Case Study Analysis Grupo Bimbo

GRUPO BIMBO CASE STUDY ANALYSIS

Analysis of GRUPO BIMBO’s cross-border marketing related situation and recommendations about future marketing related action

1. Introduction        3
2. Background        4
3. Alternatives        4

1. Brazil        4
2. USA        5
3. China        6

1. Proposed Solution        6
2. Recommendations        7
3. Exhibits        10

1. Introduction

This analysis focuses on the case study on GRUPO BIMBO (GB) written by Jordan Siegel and published by Harvard Business School on August 29, 2009. After being founded in 1918 in Mexico, Group Bimbo has come a long way to become one of the largest baking companies in the world. With the lack of growth opportunities in its native market of Mexico GB decided to enter the North American and South American market where it faced a lot of hardship in terms of operating losses initially and only recently has managed to achieve marginal operating profits in the US and Brazil. Their global strategy consists of growth by acquisition through which GB already has successfully acquired 100 popular brands. More recently GB has been looking into growth opportunities in China and has already applied their global strategy by acquiring the smaller local company Panrico. For the future the main difficulty lies within the vastness of their ventures and the regional differences of each area which require distinct strategic directions. The strategy of foreign direct investment by acquisitions holds both advantages and disadvantages. One the one side it makes for an easier entry into a foreign market as acquiring a well-established existing brand inside another country serves as a jumpstart as it is quicker to execute than greenfield investments. It also requires much less effort to just acquire the employees, distribution network and brand loyalty altogether. In the best case companies believe that they can drastically improve the efficiency of the entity they buy buy applying their corporate philosophy and using their best practice methods. On the other side acquisitions can carry far more risk than other entry methods in foreign markets as they require a big upfront investment with limited information available about the company that is acquired. For GB in particular being in the food industry this means that obviously the consumer taste will vary from one country to another and thus with each global acquisition and with each conquering of a new country GB has to formulate a new product portfolio and marketing strategy that fits the local taste.