...Entry Strategies for MNEs in China: The Case of Danone and DHL International Business Winter 2014/2015 Table of contents 1. Introduction 3 1.1. FDIs and Entry in China 3 1.2. Research Contribution 3 1.3. Research Method 3 2. Literature review 4 2.1. FDIs 4 2.2. Macro Environment 5 2.3. Timing of entry 6 3. Discussion 6 3.1. Introduction of Cases 6 3.2. Motives of Entering China 7 3.3. Joint Venture in China 8 4. Conclusion 9 4.1. Implications 9 4.2. Limitations 9 4.3. Research Outlook 9 5. References 9 1. Introduction 2.1. FDIs and Entry in China How should MNEs enter China? MNEs are usually presented with multiple entry choices, namely export, licensing agreements, franchising and FDIs. While each mode presents advantages and disadvantages, FDIs cause MNEs to make direct investments and be directly present in foreign countries, as opposed to indirect investments and presence through other modes of entry, hence the name “foreign direct investment”. But with direct presence in a foreign country MNEs are subject to both formal and informal institutions, and those institutions will directly influence a company’s decisions and it’s mode of entry (Ingram, Silverman 2002). MNEs have to decide whether to go as a first or late mover and due to what kind of motivation they decide to do FDIs in China. In countries with a weak institutional framework, Meyer et al. (2009) find that MNEs should choose the Joint Venture...
Words: 3508 - Pages: 15
...Professional report on negotiation between Danone and Wahaha (2007-2009) On the 30th of September 2009 an almost 12 year relationship between French multinational enterprise Danone and Chinese Wahaha group ended by Danone withdrawing from the IJV (International Joint Venture) for monetary settlement. This report analysis the negotiation journey of the dispute and tries to classify the different negotiation steps based on the challenges of negotiating business deals in China. As a tool IRENEs framework on “Who/ How/ What” is used. Based on the analysis of the negotiation and the review of the cultural differences between western oriented and Chinese businesses suggestions will be made what could have been done differently by Danone. Overview of the Situation between Danone and Wahaha early 2007 The multinational Danone Group SA based in Paris in France is one of the biggest players on the global dairy product and bottled water markets. They are active on all five continents and the net sales in 2007 was more than 12 billion €. The Hangzouh Wahaha Group Co., Ltd. is a company that has grown from a small business, selling drinks to school children to become one of the most important and largest Chinese bottled-water companies already in 2007. Although it is difficult to find detailed financial figures on Wahaha it can clearly be stated that in 2007 the Group was much smaller than Danone. At that time Wahaha contributed approximately 6% of Danone’s...
Words: 4670 - Pages: 19
...China Basically, Danone chose joint venture as their entry mode at the early stage of entering Chinese market. More specifically, in 1996, they began a joint venture with the other two companies: Hangzhou Wahaha Group Corparation (Wahaha Group) and a Hong Kong corporation called Bai Fu Qin (Baifu), and formed five new subsidiaries in China. However, it should be noted that Danone and Baifu did not directly invest in the JV, but established Jin jia Investment, a new corporation in Singapore instead with Danone as their controlling shareholder. In this case, Wahaha Group held 49 percent of the entire shares of JV while Jinjia owned the remaining 51 percent. The reasons why Danone decided to form a joint venture rather than a wholly owned subsidiary or other formats can generally be associated with the considerable benefits they may gain from it. Firstly, as a French company who has just entered the Chinese market for no more than 10 years since 1980s at that time, Danone’s knowledge about domestic market was still limited and may face a challenge if they run their business solely. Therefore, it is essential for them to learn from their partner in terms of related market knowledges, such as the competitive conditions, culture, political and business systems in China. Secondly, the partnership enabled Danone to share related costs and risks of developing a new product or process, in turn, led to the increase in their profit margin. It can be generally seen that Danone, as a multinational...
Words: 1579 - Pages: 7
...Analysis 1.Company description ! Danone is a french food-products multinational corporation founded in 1919. It claims world leadership in fresh dairy products, waters, but also in baby nutrition and medical nutrition. The strategy of Danone has evolved in 4 steps: 1966 -1980: change of core business: Danone Group (called BSN) decided to become an actor on the food-processing market, taking in 1970 the control of of Evian Group, merging in 1973 with the Gervais-Danone Group. 1980 - 1990: European development strategy for the group, taking in account the acquisition of of General Biscuit in 1986. In 1981, the group abandoned the glass-work market, and focused its resources on the growth of new international activities. 1990 - 1997: International development strategy taking in account evolutions in the foodprocessing market and changes in the emergence of new outlets. In 1994, the group BSN took the name Danone. 1997: Refocusing strategy on priority activities, with the goal to become leader on this sectors. 2. Strategic Business Areas (SBA) ! By the multiplicity of its acquisitions, the activity of Danone covers many trades. in order to enlighten its future strategies, we found it is useful to draw up its Strategic Business Areas. SBA Target Objectives Contribute to the human health Ensure a sufficient water provision to the world population Guarantee a healthy growth to new-borns Technology Brands Danone, Actimel, Danette, Fjord... Fresh...
Words: 1855 - Pages: 8
...Grameen Denone Shokti Doi. Following the social business concept, French based food and beverage company Denon started its operation by making an agreement with Grameen group which is named as Grameen Danon. Grameen Danon launched in 2006 and they officially launched their 1st package of product named Shokti doi as the main concern of Shokti doi is to provide nutrition to the poor children of Bangladesh which can able to fulfill their nutritional requirements. As they started their business they have faced lots of obstacles such as the lack of proper distribution, non-standardized management along with localization problem. Also, the distribution through women raised the fact of cultural barriers. The unplanned product and overstated pricing strategy also become a fact of their market loss. Various key factors like Product, Price, Promotion, Proper segmentation and target market are also play a big role in terms of generation revenue for n organization. Based on our research objectives and other related subjects of the research, we developed few hypotheses for it, which we have tested by our primary and secondary data that we have collected by survey. The data we have collected can be divided into two categories are Primary Data and Secondary Data. Primary data refers to the data collected from the survey that we have conducted among the samples of the target consumers who are assumed as representatives of the target population. Secondary data refers to the data that we have collected...
Words: 8780 - Pages: 36
...Almaty 2015 Executive summary In our project, we are going to analyze the Danone Company’s structure. Firstly, we will briefly describe the current situation of the company. Then, will show the corporate governance, namely top managers and boards of directors. This paper consists on analyzing the business structure of Danone, one of the largest yogurt and other dairy products in the world. In the first part of this paper, we study which is the main activity of the company, we identify external and internal environment, main competitors and industry analysis. We also pay attention to the main stakeholders of the company, suppliers and customers. Current situation Danone Company is a global company, which represented in 120 countries all over the world. Also it takes stable position in the market. The Danone plant watches the most noteworthy natural principles: its creation offices utilize the most recent environmentally propelled advances for capacity and transforming of the crude materials; the plant has its own particular cleaning offices, an autonomous heater house, a blaze quenching framework, refrigeration supplies and significantly more. By the end of 2014, the Danone plant has been producing 58 varieties of dairy products of Activia, Rastishka, Danone, Prostokvashino, and Bio Balance brands. Danone's objective is to lessen its carbon foot shaped impression by 30% from 2010 to 2014, as far as power, over the whole esteem chain for which the gathering holds direct...
Words: 3917 - Pages: 16
...market and Danone Group is one of them. Danone is a French food and beverage conglomerate and signed an agreement with the Hangzhou Wahaha Group in 1996, a Chinese beverage company, to set up a series of joint ventures in China. The partnership was established to market products under the Wahaha brand name. Ultimately, the agreement resulted into thirty-nine joint ventures. Those joint ventures were hugely profitable as the Wahaha brand became a household name in China. In spite of these successes, the relationship started to deteriorate. After years of court battles, Danone finally pulled out of the JV and ended this partnership with Wahaha. Based on the case study, this essay will firstly analyze Danone’s market entry mode and limitations of this mode. Subsequently, this essay will discuss contributions of both Wahaha and Danone in this relationship. Finally, this essay will present reasons for the Danone-Wahaha dispute and lessons derived from this dispute. Danone’s market entry mode Danone entered the Chinese market selling consumer drink products, including fruit juice, dairy products and bottled water, all with Chinese joint venture partners who were market leading brands in China. A joint venture is a special type of strategic alliance, which requires establishing a firm jointly owned by two or more otherwise independent firms (Hill, Wee and Udayasankar, 2012). Danone and Wahaha in this case are the two strategic partners to establish joint ventures together. Danone chose...
Words: 2318 - Pages: 10
...National Aviation University Department of Marketing Marketing plan on DANONE Done by: student of FML-206 Kateryna Golovchuk Kyiv 2015 Contents 1. Introduction 2.1. Purpose of the Marketing Plan 2.2. Mission, strategy and objectives of company 2.3. Company’s History 2.4. Company’s History 2. Situation Analysis 3.5. External Environment 3.6.1. Suppliers 3.6.2. Marketing intermediaries 3.6.3. Customers 3.6.4. Competitive Strategy 3.6.5. Companies competitors in Ukraine 3.6. Internal Environment 3.7.6. Political environment and Social environment 3.7.7. Economical environment 3.7.8. Cultural environment 3.7.9. Technological environment 3.7. Summary (SWOT analysis) 3. Marketing Programs 4.8. Product 4.9. Price 4.10. Place 4.11. Promotion 4.12. BCG Matrix for Nestle Ukraine 4.13. Segmentation, Targeting and Positioning 4. Conclusions and Recommendations 5. References 1. Purpose and Mission 2.1. Purpose of the Marketing Plan Purpose of this project is to discover the strategy for a company and its products, analyze the contemporary situation, its place in the world market, identify its marketing strategy, determine the objectives and define the basic components of marketing...
Words: 2607 - Pages: 11
...Companies The Danone-Wahaha partnership once seemed ideal, but the companies’ relationship has deteriorated. What lessons can be learned from the dispute? Jingzhou Tao and Edward Hillier T he Danone-Wahaha dispute is a story of the relationship between two very different entities against a backdrop of incredible change. The dispute reveals many questions that China faces as it integrates into the world economy, such as what to do when rule of law leads to an unpopular result or harms a valued Chinese company. The players Group Danone SA, a Paris-based multinational corporation (MNC), is a giant in the global dairy product and bottled water markets. The MNC employs roughly 90,000 staff across five continents. Though it is a beverage giant in China, the Hangzhou Wahaha Group Co., Ltd. is much smaller than Danone. Since its founding in the late 1980s, the company has grown from three people selling drinks to school children to become the largest Chinese bottled-water company today. This growth is mainly the result of the drive and talent of founder Zong Qinghou, who expanded the company by satisfying Chinese consumer demand and aligning his business strategy with government policy. Danone and Wahaha formed their first joint venture (JV) in China in 1996. Over the years, the number of JVs grew from 5 to 39, and annual sales rose from a few hun44 May–June 2008 chinabusinessreview.com dred million renminbi to more than ¥14 billion ($2 billion) in 2006. Danone held a 51 percent...
Words: 2724 - Pages: 11
...936 Groupe Danone - issues regarding its policies 1. Company’s background The company has its roots in Spain, where Danone was founded by Isaac Carasso in 1919. Having previously lived in the Balkans where yogurt was a dietary staple, Carasso decided to introduce this healthy product in Barcelona. He opened a small yogurt business named "Danone," meaning "Little Daniel" after his son. Carasso was aware of scientific advances that had been made with fermented milk by Elie Metchnikoff at the Pasteur Institute in Paris. He perfected the first industrial manufacturing process by combining the traditional method of making yogurt with the pure cultures that had been isolated in Paris. In 1923, the first Danone yogurts start to be sold in pharmacies as doctors recommend it for its therapeutic qualities. The younger Carasso, Daniel, learned the family business in Spain and decided to establish Danone in France in 1929. In 1949, the yogurt is almost a dairy product. The porcelain “envase” is substituted by the one made of glass. This innovation makes it easier to popularize the yogurt. In 1968, Danone starts its first TV campaign. In 1985, Danone creates its first “low fat yogurt” called “Danone Desnatado”. In 1992, Danone was the Official Sponsor of Barcelona's Olympic Games. “Danone Institute” is created in 1993. Its main objective is to research and develop healthier and better products for the company. 2. Mission, values and corporate philosophy Danone Group's mission...
Words: 2028 - Pages: 9
...Introduction: In 1996, Danone, a multinational foreign company entered into a joint-venture contract with a local Chinese beverage company named Wahaha in order to better access to Chinese market. The form of the joint venture was a great success at the beginning stage, with both parties gained substantial benefits from the relationship. However, in 2001, conflict arise when Wahaha Group created a series of Non-joint venture companies that sold the same product as the joint venture and use the Wahaha trademark. Since then, a long time dispute continued around the ownership of the “Wahaha” trademark, the rationality of the existence of non-joint ventures and the non-compete issue. Several lawsuits were carried but all ended in Wahaha’s favor. Eventually, Danone relinquish the claims and secede from the joint venture by selling its 51 percent share to the business’s Chinese partners. Main body With a global standing and desire for international expansion, Danone entered the Chinese market in the late 1980s. Compared with many developed countries where markets almost reach saturation, China has a promising market with cheap labor which provide a good opportunity for Danone to further develop. At early stage, Danone entered China through forming a joint venture with the local enterprise Wahaha. There are three main reasons for why Danone use the joint venture mode instead of using other modes to enter China. First, Danone can benefit a lot from Wahaha’s knowledge of local Chinese...
Words: 1773 - Pages: 8
...Dannon Company is US subsidiary of the Danone Company that was founded in Spain by Isaac Carasso in 1919. Isaac Carasso created an innovative yogurt product using ingredients obtained from Paris, which were used to treat intestinal disorders. Isaac’s son, Daniel went on to found Danone in Paris and after Isaac’s death in 1939, he immigrated to the United States seeking a safe-haven after World War II (Marquis, 2010). In 1942, Carasso founded Dannon Milk Products, Inc., changing the name from Danone to Dannon in order to sound more “American”. During this time, the market for yogurt in the United States was almost non-existent. Carasso had two successful breakthroughs, first in 1947, introducing “fruit on the bottom” yogurt and in 1955 with low-fat yogurt, all appealing to health enthusiasts (Marquis, 2010). Over the next several decades, structural and product changes took Dannon is several different directions. In the 1980’s Dannon had 17 different product lines and had received FDA approval for a new sugar free sweetener which allowed for the most successful product launch to date, “Dannon Light”. In 1994, the company focused on rebranding their products, focusing on the overall health benefits of everything they produced (Marquis, 2010). Although the United States had had yogurt products available for over 60 years, research concluded that yogurt was not a core component to the American diet and the biggest potential for growth for Danone, rested within the United States. In...
Words: 1862 - Pages: 8
...NE 2012 DANO LITY ABI TAIN SUS RT EPO R ance Perform and Strategy IC RATEG TS ST LIGH HIGH For All, Health, Nature People, E RmAnC fo GRI pERoRS T IndICA SUSTAINABILITY REPORT 2012 STRATEgY 4 EDITORIAL FRANCK RIBOUD 6 KEY SOCIAL TOPICS NUTRITION AND HEALTH ISSUES SOCIAL ISSUES ENVIRONMENTAL ISSUES 7 10 12 14 STRATEgY 2012 HIgHLIgHTS HEALTH FOR ALL PEOPLE NATURE 15 22 28 34 40 MEASURINg PROgRESS AND PERFORMANCE THROUgHOUT THE VALUE CHAIN DANONE WAY RESPECT DANONE’S EVALUATION BY NON-FINANCIAL RATING AGENCIES 41 46 56 HISTORICAL APPROACH AND HIgHLIgHTS REFERENCE DOCUMENTS HIGHLIGHTS AND KEY DATES 1972-2012 57 58 50 2 Danone Sustainability Report 2012 PERFORMANCE 62 gRI INDEx Self-evaluation of the application of GRI according to version 3.0 guidelines for the GRI with approval by KPMG Audit. 72 IMPACTS AND RESPONSIBILITIES IN BUSINESS, FROM END TO END 74 COMPANY PROFILE AND REPORT PARAMETERS COMPANY PROFILE REPORT PARAMETERS VALIDATION OF THE REPORT BY AN EXTERNAL THIRD PARTY 75 76 83 86 PERFORMANCE INDICATORS GOVERNANCE, COMMITMENTS AND DIALOGUE ECONOMIC ENVIRONMENTAL SOCIAL HUMAN RIGHTS SOCIETY PRODUCT RESPONSIBILITY 86 94 102 134 152 158 166 176 CONTACTS Danone Sustainability Report 2012 3 SUSTAINABILITY REPORT 2012 EDITORIAL FRANCK RIBOUD he year 2012 confirmed in spectacular manner the profound shift in the global economy that is gathering pace. On the one hand, new economic powers...
Words: 48350 - Pages: 194
...The Simple Marketing Analysis of... • Groupe Danone is a French food company that is challenging Nestlé’s world leadership position. It has claimed to be the world leader in the dairy products and bottled water markets. • The group’s turnover came to €14.982 billion in 2009. Turnover growth thus increased 3.2% in 2009 on a like-for-like basis, enabling the group to reach its growth targets and providing proof positive of the effectiveness of the strategy established in late 2008 to address the world economic crisis. The current operating margin of the group is up for the 15th consecutive year, firmly anchoring the global market positions. As a global leader in healthy food industry, • Danone has made €14,982 billion in sales in 2009. • Danone is the world’s number 1 in fresh dairy products. • The world’s number 2 in bottled waters (Nestlé is the #1) • The world’s number 2 in baby nutrition (Maed Johnson is the #1) • The European number 1 in medical nutrition. (global leader is Néstle) • In 2009 the group’s operating profit is €2.294 million, also the group’s operating margin is 15.31% and net current profit is €1.412 million. The Group’s total workforce as of 31/12/2009 is 80,976 people Key Brands Drive to Growth The BCG Matrix When we constructing the Boston Matrix… • We need two variables… • First, the Relative Market Share, expresses the ability of control over the market that the firm introduced • Second, the Market Growth Rate which shows the...
Words: 3920 - Pages: 16
...Case Study: The Dannon Company OL 690: Responsible Corporate Leadership Southern New Hampshire University March 25th, 2015 Introduction Danone, the parent company and U.S. subsidiary of Dannon, was founded in Barcelona Spain in 1919 by Isaac Carasso (Marquis, Shah, Tolleson, & Thomason, 2011). Isaac had the goal of developing a yogurt for more than the purpose of taste, but with additional inherent health benefits (Marquis, et al., 2011). The health benefits were based on the use of pure lactic ferments, which were initially prescribed by physicians due to their proven ability to help treat intestinal disorders (Marquis, et al., 2011). It was because of Carasso that consumers could have the added benefit of treating their intestinal disorder while nourishing their bodies. Daniel Carasso, Isaac’s son, was brought into the business and ultimately became CEO in 1939 after Isaac’s death (Marquis, et al., 2011). Prior to his father’s death, Daniel was able to take Danone to another level in 1929 when he founded it in Paris (Marquis, et al., 2011). Due to the extensive amount of competition in the yogurt business, Daniel leveraged the focus on health to differentiate Danone from the competition (Marquis, et al., 2011). After his father’s death, Daniel merged with two notable organizations in 1967 and 1973, Gervais and Boussois-Souchon-Neuvesel (BSN) respectively (Marquis, et al., 2011). These mergers resulted in rapid expansion throughout Europe, a newly named conglomerate...
Words: 2256 - Pages: 10