Group 13 – IB Raleigh – IKEA success story

IKEA, nowadays the leader in the furniture industry worldwide, has built its strategy since the 1960’s on several key success factors: excellent quality of their products, social and ethical responsibility, real marketing concept with large inventory and parking space, family experiences, unique brand identity, and last but not least the low-cost strategy (selling self-assembly features cuts operational and transportation costs and generates great economies of scale). If IKEA succeeded in implementing its strategy over the world, the leader faced some problems coming to China: marketing and pricing issues. When Ikea came to China to open stores, they faced a big issue regarding the prices: consumers were not ready and willing to buy Ikea’s product as it was unfordable for them and preferred to buy more brand-value products. The low-cost strategy failed as western products are seen as valuable and more aspirational. Indeed, purchasing low-priced materials and having suppliers in China was another key factor that Ikea didn’t have when they implemented their first store in China. The company started to build factories in China and to inspect quality locally with the aim to increase local sources and then to avoid high import taxes (since 15 years, the company was able to reduce by 60% their prices). We have to highlight that institutional factors prevent IKEA to have its own stores and subsidiaries: the company was able to reduce its costs when new policies allowed foreign companies to do so. IKEA has to focus on the price strategy: being green or creating stylish furniture would increase the prices; the company had to skip some of their usual key success factors. Once Ikea was able to deal with this issue, they needed to change their target: if it was the mass market in the rest of the world, it has been different in China. First, the company needed to adapt itself regarding Chinese consumers’ needs: Chinese people were looking for small (adapted to their tiny apartment) and user-friendly furniture. Shopping in China is also about the experience in the store, and then IKEA has to reinvent their store in compliance with Chinese people’s way of living. Regarding the target, they decided to choose the young middle-class which had better incomes and education by communicating in a different way with them than in western countries – with social media rather than with catalogues.

References IKEA’s global marketing strategy (2011). IKEA internationalization. Retrieved on 15th August 2012 from: http://www.123helpme.com/ikeas-global-marketing-strategy-view.asp?id=165535

IKEA Success in Chinese Furniture, Yihong Li, 2007: http://www.theseus.fi/bitstream/handle/10024/17554/jamk_1198235756_7.pdf?sequence=2

How Ikea adapted its strategies to expand in China, Business Today, 2013: http://businesstoday.intoday.in/story/how-ikea-adapted-its-strategies-to-expand-in-china/1/196322.html

Group 2 – IB Raleigh – Dell failure offshoring in India

DellLogo

In 2003 Dell was forced to give up one of it call center in India. In fact Dell was forced to move back it call center from India to the United States. The call center was for the OptiPlex desktops and Latitude laptops.

In order to decrease the cost Dell wanted to implement more and more call centeroffshore and India appears as a good solution. Indeed, an Indian worker cost at least 3 times lower than an American worker.

Dell really counts about this call center in India and increases rapidly the number of workers in the Indian call center.

The first reason of the failure of Dell’s call center is the excessive OptiPlex desktops and Latitude laptops. Indeed the production of Optiplex and Latitude laptops growth too fast for the firm and especially for the Indian Call center. The number of customer’s calls increases really quickly and Indian worker were submerged by the calls.

The second reason of the failure is the dissatisfaction of customers. Indeed Dell received some complaints about the quality of the service and the speed of execution.

Some customers didn’t appreciate the fact that Indian people responded with a “kind” of script. It is not really the accent of the Indian employee of Dell but it response and the feelings that his speech is robotic.

According to the CIO of Dell in 2005 (Randy Mott) these two segments were maybe too specific and difficult for Indian Workers.

Even if an offshore strategy is a good financial strategy, companies have to think about some elements: the difference of culture, the accent or the level of language, the ability and competencies of the workers…

Companies also have to accompany the offshore center.

Dell probably didn’t prepare very well the implementation of the call center in India. It was a horror stories because in a couple of months the centers just closed and Dell had to open a new one in the US to regain the confidence of the customers.

Source:

http://news.cnet.com/2100-1001_3-5182611.html

http://news.cnet.com/Dell-to-open-new-India-call-center/2100-1014_3-5623928.html

http://www.zdnet.com/dell-admits-indian-mistake-3039150648/

http://www.ecommercetimes.com/story/35308.html

http://www.ecommercetimes.com/story/32248.html

Newrest, a Success Story Made in France

Newrest, a small French startup which started from scratch in 1996, is now a global leader in multi-sector catering. With 2013 revenues under management of almost 1,085 Billion Euros and more than 25,000 employees worldwide, Newrest is present in 49 countries.

The firm, which has a really innovative approach of catering activities, succeeded in penetrating the catering market locked by some major companies, especially in France. While Sodexo – one of the biggest catering company – anchored its positioning on corporate catering, Newrest went abroad with inflight/travel services, mines/oil camps, remote sites and hostile places.

For instance, Newrest won some contracts in Areva Niger or at the AMLA Observatory in Chile in 2012 where it had to cope with resource scarcity and local risks but also built some crucial and strong customer relationships which has been extremely good for its brand image as the company is now seen as reliant and trustful enough to penetrate the global catering market. Travel and “extreme” catering is indeed a very efficient way to conquer emerging markets in Asia, Latin America and Africa.

 

Newrest

 


 

History/Key Dates:

  • Olivier Sadran founded Catair in 1996.
  • 2001: Merger with Eurest Inflight
  • 2005: Founding of Newrest
  • 2006: 2 joint-ventures (Morocco and Algeria) and acquisition in Greece
  • 2008: 2 joint-ventures in Saudi Arabia and Oman and acquisition in Spain
  • 2010: Acquisition of Compgnie des Wagons lits and Air Shop ; joint-venture in Switzerland.
  • 2011: joint-ventures in Brazil and Uganda
  • 2012: IPO of Saudia Arilines Cathering and joint venture in France and Philippines
  • 2013: Joint venture in South Africa
  • + joint venture in Qatar, Kuwait, Bahrain, UAE
  • + start up and Mozambique and Liberia

 


 

Activities:

  • Inflight: Inflight catering, integrated management of inflight and logistics.
    TO of 347M€ in 2013 ; 410,000 meals per day.
  • Train: Creator of services for railway operators,
    + Newrest Wagons-Lits offers a wide range of catering and hotel services.
    TO of 38M€ (40.3% in France, 45% in Austria).
  • Newrest Retail: manages food franchises in airports (75.7%) and highway service stations (restaurants, bars and shops).
    TO of 51M€ ; 37 points of sale and 37,000 clients per day. 57.7% of clients in North Africa.
  • Cathering: providing services for restaurants or canteens.
    TO of 89M€ ; 150,000 meals per day (72.9% in North Africa) ; 312 clients.
  • Remote site: ability to respond to the needs of clients in the oil and mining industries. Work primarily  - but not exclusively – in hostile environments.
    TO of 165M€ (51.4% with mining companies).

 


 

Performances:

perf

Fast evolution of the group’s turnover since the creation of Catair 18 years ago. The group consolidated TO is 662M€ in 2013.

 


 

Sources:

 

Group 4 @Raleigh FMI: SUCCESS OR FAILURE: IKEA’S OFFSHORING WAY IN JAPAN?

Introduction

IKEA is a Swedish company Founded in Sweden in 1943 by then Ingvar Kamprad. The company has offered home furnishings and accessories of good design and function at low prices so the majority of the people can afford them.

IKEA’s vision is to: “Create a better everyday life for the many people”

KEA has more than 590 million visitors per year to its stores all over the world. In addition to the visitors in the stores, some 450 million visitors are tracked entering the IKEA website. As of September 2014, IKEA owns and operates 351 stores in 43 countries with a revenue of €28.506 billion in 2013.

In this case, we are going to see how a huge company like Ikea can fail his entrance in the Japanese market. This is the first country in Asia that IKEA considered to enter while most countries were closed off the outside world. The differences between culture, lifestyle and behavior make IKEA face the failure. Japan is different from North America or Europe so it is difficult to pursue success in the same way.

IKEA ‘s strategy in Europe

In 1963 the first IKEA store outside of Sweden was established in Norway. From this point on, IKEA began to spread like a wildfire, first to Denmark, then Switzerland, Germany, Austria and Netherlands. As we could see, the majority of Ikea’s market outside is developed economy and Ikea’s first choice is Europe where people could have a similar culture background and a good a good acceptability of Ikea’s Scandinavian style home furnishings. Today 81%of sales IKEA are from Europe, although IKEA’S sale has got a sharp increase  in emerging markets Europe is the most core market for Ikea as usual.

The key value at IKEA is to “create a better everyday life for the many people.” The main product strategy of IKEA in Europe supports this vision, to provide good quality goods at the price as low as possible. This strategy keep  the company has succeeded in development of cost effective and innovative production methods. This has been the company’s focus since its inception, and the company has succeeded in doing so by making the maximum use out of raw materials, and adapting the products to meet people’s needs.

In the field of marketing, IKEA has an “unique” brand. The stores usually were established on suburban center and they are seen with blue boxes and yellow symbol. Ikea has a special kind of intern design and friendly service so that their market share got a sharp increase in Europe. Now Ikea has 142 stores throughout the Europe and “blue box yellow symbol” have been the most famous brand of home furnishing.

failure strategy in Japan

The strategy of IKEA has two characteristics overseas. The first one is represented through its slogan: “Your partner in better living. We do our part, you do yours. Together we save money.” The other one is about its product ranges which are standardized all over the world. When they entered to Japanese market in 1974, they have only been in 4 other European countries yet. Market research and customer profile were required before investing an unknown market.

So why did they fail ? Japanese like high-end services and customer service. Therefore, the idea of buying ready-to-install kits was not welcome by Japanese consumers. « Assemble Yourself » approach didn’t suit them much. Secondly Japanese apartments are very tight due to the overpopulation so the standardized furniture from Europe didn’t fit their rooms. Additionally the competition was rough and represented by local vendors which had traditional sale methods, preferred by the consumers.

Success for second attempt

In 2001, IKEA decided to reenter the Japanese market, thanks to the deregulation of Japanese Large Scale Retail Store Law, and after a huge marketing’s redefinition.

Indeed, IKEA made an important survey campaign by visiting more than hundreds of Japanese homes in order to not only understand their culture but also their habits. Furthermore, IKEA learnt from the Japanese stores, to be able to understand how to adapt their products to Japanese taste.

IKEA based their stores on the concept « making an ideal home », and the center of their strategy became «  small space living ».

Nowadays, IKEA has three mega-stores in japan, Funabashi, Kohoku and Port Island. When, the first shop opened on 2006, more than 35,000 clients were waiting outside the store.

Conclusion

Trying to enter a new market is attractive because it means expanding the name of a brand abroad. deciding to open a store in a country country means sell more. but in the case of IKEA, they main mistake was that did not have enough knowledge on the Japanese furniture market, they had a lot of competition and their product did respond to the Japanese expectations.

The concept of off shoring might be attractive for a lot of companies: with the right strategy, it is definitely a good way of going global.

But a wrong understanding of a market can bring a lot of issues and loss for a company.

IKEA learned from their mistakes and were final able to re-enter the Japanese market with a lot of success.

They are a perfect example of an horror story turning into a fairy tail.

Reference:

http://www.businessweek.com/stories/2006-04-25/ikeas-new-plan-for-japan

http://pure.au.dk/portal/files/7566/Afhandlinger

http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/BSTR289.htm

http://www.ikea.com/ms/en_GB/pdf/people_planet_positive/People_planet_positive.pdf

http://en.wikipedia.org/wiki/IKEA

 

Group 1 Raleigh FMI – A success story – Coca Cola France

Presentation of Coca Cola France

Coca Cola Corporation is the main producer and distributor of soft drinks in France. With 5 production plans, Coca Cola is responsible of the fabrication, commercialization and distribution of the products from The Coca Cola Company. Nowadays, 95% of the consumption of Coca Cola in France is produce there.

 

The origins of Coca Cola in France

Since the beginning M. Woodruff the first president of Coca Cola firm decided to export its famous product abroad and widen its market, where the world could become its playground. Coca Cola arrived in France after the First World War in 1919 where some American soldiers decided to consume it. The quantity of beverages was quite scarce but it tend to become a success mainly thank to the American soldier still in France. The first bottles were sold in some cafés and the first factory was created in 1933. It’s only in 1943 during the Second World War that Coca Cola started to spread its famous beverage around the world aiming to furnish to all American soldier a bottle of coke for 5 cents whatever the cost was for the company.

 

The marketing and commercial strategy

Coca Cola used in France the same strategy to expend itself as anywhere else in the world. The franchising method is applied by Coca Cola since the beginning of its expansion. Coca Cola signed some franchises with Paris, Lille and Nice. The franchise concept implies that the company, here Coca Cola gives to the franchised its brand, its image and its knowledge; they are then independent and had to pay royalties to the company.

Like in each country where Coca Cola become established, Coca Cola creates some factories and hire local labor force, which avoids anti-Americanism reactions. Coca Cola is then established in France with two kinds of entities: Coca Cola Corporation which is responsible of the bottling and the distribution. Coca Cola France implements the development and the promotion of the products. The key decision was then to extent this model in order to reach the most people as possible in the fastest way.

 

The product strategy

The strategy followed in France is really closed to those done by the Coca Cola group in the rest of the world. This strategy implies to distribute the flagship drinks of the group with some adaptations to fit to the taste of the population from the foreign market, in our case in France and launch if necessary new category of drink, for instance, in France the diet coke was developed quite early.

Over the time, Coca Cola brought to the market various beverages as, Fanta in 1958, Sprite in 1984, Coca Cola Light in 1988, Minute Maid in 1990, Nestea in 1995, Powerade en 2001, Coca Cola Zero in 2007. Each product of the group has a specific target. For instance, Powerade the sportsmen, Fanta for young as there is more sugar inside and Coca Cola light for those taking care of their weight.

 

Adaptation to the market trends:

Coca Cola Corporation is well known by this innovation aspect and is capacity of creating new consumption habits. During the seventies, the firm implanted themselves in the restaurant companies with a view to reaching another kind of consumer. Also, the can launching allowed to Coca Cola to get into the commerce of the bakeries and gas stations. Therefore we can’t deny that Coca Cola Corporation succeeds in its business model. As a matter of fact, revenues of the company keep on skyrocketing due to the exclusivity agreement signed with McDonald’s for instance.

 

What about the brand image in France?

Coca Cola Company understood really fast the huge stake of being involved in sports events to enjoy the financial media fallen. Thanks to the product advertisement and the marketing policy, the group established a positive image of the brand within the hexagon. One of the main aspects of Coca was to develop the friendliness facet of sharing a Coca between friend and family, which triggered a lasting development in the mind-set of the French people.

Sources :

http://www.coca-cola-france.fr

http://www.coca-cola-entreprise.fr

http://www.e-marketing.fr/Marketing-Magazine/Article/Coca-Cola-devoile-la-recette-de-son-succes-29453-1.htm

http://tpecoca-cola.e-monsite.com/pages/coca-cola-en-france.html

http://fr.wikipedia.org/wiki/The_Coca-Cola_Company

The failure of Wal–Mart in the key German market – Group 5, FMI Raleigh

The main issue Wal-Mart had in Germany was that they did not adapt their business model to the needs of German employees and consumers and therein were unable to set themselves apart and have exploding profits as they did in the U.S. In Germany, they were not able to offer customers any compelling value proposition in comparison with its local competitors because they did not do their research on what motivated German consumers to buy and were therefore unable to attract them with an innovative approach to retailing. Their entry-by-acquisition strategy was fundamentally flawed when they acquired the deteriorating Spar and therefore tarnished their own brand image. There was also the issue with the CEOs for Wal-Mart working in Germany who were not knowledgeable about the language, culture, and regulations and exhibited an “astounding degree of ignorance with regard to the manifold complexities and the legal and institutional framework of the German retail market ignoring the strategic advice presented by Wertkauf executives, thereby encouraging them to leave.”

Wal-Mart was also incapable of adapting their store model to German needs because, “Germans like to see the advertised discount products upfront – without having to ask the store assistant. This implies that the discount products must be placed at the eye level. Instead Wal-Mart chose to use its US style merchandise display strategy – where premium priced products are kept at eye level and discount products are kept at higher shelf or in the bottom racks. This irritated the German shoppers.” Wal-Mart failed to stay true to its value propositions: “We sell for less – always”, “Everyday low prices” and “Excellent service” because their strong competitors, mainly Aldi and other hard discounters, were able to easily match their price cuts. The management was also unable to stay focused on both short and long term operations because of the high employee turnover rate. They also completely disregarded the laws and regulations Germany had with regards to labor and food sales and merchandising.

The lessons Wal-Mart learned through their attempted acquisitions in Germany is that they must respect the laws and regulations regarding food sales and labor, they must respect unions’ laws, they must do more primary research in regards to culture and language and have more domestic management and employment, the must respect the interests of the company acquired (Massmart), and they must also do their research on the inflation rates and the economy so as not to destabilize it with prices that are too low.

References to go further :
DW.de
Business Week
NY Times

Group 3 @Raleigh Succes Story : Nike’s offshoring

Offshoring means the relocation, by a company, of a business process from one country to another, the goal of this process is to reduce the cost of labor and production forces, to get closer from resources… This practice has become more and more popular because it enables a real increase of competitivity. Offshoring seems to be a simple process to put in place but there are a lot of mistakes to avoid in order to survive in the market. We are going to talk about the Success Story of Nike’s offshoring and how they have dealt with it. The majority of Nike’s manufacturing takes place in developing countries, where its suppliers employ more than 500,000 workers. Nike was one of the first company to offshore its manufacturing production. In 1950, they offshored their manufacturing production of athletic shoes in Japan, it was by the way an immediate success. In 1974 Nike left Japan and went to Korea and Thailand because the labor force was less expensive. In the 80’s the company reached one billion dollar turnover and decided to move to China and Vietnam where they are still settled. Nike was a pioneer company in offshoring process and faced some major issues but manage to recover from it.

Settle in a country means a lot of things to take into account, as indicates the article “Achieving success in business process outsourcing and offshoring” published in Consumer market by the Boston Consulting Group, roughly half of the companies that engage in offshoring will have underwhelming results and few of them will know where they went wrong or what to do about it. The company must know all the assets and disadvantages, they must know about the law, about the historical, geographical, social, political context of the country they want to settle in. This analysis will permit to prevent a lot of risk to fail. Nike did all this well and succeed in exploiting resources and reducing cost, for example a pair of shoes cost about $20 to produce and they sell it $100. Their strategy is: the margin made in production is reinvested in marketing and that is the principal reason of its success today. In 2003 Nike spent 153 million in advertising, it is more than four and a half time than Adidas did.

Nevertheless, they encountered ethical problem which endangered the image of the brand, the bad practices of Nike sweatshop in 1998 is common knowledge, at that time there revenue fell by 69%. But their success is also linked to how they manage to overcome this scandal and revive their international image. Indeed, in May 1998 Phil Knight, then-CEO of the company, gave a speech where he said “The Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse,” and that he “truly believe the American consumer doesn’t want to buy products made under abusive conditions.” From that point onward, Nike commited to a major change signing its Ethics Charter and created The Fair Labor Association, a non-profit group of companies and human rights and labor representatives. They also created “Ninemillion” an organization defending children’s rights. Moreover they get frequently involved in major issues such as the fight of racism with the “Stand up – Speak up” campaign, or ecology with the Program Climate Savers, from which they received an honor for reducing greenhouse gases. Regarding their activities, they also chose to act with more transparency and published yearly corporate social responsibility reports where they expose conditions and pay in its factories.

So Nike is for us a good example of a success story, because they were pioneer in offshoring, because it was an immediate success and they succeeded in maintaining their success even in case of big crisis. Their turnover in 2013 was about $13 billion.

 

 

References :

http://visionsmag.com/nike-le-geant-americain-qui-na-pas-dusine-aux-etats-unis/

http://success-story.over-blog.net/m/

http://m.dailykos.com/story/2013/06/28/1219604/-Record-Earnings-but-Offshoring-is-still-Hurting-Workers

http://fr.wikipedia.org/wiki/Nike

http://nikeinc.com/

http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5

Apple Offshoring-Globalization Group 5, Paris

Since the development of globalization, offshoring has been a predominant factor in many large companies, especially in IT industry in US. Even we also focus on the disadvantages like US firms hasn’t led more US jobs, the risk, the difficulties on managing business processes. However, the offshoring has been an irreversible trend. Why isn’t more manufacturing taking place in USA? Apple’s answer: it is simple no longer possible to compete by relying on domestic factories and ecosystem that surrounds them.

Nowadays, the number of companies that have decided to offshore their production in emerging countries is still increasing. Thanks to a lot of positive effects for both parts, offshoring in the manufactured materials’ sector is rising since 20 years. At the opposite of the effects that people could imagine, the company which experiences offshoring can increase its domestic employment and improve the quality of its workers’ skills. On the other side, this partnership with SMEs in emerging countries contribute to their development and can play a important role in the country’s GDP. We will take the example of Apple, a billion-in-profit company ($37 billion for 2013) that has decided to offshore its production in the workshop of the world: China. The strategy of a partnership with the Taiwanese company Hon Hai Precision Industry Co., Ltd. – one of the worldwide leaders in electronics contract manufacturing- is without any doubt one of the keys that explain the company’s extraordinary turnover (which almost dobles every 2 years). Apple, the success story of a multinational company’s growth that seems limitless.

Foxconn Technology Group, a multinational electronics manufacturing company holding by Taiwanese, is the largest Apple offshoring manufacturing factory in China. The employees in Foxconn in China are about 230,000 last year, apparently it’s because the cheap labor force and other costs like logistics and raw materials. As it is explained in this video, offshoring is only used for low value added tasks.

The video cannot be shown at the moment. Please try again later.

This business partnership is certainly the reason of Apple success. Otherwise we can notice a link between the net profit and the first years of partnership.

glob

But even if some scandals (working conditions, suicides…) casted a shadow over this American Chinese success story, Apple doesn’t only lie in their products but also in their branding. Apple doesn’t really sell a product but the brand. Indeed, people’s connection with the brand transcended commerce especially thanks to innovation, design and corporate ethics, which make them emotionally involved. Emotional fulfillment is often reflected in ads (see Iphone 4 commercial: https://www.youtube.com/watch?v=GniV1qdFYWg) through egocentric needs and happy feelings. This association drives a positive brand image despite some horror stories coming out of factories that could stain it.

The video cannot be shown at the moment. Please try again later.

However under pressure (especially US government) and also attracted by a certain “made in USA” trend, Apple announced last year that it will open new manufacturing factories in US, due to the constantly increasing of the salary, which mostly result from the inflation rate. In this case, offshoring is gradually slowing down in China, also to avoid a possible (and dangerous) too much dependency vis-à-vis Foxconn

As an addition to the growth of labor costs in China, the cost for product freight is also increasing and has grown almost 4 times during last 5 years.
However, considering transportation costs it’s important to look at the key markets for Apple. Actually, now it’s not only the US, but also China which share in total Apple sales continuously grow and almost reached the same level as US sales. Moreover, the popularity of Apple products is improving fast in other Asian markets as Vietnam and also Eastern Europe. That means, that losing in freight costs to the US, Apple benefits a lot from transportation spending for other fast growing marketers.
Another important benefit that Apple’s offshoing to China provides to the company is the high flexibility of production in China plants and strong production ecosystem. Thus, production of the majority of Apple products’ components is located very close to each other. All that means high company’s agility and responsiveness of supply and meeting consumers’ needs.

Being in China is also a benefit due to its population. In fact China has a lot of possible workers (engineers as workmen) and it took 15 days to hire 9000 engineers there when it will take few months in USA.

Furthermore, a lot of minerals used in Apple’s screen are coming from China. Then, it is a time saving and time is money.

Overall, it can be concluded that Apple’s offshoring to China is an example how company can benefit from offshoring despite challenges that can always have place. From our point of view, Apple should continue to stick to its offshoring strategy to China but continuously track its production costs especially in terms of labor spending in order to catch possible opportunities that can occur especially in terms of manufacturing growth in other Asian countries; Indeed, fomer “low cost” countries are becoming more and more expensive as their economy grow. Some economists even highlight the “backshoring” theory, aluding to the offshore production risks, production etics and production costs on long scale.

 

 

Sources:

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=2&hp&

http://www.forbes.com/sites/stevedenning/2012/12/07/why-apple-and-ge-are-bringing-manufacturing-back/

http://www.economist.com/news/special-report/21569575-companies-need-think-more-carefully-about-how-they-offshore-and-outsource-herd-instinct

http://www.atlantico.fr/decryptage/iphone-ipad-production-usines-etats-unis-delocalisations-chine-obama-272650.html

http://venturebeat.com/2013/10/28/apples-170-billion-2013-amazing-and-amazingly-forgettable/

http://www.apple.com/…/22Apple-Reports-Third-Quarter

Group34IB Sophia-Antipolis: Coca-Cola, the dangers of a Mexican success story

With the full support of President Vicente Fox from 2000 to 2006, and the CEO of Coca-Cola Mexico before its mandate, the company succeed to exploit the first water resource of Mexico located in Chiapas to produce its black gold. The brand that wants to “refresh the world” needs 2.5 litres of water to produce one litre of beverage. The Cola-Cola Company had negotiated since 2000 some 27 water concessions, 19 to extract water from aquifers and 15 rivers. Relocation that does not cost very much is done against the modest sum of 30 thousand dollars per year … In 2012, Coca invests $ 1 billion to Mexico for a total investment of 5 billion. They have created 10,000 jobs and will create as many as they had over the last 5 years. Each day, the multinational sells nearly 2 billion bottles worldwide. Installed in a country with the largest obesity rate in the world (32.8%) against 31.8% for its American neighbours, where a resident uses an average of 163 litres of soda per year, the success story is not to prove. To reach local populations, Coca-Cola wants to appear as the savior by participating in urban and development projects of Indian communities. To sell its product at the entrance of the village, signs are red and white and advertising is even in the Mayan language. In Indian communities sodas are sold 40% cheaper than in urban areas, where prices already compete with those of bottle of water (one litre of Cola costs only 7 pesos against 8 pesos to purchase a bottle of water). With this political seduction, drink “poison” transformed the consumption patterns of many urban and rural populations in Mexico. “Why drink water when you have the possibility to offer you drinks that give you more energy? “. Without lands to cultivate because of lack of water, with food increasingly inaccessible, a Mexican citizen can spend up to one fifth of his daily wage in Coca-Cola products to starve off. But this success in terms of relocation is it safe? We have seen that Coca-Cola is involved in urban development of the Mexican poor areas … But coincidentally important sources of water are present near these towns and villages. because of The Changing pattern of consumption of Mexican population, the pushing share price policy as well as slogans to consume soda instead of water, seven on ten Mexicans are fat or burdened and over seven and a half million Mexican suffers from diabetes, which has become the leading cause of death in the country with also the explosion of hypertensive disorders and cardiovascular diseases. Aquifers are depleted, water is scarce, agriculture is struggling, land pollution is increasingly, but the company does not care. We can say that the success of this relocation is dangerous for the environment and for health. France 2 tried to denounce these practices in a documentary diffused on January 8, 2013 “Coca Cola’s secret formula” but the multinational does not like that they denounce its practices or the misdeeds of his drink on people, even deleting its advertising contract with the amount of € 2 million. The success of the relocation should it come down to a profit at all costs, often mocking the deadly impacts on affected populations?

References: https://www.youtube.com/watch?v=iPb-nbmtPDU (40mn to 42.30mn)

http://www.legrandsoir.info/coca-cola-est-comme-ca.html

Great Wall Motors Gr15

Great Wall Motors

Great Wall Motors : An example of international development for the Chinese companies through offshoring.

China is not only a country of factory and handwork. The proof is, since a few years some companies begin to invest in developed countries, Europe included. We are going to speak about the Chinese car manufacturer Great Wall Motors who can be consider as a « success story ».

We shall see that such offshoring strategy of the production allowed him at the same time, an expansion on the international level as well as the strengthening of its brand image on the Chinese internal market.

 

China invest a lot in Europe

“With trillions of dollars in foreign cash reserves, and depressed assets littering rich Western Europe, China is expected to spend around $2 trillion buying up and starting up companies on foreign soil. Their favourite destination is Europe”

To go farther on this subject, we recommend you this documentary (in French) which shows perfectly the new stakes and problems of China in Europe.
http://boutique.arte.tv//f7850-chine_delocalise_europe  (video)

Discover with this interactive link all the investments made by China in Europe during 2009:
http://app.owni.fr/la-chine-investit-l-europe/

 

The success story of Great Wall Motors

  1. Global overview

To present this company, here is the introduction video of 2012, where they explain why the globalization is a main problem for their development program.
https://www.youtube.com/watch?v=jh-5t0UJbIw

For the most curious, their site will give you more details :
http://www.gwm-global.com/company/index.html

As a brief resume on this company, we can say that Great Wall Motors is a Chinese company specialized in automobile sales since 1984. Its turnover in 2013 reaches 56,78 billions dollars. Since 2012, it began a strategy of international development based on manufacturing offshoring to penetrate these markets : Bulgaria, Equator, Egypt, Ethiopia, Russia, Vietnam… They are present in the top 50 of Chinese companies according to ” Global Entrepreneur ”

 

  1. What are its real intentions to come to produce in Europe ?

“We persist in focused development, uphold the brand concept of “focus, dedication and specialization”, and build specialized brands through specialized operation and management […]. Since 2012, we have mapped out a marketing strategy of achieving the primary goal of “customer satisfaction” and “market lead”, taken a series of measures through marketing service innovation and reform to enhance our terminal image and service quality, oriented human financial and material resources on customer satisfaction, and created “surprise for customers” through value services to constantly enhance customer satisfaction.”

We can see here the two new goals of Great Wall Motors : « customer satisfaction » and « market lead ». The ” market lead ” aspect thus led Great Wall Motors to open news factories worldwide to gain little by little markets.

  • Relocate to penetrate into the European market more easily and develop on the international stage.

By launching its own factory in Bulgaria, Great Wall Motors has started its development in Europe, to win some market share.

”While we have previously targeted emerging markets, our latest desired market is the EU,” said Shang. Great Wall Motors just launched operations in Bulgaria in February, becoming the first Chinese automaker to assemble cars in the EU. Since Bulgaria is an EU member, the project provides Great Wall Motors with access to other EU countries at zero tariff levels. The UK recently welcomed its first model – Great Wall’s Steed double-cab pickup, built at the Bulgaria plant with a selling price of 13,998 pounds ($22,404). Global automakers have made their models as affordable as domestic brands.

  • Produce to strengthen its image in its own country.

A second avantage, less known from public, but seems more important in term of figure for GWM and for the Chinese public.

According to its CEO, the main problem of Chinese companies is not technological any more but the perception that consumers have of Chinese brands.

”Even though Chinese carmakers have scored well in automotive crash testing, changing motorists’ perceptions of the inferiority of domestic brands will take time. Great Wall Motor is no exception and its brand remains weak both abroad and at home.”

The second goal is actually to increase sales on Chinese market, wich is more than 75% of its turnover.

  1. A Success story

The net income doubled since 2012 (4 bn to 8,22bn). http://markets.ft.com/research/Markets/Tearsheets/Financials?s=2333:HKG

This strategy allows Great Wall Motors to glimpse with a lot of confidence the future, because: “Within three to five years, the company plans to produce an entire line of models in Bahovitsa to be sold in Europe, she said. Test assembly of the Voleex C10 and the Steed 5 pick-up truck, which sell for 16,000 to 25,000 leva (€8,200 to €12,800), began already in November. In the midterm, Great Wall plans to assemble around 50,000 automobiles per year at the 500,000 square meter plant. The number of workers is expected to grow from the current total of 120 to 2,000. Initially, the company plans to sell its vehicles primarily in Bulgaria and neighboring Eastern European countries like Serbia and Macedonia, but it later plans to expand into other EU countries.”

Don’t be surprised if by a few years you will see these initials almost everywhere in the streets of Antibes!

 

 

 

 

 

Other references :

http://www.forbes.com/sites/kenrapoza/2012/06/10/china-companies-inching-into-europe/

http://www.gwm-global.com/company/index.html

http://www.leparisien.fr/flash-actualite-economie/le-constructeur-chinois-great-wall-motor-ouvre-sa-premiere-usine-en-europe-21-02-2012-1871203.php

http://www.leparisien.fr/flash-actualite-economie/le-constructeur-chinois-great-wall-motor-ouvre-sa-premiere-usine-en-europe-21-02-2012-1871203.php

http://www.turbo.fr/actualite-automobile/477492-great-wall-usine-europe/

http://www.novinite.com/articles/156507/Bulgarian+Litex+Motors+Starts+Exporting+Great+Wall+Cars+to+Italy

http://www.spiegel.de/international/business/cheap-labor-in-bulgaria-chinese-open-first-car-plant-in-europe-a-816851.html

http://china.org.cn/business/2012-10/15/content_26798569.htm