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From Imitation To Innovation Zongshen Industrial Group Case Study Analysis

From Imitation To Innovation Zongshen Industrial Group is currently one of the biggest food cycle worldwide. It was established by Kelloggs in 1866, a German Pharmacist who first introduced "FarineLactee"; a mix of flour and milk to feed babies and reduce mortality rate. At the exact same time, the Page bros from Switzerland likewise discovered The Anglo-Swiss Condensed Milk Company. The two ended up being competitors at first however later combined in 1905, resulting in the birth of From Imitation To Innovation Zongshen Industrial Group.
Business is now a multinational company. Unlike other international companies, it has senior executives from different nations and tries to make decisions thinking about the whole world. From Imitation To Innovation Zongshen Industrial Group presently has more than 500 factories worldwide and a network spread throughout 86 countries.


The purpose of From Imitation To Innovation Zongshen Industrial Group Corporation is to boost the lifestyle of people by playing its part and offering healthy food. It wishes to help the world in shaping a healthy and much better future for it. It likewise wants to motivate people to live a healthy life. While making certain that the business is prospering in the long run, that's how it plays its part for a much better and healthy future


From Imitation To Innovation Zongshen Industrial Group's vision is to provide its consumers with food that is healthy, high in quality and safe to consume. It wants to be ingenious and concurrently understand the needs and requirements of its consumers. Its vision is to grow quick and provide products that would please the requirements of each age. From Imitation To Innovation Zongshen Industrial Group envisions to develop a well-trained labor force which would help the business to grow


From Imitation To Innovation Zongshen Industrial Group's mission is that as presently, it is the leading business in the food industry, it believes in 'Good Food, Great Life". Its mission is to offer its consumers with a variety of choices that are healthy and finest in taste. It is concentrated on offering the best food to its consumers throughout the day and night.


From Imitation To Innovation Zongshen Industrial Group has a broad range of items that it provides to its customers. In 2011, Business was listed as the most gainful organization.

Goals and Objectives

• Bearing in mind the vision and mission of the corporation, the company has laid down its objectives and objectives. These goals and goals are noted below.
• One objective of the business is to reach absolutely no land fill status. It is pursuing no waste, where no waste of the factory is landfilled. It encourages its employees to take the most out of the spin-offs. (Business, aboutus, 2017).
• Another goal of From Imitation To Innovation Zongshen Industrial Group is to waste minimum food during production. Usually, the food produced is squandered even before it reaches the customers.
• Another thing that Business is dealing with is to improve its product packaging in such a method that it would help it to decrease the above-mentioned issues and would also ensure the shipment of high quality of its items to its clients.
• Meet worldwide standards of the environment.
• Construct a relationship based on trust with its consumers, organisation partners, staff members, and government.

Critical Issues

Recently, Business Business is focusing more towards the technique 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 attained as the sales were expected 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 need to focus more on the sales then the development technology. Otherwise, it might result in the declined profits rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The current Business strategy is based upon the concept of Nutritious, Health and Wellness (NHW). This method handles the idea to bringing change in the consumer preferences about food and making the food stuff much healthier concerning about the health problems.
The vision of this method is based on the secret method i.e. 60/40+ which merely indicates that the items will have a rating of 60% on the basis of taste and 40% is based on its nutritional worth. The items will be produced with extra dietary worth in contrast to all other products in market getting it a plus on its dietary material.
This strategy was adopted to bring more delicious plus nutritious foods and beverages in market than ever. In competitors with other companies, with an intent of retaining its trust over clients as Business Business has acquired more trusted by customers.

Quantitative Analysis.

R&D Costs as a portion of sales are declining with increasing real amount of costs reveals that the sales are increasing at a higher rate than its R&D costs, and permit the company to more spend on R&D.
Net Earnings Margin is increasing while R&D as a portion of sales is declining. This sign also shows a green light 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 advancement instead of payment of financial obligations. This increasing financial obligation ratio pose a danger of default of Business to its financiers and might lead a decreasing share costs. In terms of increasing debt ratio, the firm should not spend much on R&D and should pay its current debts to decrease the danger for financiers.
The increasing danger of investors with increasing financial obligation ratio and declining share costs can be observed by huge decrease of EPS of From Imitation To Innovation Zongshen Industrial Group stocks.
The sales growth of company is also low as compare to its mergers and acquisitions due to slow understanding building of customers. This slow growth likewise impede company to more 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 Charts given in the Exhibits D and E.

TWOS Analysis

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

Strategies to exploit Opportunities using Strengths

Business needs to present more innovative products by large quantity of R&D Spending and mergers and acquisitions. It could increase the market share of Business and increase the revenue margins for the company. It could also supply Business a long term competitive advantage over its rivals.
The global growth of Business must be focused on market capturing of developing countries by growth, drawing in more consumers through client's commitment. As developing countries are more populous than developed nations, it could increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisFrom Imitation To Innovation Zongshen Industrial Group must do careful acquisition and merger of companies, as it might impact the client's and society's perceptions about Business. It needs to get and merge with those companies which have a market reputation of healthy and nutritious companies. It would improve the understandings of customers about Business.
Business must not only spend its R&D on development, rather than it should also concentrate on the R&D costs over assessment of cost of different healthy products. This would increase cost performance of its items, which will result in increasing its sales, due to decreasing costs, and margins.

Strategies to use strengths to overcome threats

Business should move to not only establishing however likewise to developed countries. It ought to expand its circle to numerous nations like Unilever which operates in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

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

Segmentation Analysis

Demographic Segmentation

The group division of Business is based upon 4 elements; age, gender, earnings and profession. For instance, Business produces numerous products related to babies i.e. Cerelac, Nido, and so on and related to adults i.e. confectionary products. From Imitation To Innovation Zongshen Industrial Group products are quite affordable by nearly all levels, however its major targeted clients, in regards to earnings level are middle and upper middle level clients.

Geographical Segmentation

Geographical segmentation of Business is composed of its presence in practically 86 nations. Its geographical division is based upon two primary aspects i.e. average income level of the consumer along with the climate of the region. For instance, 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 consumer. For instance, Business 3 in 1 Coffee target those clients whose life style is quite hectic and don't have much time.

Behavioral Segmentation

From Imitation To Innovation Zongshen Industrial Group behavioral segmentation is based upon the attitude understanding and awareness of the consumer. For example its highly nutritious products target those customers who have a health mindful attitude towards their usages.

From Imitation To Innovation Zongshen Industrial Group Alternatives

In order to sustain the brand in the market and keep the consumer intact with the brand, there are two alternatives:
Alternative: 1
The Company needs to invest more on acquisitions than on the R&D.
1. Acquisitions would increase overall assets of the company, increasing the wealth of the business. Spending on R&D would be sunk cost.
2. The business can resell the acquired systems in the market, if it fails to execute its strategy. Quantity invest on the R&D might not be restored, and it will be thought about totally sunk cost, if it do not provide potential outcomes.
3. Spending on R&D provide sluggish development in sales, as it takes long time to present an item. However, acquisitions supply quick results, as it offer the company currently established product, which can be marketed soon after the acquisition.
1. Acquisition of business's which do not fit with the company's values like Kraftz foods can lead the company to deal with mistaken belief of consumers about Business core worths of healthy and healthy products.
2 Big spending on acquisitions than R&D would send a signal of business's inefficiency of developing innovative items, and would results in consumer's frustration.
3. Large acquisitions than R&D would extend the line of product of the company by the products which are already present in the market, making company not able to introduce new ingenious products.
Option: 2.
The Company should invest more on its R&D rather than acquisitions.
1. It would enable the company to produce more innovative products.
2. It would offer the business a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted clients by presenting those items which can be used to a totally brand-new market segment.
4. Ingenious items will provide long term benefits and high market share in long term.
1. It would reduce the earnings margins of the company.
2. In case of failure, the entire spending on R&D would be thought about as sunk cost, and would affect the business at large. The risk is not in the case of 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 rates.
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 new innovative products with less risk of transforming the spending on R&D into sunk cost.
2. It would offer a positive signal to the investors, as the general assets of the company would increase with its considerable R&D spending.
3. It would not affect the earnings margins of the business at a big rate as compare to alternative 2.
4. It would supply the company a strong long term market position in terms of the company's general wealth along with in terms of innovative products.
1. Threat of conversion of R&D spending into sunk expense, higher than option 1 lower than alternative 2.
2. Threat of misconception about the acquisitions, higher than alternative 2 and lower than alternative 1.
3. Introduction of less variety of ingenious items than alternative 2 and high number of ingenious products than alternative 1.

From Imitation To Innovation Zongshen Industrial Group Conclusion

RecommendationsIt has institutionalized its methods and culture to align itself with the market changes and client habits, which has actually eventually permitted it to sustain its market share. Business has actually developed significant market share and brand name identity in the urban markets, it is recommended that the business ought to focus on the rural locations in terms of establishing brand name commitment, awareness, and equity, such can be done by producing a particular brand name allotment strategy through trade marketing tactics, that draw clear difference in between From Imitation To Innovation Zongshen Industrial Group items and other rival items.

From Imitation To Innovation Zongshen Industrial Group Exhibits

PESTEL Analysis
Governmental assistance

Transforming requirements of international food.
Improved market share. Altering understanding towards much healthier items Improvements in R&D as well as QA divisions.

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

Use resources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Greatest given that 6000 Greatest after Organisation with less development than Business 7th Cheapest
R&D Spending Highest since 2006 Highest after Business 2nd Least expensive
Net Profit Margin Greatest given that 2003 with rapid development from 2004 to 2014 Due to sale of Alcon in 2016. Practically equal to Kraft Foods Consolidation Nearly equal to Unilever N/A
Competitive Advantage Food with Nourishment and health variable Highest possible number of brand names with lasting methods Largest confectionary as well as processed foods brand on the planet Largest dairy items and also mineral water brand worldwide
Segmentation Center as well as top center degree customers worldwide Individual clients along with household team Any age and Income Client Teams Middle and upper middle degree customers worldwide
Number of Brands 3rd 6th 2nd 1st

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 97574 159336 998415 267331 887533
Net Profit Margin 7.72% 3.53% 46.35% 9.15% 17.81%
EPS (Earning Per Share) 46.17 4.77 3.54 3.64 39.35
Total Asset 317919 479838 998866 898989 94164
Total Debt 24339 96152 32943 77378 59265
Debt Ratio 53% 37% 67% 98% 61%
R&D Spending 9915 5137 2523 3965 7221
R&D Spending as % of Sales 6.61% 8.37% 6.78% 3.97% 7.77%

Executive Summary Swot Analysis Vrio Analysis Pestel Analysis
Porters Analysis Recommendations