Suntech Power Case Study Solution & Analysis
Suntech Power Case Study Analysis is currently one of the most significant food cycle worldwide. It was established by Henri Suntech Power in 1866, a German Pharmacist who first released "Farine Lactee"; a combination of flour and milk to reduce and feed infants death rate. At the very same time, the Page brothers from Switzerland also found The Anglo-Swiss Condensed Milk Company. The two became rivals in the beginning but later on combined in 1905, leading to the birth of Suntech Power.
Suntech Power is now a global company. Unlike other multinational companies, it has senior executives from different nations and tries to make decisions considering the entire world. Suntech Power Case Study Solution currently has more than 500 factories worldwide and a network spread throughout 86 countries.
The function of Suntech Power Corporation is to improve the lifestyle of people by playing its part and offering healthy food. It wants to help the world in forming a healthy and better future for it. It also wants to encourage individuals to live a healthy life. While ensuring that the company is being successful in the long run, that's how it plays its part for a much better and healthy future
Nestlé's vision is to offer its clients with food that is healthy, high in quality and safe to eat. Suntech Power envisions to develop a well-trained labor force which would help the company to grow.
Nestlé's mission is that as presently, it is the leading company in the food industry, it believes in 'Great Food, Excellent Life". Its objective is to provide its consumers with a range of choices that are healthy and finest in taste. It is focused on providing the best food to its consumers throughout the day and night.
Suntech Power has a broad variety of products that it offers to its customers. In 2011, Suntech Power was noted as the most gainful company.
Goals and Objectives.
• Remembering the vision and mission of the corporation, the company has laid down its goals and objectives. These goals and objectives are noted below.
• One objective of the business is to reach no land fill 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 by-products. (Suntech Power, aboutus, 2017).
• Another objective of Suntech Power is to waste minimum food throughout production. Usually, the food produced is lost even prior to it reaches the consumers.
• Another thing that Suntech Power is working on is to enhance its product packaging in such a method that it would help it to reduce those problems and would also guarantee the delivery of high quality of its items to its customers.
• Meet international standards of the environment.
• Build a relationship based upon trust with its consumers, business partners, employees, and federal government.
Just Recently, Suntech Power Case Study Solution Business is focusing more towards the technique of NHW and investing more of its earnings on the R&D innovation. The nation is investing more on acquisitions and mergers to support its NHW technique. The target of the business is not accomplished as the sales were expected to grow greater at the rate of 10% per year and the operating margins to increase by 20%, given in Exhibition H.
Analysis of Existing Method, Vision and Goals.
The current Suntech Power technique is based on the concept of Nutritious, Health and Wellness (NHW). This technique deals with the idea to bringing change in the customer preferences about food and making the food stuff healthier worrying about the health issues.
The vision of this technique is based on the key technique i.e. 60/40+ which just means that the products will have a score of 60% on the basis of taste and 40% is based on its nutritional worth. The items will be made with additional dietary value in contrast to all other products in market acquiring it a plus on its dietary material.
This strategy was embraced to bring more delicious plus nutritious foods and drinks in market than ever. In competitors with other business, with an intent of keeping its trust over consumers as Suntech Power Company has gained more trusted by customers.
Microenvironment Analysis (PESTEL Analysis).
The analysis utilized to determine the position of business in the market is done by utilizing PESTLE analysis, given in Display A. Suntech Power works under the guidelines and policies directed by federal government and food authority. The business is more concentrated on its services and products to make sure about the item quality and safety. This analysis will assist in understanding environment of external market in the global food and drink industries. (Parera, 2017).
The political influence on the company is considerably influenced by the public law and policies. The business needs to fulfill its requirements provided by government otherwise it needs to pay fine. Suntech Power is significantly supported by Government to satisfy all the criteria of requirements like acts of health and safety. In efforts to make excellent food, Suntech Power is altering the requirements of food and beverage manufacturing. This might trigger the violation of governmental guidelines and regulations.
Initiation of business where the capital earnings of each private matters for the increased net sale as this varies country-to-country. The economy of the Suntech Power Business in U.S. is growing year by year with variable items launch especially focusing on the nutritional food for babies.
The social environment keeps altering with regard to time like the attitude of the customer as well as their lifestyles. Any services or product of any business can not succeed until the company is not concerned about the living system of the customer. Suntech Power is taking procedures to meet its goals as the world is in search of yummy and healthy food.
In the development of company, tactical steps are rather necessary. Suntech Power is among the top popular international firm and by time it invests in different departments to take its items to new level. Suntech Power is investing more on its R&D to make its items healthier and nutritious providing customers with health benefits.
There is no such effect of legal factors of Suntech Power as it is more concerned over its policies and laws.
Suntech Power, in regards to ecological impact is devoted to operate in environment-friendly environment with preservation of the natural resources and energy. As due to the production of bigger number of items there may be a hazard if the resources utilized are recyclable or not.
Competitive Forces Analysis (Porter's 5 Forces Design).
Suntech Power Case Study Analysis has gotten a number of companies that helped it in diversification and growth of its product's profile. This is the extensive description of the Porter's model of 5 forces of Suntech Power Business, given in Exhibition B.
Suntech Power is one of the top business in this competitive industry with a number of strong competitors like Unilever, Kraft foods and Group DANONE. Suntech Power is running well in this race for last 150 years. The competition of other companies with Suntech Power is rather high.
Danger of New Entrants.
A variety of barriers are there for the brand-new entrants to take place in the customer food industry. Only a few entrants be successful in this industry as there is a need to comprehend the consumer requirement which needs time while current competitors are well aware and has actually advanced with the consumer commitment over their products with time. There is low danger of new entrants to Suntech Power as it has quite big network of circulation worldwide controling with well-reputed image.
Bargaining Power of Providers.
In the food and beverage market, Suntech Power Case Study Solution owes the biggest share of market needing greater number of supply chains. In action, Suntech Power has also been worried for its suppliers as it thinks in long-term relations.
Bargaining Power of Buyers.
There is high bargaining power of the buyers due to excellent competition. Switching expense is rather low for the customers as numerous companies sale a variety of similar products. This seems to be an excellent threat for any company. Hence, Suntech Power Case Study Solution makes certain to keep its clients satisfied. This has led Suntech Power to be among the devoted business in eyes of its buyers.
Threat of Substitutes.
There has actually been a great risk of replacements as there are replacements of a few 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, Suntech Power began highlighting the health benefits of its items to cope up with the replacements.
Suntech Power Case Study Analysis covers a lot of the popular consumer brand names like Package Kat and Nescafe and so on. About 29 brands amongst all of its brands, each brand name earned an income of about $1billion in 2010. Its huge part of sale remains in The United States and Canada making up about 42% of its all sales. In Europe and U.S. the top major brands offered by Suntech Power in these states have an excellent trustworthy share of market. Likewise Suntech Power, Unilever and DANONE are two big industries of food and drinks along with its primary competitors. In the year 2010, Suntech Power had made its annual revenue by 26% boost because of its increased food and beverages sale particularly in cooking stuff, ice-cream, beverages based upon tea, and frozen food. On the other hand, DANONE, due to the increasing prices of shares resulting a boost of 38% in its revenues. Suntech Power Case Study Help decreased its sales expense by the adjustment of a brand-new accounting treatment. Unilever has number of staff members about 230,000 and functions in more than 160 nations and its London headquarter. It has actually ended up being the second largest food and beverage market in the West Europe with a market share of about 8.6% with only a distinction of 0.3 points with Suntech Power. Unilever shares a market share of about 7.7 with Suntech Power ending up being ranking and first DANONE as third. Suntech Power draws in local customers by its low cost of the product with the local taste of the items preserving its first place in the international market. Suntech Power company has about 280,000 employees and functions in more than 197 countries edging its rivals in lots of regions. Suntech Power has also decreased its expense of supply by introducing E-marketing in contrast to its competitors.
Keep in mind: A quick contrast of Suntech Power with its close competitors is given in Exhibit C.
The internal analysis and external of the company likewise can be done through SWOT Analysis, summed up in the Display F.
• Suntech Power has an experience of about 140 years, allowing business to much better carry out, in different scenarios.
• Nestlé's has existence in about 86 countries, making it an international leader in Food and Beverage Market.
• Suntech Power has more than 2000 brand names, which increase the circle of its target consumers. These brand names consist of child foods, family pet food, confectionary items, drinks and so on. Famous brands of Suntech Power include; Maggi, Kit-Kat, Nescafe, etc.
• Suntech Power Case Study Analysis has large amount of spending on R&D as compare to its competitors, making the company to release more innovative and nutritious products. This innovation provides the company a high competitive position in long term.
• After embracing its NHW Technique, the business has done large quantity of mergers and acquisitions which increase the sales development and improve market position of Suntech Power.
• Suntech Power is a popular brand with high customer's loyalty and brand recall. This brand commitment of consumers increases the possibilities of simple market adoption of different new brands of Suntech Power.
• Acquisitions of those organisation, like; Kraft frozen Pizza service can give a negative signal to Suntech Power customers about their compromise over their core proficiency of healthier foods.
• The development I sales as compare to the business's investment in NHW Strategy are quite different. It will take long to change the perception of people ab out Suntech Power as a business selling healthy and nutritious products.
• Introducing more health associated products makes it possible for the company to record the marketplace in which customers are rather conscious about health.
• Developing nations like India and China has largest markets on the planet. Expanding the market towards establishing countries can boost the Suntech Power company 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 also increase the variety of Suntech Power Case Study Help customers. For example, teachers can advise their trainees to purchase Suntech Power products.
• Financial instability in nations, which are the possible markets for Suntech Power, can develop several concerns for Suntech Power.
• Shifting of products from normal to much healthier, results in extra costs and can lead to decline business's revenue margins.
• As Suntech Power has a complicated supply chain, therefore failure of any of the level of supply chain can lead the business to deal with certain issues.
The demographic division of Suntech Power Case Study Help is based upon 4 elements; age, profession, income and gender. Suntech Power produces a number of products related to children i.e. Cerelac, Nido, and so on and associated to adults i.e. confectionary items. Suntech Power items are rather cost effective by practically all levels, but its significant targeted clients, in terms of income level are middle and upper middle level consumers.
Geographical division of Suntech Power Case Study Analysis is made up of its existence in nearly 86 nations. Its geographical segmentation is based upon two main elements i.e. average income level of the consumer in addition to the climate of the region. Singapore Suntech Power Company's segmentation is done on the basis of the weather of the area i.e. hot, cold or warm.
Psychographic division of Suntech Power is based upon the character and lifestyle of the customer. Suntech Power 3 in 1 Coffee target those clients whose life style is rather busy and do not have much time.
Suntech Power Case Solution behavioral division is based upon the mindset knowledge and awareness of the customer. For instance its extremely nutritious items target those consumers who have a health mindful attitude towards their intakes.
The VRIO analysis of Suntech Power Business is a broad variety analysis providing the company with a possibility to obtain a feasible competitive advantage versus its rivals in the food and beverage market, summed up in Display I.
The resources utilized by the Suntech Power business are important for the company or not. Such as the resources like financing, personnels, management of operations and specialists in marketing. This are a few of the essential important factors of for the recognition of competitive benefit.
The valuable resources used by Suntech Power are pricey or even unusual. , if these resources are typically discovered that it would be much easier for the competitors and the new rivals in the market to effortlessly move in competition.
The replica procedure is pricey for the rivals of Suntech Power Case Help Company. Nevertheless, it can be done only in 2 various strategies i.e. product duplication which is produced and made by Suntech Power Business and introducing of the substitute of the items with changing cost. This increases the risk of disturbance to the current structure of the industry.
This part of VRIO analysis deals with the compatibility of the company to position in the market making productive use of its important resources which are hard to imitate. Frequently, the development of management is completely depending on the firm's execution strategy and group. Hence, this polishes the abilities of the company by time based on the decisions made by firm for the progression of its tactical capitals.
R&D Spending as a percentage of sales are decreasing with increasing actual amount of costs shows that the sales are increasing at a higher rate than its R&D costs, and enable the company to more invest in R&D.
Net Profit Margin is increasing while R&D as a portion of sales is decreasing. This indication likewise reveals a green light to the R&D costs, mergers and acquisitions.
Debt ratio of the business is increasing due to its costs on mergers, acquisitions and R&D development instead of payment of financial obligations. This increasing debt ratio position a danger of default of Suntech Power to its investors and could lead a declining share prices. Therefore, in regards to increasing financial obligation ratio, the company must not spend much on R&D and must pay its existing financial obligations to decrease the danger for investors.
The increasing threat of financiers with increasing debt ratio and decreasing share costs can be observed by huge decrease of EPS of Suntech Power Case Analysis stocks.
The sales growth of company is also low as compare to its acquisitions and mergers due to slow perception building of customers. This sluggish development likewise hinder business to further invest in its mergers and acquisitions.( Suntech Power, Suntech Power Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of graphs and estimations given up the Exhibits D and E.
2 analysis can be used to derive different strategies based on the SWOT Analysis given above. A brief summary of TWOS Analysis is given in Display H.
Strategies to exploit Opportunities using Strengths.
Suntech Power Case Help ought to introduce more innovative products by big quantity of R&D Spending and mergers and acquisitions. It might increase the market share of Suntech Power and increase the revenue margins for the business. It might also provide Suntech Power a long term competitive benefit over its rivals.
The global expansion of Suntech Power ought to be focused on market catching of establishing countries by growth, bring in more consumers through customer's commitment. As establishing nations are more populous than developed countries, it could increase the consumer circle of Suntech Power.
Techniques to Get Rid Of Weak Points to Make Use Of Opportunities.
Suntech Power Case Help ought to do careful acquisition and merger of companies, as it could impact the client's and society's perceptions about Suntech Power. It needs to obtain and combine with those business which have a market reputation of healthy and healthy companies. It would enhance the perceptions of customers about Suntech Power.
Suntech Power ought to not only spend its R&D on innovation, instead of it needs to likewise concentrate on the R&D spending over assessment of cost of numerous healthy products. This would increase expense efficiency of its products, which will result in increasing its sales, due to decreasing costs, and margins.
Techniques to utilize strengths to overcome threats.
Suntech Power Case Analysis ought to relocate to not just establishing however also to developed countries. It should broadens its geographical expansion. This large geographical expansion towards establishing and established nations would lower the danger of potential losses in times of instability in various countries. It should broaden its circle to various countries like Unilever which runs in about 170 plus countries.
Methods to get rid of weaknesses to avoid dangers.
Suntech Power ought to carefully control its acquisitions to avoid the threat of misconception from the consumers about Suntech Power. It needs to merge and acquire with those countries having a goodwill of being a healthy company in the market. This would not only enhance the perception of customers about Suntech Power however would also increase the sales, revenue margins and market share of Suntech Power. It would likewise make it possible for the company to utilize its prospective resources efficiently on its other operations instead of acquisitions of those organizations slowing the NHW method growth.
In order to sustain the brand name in the market and keep the client intact with the brand name, there are 2 choices:.
The Business needs to spend more on acquisitions than on the R&D.
1. Acquisitions would increase total properties of the company, increasing the wealth of the business. Nevertheless, spending on R&D would be sunk cost.
2. The business can resell the acquired systems in the market, if it stops working to execute its method. Nevertheless, amount invest in the R&D might not be restored, and it will be considered entirely sunk cost, if it do not give possible outcomes.
3. Investing in R&D offer slow development in sales, as it takes long period of time to present an item. Acquisitions provide quick outcomes, as it supply the company already developed item, which can be marketed quickly after the acquisition.
1. Acquisition of business's which do not fit with the company's worths like Kraftz foods can lead the company to deal with misunderstanding of customers about Suntech Power core worths of healthy and nutritious products.
2. Large costs on acquisitions than R&D would send out a signal of business's inefficiency of establishing innovative products, and would results in consumer's dissatisfaction also.
3. Large acquisitions than R&D would extend the product line of the company by the items which are already present in the market, making company not able to present new innovative products.
The Business needs to invest more on its R&D instead of acquisitions.
1. It would allow the company to produce more innovative products.
2. It would provide the company a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted consumers by introducing those products which can be offered to a completely new market sector.
4. Ingenious products will supply long term benefits and high market share in long run.
1. It would reduce the revenue 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 risk is not in the case of acquisitions.
3. It would not increase the wealth of company, which might supply a negative signal to the financiers, and could result I decreasing stock rates.
Continue its acquisitions and mergers with considerable costs on in R&D Program.
1. It would enable the company to introduce brand-new innovative items with less danger of transforming the spending on R&D into sunk cost.
2. It would provide a favorable signal to the financiers, as the overall assets of the business would increase with its significant R&D spending.
3. It would not impact the profit margins of the business at a big rate as compare to alternative 2.
4. It would offer the company a strong long term market position in terms of the company's total wealth in addition to in terms of innovative products.
1. Threat of conversion of R&D spending into sunk expense, greater than alternative 1 lesser than alternative 2.
2. Threat of misconception about the acquisitions, higher than alternative 2 and lesser than alternative 1.
3. Introduction of less variety of ingenious products than alternative 2 and high variety of innovative products than alternative 1.
With the deep analysis of the above alternatives, it is recommended that the company should choose the alternative 3 in order to preserve a competitive position in the long run. As the alternative 3 would allow the business to not just introduce brand-new and innovative items in the market it would also decrease the high expenditures on R&D under alternative 2 and increase the revenue margins. It would enable the company to increase its share costs as well, as investors want to invest more in business with substantial R&D spending and increase in the overall worth of the company.
Action and application Technique
Strategy can be implemented successfully by developing particular short-term along with long term plans. These plans might be as follows;
Short-term Strategy (0-1 year).
• Under the short term plan Suntech Power Case Solution ought to perform different activities to implement its NHW technique efficiently. 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 create the majority of its income.
• Evaluate the existing target market along with the marketplace segment which is not include in the company's circle.
• Examine the current monetary data to measure the quantity that should be invested in the R&D and acquisitions.
• Evaluate the prospective investors and their nature, i.e. do they want long term benefits (capital gain), or the want early earnings (dividend). It would let the business to understand that just how much amount ought to be spent on R&D.
Mid Term Plan (1-5 years).
• Obtain those companies in which the business has potential experience to handle. Acquire most beneficial companies with a strong commitment to health, to construct the client's understandings in the ideal instructions.
• Focus more on acquisitions than R&D to construct the base in the consumer's mind about Suntech Power values and vision and to prevent prospective danger of sunk cost.
Long Term Plan (1-10 years).
• Obtain organizations with health along with taste aspect, as the base for the Suntech Power as a business producing healthy products has been developed under midterm strategy and now the business could move towards taste aspect as well to understand the consumers, which focus more on taste rather than health.
• Be more aggressive towards R&D than the acquisitions, as it is the substantial time to construct brand-new products.
Suntech Power Case Solution has actually established considerable market share and brand name identity in the city markets, it is advised that the business needs to focus on the rural locations in terms of establishing brand name awareness, equity, and loyalty, such can be done by developing a specific brand allocation strategy through trade marketing tactics, that draw clear difference in between Suntech Power items and other rival items. This will allow the business to develop brand equity for recently introduced and already produced items on a greater platform, making the reliable usage of resources and brand name image in the market.