expansion of Business should be focused on market catching of establishing countries by expansion, drawing in more customers through consumer's commitment. As developing nations are more populous than developed countries, it could increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisAir Miles Canada ought to do mindful acquisition and merger of companies, as it could affect the consumer's and society's understandings about Business. It ought to get and merge with those business which have a market track record of healthy and nutritious business. It would enhance the perceptions of consumers about Business.
Business must not only spend its R&D on development, instead of it needs to also focus on the R&D spending over assessment of expense of various healthy products. This would increase expense efficiency of its products, which will lead to increasing its sales, due to declining rates, and margins.

Strategies to use strengths to overcome threats

Business should move to not just developing however likewise to industrialized countries. It must expand its circle to numerous nations like Unilever which operates in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Air Miles Canada ought to wisely control its acquisitions to prevent the danger of misunderstanding from the customers about Business. It should obtain and merge with those countries having a goodwill of being a healthy business in the market. This would not only enhance the understanding of customers about Business but would also increase the sales, profit margins and market share of Business. It would also make it possible for the business to use its prospective resources efficiently on its other operations instead of acquisitions of those companies slowing the NHW strategy growth.

Segmentation Analysis

Demographic Segmentation

The demographic segmentation of Business is based on 4 aspects; age, gender, income and occupation. For instance, Business produces numerous items connected to children i.e. Cerelac, Nido, etc. and associated to adults i.e. confectionary items. Air Miles Canada products are quite economical by nearly all levels, but its significant targeted clients, in regards to earnings level are middle and upper middle level customers.

Geographical Segmentation

Geographical segmentation of Business is composed of its existence in nearly 86 nations. Its geographical segmentation is based upon two primary aspects i.e. average income level of the consumer in addition to the climate of the area. For example, 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 personality and lifestyle of the consumer. For example, Business 3 in 1 Coffee target those clients whose life style is quite hectic and don't have much time.

Behavioral Segmentation

Air Miles Canada behavioral division is based upon the attitude understanding and awareness of the client. For example its extremely nutritious products target those consumers who have a health mindful attitude towards their intakes.

Air Miles Canada Alternatives

In order to sustain the brand name in the market and keep the client intact with the brand name, there are 2 alternatives:
Option: 1
The Company must spend more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase overall possessions of the company, increasing the wealth of the business. Spending on R&D would be sunk cost.
2. The business can resell the obtained units in the market, if it fails to execute its strategy. Amount spend on the R&D might not be restored, and it will be considered completely sunk cost, if it do not give potential results.
3. Spending on R&D offer sluggish development in sales, as it takes very long time to introduce an item. However, acquisitions supply quick outcomes, as it provide the business currently developed item, which can be marketed not long after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the company's worths like Kraftz foods can lead the company to face mistaken belief of consumers about Business core values of healthy and healthy items.
2 Big costs on acquisitions than R&D would send a signal of business's inefficiency of developing ingenious items, and would lead to customer's dissatisfaction as well.
3. Big acquisitions than R&D would extend the line of product of the company by the products which are currently present in the market, making company not able to introduce new innovative products.
Option: 2.
The Business must 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 make it possible for the business to increase its targeted clients by presenting those products which can be used to an entirely brand-new market section.
4. Innovative items will supply long term benefits and high market share in long run.
Cons:
1. It would reduce the profit margins of the business.
2. In case of failure, the whole spending on R&D would be considered as sunk cost, and would impact 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 significant costs on in R&D Program.
Vrio AnalysisPros:
1. It would allow the company to introduce brand-new innovative items with less threat of transforming the spending on R&D into sunk expense.
2. It would offer a favorable signal to the investors, as the total assets of the company would increase with its substantial R&D spending.
3. It would not affect the revenue margins of the business at a big rate as compare to alternative 2.
4. It would offer the business a strong long term market position in terms of the business's overall wealth in addition to in regards to innovative products.
Cons:
1. Risk of conversion of R&D costs into sunk expense, greater than alternative 1 lower than alternative 2.
2. Danger of misunderstanding about the acquisitions, greater than alternative 2 and lesser than alternative 1.
3. Intro of less number of innovative items than alternative 2 and high variety of innovative products than alternative 1.

Air Miles Canada Conclusion

RecommendationsIt has actually institutionalized its techniques and culture to align itself with the market modifications and client habits, which has actually eventually enabled it to sustain its market share. Business has established substantial market share and brand identity in the urban markets, it is recommended that the business ought to focus on the rural areas in terms of establishing brand loyalty, awareness, and equity, such can be done by producing a particular brand allowance method through trade marketing techniques, that draw clear distinction in between Air Miles Canada items and other competitor items.

Air Miles Canada Exhibits

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

Changing requirements of global food.
Boosted market share.
Altering perception towards healthier products
Improvements in R&D and QA departments.

Introduction of E-marketing.
No such impact as it is good.
Worries over recycling.

Use resources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Highest possible considering that 6000
Greatest after Organisation with much less growth than Company 8th Cheapest
R&D Spending Highest possible because 2003 Highest after Organisation 9th Least expensive
Net Profit Margin Highest possible since 2009 with quick growth from 2001 to 2011 As a result of sale of Alcon in 2014. Nearly equal to Kraft Foods Incorporation Practically equal to Unilever N/A
Competitive Advantage Food with Nourishment and health and wellness variable Greatest number of brand names with sustainable practices Largest confectionary and also refined foods brand in the world Biggest dairy items as well as mineral water brand in the world
Segmentation Center as well as upper middle degree customers worldwide Specific consumers along with home group Any age as well as Earnings Consumer Teams Middle and upper middle degree customers worldwide
Number of Brands 4th 1st 6th 6th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 85447 994243 424684 817721 997664
Net Profit Margin 5.92% 9.63% 14.57% 2.86% 32.54%
EPS (Earning Per Share) 56.21 9.55 8.11 1.98 39.94
Total Asset 535423 932272 348291 365939 32322
Total Debt 53186 58657 24952 32385 13143
Debt Ratio 34% 11% 74% 46% 84%
R&D Spending 1127 2122 6896 8941 1418
R&D Spending as % of Sales 6.38% 8.83% 3.81% 9.91% 6.81%

Air Miles Canada Executive Summary Air Miles Canada Swot Analysis Air Miles Canada Vrio Analysis Air Miles Canada Pestel Analysis
Air Miles Canada Porters Analysis Air Miles Canada Recommendations