Danone and its strategy for the international markets

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Danone and its strategy for the international markets

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Abstract

The strategy of a firm is the base of its business model; especially if it wants to operate in international markets. Numerous strategists and economists have already written some theories about the better way for strategies to go international. Bartlett and Ghoshal are two such authors. They worked together on four international strategies: a global strategy, an international strategy, a multi domestic strategy and a transnational strategy. These four strategies are functionally based on two criteria: the pressures for low cost reductions and the pressures for the local responsiveness. DANONE is one of the biggest companies in the world. This company is present in all continents thanks to its fresh dairy products, its beverages or its baby foods. This is a French company and it is a leader in this market. Danone is a French company. Its history began in 1966 with BSN Company which was a glass and packaging manufacturer. This market was decreasing, and the CEO, Antoine Riboud, decided to focus on the content side! In order to develop its market, it bought the Kronenbourg Company followed by Gervais-Danone Company in 1973.

Introduction
Danone case study
1. Danone overview
Danone strategy
1. Maximize local responsiveness
2. Skill and product transfer
3. Multidomestic mentality
4. Personal control
5. Decentralized federation
6. Pressures for cost reductions
Limitations of Bartlett and Ghoshal framework of international strategies with the example of Danone
1. Multidomestic strategy: Advantages and disadvantages
2. International strategy: Advantages and disadvantages
3. Global strategy: Advantages and disadvantages
4. Transnational strategy: Advantages and disadvantages
Conclusion
References

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[...] But, Hill & Jones argued that”in most international companies the head office retains tight control over marketing and product strategy”. In addition, the companies are used to establishing manufactory in each major country. b. Disadvantages Several disadvantages are observed for this strategy. The first one can be the inability to realize location economies. The second one is the failure to exploit experience-curve effects. The third one is failure to transfer distinctive competencies to foreign markets. This strategy often involves an international-division structure Global strategy A global strategy is associated with low pressures for local responsiveness and high pressures for cost reductions (Bartlett & Ghoshal 1998). [...]

[...] Moreover, we notice that in general Danone employs its staff directly inside the new country; the teams account a few expatriated people (Servel 2004) Personal Control According to Servel, in the case of China HQ subsidiary relationship, in 2004, DANONE was left with a lot of autonomy and for him the group is not in support of global integration. He adds that in the inter-subsidiaries relationship, DANONE maintained a strategy of delegation. Is it true after the confrontation between them? [...]

[...] Advantages This strategy is advantageous for the company which wishes to transfer valuable skills and products to create value in international market; especially if its competitors in this market have some weaknesses or if company faces low pressures for local responsiveness and cost reductions. According to Hill & Jones, without these conditions the firm will be not profitable, particularly in the case of high pressures for local responsiveness; that leads to the peril of the firm because of its competitors which customize their products and thus respond to the local responsiveness. [...]

[...] And, the last is to achieve local responsiveness and hence to customize its products and services and also to adapt its strategy to local market. The transnational strategy demands an organization really rigorous and quite difficult. Furthermore, with this strategy it is easy to exploit experience-curve effects and location economies. Caterpillar is a firm pursuing this strategy. This strategy often involves a global-matrix structure. b. Disadvantages The biggest disadvantage of this strategy is the difficulties to put it in practice because of organizational problems. [...]

[...] But Danone has a strategy of internationalization which is global for all its subsidiaries; however each segment, such as fresh airy products or beverages can vary between different countries and in relation to the main strategy of the head office Danone strategy DANONE has a main strategy for itself and its subsidiaries. For example, according to DANONE chairman, the key points of the strategy of 2007 were the following: sales and operating income growth, innovation for the future, provide dynamic support for the brands, set up new production facilities, make major investments in research and above all accelerate geographical expansion. [...]

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