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Danone-Bayer alliance: An analysis

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  1. Introduction
  2. The Profile of the Carrefour Group
    1. Background
    2. Key figures
    3. Signs of the Carrefour Group
    4. International Development and Geographic Locations
  3. Business strategies of Carrefour
    1. The evolving strategy of Carrefour
    2. The different forms of distribution
  4. Carrefour and internationalization
    1. Internationalization, a growth mode
    2. The choice of locations and different implementation strategies of the group
  5. Conclusion

The last twenty years have witnessed the development of a considerable number of alliances or cooperative agreements between firms. These agreements form part of the strategy implementation by companies and takes into account only the cost or risk of development. During this period, the number of agreements have grown from a dozen annually to a few hundreds.

Although all industrial sectors are affected, some have been impacted more strongly than others, for example, telecommunications, computers, electronics, aeronautics and aerospace, banking, automotive, pharmaceutical, food etc. Several factors prompt some industries to more cooperation. It acts, first of all, on industries where economies of scale and effects of experiment are important. These could be the industries where technologies change very rapidly, and R & D are substantial, for instance, computer science and pharmacy.

The cost of entering new markets and the operational risks involved are also responsible for the cooperation. Finally, for the globalization of markets, competition requires an expanded presence and resources. Each of these factors pushes companies towards one form of co-operation or another.

The merger between Danone and BayerSchering AG is a blend of all these different elements and factors. To better understand the possible alliance between these two groups, this paper will conduct a strategic analysis of the partners and an analysis of the market for functional foods and therefore to study the possibility of introducing a new generation of nutraceuticals. It will then explain the choice for the bringing together of these two players and eventually it will analyze the risks of such cooperation and precautions needed by both partners to render this alliance successful.

The Groupe Danone will focus on two priority areas: fresh dairy products,and beverages. This strategy of leadership in both sectors, with the Group Danone to divest its grocery, confectionery and packaging, then confirmed its withdrawal from the beer in Europe in 1999, and to proceed with the sale of Galbani early 2002. And in 2007 it wound up its pole biscuits to provide the means to be number one in international business.

Danone is present in over eighty countries. The main market is France,followed closely by Western Europe with growing market shares in Eastern Europe and the rest of the world.Its main competitors are in the areas of bottled water and fresh products, Nestle and United Biscuits cookies (but in some countries,including Belgium, Lotus Bakeries).

From a strategic point of view, the situation of Danone is advantageous, since the groups key positions in three businesses (water, dairy products, biscuits) and two of which are growing much faster than the food sector (water, dairy products ). Moreover, despite a difficult start, the group has built strong positions in emerging markets.

The market for fresh dairy products in France is very important as one has seen previously. Over the last 20 years one has seen a proliferation of varieties and forms of yogurt and derivatives in supermarkets and hypermarkets.
In the French market, Danone is the clear leader with 34.9% market share. Among its competitors are the other two food giants are Nestle andYoplait and local manufacturers that produce products of their region and under their own brands.

Tags: Danone Group, BayerSchering AG, alliance of the two companies, analysis

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