Grupo Bimbo: Growth and Social Responsibility Case Help
Introduction
Grupo Bimbo is one of the leading global bakery companies in the world, the product profile of the company includes more than 7000baked products. The list of the baked products includes cakes, biscuits, cookies, bread and tortillas. In 2008, with the sales of approximately $7 billion, it has been recognized as the second largest and profit oriented company all around the world. In addition to this, it has been growing spectacularly in the last decades and maximizing its profit return through offering quality products to its customers.
The portfolio of Bimbo is broad-ranged and it is a well-established bakery, headquartered in Mexico. Not only this, the company has also earned excellent repute in the corporate social responsibility. It urges the development of the environment as well as community and to ensure the provision of benefits to the society. By doing so, it has created products with improved nutritional profiles, it has also provided better care and conservation in rescuing the environment. It has been engaged in the development of an environment in which it operates, additionally, it also promotes professional and personal development of employees.
As the company intended to expand its business in oversea markets, it has set its sights on the international expansion plan, but the current CEO of company has cleared that the international expansion would not be at the cost of growth and corporate social responsibility activity. The objectives of CSR and growth plans must be aligned with each other.
Description of problem
The primary issue is that the CEO has contemplated to expand its business further in the overseas market, starting from US and all way to China, for this purpose it has to compete with the competitors existing in those markets. In addition to this, the company has decided to not to compromise CSR for the sake of the growth of the business as the company has positioned itself in the market through maximizing high market share; it would worsen for the company if it concedes the CSR activities.
The CEO has to align its growth through expansion strategy with CSR activities in order to become profitable and strengthen its control in the overseas markets. Most importantly, the company has desired to pursue commitment and passion in the overseas market as well as it has to blend the mission statements, values and developments in the strategy of the company. Another issue is the globalization challenges, the company would face conversely in the business expansion.
All these considerations are equitably important to foster the growth of the company in the international arena. By doing so, the probability to beat the existing competitors of the company would be higher.
Business profile
It is one of global leaders in baked products engaged in manufacturing, distribution and selling of high quality and appetizing baked products. It was originated on December 2, 1945 by Lorenzo Servitje, Jaime Sendra, Jaime Jorba, Roberto Servitje Sendra and Alfonso Velasco. Currently, the global revenue of Bimbo is $10.7 billion. The human capital, expertise, efficiency and market leadership in Mexico are the core strengths of the company. The company is strongly recognized in the international markets. It has strong financial position as the revenues are leveraging. It offers frozen and fresh sliced bread, cookies, bunds, snack cakes, bagels, English muffins, tortillas, salted snacks, pre-packaged foods and confectionary items.
The ultimate mission of the company is to ensure the provision of nutritious and delicious snacks and baked goods, also building a highly productive, sustainable and deeply humane company. The company intends to transform the baking industry and strive to expand global leadership in order to better serve wide range of customer base.
External environment
In order to analyze the external environment, the Porter’s Five Forces analysis would most likely help in assessing the threat of intense competition in the markets where Bimbo intends to expand its business. It is important to understand the competitive external environment of Grupo Bimbo.
Intensity of rivalry among competitors:
The intensity of rivalry is a strong force as there are a number of bakery firms engaged in the selling of high quality and nutritious basked items to its customers at a competitive price. The top four player in the bakery industry account for approximately 11.7% of the overall market.
In addition to this, the size of the industry is large which allows multiple companies to produce in order to flourish without stealing the market share from one another. For Grupo Bimbo, large size of industry is positive.
Bargaining power of suppliers
The bargaining power of supplier is a strong force. The intense level of competition among suppliers in the industry tends to decrease the prices to the producers. It is positive for Grupo Bimbo.
Another consideration is that it is fairly easier to switch to suppliers because they have less bargaining power. Grupo Bimbo can be positively affected by the low supplier switching cost.
Bargaining power of customers
The customers tend to like baked products a lot and as the customers cherish the baked products, they always end up paying more for nutritious baked products, this might affect positively on Grupo bimbo.
Another element is that there are a large number of customers due to which, there is no one customer that tends to have leverage in terms of bargaining. Grupo Bimbo can be helped by limited bargaining leverage.
Threat of substitutes
There are many substitutes exist in the industry for bakery products. But the substitute product is inferior which means that there are no more chances or probability for the customers to switch from Grupo Bimbo to any other products or services.
Threat of new competitors
There is a need for strong distribution networks, because if the distribution network is weak, goods are supposed to be more expensive, in addition there are many goods which do not get to the end consumers. The expenses required to build a strong network of distribution might affect Grupo Bimbo positively.
Another element is that industries tend to require economies of scale, it helps manufactures to reduce the cost incurred on production. The economies of scale are achieved when producers produce the next output unit at lower cost. When the new entrants enter into the market, they would have high cost incurred on production of goods or services due to their low economies of scale. Grupo Bimbo can be positively affected by economies of scale.
The strong brands and recognized companies are always critical to beat or compete with, then the new entrants or new competitors should improve the value of their brand so that they would be able to compete effectively. Strong brand can also affect positively Grupo Bimbo....
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