Chocolate Industrz Strategic Analysis Microsoft Word 文档.docx

1、Chocolate Industrz Strategic Analysis Microsoft Word 文档Chocolate Industrz Strategic AnalysisIndustry and Strategic Project: Lindt & Sprngli AGBerlin School of Economics and LawStrategic Skills IIProf. Dr. Timothy PettMay 20, 2009By Ashu Singh, Carmen Medrano, Christina KreulTable of Content1.0 Execu

2、tive Summary 32.0 Company Overview 43.0 The Chocolate Confectionary Industry 4 3.1 Key Industry Segments 7 3.2 Porters Five Forces Model 7 3.3 Trends in the Environment 114.0 Lindt & Sprungli Strategy 14 4.1 Value Chain 15 4.2 Resources 185.0 Financial Analysis 206.0 Conclusion 247.0 Recommendations

3、 258.0 References 289.0 Appendix 301.0 Executive SummaryLindt & Sprngli is engaged in producing and distributing premium chocolates around the world. The company has achieved a sales growth rate of more than 10% over the last 5 years and in 2008 recorded revenues of CHF 261.5 millions. Regardless of

4、 the current financial crisis and difficult market environment Lindt & Sprngli managed to grow above average and outperformed its competitors.The chocolate confectionary industry has been growing at a rate of 6% in the last four years and the top five producers account for 50% of the global market.

5、Since the chocolate industry is considered to be mature, the Companys primary strategy to overcome the environment has been to focus on the exclusive positioning in the premium chocolate segment with concentration on innovation and systematic expansion into high potential geographies.Lindt & Sprngli

6、 has full control of all stages of production of the chocolate products from quality selection of premium cocoa varieties from the best cocoa plants in the world to manufacturing through to elegant packaging. The firm has been successful utilizing its tangible, intangible resource and its capabiliti

7、es to have a competitive advantage and differentiate itself.The premium strategy of Lindt & Sprngli has been paying off in the last year. The trends in the chocolate environment indicate that the company should enter with a more aggressive approach into the Emerging Markets to capitalize on the wind

8、ow of opportunity that these countries currently offer. Moreover the company should follow a diversification strategy and broad its sources of revenues by forward integration of the distribution channels. One recommended strategy is to open Caf shops in high growing markets; this concept will enhanc

9、ed brand awareness, as well as offer consumers new innovative chocolate based products. 2.0 Company OverviewLindt & Sprngli, from now on refer as Lindt or Lindt & Sprungli, is a Swiss home based and globally active company, producing and selling chocolate products in the premium quality segment. Lin

10、dt & Sprungli Group has it headquarter in Switzerland. The company has subsidiaries (manufacturing sites) in France, Germany, Austria, Italy and the US, along with sales or distribution companies located in Canada, Poland, United Kingdom, Spain, Australia, Sweden, Mexico, Hong Kong and Dubai. The co

11、mpany has plants across Europe and the United States.The firms products include chocolate bars, chocolate tablets, chocolate boxes, pralines and truffles, its brands include Lindt, Ghirardelli, Caffarel, Hofbaur and Kuefferle. The company markets its products through its own specialty stores and bou

12、tiques, as well as through retail outlets and catalog sales. According to Bordier & Cie the company holds 4% of the chocolate market (Bordier & Cie, 2009). In 2008 with 7,712 employees, the firm total sales amounted US $2.5 billion. The shares of Lindt & Sprungli are listed on the Swiss and German S

13、tock Market.The company was created in 1845 in the centre of Zurich by Mr. Sprungli and his son, both confectioners. In 1899 the Sprngli family took over the Swiss chocolate manufacturer Lindt and the company received the name Lindt & Sprngli AG. Today Lindt has acquired a global reputation as the m

14、ost creative and innovative chocolatier, specializing in premium quality chocolate.3.0 The Chocolate Confectionary IndustryLindt & Sprungli sales growth of more than 10% and a ROIC of more than 15% on average over the last five years, calls the attention towards the chocolate business. These figures

15、 might be the result of an attractive industry; to find more about the reasons of these figures an analysis of the chocolate confectionary industry is necessary.The chocolate confectionary industry has been growing at a rate of 6% in the last four years, the top five producers account for 50% of the

16、 global market (Cadbury Annual Report and Accounts, 2008). Since chocolate is a regional business, where consumers of each region seek a particular taste, fragmentation in the market and complexities in production exists.According to Datamonitor the global chocolate confectionary market reached a va

17、lue of $43 billion in 2003, growing with a compound annual rate of 4.1% in the period 1999-2003. During the consecutive next five years a compound annual growth rate of 3.7% was expected, the market value was forecast to grow moderate and reach a value of $51.5 billion by 2008. Concerning the market

18、 volume, it reached 5.16 billion kg in 2003, growing at a compound annual rate of 2.1% during the period 1999-2003 (Datamonitor, 2004).Along with data provided by Reuters Stock Markets the food processing industry, where confectionary chocolate is listed, has 5 Yr. Avg. Return on Investment of 5.12%

19、, 1% and 6% underneath the sector consumer goods and the S&P500 index respectively.picSince the chocolate confectionary market is more consolidated in the Western regions, the strong expansion into the Asian Pacific markets has been driving the growth in this industry. The Western markets are consid

20、ered to be mature due to the stable consumer tastes and product innovation. However, the production of chocolate in Asia Pacific has been increasing, offering an opportunity for new markets.The global chocolate Potential Industry Earnings (PIE) are estimated to reach $76 billion in 2011, growing at

21、a compound annual rate of 3.3% in the period 2008-2011. The market largest share of the global chocolate confectionary industry is expected to move from Europe, which account 46.40% in 2003 to the Asian countries. In 2011 Asia and Oceana are forecast to be the world chocolate largest market with 34%

22、, followed by Europe with 25% and North America and The Caribbean with 24%. The presence of a firm in these 3 markets enables it to cover more than 80% of the chocolate PIE (World Outlook for Chocolate Candy, 2005). These data reveals that there is room for the chocolate industry to grow as it expan

23、ds into the Asian Pacific markets.picThe chocolate confectionary industry globally has the characteristics of a mature industry; the growth prospects are few, growth rates globally are estimated to keep stable. The average return of this industry in the future is also expected to be steady. Moreover

24、 the price earnings ratio of the industry, an indicator of the investors expectations of the industry earnings growth in the future are more than 10% lower than the S&P 500.pic3.1 Key Industry SegmentsIn order to analyze in more dept the chocolate industry is necessary to divide it into segments. Th

25、is classification reflects the markets cover generally by the chocolate manufactures and it follows the industry standards. The main chocolates categories are presented as follow: Seasonal Chocolates Boxed Chocolates Milk Chocolates Exotic Flavors Sugar Free Liquid Chocolate Premium Chocolate3.2 Por

26、ters Five Forces ModelThis model, named after Michael Porter (1979), can be looked upon as a framework to analyze and structure an industry. It is a theoretical tool to elaborate the potential threats but also the chances of a particular industry. Porter mentions five forces that have an impact on a

27、n industry; suppliers, buyers, potential entrant, substitutes and the rivalry among existing firms. By means of this analysis the industry attractiveness can be determined. This analysis will be applied to the premium chocolate segment, where Lindt & Sprungli is a key player.Bargaining power of supp

28、liersIn production of premium chocolate the primary raw material is cocoa bean, secondary sugar, and milk. Concerning sugar and milk, there are numerous suppliers of these materials available around the world; there is no concentration, neither a necessary differentiation. In the case of the superio

29、r cocoa beans utilize to a great extent for the manufacturing of the premium chocolate, it is important to consider that they come from the cacao tree, which is grown generally in small, family run farms in West Africa, Latin America and Southeast Asia.The cocoa planters sell their products on local

30、 markets to so called preparateurs, who collect the beans, weigh them, pay the planters and resell the beans to intermediates. The cocoa supply chain can involve up to 12 different steps as cocoa is moved from farming village to the chocolate manufacturing facility. Only in rare cases do companies p

31、urchase cocoa from the farmers. In this context, local farmers have no influence on the price that they receive for their beans (A Guide for Value Chain Analysis, 2004). Moreover, since the cocoa beans are traded at the commodity future exchange in London, the farmers are price takers.Given these re

32、asons in addition to the fact that according to CAOBISCO, there are 4.5 million of cocoa farms around the world, to whom the chocolate manufactures are an extremely important customer, the bargaining power of the chocolate confectionary industry suppliers is generally low (CAOBISCO, 2009). However since the fine grade cocoa production represents a small part of the worlds supply, the bargaining power of superior cocoa beans suppliers increases. In addition some cocoa farmers form associations to concentrate in groups and be able to negotiat