Company Overview
Danone Groupe is one of the largest multinational corporations in the globe. The company, which was formed in France and later on moved to United States, operates in various countries, including: United Kingdom, India, Israel, Pakistan, China, Indonesia, Turkey, among others. In the United States, it operates under the name The Dannon Company, which was modified when the owners moved the company into the country to make it sound more “American.” Over the years, the company has merged with various companies, which is one of the main impetuses for the rapid growth of the company in the global market. As of now, it operates more than 200 plants with a workforce of more than 88,000 individuals in more than 120 countries globally (Fangging, 2013). With time and following the various mergers, the company is now producing a range of products within the beverages industry as well as other related industries. Currently the company it is well-known for production carbonated soft drinks, and bottled water. It is also performing well financial, as reflected in its net sales. In 2011, 56% of its net sales were accounted for by dairy products, 16% from cereals and biscuits, and 28% from beverages (Wit, & Meyer, 2010).
Industry and product and services provided
Danone operates in two major sectors namely: the beverages industry and the food products industry. In the beverage industry, the company is the second leading company in production of bottled water. Some of its brand portfolio: Evian, bottled still water brand; Danone, fresh dairy products brand; Aqua, packaged water in Indonesia; and Volvic, international brand of bottled still water (Plunkett, 2009).
Competitors
Danone is faced with significant competitors, both established and upcoming, in the market. Undoubtedly, the food and beverage industry is one the most competitive industries because of the many local and global competitors. Some of its major competitors include: Nestle, PepsiCo. Kraft, and Coca-Cola (Morschett, Schramm-Klein, & Zentes, 2009). It also faces competition from the minor competitors, especially small enterprises with concentrated markets or product lines as well as food retailing stores providing private or generic label products. However, the company has managed to remain competitive in the market through its strategy of maintaining quality, convenience, and innovative elements in its products. Moreover, its brand strength has worked to its advantage, which has seen the company keep on attracting new and maintaining the existing clients (Peng, 2009).
CSR Activities
Danone has identified the role that the community is playing in its profitability. Therefore, it has established a corporate social responsibility segment in its business plan to promote its relationship with the community. The company is always engaged in community-related services as a way of giving back to the society. For instance, it has been involved in offering sponsorships to events such as sports. It is also involved in numerous charities that take place in countries that it is operating (Pride & Ferrell, 2010). Recently, fast food and beverage industry has become under attack with regard to the role it plays in promoting unhealthy eating habits. To maintain its image, the company has stepped forward by initiating a number of healthy eating campaigns in the United States as well as other countries where it has been established. Most importantly, the company has been in the forefront in environmental preservation projects (Accenture, 2008).
Critical Analysis of CSR Activities
The company releases reports on its CSR achievements annually, which helps the public to rank or rather evaluate the performance of the company over time. Most of its CSR activities are focused on promoting healthy eating habits and environmental preservation. For example, it is involved in protection of water resources through its subterranean water protection policy. Following the implementation of this policy, the company has been in the forefront promoting awareness and water management practices. It has also put in place the Carbon Trust together with PricewaterCoopers, with an objective of managing global warming and carbon management. All these strategies have helped in improving the image of the company in the community.
Political/Legal Factors
Danone is faced with various political factors, including laws, agencies, as well as groups that manipulate and control organizations and individuals in the regions where it operates. Particularly, the company is forced to integrate government policies in its business model (Verma, 2013). For instance, considering that the food industry is among the most sensitive sectors in the economy, governments enforce regulatory policies to protect the consumers. A point to note is that, considering the fact that various countries have distinctive regulatory policies, the company has different approaches in venturing into new markets. In addition, the company has to take into consideration the various taxation rules (Askew, 2013). For instance, the company has to pay corporation tax as well as income tax as per the taxable rates that have been put in place by the government in countries in which it is operating. Besides, the company also must incorporate various legal issues in its business model. For instance, the each and every country has rules and regulation with regard to employment and this has to be considered when the company is recruiting employees. However, overall the company has good political links in the international markets, especially in China. Other political issues that affect the company include: trade policy, government economic policy, diplomatic events in neighboring countries, corruption, and bureaucracy (Best, 2013).
Technological Factors
In the recent times, technology is a key factor in enhancing competitiveness in the market. In fact, most companies, including Danone, have put technology as one of the most important factors in their diversification strategies. For instance, Danone relies largely on technology in marketing its products. The company advertises its products through social networks in addition to other websites (Forbes 2013). In fact, through online advertising, the company has managed to reduce its marketing expenses, but still covers a greater scope regionally within a short period of time. In addition to online marketing, Danone has implemented systems that allows its customers to order and pay for their product online, hence eliminating the need for customers to visit their restaurants physically. Technology is also applied in other areas, especially in production, packaging, inventory management, logistics, product development as well as waste recycling (BMCSoftware, 2012).
Key Environmental factors affecting the company
Political/Legal
The company operates in different countries with different political and legal regulations. As mentioned above, for it to function effectively, it has to incorporate all this factors in its business framework. Employment regulations keep changing from time to time, and in most cases in favor of the employees. If this scenario goes on, the operation costs of the company could increase, affecting its general performance in the market.
Technological
As mentioned above, technology plays a pivotal role in Danone’s operations. Nevertheless, the cost of technology is increasing from time to time, and so is its development. Taking into consideration the role that technology plays in the company, it is evident that it would continue allocating more resources to research and development from time to time, just to cope up with the changing technology.
Conclusion
Danone is among the leading companies in the food and beverage industry. The company is well-known for production of fresh milk products and bottled water in the global market. It faces competition from major players such as Coca-Cola, Kraft, and Nestle. Moreover, it has taken into consideration the various political/legal and technological factors into its business structure. The key external environmental factors that affect the company are changing government rules and regulations and implementation of new technology.
References
Accenture. 2008. Global business process transformation helps Groupe Danone reach new, appetizing levels of performance. Retrieved from http://www.accenture.com/SiteCollectionDocuments/PDF/DANONE_credentialv5.pdf
Askew, K. 2013. China: Danone’s Dumex accepts full accountability in bribery scandal. Retrieved from http://www.just-food.com/news/danones-dumex-accepts-full accountability-in-bribery-scandal_id124789.aspx
Askew, K. 2013. France: Danone lowers outlook after Q3 sales miss. Retrieved from http://www.just-food.com/news/danone-lowers-outlook-after-q3-sales miss_id124798.aspx
Best, D. 2013. Africa: Danone, PE firm Abraaj buy Fan Milk International. Retrieved from http://www.just-food.com/news/danone-pe-firm-abraaj-buy-fan-milk international_id124888.aspx
BMCSoftware. 2012. Danone: Customer success story. Retrieved from http://documents.bmc.com/products/documents/96/34/89634/89634.pdf
Danone.com Company Overview. Retrieved from http://www.danone.com/en/company/history.html
Fangging, W. 2013. China briefing: Multinationals face shifting formula landscape. Retrieved from http://www.just-food.com/management-briefing/multinationals-face-shifting formula-landscape_id125256.aspx
Forbes. 2013. Danone. Retrieved from http://www.forbes.com/companies/danone/
Morschett, D., Schramm-Klein, H., & Zentes, J. (2009). Strategic international management text and cases. Wiesbaden, Gabler.
Peng, M. W. (2009). Global strategy. Mason, Ohio, South-Western/Cengage Learning.
Plunkett, J. W. (2009). Plunkett's e-commerce & Internet business almanac 2009: the only comprehensive guide to the e-commerce & Internet industry. Houston, Tex, Plunkett Research Ltd.
Pride, W. M., & Ferrell, O. C. (2010). Marketing. Australia, South Western Cengage Learning.
Verma, R. 2013. India: Lactalis nears deal for dairy firm Tirumala. Retrieved from http://www.just-food.com/news/lactalis-nears-deal-for-dairy-firm tirumala_id125131.aspx
Wit, B. D., & Meyer, R. (2010). Strategy synthesis: resolving strategy paradoxes to create competitive advantage. Andover, Cengage Learning.
