Grupo Bimbo

11

Group D-

Context: Bimbo first entered USA which had a similar market as Mexico as far as consumption
of packaged bread is concerned. However, Bimbo was a late entrant and hence had to face many
challenges. In a nutshell, the performance of the company in US was average. As far as Brazil is
concerned, Bimbo wanted a presence in the country for psychological reasons even though they
knew about the cultural and taste were differences. The company tried quite a few experiments in
the country but was hardly able to break even. Continuing on its global expansion, Bimbo saw
exciting opportunities in growing Chinese market and hence decided to enter the market by
acquisition of Beijing Panrico Food processing center which had revenue of $11.1 million and
net operating loss of $0.8 million in 2005. Analyzing the Chinese market using the strategy
tripod:
Industry: Like other countries, the bakery industry in China was highly fragmented. No
company had market share of more than 2%. Many Western companies have entered into China
through either Joint Ventures or acquisitions to capture the growing Chinese markets. Panrico,
the company that Bimbo acquired, was a leader in a Niche segment of packaged bread.
Resources: Apart from Bimbos expertise in producing many types of product in a single factory
with efficiency, the acquisition provided Bimbo many resources in China. Panrico being the
market leader in packaged bread provided Bimbo a leadership position where it can further
increase the market share and profits because of its industry knowledge and diverse range of
products. Moreover, the proximity of the company of the company to large markets was also
resource for the Bimbo.
Institution: Though the language and geographic conditions in China were difficult, the
acquisition of Panrico was much smoother than Bimbo had expected. Bimbo found that the
people were amenable to change which made their task of upheaval of the production unit easier
and quicker. The informal institutions helped Bimbo in transportation too. In USA, Bimbo had to
rely on truck drivers. However, the prevalence of bicycles made it more economical for the
company to rely on bicycles for transportation. A major cultural difference in China was the

amount of trust involved in the business. This was quite different from that in US or Mexico and
hence had to be quickly adopted by Bimbo to have effective functioning in China.
Bimbos Approach: After burning its fingers in Brazil and US, Bimbo was more cautious in it
approach while entering China. Bimbo observed the market for 2 years before entering China
and hence had the time to figure out which company to acquire and which segments to target. To
find out these details, Bimbo developed a process called the Profound understanding of the
consumer where they obtained preferences from the focus groups.
Recommendation: Through its entry into China, Bimbo wanted a Global expansion of its
products instead of integration. Following are the recommendation for Bimbo to develop
business level component capabilities in China.
Leverage Processes

Building Processes

Use of Bimbos global brand

products in the China based on

partners for distribution to the

the preference of the people

hypermarkets where Bimbo

through Profound understanding

has limited expertise.

of the consumer.

techniques to maintain/increase

Component

efficiency while increasing the

Capabilities

product assortment.

acquisition to be relevant.

Understand local trends to

develop new products

Acquisition of local firms

with produce specialized
bread/confectionary to suit to

Use local sales and marketing

knowledge gained through the

Leverage the existing production

Business-Level

Hunting for Joint Ventures or

the local preferences.

Developing capabilities in the

production and sales of

Use the existing ecosystem of

biscuits which is a big market

bicycles for transportation to

in China.

minimize costs.