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Danone in China: The strategy of growth

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  1. Introduction
  2. The internationalization of Danone
    1. The foundation for development activities of Danone
    2. The global strategy of Danone
    3. The rules for entering a new market
  3. The rules for entering a new market
    1. Danone in China
    2. The Asian context
  4. The different strategies on the market by SBA
    1. The area of fresh dairy products (FDP) in China
    2. Danone and the Water Sector in China - Danone water
    3. The Danone biscuit market in China
  5. Growth analysis of Danone: Is it a mixed strategy?
    1. The internal strategy
    2. External strategy
    3. The mixed strategy

Currently, the Chinese market is figure of "El Dorado" for Western firms facing maturity or saturation of traditional markets. With more than a billion potential consumers, the steady rise in living standards, and the impressive growth rates of coastal areas, has convinced many companies to expand into the Chinese market with a product offering in many cases identical to that of Western markets, and a total disregard of the Chinese mentality.

For several years, the obvious enthusiasm of the 60 to 100 million "most creditworthy" Chinese for mass consumption, especially for new products to display conspicuously to successful "western" buyers, have maintained the illusion that all products, regardless of their design and packaging, could appeal to Chinese consumers.

The strategies of Western companies were few cases of consumers themselves, their approach to products and their logic of consumption. This spectacular development of the middle kingdom has pushed to understand the specifics of the Chinese market.

In addition, it is true that over the last five years some high profile failures have highlighted the need to pay closer attention to Chinese consumers and their logic of consumption. Indeed, Chinese consumers are subjected to complex influences, and the references are evolving very rapidly.

The DanoneGroup has successfully integrated and developed in parallel with the democratization of China. In addition, reflecting the main subject that was asked to address: choice of internal or external strategies of international development, a few questions were asked before reaching the final choice of this case: - What are companies that perform one or more of these growth strategies? - Are there really companies that do one of two strategies? - How to deal with companies that have chosen predominantly a growth strategy to develop? - Which countries and companies would be most interesting to study?

Recognizing that virtually all firms adopt both strategies at some point in their development, it was found to be difficult to choose just two companies following the strict sense, of one or the other strategy for growth.

The Danone Group is present in 120 countries and achieved a turnover of 13.1 billion € in 2003. Danone owns many brands such as Lu, Evian, Wahaha and Danone course. These four brands together account for 53% of the turnover of the group. Then, the group has other brands such qu'Actimel, products Taillefine, Volvic, Bledina, Danacol, or Pepito.

Groupe Danone is the world leader in fresh dairy products and bottled water (by volume) and No. 2 worldwide in the biscuit market worldwide.

On the beverage market, sales of Danone Group amounted to over 3.4 billion euros thanks to strong positions in Europe (No. 1 in Spain, Germany (flat water) and Poland, No. 2 in France), Latin America (No. 1 in Argentina, Mexico) and Asia (No. 1 of packaged water in China and Indonesia).

Its main competitors are in the areas of bottled water and fresh products, Nestlé. In cookies, these were mainly of United Biscuits (but in some countries, including Belgium, Lotus Bakeries).

The development of the Group is based on three principles:acquisitions of existing companies to rapidly build a strong position in the market, creation of new activities and natural growth markets driven by innovation and quality.

Tags: Danone Group, presence in China market, growth strategy

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