Perfetti Van Melle Group0000000 4l3t1c

PERFETTI VAN MELLE GROUP’S

GLOBALISATION STRATEGY

INTRO

SWOT Analysis STRENGTHS • Strong Brand Value: Perfetti is a highly popular brand and has a strong position in the worldwide confectionary market. • Affordability: Perfetti has worked hard to ensure that its product reaches higher proportion of population by offering single tablets of chewing gums and toffees for Rs. 1 • Good margin for retailers: The company is providing a good margin (substantially high but yet attractive) to its retail counters, giving them an edge over competitor’s product WEAKNESSES • Limited consumer base: Most of its products are targeted towards children except for chlormint like product, perfetti needs to expand its product portfolio • Absence in North American market: North America is a key market for all confectionary products, prefetti’s minimal presence may become a serious disadvantage for the company. • Shortage of stands: Products demand is quite high due to intensive promotion on television but shortage of stands for big packs at retail counters might pose a threat to its sale.

OPPORTUNITIES • Expanding into new products: With such strong global distribution capabilities and large revenues, tapping into new markets like chocolate or new set of snacks should be considered by the company • Separate distributor needed: The product requires sole snack selling distributor sue to lack of interest of confectionary selling distributors. The distributors are demanding extra carriage cost sue to its space consuming cartons. Otherwise the distributors might dump the whole snacks consignment into the wholesale markets which might affect the sale of the product and its availability in the retail market THREATS • Competitors selling extra: All the major brands in competition like Bingo, Parle are giving some percent extra in their packs resulting in large looking package and thus eating perfetti’s market • Shift towards healthier diets: This has led to people consuming less of sugar products which is highly dangerous for perfetti due to its focus on sugary foods.

Key strategic challenges and objectives

Difficulties of operations in Viet Nam

Difficulties of operations in Viet Nam Cultural aspect It is hard to combine and integrate Western and Vietnamese managerial styles and skills (opened for communication vs. respectful and afraid of people at higher level; action- oriented in decision making and implementation vs. official meetings; and verbal orders vs. written orders etc.) Language barrier hindered the communication and transmission of Western managerial concept. Lack of cooperation between people. Vietnamese people always see and criticize the weakness of other people instead of trying to help them to improve. Local workers have low level of experience, skills, knowledge, understandings and a poor consciousness toward safety, and hygiene, which result in low ability to learn technology and changing bad habits. Local middle managers also lack of education and background.

Pefertti Van Melle Viet Nam (PVM Viet Nam) was established in August 1995 under a t venture contract with Saigon Foods Stuff Company (SAFOODSCO), in which Perfetti contributed 70% of capital. The remaining 30% was invested by Vietnamese partner in the form of land use right. Initially, the t venture was named Perfetti Confectionery Viet Nam Ltd. The reasons for selecting partner were government’s force at that time, and partner’s capability in producing glucose - one of the major raw materials for Perfetti’s operations. The only motive to operating in Viet Nam is to expand PVM’s market to a country where young population is significantly increasing.

In May 2002, the company switched to a 100% foreign invested enterprise in order to respond to the needs of development, but PVM Viet Nam is still maintaining a good relationship with the ex-partner. Currently, the local plant offers the market its products under the brands of Happydent, Alpenliebe, Golia, and BigBabol. PVM Viet Nam is directed by an Italian expatriate General Manager.