Grupo Bimbo Case Study Analysis

Executive Summary

Grupo Bimbo founded in 1918 in Mexico that becomes one of the largest bakery companies in the world. Recently, it is studying the possibility of growth in China after the acquisition of Panrico.

Analysis

Grupo Bimbo continues its expansion with the ambition to become fifth largest bakers in the world, while the performance of the company in foreign markets must be improved in term of profit so that the company will be safe. The financial risks associated with the acquisition of losses and the lack of productivity constitute a substantial advantage of foreign markets. Almost 70% of its’ sales came from Mexico, where the company had acquired a 90% market share of packaged bread, profitability, and business in a growing market.

Investments of Grupo in the United States and Latin America had competitive markets, where there is low or not profitable. According to Grupo Bimbo’s global strategy, which would become one of the top five bakers in the world, has launched a series of strategic initiatives to ensure the success of operations abroad. In March / April, she bought the Panrico Food Processing Center in Beijing, already established in China.

The Bimbo Group must adapt its distribution networks to the differences of each country (union pressure in the United States, independent operators with no experience in Brazil, modification of China’s distribution structure so that it trusts bicycles). Due to the nature of the products (fresh bread), Grupo has to serve the stores directly on a daily basis. This places enormous demands on the distribution network to ensure the uninterrupted delivery of fresh produce. The broad geographic spread of the business created by Bimbo’s rapid expansion internationally required complex logistics planning for the company to operate effectively.

Due to todifferent markets in Mexico, the USA, Latin America and China required different modes of operation and different price standards. While 80% of sales in Mexico are still in “mom and pop” stores, controlling where, when, how and at what price products were sold, 80% of sales in the United States. UU And 70% in Latin America pass through large supermarkets. The power of supermarkets as the main product distribution channel in the domestic markets of Mexico, as well as in the markets of Brazil and Argentina, increases their bargaining power was very high. The company needs to find the best practices to personalize relationships with these large chains in the newly established Chinese market. One issue is the cultural difference due to multinational Bimbo division, cultural difference in South America, language difference in Latin America.

Recommendations

To implement the strategy successfully, it is essential to address cultural differences, as it was the basis for choosing the right products according to the requirements and tastes of Chinese consumers, as well as language barriers, according to local employees and suppliers.