Otoyol Motor Company Case Study Solution and Analysis
Otoyol Motor Company is currently one of the greatest food chains worldwide. It was founded by Henri Otoyol Motor Company in 1866, a German Pharmacist who initially launched "Farine Lactee"; a combination of flour and milk to reduce and feed infants mortality rate.
Otoyol Motor Company is now a multinational company. Unlike other international companies, it has senior executives from different nations and tries to make decisions thinking about the entire world. Otoyol Motor Company Case Study Solution presently has more than 500 factories worldwide and a network spread across 86 countries.
The function of Otoyol Motor Company Corporation is to enhance the quality of life of individuals by playing its part and providing healthy food. While making sure that the business is succeeding in the long run, that's how it plays its part for a much better and healthy future
Nestlé's vision is to supply its consumers with food that is healthy, high in quality and safe to consume. Otoyol Motor Company envisions to develop a trained workforce which would assist the company to grow.
Nestlé's mission is that as presently, it is the leading business in the food industry, it believes in 'Great Food, Great Life". Its mission is to supply its consumers with a range of options that are healthy and best in taste. It is concentrated on supplying the very best food to its consumers throughout the day and night.
Otoyol Motor Company has a wide variety of items that it uses to its customers. In 2011, Otoyol Motor Company was noted as the most gainful company.
Goals and objectives.
• Bearing in mind the vision and objective of the corporation, the business has laid down its objectives and goals. These goals and goals are listed below.
• One objective of the business is to reach absolutely no garbage dump status. It is working toward no waste, where no waste of the factory is landfilled. It encourages its staff members to take the most out of the spin-offs. (Otoyol Motor Company, aboutus, 2017).
• Another objective of Otoyol Motor Company is to squander minimum food during production. Most often, the food produced is wasted even prior to it reaches the clients.
• Another thing that Otoyol Motor Company is dealing with is to improve its product packaging in such a way that it would assist it to minimize the above-mentioned complications and would also guarantee the delivery of high quality of its products to its customers.
• Meet global requirements of the environment.
• Develop a relationship based on trust with its consumers, service partners, employees, and federal government.
Recently, Otoyol Motor Company Company is focusing more towards the technique of NHW and investing more of its revenues on the R&D innovation. The country is investing more on acquisitions and mergers to support its NHW strategy. The target of the company is not attained as the sales were expected to grow higher at the rate of 10% per year and the operating margins to increase by 20%, offered in Exhibit H. There is a need to focus more on the sales then the development technology. Otherwise, it might lead to the decreased income rate. (Henderson, 2012).
Analysis of Existing Strategy, Vision and Goals.
The present Otoyol Motor Company strategy is based on the principle of Nutritious, Health and Wellness (NHW). This strategy handles the idea to bringing change in the client preferences about food and making the food things healthier worrying about the health problems.
The vision of this technique is based upon the key method i.e. 60/40+ which simply suggests that the items will have a rating of 60% on the basis of taste and 40% is based upon its nutritional worth. The items will be manufactured with additional dietary worth in contrast to all other products in market acquiring it a plus on its dietary material.
This method was adopted to bring more healthy plus tasty foods and drinks in market than ever. In competitors with other companies, with an intention of retaining its trust over customers as Otoyol Motor Company Company has gotten more relied on by customers.
Microenvironment Analysis (PESTEL Analysis).
The analysis used to measure the position of company in the market is done by using PESTLE analysis, offered in Exhibition A. Otoyol Motor Company works under the rules and guidelines directed by government and food authority. The company is more focused on its services and products to make sure about the product quality and safety.
The political impact on the company is significantly affected by the government laws and policies. The company needs to meet its requirements offered by federal government otherwise it has to pay fine. Otoyol Motor Company is considerably supported by Government to meet all the criteria of requirements like acts of health and wellness. In efforts to manufacture great food, Otoyol Motor Company is changing the requirements of food and drink production. This may cause the offense of governmental rules and guidelines.
Initiation of business where the capital income of each specific matters for the increased net sale as this differs country-to-country. The economy of the Otoyol Motor Company Company in U.S. is growing year by year with variable items launch especially focusing on the nutritional food for infants.
The social environment keeps altering with regard to time like the attitude of the customer along with their lifestyles. Any services or product of any business can not be successful until the business is not worried about the living system of the customer. Otoyol Motor Company is taking procedures to meet its objectives as the world remains in search of delicious and healthy food.
In the development of service, strategic steps are rather compulsory. Otoyol Motor Company is among the leading popular multinational firm and by time it invests in different departments to take its products to brand-new level. Otoyol Motor Company is investing more on its R&D to make its products healthier and healthy supplying consumers with health advantages.
There is no such impact of legal aspects of Otoyol Motor Company as it is more concerned over its policies and laws.
Otoyol Motor Company, in regards to ecological impact is dedicated to work in environment-friendly environment with preservation of the natural resources and energy. As due to the production of larger number of products there might be a danger if the resources used are recyclable or not.
Competitive Forces Analysis (Porter's 5 Forces Model).
Otoyol Motor Company Case Study Help has obtained a number of business that assisted it in diversity and growth of its product's profile. This is the extensive description of the Porter's model of five forces of Otoyol Motor Company Business, given in Display B.
Otoyol Motor Company is one of the leading business in this competitive industry with a number of strong rivals like Unilever, Kraft foods and Group DANONE. Otoyol Motor Company is running well in this race for last 150 years. The competition of other business with Otoyol Motor Company is rather high.
Threat of New Entrants.
A number of barriers are there for the brand-new entrants to happen in the customer food industry. Only a few entrants succeed in this industry as there is a requirement to understand the customer need which requires time while current competitors are aware and has advanced with the customer loyalty over their products with time. There is low hazard of brand-new entrants to Otoyol Motor Company as it has rather large network of distribution worldwide controling with well-reputed image.
Bargaining Power of Suppliers.
In the food and drink market, Otoyol Motor Company owes the largest share of market needing greater number of supply chains. This causes it to be an idyllic buyer for the providers. Any of the provider has actually never ever expressed any complain about rate and the bargaining power is also low. In reaction, Otoyol Motor Company has actually also been worried for its providers as it believes in long-term relations.
Bargaining Power of Buyers.
Therefore, Otoyol Motor Company makes sure to keep its customers satisfied. This has actually led Otoyol Motor Company to be one of the devoted company in eyes of its buyers.
Threat of Substitutes.
There has been a fantastic danger of alternatives as there are alternatives of some of the Nestlé's products such as boiled water and pasteurized milk. There has likewise been a claim that a few of its products are not safe to use resulting in the decreased sale. Hence, Otoyol Motor Company started highlighting the health benefits of its products to cope up with the replacements.
It has become the second largest food and beverage market in the West Europe with a market share of about 8.6% with just a distinction of 0.3 points with Otoyol Motor Company. Otoyol Motor Company brings in regional clients by its low expense of the item with the regional taste of the items preserving its first location in the worldwide market. Otoyol Motor Company Case Study Analysis business has about 280,000 workers and functions in more than 197 nations edging its competitors in lots of areas.
Keep in mind: A brief contrast of Otoyol Motor Company with its close rivals is given up Exhibit C.
The internal analysis and external of the company likewise can be done through SWOT Analysis, summed up in the Exhibit F.
• Otoyol Motor Company has an experience of about 140 years, allowing business to better perform, in different situations.
• Nestlé's has presence in about 86 nations, making it a global leader in Food and Beverage Market.
• Otoyol Motor Company has more than 2000 brands, which increase the circle of its target customers. Famous brand names of Otoyol Motor Company include; Maggi, Kit-Kat, Nescafe, etc.
• Otoyol Motor Company Case Study Analysis has large big quantity spending costs R&D as compare to its competitorsRivals making the company business launch introduce nutritious and innovative healthy.
• After embracing its NHW Strategy, the business has done big quantity of mergers and acquisitions which increase the sales development and enhance market position of Otoyol Motor Company.
• Otoyol Motor Company is a widely known brand name with high consumer's commitment and brand recall. This brand name loyalty of customers increases the chances of easy market adoption of numerous new brand names of Otoyol Motor Company.
• Acquisitions of those service, like; Kraft frozen Pizza service can provide an unfavorable signal to Otoyol Motor Company clients about their compromise over their core proficiency of much healthier foods.
• The growth I sales as compare to the company's investment in NHW Strategy are quite different. It will take long to alter the understanding of individuals ab out Otoyol Motor Company as a business offering healthy and healthy items.
• Presenting more health related items makes it possible for the business to catch the market in which customers are quite mindful about health.
• Developing countries like India and China has largest markets on the planet. Expanding the market towards establishing nations can enhance the Otoyol Motor Company organisation by increasing sales volume.
• Continue acquisitions and joint endeavors increases the market share of the business.
• Increased relationships with schools, hotel chains, restaurants and so on can likewise increase the variety of Otoyol Motor Company Case Study Analysis consumers. Teachers can recommend their students to acquire Otoyol Motor Company items.
• Financial instability in nations, which are the prospective markets for Otoyol Motor Company, can develop numerous problems for Otoyol Motor Company.
• Shifting of products from normal to healthier, leads to additional costs and can lead to decrease company's earnings margins.
• As Otoyol Motor Company has a complex supply chain, therefore failure of any of the level of supply chain can lead the business to deal with certain issues.
The market segmentation of Otoyol Motor Company Case Study Analysis is based on four aspects; age, gender, earnings and profession. For example, Otoyol Motor Company produces numerous items related to infants i.e. Cerelac, Nido, etc. and associated to grownups i.e. confectionary items. Otoyol Motor Company products are quite cost effective by almost all levels, however its major targeted consumers, in regards to earnings level are upper and middle middle level clients.
Geographical segmentation of Otoyol Motor Company Case Study Solution is made up of its presence in almost 86 nations. Its geographical segmentation is based upon two primary aspects i.e. average earnings level of the customer along with the climate of the area. For example, Singapore Otoyol Motor Company Business's division is done on the basis of the weather condition of the region i.e. hot, warm or cold.
Psychographic division of Otoyol Motor Company is based upon the character and lifestyle of the customer. For instance, Otoyol Motor Company 3 in 1 Coffee target those customers whose life style is quite hectic and don't have much time.
Otoyol Motor Company Case Help behavioral division is based upon the mindset knowledge and awareness of the client. Its highly healthy products target those customers who have a health conscious mindset towards their intakes.
The VRIO analysis of Otoyol Motor Company Business is a broad variety analysis providing the organization with a chance to get a viable competitive advantage against its competitors in the food and beverage industry, summarized in Exhibit I.
The resources used by the Otoyol Motor Company company are important for the business or not. Such as the resources like financing, personnels, management of operations and specialists in marketing. This are some of the key important factors of for the identification of competitive advantage.
The valuable resources utilized by Otoyol Motor Company are costly or even uncommon. , if these resources are commonly discovered that it would be much easier for the rivals and the brand-new rivals in the industry to effortlessly move in competitors.
The replica procedure is pricey for the rivals of Otoyol Motor Company Case Help Business. However, it can be done only in two various methods i.e. product duplication which is produced and produced by Otoyol Motor Company Company and introducing of the substitute of the products with changing cost. This increases the hazard of disturbance to the current structure of the industry.
This component of VRIO analysis deals with the compatibility of the company to position in the market making productive use of its important resources which are tough to mimic. Often, the advancement of management is totally based on the firm's execution technique and group. Thus, this polishes the abilities of the firm by time based upon the choices made by company for the development of its tactical capitals.
R&D Spending as a percentage of sales are declining with increasing actual quantity of spending shows that the sales are increasing at a higher rate than its R&D costs, and enable the business to more invest in R&D.
Net Revenue Margin is increasing while R&D as a portion of sales is declining. This indicator also shows a green light to the R&D spending, mergers and acquisitions.
Debt ratio of the company is increasing due to its spending on mergers, acquisitions and R&D development rather than payment of financial obligations. This increasing financial obligation ratio posture a danger of default of Otoyol Motor Company to its financiers and might lead a declining share rates. In terms of increasing financial obligation ratio, the company must not invest much on R&D and must pay its current debts to reduce the threat for investors.
The increasing danger of investors with increasing financial obligation ratio and declining share rates can be observed by substantial decrease of EPS of Otoyol Motor Company Case Solution stocks.
The sales growth of business is likewise low as compare to its mergers and acquisitions due to slow perception building of customers. This slow growth likewise prevent business to additional invest in its mergers and acquisitions.( Otoyol Motor Company, Otoyol Motor Company Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of calculations and Charts given up the Exhibitions D and E.
2 analysis can be used to obtain different techniques based on the SWOT Analysis given above. A short summary of TWOS Analysis is given up Exhibit H.
Strategies to exploit Opportunities using Strengths.
Otoyol Motor Company Case Analysis must present more ingenious items by large amount of R&D Costs and acquisitions and mergers. It might increase the market share of Otoyol Motor Company and increase the profit margins for the company. It might also supply Otoyol Motor Company a long term competitive benefit over its rivals.
The international expansion of Otoyol Motor Company should be concentrated on market catching of developing countries by expansion, drawing in more customers through client's commitment. As developing nations are more populous than developed countries, it might increase the consumer circle of Otoyol Motor Company.
Strategies to Conquer Weaknesses to Make Use Of Opportunities.
Otoyol Motor Company Case Help ought to do mindful acquisition and merger of organizations, as it might impact the customer's and society's understandings about Otoyol Motor Company. It must get and merge with those companies which have a market reputation of healthy and healthy business. It would improve the understandings of customers about Otoyol Motor Company.
Otoyol Motor Company needs to not only invest its R&D on innovation, rather than it needs to likewise concentrate on the R&D costs over evaluation of expense of various healthy items. This would increase cost efficiency of its products, which will lead to increasing its sales, due to declining rates, and margins.
Techniques to utilize strengths to overcome threats.
Otoyol Motor Company ought to move to not only establishing but also to industrialized nations. It needs to broaden its circle to numerous countries like Unilever which operates in about 170 plus nations.
Techniques to get rid of weak points to prevent dangers.
Otoyol Motor Company should sensibly control its acquisitions to prevent the risk of misconception from the consumers about Otoyol Motor Company. It must acquire and combine with those countries having a goodwill of being a healthy company in the market. This would not just enhance the understanding of consumers about Otoyol Motor Company however would also increase the sales, revenue margins and market share of Otoyol Motor Company. It would also allow the business to use its possible resources effectively on its other operations instead of acquisitions of those companies slowing the NHW technique development.
In order to sustain the brand in the market and keep the customer undamaged with the brand name, there are two alternatives:.
The Company ought to invest more on acquisitions than on the R&D.
1. Acquisitions would increase overall properties of the business, increasing the wealth of the company. However, spending on R&D would be sunk expense.
2. The company can resell the obtained units in the market, if it stops working to execute its method. However, amount spend on the R&D could not be restored, and it will be considered entirely sunk cost, if it do not offer potential outcomes.
3. Investing in R&D supply sluggish growth in sales, as it takes long time to introduce an item. Acquisitions supply fast results, as it offer the company currently established item, which can be marketed soon after the acquisition.
1. Acquisition of company's which do not fit with the business's worths like Kraftz foods can lead the business to face mistaken belief of customers about Otoyol Motor Company core values of healthy and healthy products.
2. Big spending on acquisitions than R&D would send out a signal of business's inefficiency of establishing innovative items, and would lead to customer's dissatisfaction too.
3. Big acquisitions than R&D would extend the line of product of the business by the items which are currently present in the market, making business unable to introduce new ingenious items.
The Company ought to spend more on its R&D instead of acquisitions.
1. It would allow the company to produce more innovative items.
2. It would supply the business a strong competitive position in the market.
3. It would enable the business to increase its targeted customers by presenting those products which can be used to a totally new market sector.
4. Innovative items will supply long term advantages and high market share in long term.
1. It would reduce the profit margins of the business.
2. In case of failure, the whole costs on R&D would be thought about as sunk expense, and would impact the business at large. The threat is not in the case of acquisitions.
3. It would not increase the wealth of company, which could provide an unfavorable signal to the financiers, and could result I declining stock prices.
Continue its acquisitions and mergers with substantial costs on in R&D Program.
1. It would allow the company to present new innovative products with less threat of converting the spending on R&D into sunk cost.
2. It would supply a favorable signal to the financiers, as the overall assets of the business would increase with its considerable R&D spending.
3. It would not affect the earnings margins of the business at a big rate as compare to alternative 2.
4. It would supply the business a strong long term market position in terms of the company's total wealth in addition to in regards to innovative products.
1. Danger of conversion of R&D spending into sunk expense, greater than alternative 1 lower than alternative 2.
2. Risk of misconception about the acquisitions, higher than alternative 2 and lower than alternative 1.
3. Intro of less number of innovative products than alternative 2 and high variety of ingenious products than alternative 1.
With the deep analysis of the above alternatives, it is recommended that the business ought to select the alternative 3 in order to maintain a competitive position in the long run. As the alternative 3 would allow the company to not only present brand-new and innovative products in the market it would likewise minimize the high expenses on R&D under alternative 2 and increase the revenue margins. It would allow the company to increase its share rates too, as investors are willing to invest more in companies with substantial R&D costs and increase in the total worth of the company.
Action and execution Strategy
Method can be implemented effectively by establishing specific short-term as well as long term plans. These plans might be as follows;
Short Term Plan (0-1 year).
• Under the short-term plan Otoyol Motor Company Case Solution need to carry out numerous activities to implement its NHW strategy efficiently. These activities are as follows;.
• Get the audit of its brand portfolio done, to take a look at the core selling brands, which produce the majority of its profits.
• Analyze the present target market along with the marketplace section which is not include in the business's circle.
• Analyze the current monetary data to determine the quantity that should be spent on the R&D and acquisitions.
• Evaluate the possible investors and their nature, i.e. do they desire long term benefits (capital gain), or the want early revenues (dividend). It would let the business to know that how much amount should be spent on R&D.
Mid Term Plan (1-5 years).
• Get those companies in which the company has possible experience to handle. Obtain most favorable organizations with a strong dedication to health, to build the customer's perceptions in the best direction.
• Focus more on acquisitions than R&D to build the base in the customer's mind about Otoyol Motor Company values and vision and to prevent possible risk of sunk expense.
Long Term Strategy (1-10 years).
• Get organizations with health along with taste factor, as the base for the Otoyol Motor Company as a business producing healthy products has been constructed under midterm plan and now the company might move towards taste aspect too to grasp the customers, which focus more on taste rather than health.
• Be more aggressive towards R&D than the acquisitions, as it is the significant time to build new products.
Otoyol Motor Company has stayed the top market gamer for more than a years. It has actually institutionalised its strategies and culture to align itself with the market changes and consumer habits, which has actually ultimately enabled it to sustain its market share. Though, Otoyol Motor Company has developed substantial market share and brand name identity in the city markets, it is recommended that the company must focus on the rural areas in terms of developing brand name awareness, equity, and loyalty, such can be done by creating a specific brand allotment technique through trade marketing methods, that draw clear distinction between Otoyol Motor Company Case Help items and other competitor products. Otoyol Motor Company ought to utilize its brand image of healthy and safe food in catering the rural markets and also to upscale the offerings in other categories such as nutrition. This will permit the business to establish brand equity for recently presented and already produced products on a greater platform, making the reliable use of resources and brand image in the market.