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Pravda Asset Management Case Study Solution and Analysis


Introduction

Pravda Asset Management is presently one of the most significant food chains worldwide. It was founded by Henri Pravda Asset Management in 1866, a German Pharmacist who initially introduced "Farine Lactee"; a combination of flour and milk to feed infants and decrease mortality rate.

Pravda Asset Management is now a global business. Unlike other multinational business, it has senior executives from various nations and attempts to make decisions thinking about the entire world. Pravda Asset Management Case Study Analysis currently has more than 500 factories around the world and a network spread throughout 86 nations.

Function

The purpose of Pravda Asset Management Corporation is to enhance the lifestyle of individuals by playing its part and offering healthy food. It wants to assist the world in shaping a healthy and much better future for it. It also wishes to motivate people to live a healthy life. While making sure that the company is being successful in the long run, that's how it plays its part for a much better and healthy future

Vision

Nestlé's vision is to offer its consumers with food that is healthy, high in quality and safe to consume. Pravda Asset Management visualizes to establish a trained workforce which would assist the business to grow.

Mission.

Nestlé's objective is that as currently, it is the leading business in the food market, it believes in 'Great Food, Good Life". Its objective is to offer its consumers with a range of choices that are healthy and best in taste. It is focused on providing the best food to its clients throughout the day and night.

Products.

Pravda Asset Management Case Study Analysis has a wide variety of products that it uses to its consumers. Its items consist of food for babies, cereals, dairy items, treats, chocolates, food for family pet and bottled water. It has around 4 hundred and fifty (450) factories worldwide and around 328,000 employees. In 2011, Pravda Asset Management was listed as the most gainful company.

Goals and objectives.

• Keeping in mind the vision and objective of the corporation, the company has set its goals and objectives. These objectives and objectives are listed below.
• One objective of the business is to reach no landfill status.
• Another goal of Pravda Asset Management is to lose minimum food throughout production. Frequently, the food produced is lost even prior to it reaches the clients.
• Another thing that Pravda Asset Management is working on is to improve its product packaging in such a way that it would help it to lower the above-mentioned issues and would also guarantee the delivery of high quality of its products to its consumers.
• Meet worldwide standards of the environment.
• Build a relationship based on trust with its consumers, service partners, staff members, and federal government.

Crucial Concerns.

Recently, Pravda Asset Management Case Study Solution Company is focusing more towards the strategy of NHW and investing more of its revenues on the R&D innovation. The country is investing more on mergers and acquisitions to support its NHW technique. The target of the business is not attained as the sales were anticipated to grow greater at the rate of 10% per year and the operating margins to increase by 20%, offered in Display H.

Situational Analysis.

Analysis of Current Method, Vision and Goals.

The present Pravda Asset Management technique is based on the principle of Nutritious, Health and Wellness (NHW). This method deals with the concept to bringing modification in the client preferences about food and making the food stuff much healthier worrying about the health issues.

The vision of this technique is based on the key method i.e. 60/40+ which simply implies that the items will have a score of 60% on the basis of taste and 40% is based on its dietary value. The products will be made with additional nutritional worth in contrast to all other products in market getting it a plus on its nutritional content.

This method was adopted to bring more yummy plus healthy foods and beverages in market than ever. In competitors with other companies, with an intention of maintaining its trust over clients as Pravda Asset Management Company has acquired more relied on by costumers.

Microenvironment Analysis (PESTEL Analysis).

The analysis used to measure the position of business in the market is done by using PESTLE analysis, given in Exhibition A. Pravda Asset Management works under the rules and policies directed by federal government and food authority. The business is more focused on its products and services to make sure about the product quality and safety.

Political.

The political effect on the company is greatly influenced by the public law and regulations. The company has to fulfill its requirements offered by federal government otherwise it has to pay fine. Pravda Asset Management is greatly supported by Government to fulfill all the requirements of standards like acts of health and safety. In efforts to produce great food, Pravda Asset Management is altering the standards of food and beverage manufacturing. This may cause the violation of governmental rules and policies.

Economic.

Initiation of the business where the capital earnings of each individual matters for the increased net sale as this varies country-to-country. The economy of the Pravda Asset Management Business in U.S. is growing year by year with variable items launch especially concentrating on the nutritional food for infants.

Social.

The social environment keeps changing with respect to time like the attitude of the customer along with their way of lives. Any product and services of any company can not succeed until the business is not concerned about the living system of the customer. Pravda Asset Management is taking procedures to fulfill its objectives as the world is in search of yummy and healthy food.

Technological.

In the development of organisation, strategic measures are rather necessary. Pravda Asset Management is among the leading well-known international firm and by time it invests in various departments to take its items to new level. Pravda Asset Management is investing more on its R&D to make its products healthier and nutritious providing consumers with health benefits.

Legal.

There is no such impact of legal factors of Pravda Asset Management as it is more concerned over its laws and policies.

Environmental

Pravda Asset Management, in terms of ecological effect is committed to operate in environment-friendly environment with preservation of the natural resources and energy. As due to the manufacturing of larger number of items there may be a danger if the resources utilized are recyclable or not.

Competitive Forces Analysis (Porter's 5 Forces Design).

Pravda Asset Management Case Study Solution has gotten a number of companies that assisted it in diversity and development of its product's profile. This is the thorough explanation of the Porter's design of 5 forces of Pravda Asset Management Business, given in Exhibition B.

Competitiveness.

Pravda Asset Management is one of the top company in this competitive market with a number of strong rivals like Unilever, Kraft foods and Group DANONE. Pravda Asset Management is running well in this race for last 150 years. The competition of other companies with Pravda Asset Management is quite high.

Risk of New Entrants.

A variety of barriers are there for the brand-new entrants to occur in the consumer food market. Just a few entrants be successful in this industry as there is a need to comprehend the consumer requirement which requires time while current competitors are aware and has actually progressed with the consumer loyalty over their products with time. There is low hazard of new entrants to Pravda Asset Management as it has rather big network of distribution internationally controling with well-reputed image.

Bargaining Power of Suppliers.

In the food and beverage market, Pravda Asset Management owes the largest share of market needing higher number of supply chains. This causes it to be a picturesque purchaser for the suppliers. Thus, any of the provider has actually never ever revealed any grumble about cost and the bargaining power is likewise low. In action, Pravda Asset Management has actually likewise been worried for its providers as it believes in long-term relations.

Bargaining Power of Buyers.

There is high bargaining power of the buyers due to terrific competitors. Switching cost is quite low for the customers as numerous companies sale a variety of comparable items. This appears to be an excellent hazard for any company. Thus, Pravda Asset Management Case Study Analysis makes sure to keep its customers satisfied. This has led Pravda Asset Management to be one of the loyal business in eyes of its purchasers.

Threat of Replacements.

There has been a great danger of substitutes as there are substitutes of some of the Nestlé's products such as boiled water and pasteurized milk. There has actually also been a claim that some of its products are not safe to use leading to the reduced sale. Therefore, Pravda Asset Management started highlighting the health advantages of its products to cope up with the replacements.

Rival Analysis.

It has actually 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 Pravda Asset Management. Pravda Asset Management attracts local costumers by its low expense of the product with the local taste of the products preserving its first location in the international market. Pravda Asset Management Case Study Solution company has about 280,000 staff members and functions in more than 197 countries edging its rivals in numerous regions.

Note: A short contrast of Pravda Asset Management with its close competitors is given in Display C.

SWOT Analysis.

The internal analysis and external of the company also can be done through SWOT Analysis, summed up in the Display F.

Strengths.

• Pravda Asset Management has an experience of about 140 years, enabling company to better perform, in different scenarios.
• Nestlé's has existence in about 86 nations, making it an international leader in Food and Beverage Industry.
• Pravda Asset Management has more than 2000 brands, which increase the circle of its target consumers. These brand names consist of child foods, animal food, confectionary products, drinks and so on. Famous brands of Pravda Asset Management consist of; Maggi, Kit-Kat, Nescafe, etc.
• Pravda Asset Management Case Study Solution has large amount of costs on R&D as compare to its rivals, making the company to release more innovative and nutritious products. This innovation provides the company a high competitive position in long term.
• After adopting its NHW Technique, the business has actually done big quantity of mergers and acquisitions which increase the sales growth and improve market position of Pravda Asset Management.
• Pravda Asset Management is a widely known brand name with high consumer's loyalty and brand recall. This brand name loyalty of consumers increases the possibilities of easy market adoption of different brand-new brand names of Pravda Asset Management.
Weak points.
• Acquisitions of those company, like; Kraft frozen Pizza business can offer an unfavorable signal to Pravda Asset Management customers about their compromise over their core competency of healthier foods.
• The growth I sales as compare to the company's financial investment in NHW Technique are quite different. It will take long to change the understanding of individuals ab out Pravda Asset Management as a company selling healthy and healthy products.

Opportunities.

• Presenting more health associated items enables the company to catch the marketplace in which consumers are rather mindful about health.
• Developing nations like India and China has biggest markets on the planet. Expanding the market towards developing countries can enhance the Pravda Asset Management company by increasing sales volume.
• Continue acquisitions and joint ventures increases the market share of the company.
• Increased relationships with schools, hotel chains, restaurants and so on can also increase the variety of Pravda Asset Management Case Study Help consumers. For instance, teachers can recommend their students to buy Pravda Asset Management items.

Hazards.

• Financial instability in countries, which are the prospective markets for Pravda Asset Management, can develop a number of concerns for Pravda Asset Management.
• Shifting of items from typical to healthier, causes additional expenses and can lead to decline business's profit margins.
• As Pravda Asset Management has a complicated supply chain, therefore failure of any of the level of supply chain can lead the business to face certain problems.

Division Analysis

Demographic Division

The market segmentation of Pravda Asset Management Case Study Solution is based on four factors; age, occupation, gender and income. Pravda Asset Management produces a number of products related to infants i.e. Cerelac, Nido, and so on and associated to adults i.e. confectionary products. Pravda Asset Management items are rather budget friendly by almost all levels, however its major targeted consumers, in regards to earnings level are middle and upper middle level clients.

Geographical Segmentation

Geographical segmentation of Pravda Asset Management Case Study Solution is made up of its presence in practically 86 countries. Its geographical division is based upon 2 primary factors i.e. average income level of the customer in addition to the climate of the region. For instance, Singapore Pravda Asset Management Company's segmentation is done on the basis of the weather of the region i.e. hot, cold or warm.

Psychographic Division

Psychographic segmentation of Pravda Asset Management is based upon the character and life style of the client. For instance, Pravda Asset Management 3 in 1 Coffee target those consumers whose life style is quite hectic and do not have much time.

Behavioral Segmentation

Pravda Asset Management Case Help behavioral division is based upon the attitude understanding and awareness of the consumer. Its highly healthy items target those customers who have a health mindful attitude towards their usages.

VRIO Analysis

The VRIO analysis of Pravda Asset Management Business is a broad range analysis supplying the company with a chance to obtain a viable competitive benefit against its competitors in the food and beverage market, summed up in Exhibition I.

Valuable

The resources utilized by the Pravda Asset Management business are important for the business or not. Such as the resources like financing, personnels, management of operations and specialists in marketing. This are a few of the essential important aspects of for the identification of competitive benefit.

Uncommon

The valuable resources used by Pravda Asset Management are expensive or even rare. , if these resources are typically discovered that it would be simpler for the rivals and the brand-new competitors in the market to easily move in competitors.

Imitation

The replica procedure is costly for the rivals of Pravda Asset Management Case Help Business. However, it can be done only in two various techniques i.e. product duplication which is produced and manufactured by Pravda Asset Management Company and introducing of the alternative of the products with switching cost. This increases the threat of disruption to the recent structure of the market.

Organization

This component of VRIO analysis deals with the compatibility of the business to place in the market making efficient use of its valuable resources which are tough to imitate. Regularly, the development of management is totally dependent on the firm's execution method and team. Thus, this polishes the abilities of the company by time based on the decisions made by firm for the progression of its tactical capitals.

Quantitative Analysis

R&D Spending as a percentage of sales are declining with increasing real amount of costs 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 Earnings Margin is increasing while R&D as a percentage of sales is decreasing. This indication also reveals a thumbs-up to the R&D costs, mergers and acquisitions.

Debt ratio of the business is increasing due to its spending on mergers, acquisitions and R&D development instead of payment of debts. This increasing debt ratio posture a hazard of default of Pravda Asset Management to its financiers and might lead a decreasing share costs. Therefore, in terms of increasing debt ratio, the firm must not invest much on R&D and ought to pay its existing debts to reduce the danger for financiers.

The increasing risk of investors with increasing debt ratio and declining share rates can be observed by huge decrease of EPS of Pravda Asset Management Case Analysis stocks.

The sales growth of business is likewise low as compare to its acquisitions and mergers due to slow perception building of customers. This slow development likewise prevent business to more spend on its acquisitions and mergers.( Pravda Asset Management, Pravda Asset Management Financial Reports, 2006-2010).

Note: All the above analysis is done on the basis of charts and estimations given in the Displays D and E.

TWOS Analysis.

2 analysis can be used to obtain numerous techniques based upon the SWOT Analysis provided above. A brief summary of TWOS Analysis is given in Exhibit H.

Strategies to exploit Opportunities utilizing Strengths.

Pravda Asset Management Case Solution should introduce more ingenious products by big amount of R&D Costs and mergers and acquisitions. It could increase the market share of Pravda Asset Management and increase the profit margins for the company. It might likewise supply Pravda Asset Management a long term competitive advantage over its rivals.

The international growth of Pravda Asset Management need to be focused on market catching of developing countries by expansion, bring in more customers through client's commitment. As establishing nations are more populous than developed countries, it could increase the customer circle of Pravda Asset Management.

Methods to Overcome Weaknesses to Exploit Opportunities.

Pravda Asset Management Case Help ought to do cautious acquisition and merger of companies, as it might affect the consumer's and society's understandings about Pravda Asset Management. It should acquire and merge with those business which have a market reputation of nutritious and healthy companies. It would enhance the understandings of consumers about Pravda Asset Management.

Pravda Asset Management needs to not just invest its R&D on innovation, rather than it needs to likewise focus on the R&D spending over assessment of cost of different nutritious products. This would increase expense performance of its items, which will result in increasing its sales, due to decreasing rates, and margins.

Methods to use strengths to overcome dangers.

Pravda Asset Management Case Solution must relocate to not only establishing however also to developed countries. It should broadens its geographical growth. This large geographical growth towards developing and established nations would lower the danger of prospective losses in times of instability in different countries. It must widen its circle to various nations like Unilever which operates in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats.

Pravda Asset Management must sensibly manage its acquisitions to avoid the risk of misconception from the consumers about Pravda Asset Management. It should combine and get with those nations having a goodwill of being a healthy company in the market. This would not only improve the perception of customers about Pravda Asset Management but would also increase the sales, revenue margins and market share of Pravda Asset Management. It would likewise enable the company to use its prospective resources effectively on its other operations rather than acquisitions of those companies slowing the NHW strategy growth.

Alternatives.

In order to sustain the brand in the market and keep the consumer intact with the brand, there are 2 options:.

Alternative: 1.

The Business needs to invest more on acquisitions than on the R&D.

Pros:.

1. Acquisitions would increase overall assets of the business, increasing the wealth of the business. Costs on R&D would be sunk expense.
2. The business can resell the acquired units in the market, if it stops working to execute its strategy. Nevertheless, quantity invest in the R&D could not be restored, and it will be considered completely sunk expense, if it do not provide prospective results.
3. Investing in R&D provide slow development in sales, as it takes long time to present an item. However, acquisitions supply quick outcomes, as it supply the business already established item, which can be marketed soon after the acquisition.

Cons:.

1. Acquisition of business's which do not fit with the company's values like Kraftz foods can lead the business to face misconception of customers about Pravda Asset Management core worths of healthy and nutritious items.
2. Large costs on acquisitions than R&D would send a signal of business's inefficiency of developing ingenious items, and would lead to customer's frustration also.
3. Big acquisitions than R&D would extend the product line of the business by the products which are currently present in the market, making company not able to introduce new ingenious products.

Alternative: 2

The Business must invest more on its R&D rather than acquisitions.

Pros:

1. It would enable the business to produce more innovative products.
2. It would supply the company a strong competitive position in the market.
3. It would allow the company to increase its targeted consumers by introducing those items which can be offered to a totally new market segment.
4. Ingenious products will provide long term benefits and high market share in long run.

Cons:

1. It would decrease the profit margins of the company.
2. In case of failure, the entire spending on R&D would be considered as sunk cost, and would impact the business at large. The danger is not when it comes to acquisitions.
3. It would not increase the wealth of company, which could provide an unfavorable signal to the investors, and might result I declining stock prices.

Alternative 3:

Continue its acquisitions and mergers with considerable costs on in R&D Program.

Pros:

1. It would enable the company to present new ingenious items with less threat of transforming the spending on R&D into sunk cost.
2. It would supply a favorable signal to the investors, as the overall properties of the company would increase with its considerable R&D spending.
3. It would not affect the profit margins of the business at a big rate as compare to alternative 2.
4. It would supply the company a strong long term market position in terms of the business's total wealth in addition to in terms of innovative items.

Cons:

1. Threat of conversion of R&D spending into sunk expense, greater than option 1 lesser than alternative 2.
2. Danger of misconception about the acquisitions, higher than alternative 2 and lesser than option 1.
3. Introduction of less variety of ingenious products than alternative 2 and high number of ingenious items than alternative 1.

Suggestion

With the deep analysis of the above alternatives, it is recommended that the company should choose the alternative 3 in order to keep a competitive position in the long run. As the alternative 3 would make it possible for the business to not only present new and ingenious items in the market it would also lower the high expenditures on R&D under alternative 2 and increase the profit margins. It would make it possible for the company to increase its share prices as well, as financiers want to invest more in business with significant R&D costs and boost in the total worth of the business.

Action and execution Strategy

Method can be implemented successfully by establishing particular short-term as well as long term strategies. These plans could be as follows;

Short-term Plan (0-1 year).

• Under the short-term plan Pravda Asset Management Case Analysis ought to carry out different activities to implement its NHW technique effectively. These activities are as follows;.
• Get the audit of its brand name portfolio done, to take a look at the core selling brand names, which generate most of its revenue.
• Examine the current target audience along with the market section which is not consist of in the business's circle.
• Evaluate the existing financial data to measure the amount that should be spent on the R&D and acquisitions.
• Examine the potential financiers and their nature, i.e. do they desire long term advantages (capital gain), or the desire early earnings (dividend). It would let the business to know that how much amount ought to be spent on R&D.

Mid Term Strategy (1-5 years).

• Acquire those organizations in which the company has potential experience to handle. Get most beneficial companies with a strong commitment to health, to construct the consumer's understandings in the ideal instructions.
• Focus more on acquisitions than R&D to build the base in the consumer's mind about Pravda Asset Management worths and vision and to avoid prospective risk of sunk expense.

Long Term Strategy (1-10 years).

• Obtain organizations with health in addition to taste element, as the base for the Pravda Asset Management as a business producing healthy products has actually been developed under midterm plan and now the company could move towards taste aspect too to comprehend the customers, which focus more on taste instead of health.
• Be more aggressive towards R&D than the acquisitions, as it is the substantial time to develop brand-new products.

Conclusion.

Pravda Asset Management has remained the leading market gamer for more than a decade. It has institutionalised its strategies and culture to align itself with the market changes and consumer habits, which has ultimately permitted it to sustain its market share. Though, Pravda Asset Management has established substantial market share and brand name identity in the urban markets, it is suggested that the company ought to concentrate on the rural areas in regards to developing brand name equity, commitment, and awareness, such can be done by creating a specific brand name allowance strategy through trade marketing tactics, that draw clear distinction between Pravda Asset Management Case Help products and other rival products. Furthermore, Pravda Asset Management needs to leverage its brand image of safe and healthy food in catering the rural markets and also to upscale the offerings in other categories such as nutrition. This will allow the company to develop brand equity for recently presented and currently produced products on a higher platform, making the reliable usage of resources and brand name image in the market.