Analysis of Grupo bimbo Multinational

The Grupo Bimbo is a Mexican Multinational corporation that operates under the food industry sector. The multinational company has specialized in the bakery sector. The MNC has one hundred and ninety-eight production plants globally where forty-three of them are established in Asia, Africa, and Europe. Grupo Bimbo Multinational Corporation’s latest move is the acquisition of Mankattan bakery industry in China. The acquisition was finalized in July 2018. Since its establishment in 1945, Grupo Bimbo MNC has been making advancements in accessing the international market. Its success in the past endeavors has been favored by its strategic priorities. Its strategic priorities include; establishment of a low-cost distribution channel, embracing and adopting efficient management, facilitation of human resource development, and application of market leadership. These set of tools has been playing a significant role in Grupo Bimbo's growth. Despite the company's expansion in other foreign countries, Africa has not received enough attention from it. Specifically, Grupo Bimbo should expand further and get hosted in Nigeria and Egypt. Grupo Bimbo initially had intentions of setting up in African countries, but that they gave up since the market had not grown to significant levels by then. That was in the late 20th

century. Most of the African countries are in the developing stage, and new opportunities are emerging. The infrastructure and commodity markets in these two countries have highly improved. From the records of the World Bank, Nigeria and Egypt are among the highest populated countries in the whole of Africa. The demand for consumer food products is very high. A strong and established Multinational corporation such as Grupo Bimbo would make a kill in these two countries. Grupo Bimbo has operated in different parts of the world, and the management has gained a lot of experience in setting up valid and technical approaches in the market. Grupo Bimbo Multinational Corporation could be at an advantage of prevailing in the commodity market in the two countries than the upcoming domestic companies in the bakery and food processing industry.

Phase II

Background information of Grupo Bimbo Multinational Company

Bimbo Multinational Corporation stared in 1945 in the city of Mexico. The founders were relatives who opted to take the advantage family's skills and experience in setting up their own company that was to produce a tasty, cheap, nourishing and high-quality bread to sell to the public. Within a year, Bimbo had started supplying its products to the retailers in the city of Mexico and the surrounding regions such as Puebla, Cuernavaca, Pachuca, and Toluca. The company directors made some informal alliances through newspapers. The market demand for this company had risen to the extent that Bimbo was unable to meet them. So, the company sought to purchase some trucks that aided in the products distribution and the process of marketing. By 1970, the company had acquired better domestic infrastructure that facilitated the manufacturing, production and improved logistics.

The sudden vertical integration by Bimbo Company pushed the competitors to industrialization and taking economies of scale advantage (Ocampo, 2013). It resulted in the emergence of oligopoly competition in the 1980s where Bimbo and Gamesa owned approximately 80% of the market share in Mexico. Bimbo developed a defensive investment behavior and started penetrating to the foreign markets through exports. The exports were directed to the American markets, and later they were able to set up the first production plant away from home country in Guatemala. From the pressure of competitors, Bimbo opted to use mergers and acquisitions approach. In 2001 it merged with Noel of Columbia. The company acquired Mrs. Baird's bakery in America which had three thousand employees and distributed in eleven production plants (Grupo Bimbo, 2018). In Canada, they acquired George Weston Inc. In 2006 they acquired Panrico Company in Chinese. Even though Bimbo is focusing on international markets, the firm has acquired many bakeries in Mexico. Some of them include; Joyce, Gabi cookies, El Globo and La Corona. More firms that they have acquired abroad include; Pan Europe in Guatemala, South Lakes in Chile, Lalo’s bakery in Columbia, Vita Nutrella in Brazil, and Los Sorchantes in Uruguay. As of 2013, “Bimbo had more than 170 brands, 156 plants worldwide, 42 plants in Mexico, 34 in the United States, 25 in Central and South America and 2 in China" (Ocampo, 2013). Bimbo's growth in the commodity market is driven by its strategic priorities which include; low-cost distribution channel, efficient management, human resource development, and market leadership.

Grupo Bimbo’s current position and global strategy

Grupo bimbo multinational company has a clear set vision, mission, and purpose. Its vision is “to transform the baking industry and expand our global leadership to better serve more consumers by 2020”. Its primary mission is “to deliver delicious and nutritious baked goods and snacks in the hands of all.” Its purpose is "to enhance the building of a sustainable, highly productive and deeply humane company." its slogan is "With love as always.” Its operating principle is “digitizing processes, with agile methodologies, highly engaged and talented teams, to build a sustainable, highly productive and deeply humane company” (Ghemawat and Pankaj, 2014). “Grupo Bimbo SA de CV operates as an investment holding company, which engages in the manufacturing, distribution, and sale of bread, cookies, cakes, candies, chocolates, snacks, tortillas, and processed foods” (Forbes, 2018). Grupo Bimbo has a market capitalization of 9.7 billion dollars. One of the global through the acquisition of existing plants in different nations. The company has been seeking to either consolidation, merging or acquisition. Merging has not been very common with recent past. Full acquisitions of bakery industries and production plants have been common with the recent acquisition made in China. Grupo Bimbo has prioritized strictly on innovation. The company has embraced the technology of recycling the waste packaging metalized plastics and films. The action makes the company environmental friendly. Grupo Bimbo has been in the front line in trying to help the achievement of both the sustainable development goals and the millennium development goals. That has happened from the company’s effort to provide very nutritious food products at low prices. The Grupo Bimbo has supported the use of renewable source of energy in its production and across the globe.

The possibility for expanding Grupo Bimbo MNC to Nigeria and Egypt

Nigeria's population is the largest in Africa. Egypt's population is the third largest in the same continent. Nigeria is a country found in western Africa. Egypt, on the other hand, is found in the northern part of Africa. The two countries have well-developed infrastructure that would favor the transportation and distribution of food products to the customers. Both countries have stable governments, and the political climate is favorable for investors to operate a business. The government of both countries encourages foreign investors. There is an assurance of a market for the food products due to the large populations. In the African Continent, Grupo Bimbo Multinational Company has only concentrated with the southern end that is only in South Africa. Apart from this single region in the whole continent, the rest of the regions have not received any attention from Grupo Bimbo. Therefore, it would be necessary and a golden opportunity for Grupo Bimbo to expand their operations to these regions, specifically in the two countries.

Global market entry strategies for Grupo Bimbo company in Nigeria and Egypt

The company has a variety of global market entry strategies that it can adopt. They include;

Grupo bimbo can buy an established company owned by the host company. The two countries have some domestic companies that have acquired a great market share. The company can conduct a thorough analysis to determine which local company has the greatest market share. They should later seek negotiations with the main stakeholders of the target companies to engage in a purchase deal. Grupo Bimbo should not only focus on the best companies but also should consider the companies that are underutilizing the resources but have the potential for acquiring a bigger market share in the future.

Partnering with some of the best performing local food processing companies in the two target countries. Forming partnership coalitions with those companies would provide an opportunity for the Grupo Bimbo to add more stakes in them with time. Later the Grupo Bimbo will have owned more than ninety percent of the shares in the company hence making it the prime stakeholder in the business. Partnership strategy could be the best strategy that Grupo Bimbo could use out of the available out of the available strategies.

Grupo Bimbo can try out using greenfield investment in both countries. However, this strategy involves a lot of risks (Calvelli and Cannavale, 2018). The company can purchase land in both Nigeria and Egypt and then set up their facility. The main factors to consider are the government regulations that apply in the respective countries.

Direct exporting-Grupo bimbo can decide to export their products into those countries. The strategy could only be viable if the two countries allow the exportation of food products. Most countries discourage the importation of food products in the process of protecting the domestic or local industries. Grupo Bimbo can post the agents and salespeople and distributors in the two countries to assist in the flow of their food products.

Of the above available strategies, partnership is the best and most effective market entry strategy for Grupo Bimbo.

The rationale for the partnership as best market entry strategy for Grupo Bimbo MNC

In most parts of the world, any multinational company that intends to enter the foreign markets, a partnership is a necessity. Partnership with the existing local companies has been found to be beneficial to the local industries (Africa Competitiveness Report, 2013). These local industries can improve on their performance standards as try to emulate the top-level management styles which are introduced by foreign investors. On the other hand, Grupo Bimbo will gain a lot of knowledge about the new foreign market from its partner. The partner from the host country has a lot of trade secrets about the competitors and customers (Ekeledo and Sivakumar, 2013).

SWOT analysis for Grupo Bimbo MNC

The Grupo Bimbo company strengths

Grupo Bimbo has been one of the leading players in an active, non-cyclical and attractive industry. Food is a basic need in life. The food processing industry is a very crucial industry that must whatsoever continue producing enough products to cater for the demand that exists in the global market.

Over the years, the success of Grupo Bimbo has been continuously realized significant growth and due to its conservative financial policies, making strategic acquisitions and excellent market leadership.

The company has established itself in over twenty countries that are located at different parts of the globe precisely in different continents.

Grupo Bimbo has over one thousand varieties of products and over one hundred brands.

The company has a strong-chained network that plays a crucial role during the products distribution. Precisely, it has over one thousand distribution routes, one hundred and fifty-three production plants, and more than one hundred and twenty-seven thousand employees.

Grupo Bimbo has invested in research and innovation, product development and intensive market research to provide a better understanding of the product consumers.

The Multinational Company has been able to maintain strong brand equity and franchise.

The Grupo Bimbo company weaknesses

The company operates in an industry in an industry that is seen to be fragmented. The key players can only have a small market share.

There is “Weak volume recovery due to weak consumption environment in the US and lower average prices” (Grupo Bimbo, 2018).

Since there are decelerations in volumes in America and mostly in the Latin region, costs absorption has been laid low.

Opportunities available to Grupo Bimbo MNC

Egypt produces wheat on a large scale. Wheat is a raw material in bakery production. Setting up a production plant in this country would economically beneficial to the company.

Nigeria and Egypt consist of the first and the third countries with the biggest population in Africa respectively. High population indicates that there is high demand for food products in the market.

There is growth in cookies and other baked products. Both the millennials and the baby boomers have developed a tendency of purchasing the takeaway food packages.

Improved and favorable market conditions for foreign investors.

Threats for Grupo Bimbo MNC

The existence and emergence of complicated and tough regulatory frameworks in the two countries.

The presence of unstable and changing consumer trends and patterns in the market.

Getting subjected to high tax.

Phase III

Abstract

Grupo Bimbo is a multinational company that has a Mexican origin. The company deals with food products such as snacks, chocolate, cakes, bread, processed foods, and tortillas. As of 2013, “Bimbo had more than 170 brands, 156 plants worldwide, 42 plants in Mexico, 34 in the United States, 25 in Central and South America and 2 in China" (Ocampo, 2013). Its vision is “to transform the baking industry and expand our global leadership to better serve more consumers by 2020” Grupo Bimbo would make a kill if it expanded to Nigeria and Egypt. The two countries are in Africa, and they are suitable for business investment. The infrastructure, government stability, and market availability favor the Grupo bimbo’s Business. This research provides an analysis of the rationale for the two countries to host Grupo Bimbo. It also provides an analysis of the company’s current position and its global strategy. A SWOT analysis of Grupo Bimbo Multinational Company is also provided in the discussion.

Grupo Bimbo Multinational Company

The Grupo Bimbo MNC intends to dominate in the global markets in the food processing industries. The company has not fully covered the African continent. Giving attention to both Nigeria and Egypt would be of great benefit to the growth of the company. The two countries are among the countries with the highest populations in the whole continent. The business environment for investors both domestic and foreign is excellent. Bimbo's growth in the commodity market is driven by its strategic priorities which include; low-cost distribution channel, efficient management, human resource development, and market leadership. Bimbo has intensified in research, development, and innovation. Its strategy of internationalization is working. The approach might be best for getting into African food products market before it is too late.

Grupo Bimbo Multinational company background

The Grupo Bimbo is a Mexican Multinational corporation that operates under the food industry sector. The multinational company has specialized in the bakery sector. The MNC has one hundred and ninety-eight production plants globally where forty-three of them are established in Asia, Africa, and Europe. Grupo Bimbo Multinational Corporation’s latest move is the acquisition of Mankattan bakery industry in China. The acquisition was finalized in July 2018. Since its establishment in 1945, Grupo Bimbo MNC has been making advancements in accessing the international market. Its success in the past endeavors has been favored by its strategic priorities. Its strategic priorities include; establishment of a low-cost distribution channel, embracing and adopting efficient management, facilitation of human resource development, and application of market leadership. These set of tools has been playing a significant role in Grupo Bimbo's growth. Despite the company's expansion in other foreign countries, Africa has not received enough attention from it. Specifically, Grupo Bimbo should expand further and get hosted in Nigeria and Egypt. Grupo Bimbo initially had intentions of setting up in African countries, but that they gave up since the market had not grown to significant levels by then. That was in the late 20th century. Most of the African countries are in the developing stage, and new opportunities are emerging. The infrastructure and commodity markets in these two countries have highly improved. From the records of the World Bank, Nigeria and Egypt are among the highest populated countries in the whole of Africa. The demand for consumer food products is very high. A strong and established Multinational corporation such as Grupo Bimbo would make a kill in these two countries. Grupo Bimbo has operated in different parts of the world, and the management has gained a lot of experience in setting up valid and technical approaches in the market. Grupo Bimbo Multinational Corporation could be at an advantage of prevailing in the commodity market in the two countries than the upcoming domestic companies in the bakery and food processing industry.

International strategy

Grupo Bimbo has operated in different parts of the world, and the management has gained a lot of experience in setting up valid and technical approaches in the market. Grupo bimbo multinational company succeeds due to strictly adhering to its clear set vision, mission, and purpose. Grupo Bimbo has prioritized strictly on innovation.

Objective for expansion

The main objective for expanding to both Nigeria and Egypt is for increasing their market share across the globe. As the company continues establishing itself in other countries, there is a realization of new markets for its food products

How the globalization of the world economy is affecting the firm

The firm can make expansion in other countries. Grupo Bimbo can freely operate in the international markets. The company has embraced the technology of recycling the waste packaging metalized plastics and films. The action makes the company environmental friendly. Grupo Bimbo has been in the front line in trying to help the achievement of both the sustainable development goals and the millennium development goals. The firm can trade freely.

SWOT analysis of Grupo Bimbo MNC

The Grupo Bimbo company strengths

Grupo Bimbo has been one of the leading players in an active, non-cyclical and attractive industry. Food is a basic need in life. The food processing industry is a significant industry that must whatsoever continue producing enough products to cater for the demand that exists in the global market.

Over the years, the success of Grupo Bimbo has continuously been realized significant growth and due to its conservative financial policies, making strategic acquisitions and excellent market leadership.

The company has established itself in over twenty countries that are located at different parts of the globe precisely in different continents.

Grupo Bimbo has over one thousand varieties of products and over one hundred brands.

The company has a strong-chained network that plays a crucial role during the products distribution. Precisely, it has over one thousand distribution routes, one hundred and fifty-three production plants, and more than one hundred and twenty-seven thousand employees.

Grupo Bimbo has invested in research and innovation, product development and intensive market research to provide a better understanding of the product consumers.

The Multinational Company has been able to maintain strong brand equity and franchise.

The Grupo Bimbo company weaknesses

The company operates in an industry in an industry that is seen to be fragmented. The key players can only have a small market share.

There is “Weak volume recovery due to weak consumption environment in the US and lower average prices” (Grupo Bimbo, 2018).

Since there are decelerations in volumes in America and mostly in the Latin region, costs absorption has been laid low.

Opportunities available to Grupo Bimbo MNC

Egypt produces wheat on a large scale. Wheat is a raw material in bakery production. Setting up a production plant in this country would economically beneficial to the company.

Nigeria and Egypt consist of the first and the third countries with the biggest population in Africa respectively. High population indicates that there is high demand for food products in the market.

There is growth in cookies and other baked products. Both the millennials and the baby boomers have developed a tendency of purchasing the takeaway food packages.

Improved and favorable market conditions for foreign investors.

Threats for Grupo Bimbo MNC

The existence and emergence of complicated and tough regulatory frameworks in the two countries.

The presence of unstable and changing consumer trends and patterns in the market.

Getting subjected to high tax.

Business factors in Nigeria and Egypt

There are well-set policies that control the business operation in both countries. The government is stable, and the cultural environment is favorable to both local and foreign investors.

The environment factors favor the foreign investors in the two countries. The economy of the two countries is high. Both countries have realized high social and economic growth in the recent past and currently. The trade risks that are present in the two countries are very minimal.

Market Entry mode

A partnership is the best and most effective market entry strategy for Grupo Bimbo. Partnership with the existing local companies has been found to be beneficial to the local industries (Africa Competitiveness Report, 2013). These local industries can improve on their performance standards as try to emulate the important management styles which are introduced by foreign investors. On the other hand, Grupo Bimbo will gain a lot of knowledge about the new foreign market from its partner. The partner from the host country has a lot of trade secrets about the competitors and customers (Ekeledo and Sivakumar, 2013).

Opportunities and strengths for operating Nigeria and Egypt

Grupo Bimbo has invested in research and innovation, product development and intensive market research to provide a better understanding of the product consumers.

The Multinational Company has been able to maintain strong brand equity and franchise.

The company has established itself in over twenty countries that are located at different parts of the globe precisely in different continents.

Grupo Bimbo has over one thousand varieties of products and over one hundred brands.

The company has a strong-chained network that plays a crucial role during the products distribution. Precisely, it has over one thousand distribution routes, one hundred and fifty-three production plants, and more than one hundred and twenty-seven thousand employees.

Egypt produces wheat on a large scale. Wheat is a raw material in bakery production. Setting up a production plant in this country would economically beneficial to the company.

Nigeria and Egypt consist of the first and the third countries with the biggest population in Africa respectively. High population indicates that there is high demand for food products in the market.

There is growth in cookies and other baked products. Both the millennials and the baby boomers have developed a tendency of purchasing the takeaway food packages.

Improved and favorable market conditions for foreign investors.

Trade issues to be faced in Nigeria and Egypt

The existence and emergence of complicated and tough regulatory frameworks in the two countries.

The presence of unstable and changing consumer trends and patterns in the market.

Getting subjected to high tax.

Human resource management in Nigeria and Egypt

The two countries have a high level of employment especially in Nigeria (Budhwar, 2013). However, there are high skilled personnel to work to be absorbed in the Grupo Bimbo Company after establishing itself. Labor is cheap hence the company will be at an advantage.

Plan Conclusion

From the analysis of the two countries, Nigeria would be the best country for expansion since it has the highest population in Africa continent. It has high economic growth. There is adequate and highly skilled labor, and labor is cheap hence the company will have reduced cost of production (Tijani, 2016).

Conclusion

Grupo Bimbo Company could boost its growth in the global market through expansion. The two countries targeted are Nigeria and Egypt. From the analysis, a recommendation for the expansion of Grupo Bimbo in any or both of the two countries would be given. More weight would fall in Nigeria due to its strengths and opportunities.

References

Africa Competitiveness Report (2013) ‘Connecting Africa's markets in a competitive way,' 4th Edition, May, pp. 73-76

Budhwar, Pawan S. Debrah, Yaw A., 1956-. (2013). Human resource management in developing countries.

Calvelli, A., & Cannavale, C. (2018). Market Entry Strategy. Internationalizing Firms, 59-110. doi:10.1007/978-3-319-91551-7_3

Ekeledo & Sivakumar, (2013). Foreign Market Entry Mode Choice of Service Firms: A Contingency Perspective, Journal of the Academy of Marketing Science

Forbes. (2018). Grupo Bimbo on the Forbes World's Best Employers List. Retrieved from https://www.forbes.com/companies/grupo-bimbo/#2376b01354d0

Ghemawat, Pankaj. (2014). Cases about redefining global strategy. Boston, MA: Harvard Business Pub.

Grupo Bimbo. (2018). Annual Reports. Retrieved from https://www.grupobimbo.com/en/investors/financial-information/annual-information

Ocampo, J. F. (2013). Internationalization process of a developing country multinational: the outward foreign direct investment decisions in Bimbo Group. Retrieved from http://www.scielo.org.co/scielo.php?script=sci_arttext&pid=S1657-62762013000100004

Tijani, H. (2016). Union education in Nigeria: Labor, empire, and decolonization since 1945. Place of publication not identified: Palgrave Macmillan.