MBA Semester 2 : Strategic Management Assignment B - Group Presentation

Module Code: BC415041S / AS1 / 2011/2 / 011

Group Members SID: 1221278 SID: 1163321 SID: 1129870

Topic: Fraser and Neave - Business Level Strategy for Food & Beverage Segment
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Agenda

Introduction Analysis Conclusion & Recommendations

Fraser & Neave Company Overview

Founded in Singapore by John Fraser & David Neave in 1883 Started with printing & diversified to aerated water, F&B & Properties Conglomerate listed in SGX & headquartered in Singapore 13000 employees in 20 countries USD 5.69B Revenue in Fiscal 2011 with USD 584M profit Current Chairman : Lee Hsien Yang

Fraser & Neave (F&N) Food & Beverage Business

Asia Pacific Breweries Limited F&N Holdings Bhd F&N Foods Pte Ltd

Soft Drinks Breweries Dairies Glass Containers

History of F&N
Founded in 1883 Printing to Aerated water business Listed in SGX Diversification Brewing business in 1931 Dairies in 1959 Property in 1990 Publishing & Printing in 2000 JV with Heinekan (Holland) in 1931 for brewing Malaysian Breweries -> Asia Pacifc Beweries in 1990 Acquired majority control of Time Publishing in 2000

History of F&N Financial Trend

Fiscal Year 2011 Financials

Awards

Vision & Mission

Vision - To be a world-class multinational enterprise with an Asian base, providing superior returns with a focus on the Food & Beverage, Properties and Publishing & Printing businesses. Mission - To be a world-class multinational enterprise providing superior returns to our shareholders, excellent value for our customers and a rewarding career for our employees.

Agenda

Introduction Analysis Conclusion & Recommendations

Porters 5 Forces - Assessing F&B Industry Attractiveness

Barriers to Entry - Low
Low Barriers to Entry (Except Regulation)

Rivalry Amongst Competitors

Assets Are Product Quality, champion brands

New Entrants
Industry Competitors Intensity of Rivalry

Fast respond to consumer trends and demands Growth Prospects Vary By Markets Intense Rivalry of products available in the vending Machines Competitive Price

Suppliers
Power of Suppliers - Strong
Direct negotiation with suppliers Abundance of supply in the market for inputs

Buyers
Power of Buyers - Moderate
Main distribution channels (supermarkets, retail chains, vending machines and convenience stores.

Substitutes
Availability of Substitutes
Several Substitutes (Soft drinks, Beers, etc)

SWOT Analysis F&N Strengths

Well known brand Strong Financial performance Singapore based (next food hub) Customer Loyalty Strong portfolio on Non carbonated drinks

Weaknesses
Health concerns that affect mainly the soft drinks market Some of the brands are not popular

Opportunities
Venture in to new emerging markets Leverage the Singapore Brand New strategies of reformulation for more natural drinks Many successful brands to pursue

Threats
Competition From Coke, Pepsi & local brands in other countries Currency fluctuations Geopolitical Adversities Regulations

F&Ns Four Criteria of Sustainable Competitive Advantages

1. Valuable Capabilities Create Business Ecosystems Rather Than Value Chains Which Are Linear 2. Rare Capabilities Execute Dual Strategy to Neutralize Threats or Exploits Opportunities 3. Costly-To-Imitate Capabilities Rivals Cant Easily Copy People & Organizational Culture ? 4. Non-Substitutable Capabilities Fostering Both Centralized & Decentralized Innovation ?
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F&Ns Focus areas Management Development Programme (MDP) Dedicated team to create new Products & Services every year Quality Team Innovation

The three levels of strategy

Business-level Strategy Key Issues

Which Good or Service to Offer Customers?

Business-level Strategy

How to Manufacture or Create it? How to Distribute it?

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Types of Business-Level Strategy Each Business-Level Strategy Involves a Particular Competitive Scope: Broad Target (Industry Wide) Narrow Target (Particular Segment Only)
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Business - Level: Porters Three Generic Strategies

Competitive Advantage
Uniqueness Perceived By The Customer Low Cost Position

Strategic Target

Industry Wide

Differentiation

Overall Cost

Leadership

Particular Segment Only

Focus

Porters Three Generic Strategies Overall Cost Leadership Low-Cost-Position Relative to a Firms Peers Manage Relationships Throughout the Entire Value Chain
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Porters Three Generic Strategies (contd.)

Differentiation

Create Products and/or Services That are Unique and Valued Non-price Attributes For Which Customers Will Pay a Premium
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Porters Three Generic Strategies contd. Focus Strategy Narrow Product Lines, Buyer Segments, or Targeted Geographic Markets Attain Advantages Either Through Differentiation or Cost Leadership
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Integrated Cost Leadership/Differentiation Strategy

Competitive Advantage
Uniqueness Perceived By The Customer Low Cost Position

Strategic Target

Differentiation
Industry Wide

Overall Cost Leadership

Particular Segment Only

Integrated Cost Leadership/Differentiation Strategy Focus

Combination Strategies: Integrating Overall Low Cost and Differentiation How Firms Can Effectively Combine the Generic Strategies of Overall Cost Leadership and Differentiation.?

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A Leading F&B Provider in Asia

Invests Heavily In People Everything Behind The Scenes Is Subject To Rigorous Control

F&N spends considerably in the following areas: Buying New Aircraft Dedicated funding for Training Marketing Innovation

F&Ns Pursuit of Multiple Value Disciplines

F&Ns Strategy

Product Leadership

Operational Excellence

Customer Intimacy

Key Drivers of F&Ns Operational Excellence

3. Productivity

5. Culture

Operational Excellence

1. Products

4. Comparative Advantage

2. Labor Costs

What Factors Can Explain F&Ns Success?

Products Internal Policies Related Operations Distribution

Incentives

Consistent Performance Top Management

Legal Systems Strategy Comparative Advantage
Opportunistic Purchasing

Marketing Technology Deployment Owns Breweries

Unions

Cash Flow Low Costs Regulation

Forces Shaping F&Ns Future Strategy

Alliances Extend Reach Reduce Geographic Dependence Enhance Operations Continued Opportunities

Future Strategy

Enhance Products/Services

Maintain Low Costs Acquire leading players in emerging countries & expand Greater Use of Technology

Agenda

Introduction Analysis Conclusion & Recommendations

Conclusions & Recommendations

Lowering the cost of products while maintaining quality Form Joint Ventures to enter in to untapped markets with huge potential, starting with African countries. Knowledge Management More distribution channels for easy access Continuous innovation