1.0 – BACKGROUND OF COMPANY: Société Bic was founded in Clichy, France in 1945 by Marcel Bich. ‘Bic’ is a shortened, easy-to-remember version of Marcel’s family name and hence was adopted as the logo for all of the company’s products. Bic is well known for producing and manufacturing stationery products, razors, lighters, water-sports equipment, services with promotional products and phones. The company is located in more than 160 countries worldwide and employs over 8400 employees. The Bich family owns 40% of Bic stock and controls 55% of its voting power. Bic’s vision is “we offer simple, inventive and reliable choices for everyone, everywhere, everytime.” Their consumer range therefore, stretches from offices to small children, encompassing ‘everyone’. In order to satisfy this wide spread, Bic tries to gain a balance between reasonably high quality and reasonable price. In performing a strategic analysis of the company, we hope to evaluate its current position and make recommendations of how they can improve in the future.

1.0 – HISTORY: 1945: Marcel Bich bought an empty factory in Paris with his partner, Edouard Bouffard. Bich had substantial knowledge of the writing instrument trade having previously worked as a production manager for an ink maker. Together they started producing fountain pen parts and mechanical pencils, and in 1950 Bich purchased the patent for ballpoint pens. This led to the creation of the disposable pen. 1954 – 1957: the Company entered into foreign markets, such as Europe and South America, by creating subsidiaries and acquiring companies. 1958: the Company expanded to the United States, after realizing the demand for mass-produced disposable ballpoint pens there. Bic also acquired the Waterman Pen Company in Connecticut and developed in Africa and the Middle East. 1965: Bic entered the Japanese market and in 1969 BIC GRAPHICS was developed; this activity involves a diverse line of Bic products for the corporate advertising and gift business. 1972: Bic becomes a publicly traded company on the Paris Stock Exchange. 1973: the Company sees the need to diversify and so the BIC LIGHTER is launched, and shortly after, the one-piece BIC RAZOR in 1975. 1979: the felt pens and French pencil manufacturer Conte, is acquired as well as the boat manufacturer Tabur Marine, which becomes BIC MARINE and eventually BIC SPORT in 1985. 1992: Acquisition of Wite-Out Products Inc. followed closely by the acquisitions of Tip-Ex and Sheaffer in 1997, leading brands of correction products and premium writing instruments respectively. 1998: Further development of stationery products, lighters and razors. 2000: Bic increases its geographical presence, especially in the Asian market and subsidiaries and joint ventures are set up in Indonesia, Thailand, China, South Korea and India. Bic also continues to develop its current products and build on their strength. 2004: Acquisition of Stypen, refillable school fountain pen Company, and also the Japanese distributor, Kosaido Shoji. 2006: Purchase PIMACO Company, leading manufacturer and distributor of adhesive labels, which broadens Bic’s range of STATIONERY PRODUCTS. 2008: Bic teams up with France Telecom’s Orange and launches disposable BIC PHONE. 2009: Acquire Norwood Promotional Products, a leader in calendars, bags, and awards; drink ware and other promotional goods.

2.0 – CURRENT SITUATION: 3.1 – Strategic Business Units: As highlighted in the detailed history of the company, the clear Strategic Business Units are: * Stationery Products * Razors * Lighters * BIC Graphics * BIC Sport * Phones We distinguished these segments based on customer needs. Obviously not everyone who needs a razor needs a lighter as well, for example, and young kids who purchase stationery don’t have the need for razors etc. Stationery, Lighters and Razors are most definitely the 3 main Strategic Business Units; together they represent 87% of the company’s sales. (See Appendix 15.1, page 17) These 3 units will therefore be primarily focused on, but references to the others will be made where necessary. 3.2 – Hybrid Strategy: It is evident, on the business-level, that Bic operates a hybrid strategy, seeking to simultaneously achieve differentiation and a price lower than that of competitors. There is evidence of this from the acquisition of Tabur Marine, which eventually becomes Bic Sport, and also the joint venture with Orange in launching the disposable mobile phone. These activities are completely unrelated to the original Bic stationery products yet they help the Bic brand to become more recognized and allow them to also spread their risk across many markets instead of just one. Likewise, entering these different markets on an international scale also benefits to the company. (See Appendix 15.2, page 17) In addition Bic differentiates itself from competitors by the range of products and services they offer. There are few companies that offer the wide range of products Bic does under one name. Due to the fact that they offer such a broad range and abundant supply, the stationery, for instance is mass-produced, Bic can gain from economies of scale which help to keep their costs down and therefore allow them to be able to offer affordable prices. 3.3 – Critical Success Factors: In BIC’s major markets, stationary, lighters and razors, disposable goods act as “sub-markets” entering in competition with high quality non-disposable products. One of BIC’s Critical Success Factors (CSF) is being able to produce disposable or non-disposable products. This CSF has a clear commonness on the price of the products, but also in the distribution chain, as disposable items are sold in a higher amount and in more varied locations. The quality of products is the second CSF. BIC’s strong R&D research reveals the importance of this factor. BIC has always positioned itself with products tending toward “non-disposable quality”. The “quality” in each product integrates the notion of technological advances.

3.0 – STRATEGIC ISSUES:

4.4 – Environmental impact of disposable products: Everyday Bic sells 24 million stationery products, 5 million lighters and 10 million shavers. As these are all disposable products, one of the major issues facing the company is how these products can be disposed of so their impact on the environment is as minimal as possible. With the current trend of ‘environmentally friendly’ products, becoming more and more popular, Bic faces strong competition from non-disposable producers. 4.5 – Asian Manufacturers: Another issue facing the company is the competition from Asian manufacturers. As these manufacturers are located in less regulated and less developed countries, they can avoid the legal regulations that Bic has to abide by in terms of the safety of their lighters, for instance. Abiding by these regulations obviously makes it more expensive for Bic to produce their lighters than the Asian manufacturers, as they have to ensure that their products meet specific standards. Due to this the Asian manufacturers can offer lighters that provide the same service as Bic lighters yet at a much lower price, which usually appeals more to the customer. Bic needs to work out how it can ensure that customers choose their lighters over cheaper competition. 4.6 – Survival: Finally, the third issue Bic is facing is the fact that they are competing in numerous markets against numerous competitors. These competitors may not only be offering disposable products like Bic, but also non-disposable products as mentioned in the primary issue. Being able to sustain strong positions in each market they operate in is indeed a challenge; Bic needs to find ways to cope with the competitive environment in order to survive for the long-run.

EXTERNAL ANALYSIS: 4.0 – STRATEGIC MAPPING OF INDUSTRIES: 5.1 – The Stationery Industry (See Appendix 15.3, page 18) In the stationery industry there are 4 distinct strategic groups including: * High quality disposable stationery: This is the category Bic falls under along with competitors including Newell-RubberMaid and Pilote, all of whom face strong competition from the non-disposable providers, who offer more durable, longer-lasting stationery. * Luxurious non-disposable stationery: For example, Mont Blanc. This category represents products of very high quality and high added value. * High quality non-disposable stationery: For example, Waterman. Products in this category are sometimes referred to as the intermediate type as they still offer relatively high quality when compared with disposable products, however obviously not as high a quality as the luxury non-disposable producers. * Asian Manufacturers: This category represents the cheap low-quality products offered under no particular well-known brand names, and they are often produced in developing countries where they can produce and sell at very low prices. 5.2 – The Razor Industry (See Appendix 15.4, page 18) Bic competes directly with Gillette & Wilkinson in this industry. These 3 companies produce reasonably high quality disposable razors, and so all are competing against each other to gain consumer trust and loyalty. Other strategic groups in this industry include electric razors, whose non-disposable convenience gives them an advantage over disposable razors. Also professional razors, however, these are mainly used in hair salons nowadays by qualified hairdressers. Finally, as in the stationery industry, Asian manufacturers are present in the razor industry too. They pose a threat to Bic as they avoid many of the legal regulations Bic must follow, because they are manufactured in less regulated and less developed countries. This results in them being able to offer disposable razors at lower prices, although this could in turn work to Bic’s advantage if the customers associate lower price with lower quality. 5.3 – The Lighter Industry (See Appendix 15.5, page 19) The competitive rivalry in this industry is formed of Asian and Western manufacturers (ex. Cricket), on one side, and BIC on the other. Price and quality are correlated in this industry and that is why Western and Asian manufacturers position themselves on either a “medium quality-medium price” strategy or “low quality-low price strategy”. Western manufacturers achieve a certain quality standard by complying with safety rules and labor regulations, without achieving BIC’s high quality This makes Western manufacturers major competitors in developed and regulated markets. Asian manufacturers rarely comply with these regulations and make their mark in less regulated, developing countries. Their competitive advantage, based on low price, is adapted to local demand. BIC’s competitive advantage is based on heavy R&D research and technological and legal factors as well as financial strategies combined with rarely seen costs control processes. This equilibrium between costs, low prices and high quality is jeopardized by Asian manufacturer’s extreme lead in price. 5.0 - PESTEL FRAMEWORK: 6.7 – Political The company needs to take two major political factors into account: Monetary policies, especially in developing countries, are extremely dependent on government issues. Monetary policies can rapidly and drastically change exchange rates and this can leave exporters and importers in great risk for their liquid monetary assets. Import taxes are, too, used by governments in order to regulate their home economy. Given international political issues, these taxes can lower and rise at any time. These have a direct impact on BIC’s competitive advantage, especially in developing countries where price becomes a more important critical success factor. 6.8 – Economical There are two economical factors that affects BIC’s business model, prices affected by international markets and competition. International exchange rates for the dollar are a major risk for BIC since the company’s turnover is made in dollars. This affects BIC’s financial stability and operational profits. These rates are highly volatile and affect both its income and its costs. In developed countries, extreme competition in the distribution business has led to the rising importance of “hard discount” stores. These provide all types of goods at very competitive prices. BIC’s competing products. BIC’s competing products (lighters, razors and stationery products), although of far worse quality, can be found at extremely convenient prices.

In developing countries, illegal competition has taken the lead in providing poor quality products at low prices using BIC’s image. These counterfeited products have a double effect: it tarnishes BIC’s image and damages demand for its products.

6.9 – Sociological Consumers’ tastes change constantly and so companies must be able to adapt to this and innovate their products to meet the consumers ever-changing demands. Today consumers are more concerned with health and safety as well; the risks and side effects of smoking are advertised more heavily and there is a more negative view cast on the act of smoking; the activity for which, a lighter is required. ‘Back to school’ time means the purchase of a copious amount of stationery by students and teachers worldwide and so firms must be able to provide for all cultural circles; in Asia, the writing style is very different, and involves using the pen at a very different angle than the more western countries, and so the design must be slightly adjusted to suit their needs. 6.10 – Technological Technology is constantly changing and improving. These advances, in terms of electric razors and computers, for example, reduce the need for disposable products, however, by no means makes them redundant. No matter how convenient it is to contact people electronically, and edit and save files online for instance, pens are always needed for signing documents, cheques and scribbling notes etc. Advances in technology can also lead to more efficient production processes and reduce firms’ production costs. 6.11 – Environmental Disposable products have a greater impact on the environment than non-disposable, simply because their product life cycle is much shorter so they are disposed of at a much more frequent rate. The name says it all, ‘disposable.’ With consumers tending more towards ‘green’ and ‘environmentally-friendly’ products, firms’ must take into consideration the impact of their products on the environment, during and after production, in order to win customers approval for purchase. 6.12 – Legal Many legal constraints have been put in place due to safety concerns, particularly in the lighter industry. There are now child safety standards that firms must comply with in Europe, for instance, and in Canada there are strict regulations on importing, selling and advertising ‘dangerous products’.

6.0 – PORTER’S 5 FORCES: 7.13 – Competitive Rivalry Competitive rivalry in the disposable products industry is relatively high. Many companies offer disposable products and they are easy to imitate. In terms of the lighter industry, Asian manufacturers rarely comply with legal regulations, as mentioned earlier, by mainly targeting less regulated, developing countries. They pose a threat to those companies that do comply as they can obviously produce their products at lower costs by avoiding these regulations. With regards to the razor industry, there exists high research & development costs due to the high competition in the market between the leading firms Bic, Gillette & Wilkinson, and then the lower priced disposable razors provided by Asian manufacturers. For the stationery industry, Asian manufacturers again prove the major rivals with their low-price strategy but there is also the added pressure from the non-disposable producers.

7.14 – Potential Entrants The pressure imposed by potential entrants is low because there exists such high competitive rivalry within this industry. Due to high research and development costs as a result of safety standards and legal regulations, the threshold resources are not easy to obtain. In addition, a great deal of experience is required, in terms of threshold competences, in order to manage the high costs and survive in the market and this is also not simple to acquire. 7.15 – Buyers The power of buyers is medium for retailers; due to the fact that retailers are limited in number today in terms of a channel of distribution, they therefore have great power in negotiating what brands they offer in their stores, however they are also taking a huge risk if they don’t provide the leading brands. Where as, the power of buyers, with respect to end consumers, is high as the life of disposable products is so short so the consumers can easily switch between competitive rivals at regular or short intervals. 7.16 – Suppliers The power of suppliers is medium; in the disposable products market, the suppliers are mostly plastic and metal providers. There is a relatively high distribution of suppliers for this industry, which makes it difficult for them to control prices. International markets impose the prices of raw materials, which in addition mean the competitive rivals don’t have much negotiating power when it comes to purchasing. This therefore, results in there existing a medium power from the suppliers. 7.17 – Substitutes The threat of substitutes in this industry is very high. In terms of stationery products, existing substitutes include laptops, computers etc (evolving technologies) however, on the other hand, these are also all more expensive alternatives to stationery. Concerning disposable razors, the obvious substitutes are electrical razors, and laser hair removal technologies etc yet again disposable razors are the cheapest option. With regards to lighters, substitutes include matches and refillable lighters both of which are not always as convenient as a disposable lighter. Therefore, although the disposable products generally appear to be the cheapest alternative, there does exist an abundant supply of substitutes, which could be more appealing to consumers, even if they are pricier, simply for their non-disposable quality. For this reason, there exist a high threat of substitutes.

7.0 – OPPORTUNITIES & THREATS: 8.18 – OPPORTUNITIES: 8.1.1 - Increasing Legislation: Nowadays, within developed countries there is an increasing growth in legislations for many types of products, especially regarding the security of products; they have to be safe for children, with no risk of breaking and more and more environmentally friendly. Emerging countries do not yet cover these needs, due to the fact that their legislations take care of other existing needs in those countries. Those needs are the working conditions for example and many other things. All these legislations, give more opportunities for companies that are placed in developed countries or offer products to them, due to the fact that these companies have an advantage on other companies that have power in emerging countries because they have to cover needs before them. 8.1.2 – Innovation: Markets nowadays are mainly focused on innovation, this is because if a firm has an innovative product it can obtain higher incomes, for a period of time, than its competitors. Companies that have high investment in technology can have a competitive advantage over their competitors. Investing in innovation is very expensive, and it has a very high risk because that investment can maybe not give any benefits for the company. But in general we can say that investing in R&D gives companies a competitive advantage. 8.1.3 – Rising Economies: Rising economies or emerging countries, are very interesting markets to serve. This is because it is easier to build a need for consumers, as they have many needs that have not yet been served. Investing in rising economies if the strategy works out can give very high profitability.

8.19 – THREATS: 8.2.1- Low-price Asian competitors: Low-price competitors from Asia are one of the biggest threats Bic faces. These manufacturers avoid legal regulations and standards by targeting the less developed, less regulated countries. As a result, their costs are much lower and they can offer very low prices for their products, which can be hard for Bic to compete with. As disposable products are regularly ‘disposed of’, hence the name, it is expected that consumers will want the cheapest available since its just for a one-time use. 8.2.2 – Counterfeiting: Another serious issue threatening Bic is the problem with counterfeiting. Bic is one of the leading brands in the market for stationery products, for instance, and high quality and a strong reputation are associated with the brand. Due to this, the Bic logo has been illegally used, in developing countries especially, by other manufacturers who produce products of a much lower quality than Bic’s. This can tarnish the Bic image as consumers will see the Bic logo and then the cheap quality and possibly reconsider purchasing in future. 8.2.3 – Disposable products and the Environment: Being a manufacturer and producer of ‘disposable’ goods, Bic must be very careful in terms of the disposal of their products. If they have a serious impact on the environment, Bic will risk losing its customers to competitors whose products cause less of an impact. 8.2.4 – Exchange rate fluctuations: Exchange rate fluctuations are a threat to the company as well. Bic operates worldwide in over 160 countries so deals in many different currencies daily. With the exchange rates constantly changing, this can work to Bic’s advantage sometimes but on the other hand, can also result in great losses of money through exchange too. 8.2.5 – Prices of Raw materials: Either the competitive rivals or suppliers, as detailed earlier in Porters 5 Forces analysis, do not control raw materials markets. Therefore, Bic has no power over the prices of its supplies, which can pose a threat if the international markets raise their prices significantly.

INTERNAL ANALYSIS: 8.0 – THE VALUE CHAIN (See Appendix 15.6, page 19): In the value chain there are two types of activities taken into account, these are the primary ones and the support activities. 9.1 – PRIMARY ACTIVITIES: 9.1.1 - Production of raw materials: the company is nowadays producing its own raw materials; this does not represent yet an important part of the ones they use to produce their products but we have found this process relevant due to the fact that the company tries to not be so dependent on the raw materials markets. This production of raw materials is a consequence of the company’s investment in R&D, which will be stated later. 9.1.2 - Manufacturing: the BIC Group has nearly a total control of what they produce, as they only subcontract 10% of what they produce. The assembling of the products is done entirely by the company. Some other very important thing to state, is where all this manufacturing process is done; it has its main factories in the US and Europe. Offices and factories are located in the same places so the control of the production is extremely high. The fact that the manufacturing of goods is totally controlled by the company makes it control all the variables. The company has implemented its own production processes as well as quality and safety tests. 9.1.3 - Marketing and Sales: the 4 P’s of the marketing-mix are very important for the company. The brand has to be perceived in a way, which is controlled, by the product, price, place and promotion. These 4 P’s have to have an extremely high coherence. This coherence between the p’s maintains the companies brand name. The price and product are given a lot of importance and they both have to be taken into account for the different areas or products. 9.1.4 – Distribution: the company has a very strong distribution power, due to its mass production and sales. The company has a very high power, but despite this power they work very closely with their clients, and have developed some programs with their clients that give them a great amount of information.

9.2 – SUPPORT ACTIVITIES: 9.2.1 - Human Resource Management: the employees represent a very high value for the company; they are recruited in the regions where the company is established. These regions are highly developed, so the employees recruited by the company are highly skilled people. These represent one of the company’s main assets. The company also has its own University to teach them and therefore to make them acquired the knowledge they need. 9.2.2 - Research and Development: investment in R&D for the group represents big part of its revenue. It has always been a technological based firm, since its creation with the acquisition of a patent and further on with its own development of patents. All its products have a high level of technology, which make it hard for its competitors to copy. 9.2.3 - Firm infrastructure: the firm is organized in a matrix way which makes it have a high control on what they produce, but also makes taking decisions slower and have extremely high costs. The firm has established many control systems and information systems. All these make the firm have high control on what they produce. 9.2.4 - Finance: we have stated this as a support activity, because the firm sells its products worldwide and has to have a high control on the currencies, due to the existing fluctuations. The finance department also takes care of the investments done by the firm.

9.3 – COMPETITIVE ADVANTAGE: The high level of vertical integration of the group makes it have a high control on what they produce. This control makes the firm have a high power on the industries they work on and this makes it have a competitive advantage over the other companies. The firm infrastructure is very hard to copy for its competitors, because it is very expensive to build a matrix structure that is effective. Control systems are also very hard to copy, and very expensive to implement. This all has to be sustained by the human resources of the company. Its economies of scale give the firm the opportunity to produce at low price, which is also another source of competitive advantage. So we could say these sources of competitive advantage are sustainable in time, but these have to be sustained by technology, which also ads value to the company.

9.0 – THE BCG MATRIX (See Appendix 15.7, page 20) :

DIEGO? RAFA?

10.0 – STRENGTHS & WEAKNESSES:

11.20 – STRENGTHS: 11.1.1 - Financial capabilities: the BIC group does not have a lot of cash flow, because all the benefits are always reinvested so we think this is not a problem because many of its investments are can be very rapidly converted into cash flow. This makes it have strong financial capabilities. The group does not have debts. Its strong and performing financial department makes the group have an advantage.

11.1.2 - R&D: BIC’s investment in R&D makes it have innovative products; this contributes to better the brand’s image. As they have these kinds of products it makes the brand be very competitive in many markets. Its investment in new types of materials and security policies make it be a stronger brand to compete with.

11.1.3 - Cost management: BIC is able to produce at low price and high quality. The cost management of the company has produced this effective hybrid strategy. This management is one the brand’s mains strengths.

11.1.4 - International development: its matrix structure enables the group to act in emerging markets in an effective way. Working in a market from two different angles makes it have a better strategy.

11.21 – WEAKNESSES: 11.2.1 - Brand image: although BIC’s brand name can be a competitive advantage it can also be a possible risk, because the brand name is used for many different products so any incident in any of them can affect the others. Its brand name does not work for higher quality products.

11.2.2 - Low unit margins: the group has many low margins for its products, that is why it needs to have high sales to be profitable. If the group does not sale big quantities it can be in big risks.

11.2.3 - Price: where price is a critical success factor, e.g. in developing economies, the brand cannot compete.

CONCLUSION: 11.0 – RECOMMENDATIONS: 12.22 – Develop non-disposable products:

12.23 – Improve position in Asian countries:

12.24 – Push growth in sports market:

12.0 – FEASIBILITY ANALYSIS:

13.0 – BIBLIOGRAPHY:

Gerry Johnson, Kevan Scholes, Richard Whittington, “Exploring corporate strategy”, Prentice Hall, 7th edition

Societe BIC, “Stationery presentation”, 2008, <http://www.bicworld.com> December 2009. Societe BIC, “Shaver presentation”, 2008, <http://www.bicworld.com/>, December 2009. Societe BIC, “Lighter presentation”, 2008, <http://www.bicworld.com/>, December 2009. Societe BIC, “Corporate presentation, 2008, <http://www.bicworld.com/>, December 2009. Societe BIC, “Investor Relations”, 2008, <http://www.bicworld.com/>, December 2009. Societe BIC, “Human Resources”, 2008, <http://www.bicworld.com/>, December 2009. Societe BIC, “Sustainable Resources”, 2008, <http://www.bicworld.com/>, December 2009.

15.0– APPENDICES: 15.1 – Net Sales by Category 2009:

15.2 – Net Sales by Geography 2009:

15.3 - Strategic Map of the Stationery Industry: LOW Quality HIGH
Non disposable Disposable

Asian Manufacturers

High quality non-disposable Stationery (Waterman)
BIC
Newell-
RubberMaid
Pilote
Luxurious non-disposable stationery ( Mont Blanc)

15.4 – Strategic Map of the Razor Industry:

LOW Quality HIGH
Non disposable Disposable

BIC
Wilkinson
Gillette
Asian Manufacturers
Professional Shavers
Electric Shavers

15.5 – Strategic Map of the Lighter Industry:

LOW Quality HIGH
Non disposable Disposable

Asian Manufacturers
Other Western brands
BIC
Non-disposable lighters

15.6 – The Value Chain:

Human Resource Management
Research + Development
Manufacturing
Marketing + Sales
Firm Infrastructure
Finance
Production of Raw Materials
Distribution

15.7 – The BCG Matrix: High MARKET SHARE Low
Low MARKET GROWTH High

Lighters

Stationery

Phones

Graphics

Razors

Sport