Groupe Danone Growth Strategies

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Groupe Danone Growth Strategies
Groupe Danone is a food production group that deals with specialized nutrition, waters, and dairy-based products. The multinational corporation was founded in Barcelona but is currently based in Paris. Over the years, it has built a strong brand and influence in the global market of dairy products. Their success had stemmed from growth strategies adopted over the years, such as acquisition or alliances. Despite failures in growth, the brand is well recognized, especially in Western Europe, where it controls over 85% of the sales. It, however, plans to grow into international markets where it is bound to face aggressive environments. This essay analyzes approaches, target countries, and leverage Danone can utilize to facilitate their growth.
Acquisition of similar businesses is the best approach for a significant business such as Groupe Danone to expand its international markets. Danone is among the world’s leading food companies; therefore, it has substantial resources and influence to afford acquisition as a growth method. The acquisition is an effective way of company growth in a short period. Companies manage to improve operation synergy, improve market shares and acquire new assets. This is a less expensive, lower risk, and faster approach to growth than traditional methods such as sales and marketing CITATION Cor21 \l 1033 (Corporatefinanceinstitute). However, this approach has its disadvantages, such as a clash in different corporate cultures. Therefore, Danone should focus on acquiring companies that closely match their ethos and operational processes.
Intellectual property is valuable as it helps companies to market their products exclusively. Therefore, companies wildly as successful as Danone need to protect their IP through patents, trademarks, copyrights. When intellectual property is secure, a company might decide to capitalize on it and exchange it for a fee. Contract licensing of intellectual property is an approach that can help a company grow. Under an intellectual property licensing agreement, the parent company retains ownership of a patent, copyright, or trademark; however, another entity can use it for some time and royalty. Such an arrangement is advantageous as the parent company maintains control of the IP and receives a steady income for the licensing. It can also help in marketing and advertising. For instance, if a company uses IP from Danone, the consumer will be exposed to the name Danone and associate specific characteristics to the parent company hence more traffic to the Danone brand.
Another outlet for growth is the expansion of distribution networks. Franchise agreement and distribution agreement are two means a company can utilize to ensure their products are visible in more markets. Franchise agreements provide distributors with the right to sell and market goods under the trademarked name our patented process of the parent company CITATION Mit21 \l 1033 (Mitzsheva). However, for a distribution agreement, a distributor company buys products from the parent company. Consequently, it houses the products in warehouses and sells them to retailers or directly to the consumers. The distribution agreement is legally binding and addresses the rights, costs, and responsibilities during the handling of the products. Danone can expand its distribution network through a franchise agreement or the traditional means of distribution.
Danone gets over 85% of its sales from Western Europe. However, over the years, it has taken steps to branch out to other global markets. For instance, in October 2013, Danone and Abraaj Group agreed on a combined effort to acquire Fan Milk International (FMI). The two companies would consequently hold 49% and 51% of the shares, respectively. In 2012, Fan Milk posted around €120 million in sales, making it the leading manufacturer and distributor of daily produce in West Africa. Fifty years into its establishment, it had managed to build a unique distribution system in Ghana, Nigeria, Togo, Burkina Faso, Benin, and Ivory Coast. The Abraaj Group is a leading Dubai-based private equity investment company that operates in emerging markets in Africa. At the moment, it was also in partnership with Brookside Dairy, which is the largest dairy company in East Africa. Therefore, the collaboration with Abraaj Group provided Danone with a foundation into th...