Kpmg Peat Marwick The Shadow Partner Case Study Solution

Case Study Solution And Analysis

Home >> Kelloggs >> Kpmg Peat Marwick The Shadow Partner >>

Kpmg Peat Marwick The Shadow Partner Case Study Help

Kpmg Peat Marwick The Shadow Partner is presently among the greatest food cycle worldwide. It was founded by Kelloggs in 1866, a German Pharmacist who initially introduced "FarineLactee"; a combination of flour and milk to feed babies and decrease mortality rate. At the exact same time, the Page siblings from Switzerland likewise discovered The Anglo-Swiss Condensed Milk Company. The two ended up being competitors initially however in the future merged in 1905, leading to the birth of Kpmg Peat Marwick The Shadow Partner.
Business is now a transnational company. Unlike other international business, it has senior executives from various nations and attempts to make choices considering the whole world. Kpmg Peat Marwick The Shadow Partner currently has more than 500 factories around the world and a network spread throughout 86 countries.


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


Kpmg Peat Marwick The Shadow Partner's vision is to supply its consumers with food that is healthy, high in quality and safe to eat. It wishes to be ingenious and at the same time understand the requirements and requirements of its clients. Its vision is to grow quick and provide products that would please the requirements of each age. Kpmg Peat Marwick The Shadow Partner imagines to establish a well-trained workforce which would help the business to grow


Kpmg Peat Marwick The Shadow Partner's mission is that as currently, it is the leading company in the food market, it believes in 'Great Food, Good Life". Its mission is to offer its consumers with a range of choices that are healthy and best in taste. It is concentrated on offering the best food to its consumers throughout the day and night.


Business has a wide variety of items that it provides to its customers. Its products consist of food for infants, cereals, dairy products, snacks, chocolates, food for animal 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 gainful organization.

Goals and Objectives

• Keeping in mind the vision and objective of the corporation, the business has put down its goals and objectives. These objectives and goals are listed below.
• One goal of the company is to reach absolutely no garbage dump status. It is pursuing zero waste, where no waste of the factory is landfilled. It encourages its staff members to take the most out of the by-products. (Business, aboutus, 2017).
• Another goal of Kpmg Peat Marwick The Shadow Partner is to squander minimum food during production. Usually, the food produced is lost even prior to it reaches the clients.
• Another thing that Business is working on is to improve its packaging in such a method that it would help it to minimize those issues and would also guarantee the shipment of high quality of its items to its clients.
• Meet worldwide standards of the environment.
• Build a relationship based upon trust with its consumers, organisation partners, workers, and federal government.

Critical Issues

Recently, Business Business is focusing more towards the strategy 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 strategy. The target of the company is not achieved as the sales were expected to grow higher at the rate of 10% per year and the operating margins to increase by 20%, provided in Exhibit H.

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The current Business technique is based upon the idea of Nutritious, Health and Health (NHW). This technique deals with the idea to bringing change in the consumer choices about food and making the food things much healthier concerning about the health concerns.
The vision of this technique is based upon the secret technique i.e. 60/40+ which just suggests that the products will have a score of 60% on the basis of taste and 40% is based upon its dietary value. The products will be produced with additional dietary worth in contrast to all other items in market getting it a plus on its dietary material.
This method was adopted to bring more delicious plus nutritious foods and beverages in market than ever. In competitors with other companies, with an intention of maintaining its trust over clients as Business Business has actually gotten more trusted by costumers.

Quantitative Analysis.

R&D Spending as a percentage of sales are declining with increasing actual quantity of costs reveals that the sales are increasing at a higher rate than its R&D costs, and allow the business to more spend on R&D.
Net Revenue 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.
Debt ratio of the business is increasing due to its costs on mergers, acquisitions and R&D advancement instead of payment of debts. This increasing debt ratio pose a threat of default of Business to its financiers and might lead a decreasing share costs. For that reason, in regards to increasing financial obligation ratio, the company should not spend much on R&D and should pay its present debts to decrease the danger for investors.
The increasing risk of investors with increasing financial obligation ratio and declining share rates can be observed by substantial decrease of EPS of Kpmg Peat Marwick The Shadow Partner stocks.
The sales growth of business is also low as compare to its mergers and acquisitions due to slow understanding building of customers. This slow growth likewise prevent company to additional spend on its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Keep in mind: All the above analysis is done on the basis of computations and Graphs given in the Exhibitions D and E.

TWOS Analysis

2 analysis can be used to derive numerous strategies based on the SWOT Analysis offered above. A short summary of TWOS Analysis is given in Exhibit H.

Strategies to exploit Opportunities using Strengths

Business should introduce more innovative products by big quantity of R&D Costs and mergers and acquisitions. It could increase the marketplace share of Business and increase the earnings margins for the company. It could likewise supply Business a long term competitive advantage over its competitors.
The global expansion of Business must be focused on market capturing of developing countries by growth, attracting more consumers through consumer's commitment. As developing countries are more populous than developed countries, it might increase the client circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Swot AnalysisKpmg Peat Marwick The Shadow Partner must do cautious acquisition and merger of companies, as it might affect the client's and society's understandings about Business. It must obtain and merge with those companies which have a market credibility of healthy and nutritious companies. It would enhance the perceptions of consumers about Business.
Business ought to not just invest its R&D on innovation, instead of it ought to also focus on the R&D costs over examination of expense of numerous healthy items. This would increase expense performance of its items, which will lead to increasing its sales, due to decreasing rates, and margins.

Strategies to use strengths to overcome threats

Business should relocate to not only developing but also to developed countries. It should widens its geographical growth. This large geographical growth towards establishing and established nations would reduce the risk of prospective losses in times of instability in different nations. It ought to widen its circle to numerous countries like Unilever which operates in about 170 plus nations.

Strategies to overcome weaknesses to avoid threats

Kpmg Peat Marwick The Shadow Partner should carefully manage its acquisitions to prevent the risk of mistaken belief from the consumers about Business. It should get and merge with those nations having a goodwill of being a healthy company in the market. This would not only improve the understanding of customers about Business but would likewise increase the sales, earnings margins and market share of Business. It would also allow the business to utilize its prospective resources effectively on its other operations rather than acquisitions of those companies slowing the NHW strategy development.

Segmentation Analysis

Demographic Segmentation

The demographic division of Business is based on four factors; age, gender, income and occupation. Business produces several items related to children i.e. Cerelac, Nido, and so on and related to grownups i.e. confectionary products. Kpmg Peat Marwick The Shadow Partner products are rather cost effective by practically all levels, but its major targeted customers, in regards to earnings level are middle and upper middle level customers.

Geographical Segmentation

Geographical division of Business is made up of its existence in nearly 86 countries. Its geographical segmentation is based upon two primary elements i.e. average income level of the customer in addition to the climate of the area. 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 division of Business is based upon the personality and life style of the customer. For instance, Business 3 in 1 Coffee target those customers whose lifestyle is rather hectic and do not have much time.

Behavioral Segmentation

Kpmg Peat Marwick The Shadow Partner behavioral segmentation is based upon the attitude knowledge and awareness of the client. For example its extremely healthy items target those customers who have a health conscious mindset towards their intakes.

Kpmg Peat Marwick The Shadow Partner Alternatives

In order to sustain the brand in the market and keep the client undamaged with the brand name, there are 2 choices:
Alternative: 1
The Company must invest more on acquisitions than on the R&D.
1. Acquisitions would increase total assets of the company, increasing the wealth of the company. Nevertheless, spending on R&D would be sunk cost.
2. The company can resell the obtained systems in the market, if it stops working to implement its technique. Amount spend on the R&D could not be revived, and it will be thought about totally sunk cost, if it do not provide potential outcomes.
3. Investing in R&D offer sluggish development in sales, as it takes long period of time to introduce a product. However, acquisitions provide fast outcomes, as it provide the business currently established item, which can be marketed not long after the acquisition.
1. Acquisition of business's which do not fit with the business's worths like Kraftz foods can lead the business to deal with misunderstanding of consumers about Business core worths of healthy and nutritious products.
2 Big spending on acquisitions than R&D would send out a signal of company's inadequacy of establishing innovative products, and would lead to customer's dissatisfaction also.
3. Large acquisitions than R&D would extend the product line of the company by the products which are already present in the market, making business unable to present brand-new innovative products.
Alternative: 2.
The Company ought to invest more on its R&D rather than acquisitions.
1. It would allow the business to produce more innovative items.
2. It would supply the business a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted customers by presenting those products which can be used to an entirely brand-new market segment.
4. Ingenious items will provide long term benefits and high market share in long term.
1. It would decrease the revenue margins of the business.
2. In case of failure, the entire spending on R&D would be thought about as sunk expense, and would affect the business at large. The risk is not when it comes to acquisitions.
3. It would not increase the wealth of company, which could provide an unfavorable signal to the investors, and could result I decreasing stock prices.
Alternative 3:
Continue its acquisitions and mergers with considerable spending on in R&D Program.
Vrio AnalysisPros:
1. It would allow the company to present new ingenious items with less threat of transforming the costs on R&D into sunk cost.
2. It would supply a positive signal to the investors, as the overall properties of the business would increase with its considerable R&D costs.
3. It would not impact the earnings margins of the company at a large rate as compare to alternative 2.
4. It would offer the company a strong long term market position in terms of the business's overall wealth along with in regards to ingenious products.
1. Danger of conversion of R&D costs into sunk expense, higher than alternative 1 lesser than alternative 2.
2. Danger of misunderstanding about the acquisitions, greater than alternative 2 and lesser than alternative 1.
3. Introduction of less number of ingenious items than alternative 2 and high number of innovative products than alternative 1.

Kpmg Peat Marwick The Shadow Partner Conclusion

RecommendationsIt has actually institutionalised its strategies and culture to align itself with the market changes and client habits, which has eventually enabled it to sustain its market share. Business has actually established substantial market share and brand identity in the metropolitan markets, it is recommended that the business should focus on the rural areas in terms of establishing brand name loyalty, awareness, and equity, such can be done by creating a particular brand allocation method through trade marketing techniques, that draw clear difference in between Kpmg Peat Marwick The Shadow Partner items and other competitor items.

Kpmg Peat Marwick The Shadow Partner Exhibits

PESTEL Analysis
Governmental support

Changing requirements of worldwide food.
Improved market share. Altering assumption towards healthier products Improvements in R&D and also QA departments.

Intro of E-marketing.
No such influence as it is favourable. Worries over recycling.

Use sources.

Competitor Analysis
Business Unilever PLC Kraft Foods Incorporation DANONE
Sales Growth Greatest given that 5000 Highest after Business with much less growth than Business 7th Lowest
R&D Spending Greatest given that 2009 Highest possible after Business 3rd Least expensive
Net Profit Margin Greatest given that 2008 with rapid growth from 2008 to 2013 As a result of sale of Alcon in 2015. Practically equal to Kraft Foods Incorporation Virtually equal to Unilever N/A
Competitive Advantage Food with Nutrition and also wellness aspect Greatest variety of brand names with lasting methods Largest confectionary as well as refined foods brand name worldwide Biggest dairy products and also bottled water brand in the world
Segmentation Center as well as top center degree consumers worldwide Individual clients together with house team All age and also Income Consumer Groups Center and also top middle level consumers worldwide
Number of Brands 1st 8th 5th 1st

Quantitative Analysis​
Analysis of Financial Statements (In Millions of CHF)
2006 2007 2008 2009 2010
Sales Revenue 17295 613499 186499 874675 944929
Net Profit Margin 9.58% 1.67% 23.35% 1.12% 31.68%
EPS (Earning Per Share) 58.65 8.61 2.79 7.99 79.71
Total Asset 579734 218341 484871 276472 76326
Total Debt 12874 45286 79926 85496 68143
Debt Ratio 97% 63% 13% 11% 16%
R&D Spending 2598 1741 7769 8366 9296
R&D Spending as % of Sales 3.69% 9.37% 4.67% 3.76% 4.36%

Executive Summary Swot Analysis Vrio Analysis Pestel Analysis
Porters Analysis Recommendations