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Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
Ice-cream market entrance by Unilever. Team 2
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Ice-cream market entrance by Unilever. Team 2

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  • 1. Unilever: entering Russian ice cream market
  • 2. Agenda Assessment of potential market entry Possible ways to enter Ice Cream market Price of entering Ice Cream market Conclusion
  • 3.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionAssessment of potential market entry Should we enter the ice-cream market? Key factor we should consider Market Company Potential Analysis capabilities barriers to enter
  • 4.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionAssessment of potential market entry Market Analysis Client Competitors Current situation availability• 60% are ice cream consumers • Competitive environment •CAGR is 2.2$ in volume and• Increase in DI drives ice cream • Biggest 15 companies hold 2.8% in valuedemand 60% of the market • Long history of ice cream• Per capita consumption of ice • Active consolidation process consumptioncream is likely to increase Clients are willing Low resistance for High growth to consume more potential market potential entries Market is attractive
  • 5.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionAssessment of potential market entry Company capabilities International Local Experience Strength • Present in more that 40 different markets 15+ of successful • Leader in most of its markets performance on years • Experts in ice cream on Russian marker production Unilever has experience and desirability to succeed
  • 6.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionAssessment of potential market entry Potential barriers to enter Government Access to Economy of scale regulation distributors No substantial Benefits from big Possibility to obtainedgovernment regulation scale production access to distribution network Low entry barriers
  • 7.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionAssessment of potential market entry Should we enter the ice-cream market? Market Company Potential Analysis capabilities barriers to enter We should enter Russian Ice-Cream market
  • 8.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  Conclusion Possible ways to enter Ice Cream market Produce ice Produce ice cream abroad cream in Russia• High price• Dependence on • Lower priceexchange rate • Ability to produce• Unable to satisfy “true” ice creamconsumer • Relatively smallerpreferences logistic problems
  • 9.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPossible ways to enter Ice Cream market Produce ice cream abroad Produce ice cream in Russia
  • 10.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPossible ways to enter Ice Cream market How to enter? Start ice cream Acquire existing Joint Venture production player
  • 11.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPossible ways to enter Ice Cream market Start ice cream production Pros Cons• Ability to implementUnilever corporate culture • Lack of brand awareness• Build own management • No distribution networkhierarchy • Time consuming process• Variety choices in technologyand quality selection Not optimal
  • 12.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPossible ways to enter Ice Cream market Joint Venture Pros Cons Less capital expenditures Dependence on partner company Not optimal
  • 13.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPossible ways to enter Ice Cream market Acquire existing player Pros Cons• Access to distributionnetwork and productionfacilities Huge Capital•Brand awareness expenditures•Relatively fast process Optimal and Feasible
  • 14.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPossible ways to enter Ice Cream market How to enter? Start ice cream Acquire existing Joint Venture production player Unilever should enter Russian market through acquisition of existing player
  • 15.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPrice of entering Ice Cream market Whom to acquire? Two biggest Russian players Talosto Inmarko •Strong positions in Frozen •Ice cream is a core asset food market •Largest distribution network •Operates in high population among competitors density regions •Large production capacity • Wide distribution network •Brand awareness •Brand awareness Acquire Inmarko
  • 16.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  Conclusion Price of entering Ice Cream marketAll figures in ‘000 of USD % Real Growth 10% 2009 2010 2011 2012 2013 2014 Sales 217 620,70 239 382,77 263 321,05 289 653,15 318 618,47 350 480,31 EBIAT 17 409,66 19 150,62 21 065,68 23 172,25 25 489,48 28 038,43 % EBIAT margin 8,0% Depreciation&Amortization 9 792,93 10 772,22 11 849,45 13 034,39 14 337,83 15 771,61 D&A as % of volume 4,5% Capital Expenditures 20 000,00 20 000,00 20 000,00 20 000,00 20 000,00 20 000,00 Increase in Net Working Capital 1 978,37 2 176,21 2 393,83 2 633,21 2 896,53 3 186,18 Increase in NWC as % of change in Sales 10% Unlevered Free Cash Flow 5224,2 7746,6 10521,3 13573,4 16930,8 20623,9 WACC 11,5% Discount Period 0,5 1,5 2,5 3,5 4,5 5,5 Discount Factor 0,95 0,85 0,76 0,68 0,61 0,55 Present Value of FCF 4 947,03 6 577,85 8 011,02 9 267,34 10 365,48 11 322,17 Cumulative present value of FCF 50 490,89
  • 17.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  Conclusion Price of entering Ice Cream marketAll figures in ‘000 of USDSensitivity analysis Real Growth,% 0,06 0,08 0,1 0,12 0,14 0,105 113 805,24 153 502,56 196 262,56 242 270,40 291 719,21 WACC,% 0,11 91 092,51 125 049,37 161 601,84 200 906,10 243 125,01 0,115 72 979,59 102 364,88 133 974,32 167 941,06 204 403,95 0,12 59 738,45 85 786,84 113 788,66 143 860,31 176 123,12 0,125 48 518,65 71 744,16 96 694,47 123 471,82 152 182,80 Terminal Value 268 024,81 Present Value of Terminal Value 139 334,43 Enterprise Value 189 825,32 Implied Equity Value 133 974,32
  • 18.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionPrice of entering Ice Cream market Based on DCF model of Inmarko we suggest that target price of the company should be roughly 190M USD
  • 19.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  Conclusion Post acquisition strategy Improvement Strategy Human Distribution Quality Resources•Use Unilever distribution Ability to attractnetwork to promote ice Implement recent talents to work forcream product innovations in ice Unilever•Offer freezer chest to SME cream productionand sole entrepreneurs tosell Unilever ice cream Replication of worldwide success in Russian market
  • 20.  Assessment of potential market entry  Possible ways to enter Ice Cream market  Price of entering Ice Cream market  ConclusionConclusion  Unilever should enter Russian market due to it attractiveness and company capabilities and desire  Marker entry should be done through acquisition of Inmarko company  Price of the acquisition is 190M USD

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