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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 most significant food cycle worldwide. It was established by Kelloggs in 1866, a German Pharmacist who initially introduced "FarineLactee"; a combination of flour and milk to feed infants and decrease death rate. At the very same time, the Page brothers from Switzerland also discovered The Anglo-Swiss Condensed Milk Business. The two became rivals at first however in the future merged in 1905, resulting in the birth of From Imitation To Innovation Zongshen Industrial Group.
Business is now a transnational business. Unlike other international business, it has senior executives from various nations and attempts to make choices considering the whole world. From Imitation To Innovation Zongshen Industrial Group currently has more than 500 factories worldwide and a network spread across 86 nations.


The function of From Imitation To Innovation Zongshen Industrial Group 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 better future for it. It likewise wishes to motivate 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 better and healthy future


From Imitation To Innovation Zongshen Industrial Group's vision is to offer its consumers with food that is healthy, high in quality and safe to consume. It wants to be ingenious and all at once comprehend the needs and requirements of its clients. Its vision is to grow quickly and supply items that would please the needs of each age group. From Imitation To Innovation Zongshen Industrial Group pictures to establish a trained labor force which would help the company to grow


From Imitation To Innovation Zongshen Industrial Group's mission is that as presently, it is the leading business in the food market, it thinks in 'Excellent Food, Great Life". Its objective is to offer its consumers with a range of choices that are healthy and best in taste too. It is focused on providing the very best food to its customers throughout the day and night.


Business has a large range of items that it uses to its consumers. Its items include food for infants, cereals, dairy products, snacks, chocolates, food for family pet and mineral water. It has around 4 hundred and fifty (450) factories all over the world and around 328,000 staff members. In 2011, Business was noted as the most rewarding company.

Goals and Objectives

• Keeping in mind the vision and mission of the corporation, the business has set its goals and objectives. These goals and goals are listed below.
• One objective of the business is to reach no garbage dump status. It is pursuing absolutely no waste, where no waste of the factory is landfilled. It motivates its staff members to take the most out of the spin-offs. (Business, aboutus, 2017).
• Another objective of From Imitation To Innovation Zongshen Industrial Group is to waste minimum food throughout production. Most often, the food produced is squandered even before it reaches the customers.
• Another thing that Business is working on is to improve its product packaging in such a way that it would help it to lower those complications and would also guarantee the shipment of high quality of its items to its clients.
• Meet global standards of the environment.
• Construct a relationship based upon trust with its consumers, organisation partners, employees, and government.

Critical Issues

Just Recently, Business Business is focusing more towards the strategy of NHW and investing more of its profits on the R&D technology. The nation is investing more on acquisitions and mergers to support its NHW strategy. The target of the business 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%, offered in Display H.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The present Business technique is based on the idea of Nutritious, Health and Wellness (NHW). This strategy deals with the idea to bringing change in the customer choices about food and making the food things much healthier concerning about the health issues.
The vision of this strategy is based upon the secret method i.e. 60/40+ which simply means that the products will have a rating of 60% on the basis of taste and 40% is based upon its nutritional value. The products will be produced with additional nutritional worth in contrast to all other products in market acquiring it a plus on its dietary content.
This technique was embraced to bring more delicious plus healthy foods and beverages in market than ever. In competitors with other companies, with an intention of retaining its trust over clients as Business Company has actually gained more trusted by customers.

Quantitative Analysis.

R&D Spending as a percentage of sales are declining with increasing real amount of spending shows that the sales are increasing at a higher rate than its R&D spending, and permit the business to more spend on R&D.
Net Revenue Margin is increasing while R&D as a portion of sales is decreasing. This sign also reveals a thumbs-up to the R&D costs, mergers and acquisitions.
Debt ratio of the business is increasing due to its spending on mergers, acquisitions and R&D advancement rather than payment of financial obligations. This increasing financial obligation ratio posture a danger of default of Business to its investors and might lead a declining share costs. In terms of increasing financial obligation ratio, the firm needs to not spend much on R&D and should pay its existing financial obligations to reduce the threat for investors.
The increasing threat of investors with increasing debt ratio and decreasing share costs can be observed by big decline of EPS of From Imitation To Innovation Zongshen Industrial Group stocks.
The sales growth of company is likewise low as compare to its mergers and acquisitions due to slow understanding building of consumers. This sluggish growth likewise hinder business to more spend on its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of calculations and Graphs given up the Exhibitions D and E.

TWOS Analysis

TWOS analysis can be utilized to obtain various strategies based upon the SWOT Analysis given above. A quick summary of TWOS Analysis is given up Exhibition H.

Strategies to exploit Opportunities using Strengths

Business must present more ingenious items by big quantity of R&D Spending and mergers and acquisitions. It could increase the market share of Business and increase the profit margins for the business. It might also offer Business a long term competitive benefit over its rivals.
The international expansion of Business must be focused on market catching of developing countries by expansion, attracting more consumers through customer's loyalty. As establishing countries are more populous than developed nations, it could increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisFrom Imitation To Innovation Zongshen Industrial Group needs to do cautious acquisition and merger of companies, as it might impact the customer's and society's perceptions about Business. It needs to acquire and combine with those business which have a market track record of healthy and nutritious companies. It would enhance the understandings of consumers about Business.
Business should not only spend its R&D on development, rather than it ought to also concentrate on the R&D costs over examination of cost of different nutritious products. This would increase expense 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 must relocate to not just developing but also to industrialized countries. It needs to broadens its geographical expansion. This large geographical growth towards developing and established nations would minimize the danger of potential losses in times of instability in various countries. It ought to broaden its circle to numerous nations like Unilever which runs in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

It must get and combine with those countries having a goodwill of being a healthy business in the market. It would likewise allow the company to use its possible resources effectively 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 four factors; age, gender, income and profession. For example, Business produces a number of items related to babies i.e. Cerelac, Nido, and so on and associated to grownups i.e. confectionary items. From Imitation To Innovation Zongshen Industrial Group items are quite budget friendly 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 practically 86 nations. Its geographical division is based upon 2 primary aspects i.e. average income level of the consumer in addition to the environment of the region. 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 character and lifestyle of the client. For instance, Business 3 in 1 Coffee target those clients whose life style is rather busy and don't have much time.

Behavioral Segmentation

From Imitation To Innovation Zongshen Industrial Group behavioral division is based upon the attitude knowledge and awareness of the customer. Its extremely healthy items target those consumers who have a health conscious attitude towards their intakes.

From Imitation To Innovation Zongshen Industrial Group Alternatives

In order to sustain the brand in the market and keep the client undamaged with the brand name, there are two choices:
Option: 1
The Business needs to invest more on acquisitions than on the R&D.
1. Acquisitions would increase total assets of the company, increasing the wealth of the company. Costs on R&D would be sunk cost.
2. The business can resell the gotten units in the market, if it fails to execute its method. Amount spend on the R&D could not be revived, and it will be considered totally sunk cost, if it do not give potential results.
3. Investing in R&D supply slow growth in sales, as it takes long time to introduce a product. Acquisitions supply quick outcomes, as it provide the business already developed item, which can be marketed soon after the acquisition.
1. Acquisition of company's which do not fit with the business's values like Kraftz foods can lead the business to deal with mistaken belief of customers about Business core worths of healthy and nutritious items.
2 Big costs on acquisitions than R&D would send a signal of company's ineffectiveness of developing innovative items, and would results in customer's frustration.
3. Large acquisitions than R&D would extend the product line of the company by the items which are already present in the market, making business not able to introduce new innovative items.
Option: 2.
The Business 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 enable the business to increase its targeted customers by presenting those products which can be offered to a completely new market sector.
4. Innovative products will offer long term advantages and high market share in long term.
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 expense, and would impact the company at big. The threat is not in the case of acquisitions.
3. It would not increase the wealth of company, which could supply a negative signal to the financiers, and might 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 permit the business to introduce new innovative items with less threat of converting the costs on R&D into sunk expense.
2. It would provide a positive signal to the investors, as the overall assets of the company 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 offer the company a strong long term market position in terms of the business's general wealth in addition to in regards to innovative items.
1. Risk of conversion of R&D costs into sunk cost, greater than option 1 lower than alternative 2.
2. Danger of mistaken belief about the acquisitions, higher than alternative 2 and lesser than option 1.
3. Introduction of less number of ingenious products than alternative 2 and high variety of innovative products than alternative 1.

From Imitation To Innovation Zongshen Industrial Group Conclusion

RecommendationsIt has actually institutionalised its methods and culture to align itself with the market modifications and customer habits, which has eventually allowed it to sustain its market share. Business has established considerable market share and brand identity in the city markets, it is suggested that the business needs to focus on the rural locations in terms of establishing brand name loyalty, awareness, and equity, such can be done by developing a particular brand allocation strategy through trade marketing methods, that draw clear distinction in between From Imitation To Innovation Zongshen Industrial Group products and other rival products.

From Imitation To Innovation Zongshen Industrial Group Exhibits

PESTEL Analysis
Governmental assistance

Transforming criteria of global food.
Enhanced market share.
Changing understanding towards much healthier items
Improvements in R&D and QA departments.

Introduction of E-marketing.
No such impact as it is beneficial.
Issues over recycling.

Use sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Greatest given that 3000
Greatest after Service with less growth than Company 6th Most affordable
R&D Spending Highest since 2003 Highest after Company 1st Cheapest
Net Profit Margin Highest possible given that 2004 with quick development from 2006 to 2013 As a result of sale of Alcon in 2016. Practically equal to Kraft Foods Incorporation Almost equal to Unilever N/A
Competitive Advantage Food with Nourishment and health and wellness element Highest possible number of brand names with lasting methods Largest confectionary and refined foods brand worldwide Largest milk products and bottled water brand worldwide
Segmentation Middle and also top center degree customers worldwide Private customers in addition to household group Every age and Earnings Customer Groups Middle as well as top middle degree customers worldwide
Number of Brands 4th 5th 8th 8th

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 46198 935895 395193 792574 435745
Net Profit Margin 2.85% 3.32% 73.15% 1.19% 91.73%
EPS (Earning Per Share) 97.78 5.95 6.74 8.88 89.73
Total Asset 694114 346457 989474 996163 16475
Total Debt 29384 83755 91111 63696 91915
Debt Ratio 33% 79% 47% 76% 16%
R&D Spending 9369 1632 4942 9372 9322
R&D Spending as % of Sales 3.29% 5.17% 5.66% 2.97% 2.86%

From Imitation To Innovation Zongshen Industrial Group Executive Summary From Imitation To Innovation Zongshen Industrial Group Swot Analysis From Imitation To Innovation Zongshen Industrial Group Vrio Analysis From Imitation To Innovation Zongshen Industrial Group Pestel Analysis
From Imitation To Innovation Zongshen Industrial Group Porters Analysis From Imitation To Innovation Zongshen Industrial Group Recommendations