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Clm mark@- нпгю

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    Clm mark@- нпгю Clm mark@- нпгю Presentation Transcript

    • By MARK@ (Ruska,Markevichus, Naniev, Grachev)
    • Emerging russian ice-cream market is good area for different producers as it has great potential 1. Currently Russian Russian ice-cream market is growing slowly but has a good potential ice-cream market is the 4th largest in Trend of ice-cream consumers share 60% Trend of market volume terms of amount produced and 10th 59% 112,80% 113,15% in terms of value. 58% 115% 2. The market is 57% 110% growing slowly and 56% 100% 105% the consumption 55% 100% less than in the US 54% 95% and Scandinavian countries. 53% 90% 3. The ice-cream 2011 2012 2013 2014 2015 2009 2010 2011 market has got good potential. Differentiated demand provide sufficient market share for main producers 4. Mainly people Trubochka Other contribute ice- 3% 10% Main ice-cream categories Share value of main producers, 2011 cream by impulse Sandwich rather than taking it Bulk 2% Log+Cake 5% Unilever-Inmarko home. 3% 22% 5. A few leaders have Cone Nestle 36% got huge share of 18% Take- Pot Big Iceberry the market. Fruit Ice home; 4% Brick 3% 32,00% 9% 15% Russki Holod Tub 10% 6% Talosto Wafer Cup Stick 7% 14% 21% Other Other 11% 1% According to current situation on the Russian ice-cream market Unilever-Inmarko has got a great potential acting in this area. Hence, Unilever-Inmarko could achieve good results by having a good-functioning structure. So the main goal is to achieve the 1st place in certain areas (Central, North-West, South) of Russia by modifying current distribution system. © MARK@ 2
    • Current position of Unilever-Inmarko on the market gives huge opportunities for constructing effective distribution network Unilever-Inmarko can use its strengths to resist threats and use Acting in competitive market opportunities to improve weaknesses. with strong players Unilever Strength Weaknesses has got its own advantages (Price/quality; Tula – high •Good position in world and Russian •Bad experience in acting on Russian technology; High quality of market; ice-cream market; service) that give company •Good facilities; •Production capacities not always •Well-balanced portfolio of brands; cover existing demand; opportunities for growth. •High quality of products •Weak position in distribution in some regions Producer’s CPI Opportunities Threats Brand •Central region has great potential; •Unstable political situation; 10 •Developing economy gives huge •Uncertain tax policy of the 8 Brand 6 opportunities; government; 4 Value shares •Huge areas that could be used in •Strong competitors portfolio 2 0 Unilever-Inmarko manufacturing; •Economy of scale could be used Nestle Price (from the Effectiveness Iceberry Unilever has strong positions in Russian market in certain areas, but not good enough to be a point of view… of… leader in ice-cream sector. Previous bad experience could be a good example for company. Russki Holod Unilever should use existing capacities of Inmarko and should improve distribution channels. Talosto Novosibirsk Tula •Good location (Central, South and North-West). Omsk •Fairly modern enterprise. • Low power and not suited •The high production capacities. •Regular upgrading. Unilever can optimize to modernization. •Complex for the production of ice cream + logistics •Can produce only 50 mln tons of distribution network • The shop in Novosibirsk is center (5,000 tons of finished products). •By the end 2014 will produce about 120 mln liters of ice cream per year. •Partial modernization has (in Central, North- equipped with only two ice cream (potentially 200 million liters). already begun. production lines. West, South regions) •In 2011 - re-equip into the distribution •I = 100 million euros. •Produces 60% of Inmarko production. •Restructuring measures will increase the production of ice cream up to 75 tons per using given capacities. warehouse and the logistics center. •Maximum production capacity = 60 million liters of ice cream. year. •Warehouse (20,000 pallets for 5,000 tons of finished •Later will produce goods for Siberia, the products). Far East and Kazakhstan. Using its competitive advantages and existing capacities Uniliver can build effective distribution network in Central, North-West and South regions based mainly on highly technological plant in Tula. © MARK@ 3
    • Modify currently existing system in Central Federal District Pros and cos of highly populated region with lots of distributors Modification of current distribution network will give Unilever-InmarkoCentral Federal District has the biggest population among the others (37 more effective structuremillion). Central region also less suffers from seasonal changes, also, Inmarko’splant is situated here. In this region we have a lot of strong and productively working current andOur current distributors (5) work almost in every city except Lipetsk and Tula. possible distributors. So, we do not have to change distribution networkThey have high CCFOT and expectable level of % of sales. Almost all system. But we can change some currently working distributors in differentwarehouses are owned. Almost all distributors are huge and highly appreciated cities to possible distributors. Thus we will build efficiently working system.by companies. They have high rating. Changes will take place in these cities:We have 10 possible distributors, as well, that gives us opportunity to change Belgorodsomething. CentralD -> Distributor 16In Central Federal District work a lot of companies. That is why it is highly Less % of sales, less CCFOT, but more pallet capacity + ability to rentconcentrated. Minus is that almost all our current distributors work with our Vladimircompetitors. That is why we can’t guarantee that we will get required amount CLC -> Distributor 9of pallets. Less % of sales, less CCFOT, but more pallet capacity + ability to rent Kostroma Ice -> Distributor 8 x2 => 1st The same % of sales, more CCFOT, more pallet capacity Lipetsk Wait till Logistic+ will build there warehouse place in Ryazan Logistic+ -> Distributor 11 More % of sales, more CCFOT, more capacity CFD Smolensk Snezhok-> Distributor 11 More % of sales, more CCFOT, more capacity Tver Ice -> Distributor 9 According to predictions demand will grow and capacities of Tula More % of sales, more CCFOT, more capacity manufactory will grow as well. This will lead to increase of sales and We made our assumptions according to % of sales, CCFOT, pallet capacity, increase of profit. Thus, having such structure we will get the 1st place own/rent, customer price. in Central Federal District and this will lead to doubling of profit by 2015 Look for calculations in Appendix © MARK@ 4
    • Combine different systems for North-West Federal District Pros and cos Modification of current distribution network will give Unilever-Inmarko more effective structureHas small population level and hard climatic environment, therefore, weconsider low consumption level in its regions. Inmarko has 5 distributors in We suppose, that organizing an own distribution network there is not theNorth-West district. Besides, Inmarko may have 7 possible distributors here. most effective option. The better way is to use current distribution channels.Almost all current distributors have high CCFOT and low % of sales.Distributors are represented in almost every region. To make the system work more effectively we should change distributor CPossible distributors have some optional qualities. on distributor 4 (higher CCFOT, no contracts with competitors, more pallets,The main characteristic is low temperatures. That is why demand here could be own). There is a possibility to change A on 1 and 3, thus we would have gotlower. entrance on new market, but their KPI is lower. We cab add 5 (and probably move out E) – that will give us entrance on new market in Murmansk, but again KPI is worse. x2 => 1st In our opinion we should combine modified distribution network and logistics center. The costs will approve themselves. For more calcilations place in look in the Appendix. We made our assumptions according to % of sales, CCFOT, pallet capacity, NWFD own/rent, customer price. Look for calculations in Appendix According to predictions demand will grow and capacities of Tula manufactory will grow as well. This will lead to increase of sales and increase of profit. Thus, having such structure we will get the 1st place in North-West Federal District and this will lead to doubling of profit by 2015 © MARK@ 5
    • Make own distribution network in South Federal District Pros and cos Own distribution networkHas high level of demand depending on season. In this region we should makeown distribution network. We have 4 distributors here and 6 potentialdistributors. (RUR) 2010 SFDTo make work more efficient we should add distributor 5 (entrance on new FC 5 400 000market) or add distributor 5 and 6 and put out distributor B, because they have VCbetter KPI but less capacities. Distributor C is the most interesting from thepoint of view of M&A. He works only with us, he is one of the most trusted Kiosks 219 157 198distributors and has logistics contract as well. Quantity of subjects in region 6 Chests 80 660 744 Quantity of chests 2504,653696 x2 => 1st Trucks 145 859 245 Consumption per year 810 329 Trucks roads per year 51 place in Total costs 445 677 187 SFD Consumption per year Population 14 686 261,00 Consumption per district (liters) 30 694 285,49 Inmarko consumption in region (liters) 1 841 657,13 Inmarko consumption in region (kg) 810329,1369 According to predictions demand will grow and capacities of Tula manufactory will grow as well. This will lead to increase of sales and increase of profit. Thus, having such structure we will get the 1st place in South Federal District and this will lead to doubling of profit by 2015 © MARK@ 6
    • Each region requires individual structure of distribution depending on different strategic options of channels Having certain demand and knowing capacities in Tula we can calculate what structure will give us the least costs. Take- •Russia’s location Demand in Russian ice-cream market home •Low HoReCa highly depends on season, but in 32% •Pretty high price volume we have huge numbers. As for quality ice- most purchasing are made buy Impuls impulse than we should mainly e cream (185,7 concentrate on Traditional trade 68% rubles in 2010) Every region needs individual approach according to its characteristics and given market features (For more information refer to Appendix) Central Federal District has the biggest population among the others (37 million). Central region also less suffers from seasonal changes, also, Inmarko’s plant is situated here. Our current distributors (5) work almost in every city except Lipetsk and Tula. They have high CCFOT and expectable level of % of sales. Almost all warehouses are owned. Almost all distributors are huge and highly appreciated by companies. They have high rating. We have 10 possible distributors, as well, that gives us opportunity to change something. Own network In Central Federal District work a lot of companies. That is why it is highly concentrated. Minus is that almost all our current distributors work with our •Long-term strategy competitors. That is why we can’t guarantee that we will get required amount of pallets. •Kiosks (average cost 150 – 200 000 RUR) In this region we have a lot of strong and productively working current and possible distributors. So, we do not have to change distribution network system. But we can change some currently working distributors in different cities to possible distributors. Thus we will build efficiently working system. •Labor-intensive North-West FD Has small population level and hard climatic environment, therefore, we consider low consumption level in its regions. Inmarko has 5 •Refrigeration equipments distributors in North-West district. Besides, Inmarko may have 7 possible distributors here. •Vehicles Almost all current distributors have high CCFOT and low % of sales. •Chest boxes Distributors are represented in almost every region. Possible distributors have some optional qualities. •Warehousing The main characteristic is low temperatures. That is why demand here could be lower. •Own Sales Department We suppose, that organizing an own distribution network there is not the most effective option. The better way is to use current distribution channels. Logistics South FD has high level of demand depending on season. In this region we should make own distribution network. We have 4 distributors here and 6 potential distributors. •Delivery between cities To make work more efficient we should add distributor 5 (entrance on new market) or add distributor 5 and 6 and put out distributor B, because they •Delivery within city have better KPI but less capacities. Distributor C is the most interesting from the point of view of M&A. He works only with us, he is one of the most Distributors trusted distributors and has logistics contract as well. •Compensation to distributors •(discounts + bonus for CCFOT)As we are considering that Inmarko’s interaction with distributors in European regions is not absolutely effective, we should change the existing system of distribution sothat in every region (North-Western, Central and Southern Federal Districts ). According to our reasoning we should built own distribution network in Central region and use services of current distributors in North-West and South region © MARK@ 7
    • Appendix 1. Unilever-Inmarko SWOT-analysisStrengths Weaknesses• Unilever is the worlds biggest ice cream manufacturer • Unilever came on the domestic market twice, in 1997 and• Inmarko - the leading manufacturer of ice cream in Russia, 2003, both times did not last more than one season (1st - and has a strong position in the market Algida brand +crisis, 2nd – huge costs) • The production capacities in Tula did not provide complete• Good facilities and good location of plants, ensuring a high coverage of the rapidly growing demand in central and north- coverage of demand. western region• Well-balanced portfolio of brands, aimed at medium and high • The factory in Novosibirsk seemed low power and not suited price categories, as well as different tastes of consumers. to modernization.• High quality of the products and a continuous expansion of • Weak positions in distribution in North-West, Central and the range + active communication with consumers. South regions• 3 factories (Omsk, Novosibirsk, Tula) are equipped with the latest innovative technologies and have the necessary capacity to meet demands in the Russian market• Tremendous capacity (9 branches in major cities across Russia)Opportunities Threats• Central region has great potential • Unstable political situation• Developing economy gives huge opportunities • Uncertain tax policy of the government• Huge areas that could be used in manufacturing • Strong competitors• Economy of scale could be used as Unilever is large company © MARK@ 8
    • Appendix 2. Central current distributors Distribut Coverage % of sales CCFOT Type of Contracts with Stock (pallet capacity) Own/ Transport (own/rent) or volume company competitors Rent CLC Moscow, Ivanovo, 30% 97% Distributor + Own, 10000(Moscow) + Own + Rent Vladimir (Central 4000(Ivanovo)A Disrtict) +3000(Vladimir) Ice Moscow, Yaroslavl 20% 85% Distributor + Own, 8000(Moscow) + ? (25% to Kostroma), 4000(Yaroslavl) +1500(Tver)B Tver Snezhok Smolensk, Bryansk, 20% + 80-90% Local Own, 6000(Kaluga) + Own Kaluga indexing producer 2000(Smolensk) +C 2000(Bryansk) Logistics + Ryazan, Tambov 20% 92% Distributor + Own, Possible rent 3000(Ryazan)+1500(Tambov).D possible rent CentralD Orel, Kursk, Belgorod, 30% 95% Distributor _ Own, 6000 (Voronezh) + Voronezh, Lipetsk 2000 (Orel) + 2000(Belgorod) +3000 (Kursk) + 3000 (Lipetsk, 30% rent) + 1000E rent in Belgorod © MARK@ 9
    • Appendix 3. Central potential distributors Distributor Coverage % of sales CCFOT Type of company Contracts with Stock (pallet volume competitors capacity) Own/ Rent1 Distributor 8 Yaroslavl Kostroma 20% 89% Local producer - Own 2000 Rent 15002 Distributor 9 Moscow Tver Vladimir 28% 93% Distributor + Own 6000 Rent 25003 Distributor 10 Moscow Yaroslavl Vladimir 27% 91% Distributor + Own 7000 Ivanovo Rent 20004 Distributor 11 Moscow Ryazan Smolensk 26% 93% Distributor + Rent 60005 Distributor 12 Moscow Kaluga Bryansk 25% 90% Distributor - Own 2000 Rent 35006 Distributor 13 Bryansk Kursk Belgorod 20% 84% Local producer + Own 2000 Rent 30007 Distributor 14 Orel Lipetsk 19% 88% Distributor - Own 30008 Distributor 15 Voronezh 20% 90% Distributor - Rent 35009 Distributor 16 Voronezh Belgorod Lipetsk 27% 91% Distributor + Own 5000 Rent 250010 Distributor 17 Moscow 28% 94% Distributor + Own 6000 © MARK@ 10
    • Appendix 4. Central distributors © MARK@ 11
    • Appendix 5. North-West current distributors Distributor Coverage % of CCFOT Type of Contrac Stock (pallet sales company ts with capacity) Own/ volume competi Rent torsA Arktika St. Petersburg, 25% 94% Local + Own, 6000 Novgorod, producer Rent 2000 PskovB LED St. Petersburg, 20-25% 92% Distributor + Own, 5000 rent Novgorod, 1200 Tcherepovets, VologdaC Sever- Ukhta, 10% + 85% Distributor + Rent, 1500 Kholod Syktyvkar 7% (50% for Inmarko, rest for others)D Alfa Arkhangelsk 20% 90% Distributor + Rent 3000 (part of it)E Beta Severodvinsk 20% 91% Distributor - Rent 3000 (part of it) © MARK@ 12
    • Appendix 6. North-West possible distributors Distributor Coverage % of CCFOT Type of Contracts Stock sales company with (pallet volume competitor capacity) s Own/ Rent1 Distributor 1 St. Petersburg, 25% 92% Distributo + Own 5000 Petrozavodsk, r Velikiy Novgorod2 Distributor 2 Tcherepovets, St. 27% 90% Distributo - Own 2000, Petersburg r Rent 25003 Distributor 3 Velikiy Novgorod, 18% 87% Local + Own 1500 Pskov producer4 Distributor 4 Ukhta, Syktyvkar 22% 88% Distributo - Own 3000, r Rent 10005 Distributor 5 Murmansk, Apatity, 25% 90% Distributo - Rent 2000 Severodvinsk r6 Distributor 6 Arkhangelsk 21% 89% Distributo + Own 1500, r Rent 10007 Distributor 7 Arkhangelsk 18% 88% Distributo - Own 1000 Vologda r © MARK@ 13
    • Appendix 7. North-West distributors © MARK@ 14
    • Appendix 8. South current distributors Distributor Coverage % of sales CCFOT Type of Contrac Stock (pallet capacity) volume company ts with Own/ Rent compet itorsA Santa Krasnodar, 15-24% 80-90% Local Own, 4000 + 3500 + Stavropol, producer 1000 Tcherkessk (summer) + Distributor (winter)B FGD Stavropol, 25% 87% Distributor - Own 2000 + 6000 Vladikavkaz, Rent, own 2500, rent Naltchik, 1800, rent 1000) NazranC Antares Kalmykia, 20% 90% (99% Distributor - Own, 1200(Elista) + Rostov, for logistics) 5000(Rostov) + Astrakhan 3000(Astrakhan)D Zero Volgograd 15% 80% Local - Rent, 3500 (share producer with own goods) © MARK@ 15
    • Appendix 9. South possible distributors Distributor Coverage % of CCFOT Type of Contracts Stock sales company with (pallet volume competitors capacity) Own/ Rent1 Distributor 18 Volgograd, 25% 88% Distributor + Own 4000 Astrakhan2 Distributor 19 Volgograd 27% 89% Local + Own 3000 Rostov producer Rent 10003 Distributor 20 Elista Rostov 27% 94% Distributor + Own 3800 Astrakhan4 Distributor 21 Krasnodar 25% 90% Distributor + Own 3000 Stavropol5 Distributor 22 Grozny 24% 89% Local + Rent 1900 Makhatchkala producer Nazran6 Distributor 23 Vladikavkaz 23% 93% Distributor + Own 3500 Naltchik 4000 Rent Tcherkessk 1200 © MARK@ 16
    • Appendix 10. South distributors © MARK@ 17
    • Appendix 11. ice-cream densitym=pVDepending on kind of an ice-cream its density (p) could be different.According to our own empirical data (ice- cream’s wrapper) we found that 1 liter of ice- cream in average weight 0,44 kg. © MARK@ 18
    • Appendix 12. ChestsThe chest boxes with a metal lidSize: 200 - 700 litersPrice: from $ 500 - $ 700 to $ 800 - $ 1000 (Europe)from $ 350 -$ 500 to $ 700 $ - $ 800 (Russia)If we consider the highest size for foreign chest we will give 600$ for 3 years ((1000/5)*3) + 150$ (average delivery costs) = 750$, for Russian chest we will give the whole value 800$ for the same period of time. So, foreign chest is more profitable and we will choose it.The chests with a glass straight sliding lidSize: 200- 600 litersPrice: from $ 550 - $ 600 to $ 800-900 (Europe)from $ 370 - $ 500 up to $ 700 (Russia)If we consider the highest size for foreign chest we will give 540$ for 3 years ((900/5)*3) + 150$ (average delivery costs) = 690$, for Russian chest we will give the whole value 700$ for the same period of time. So, foreign chest is more profitable and we will choose it.The chests with a sagged (bent) glass coverIncreases the exhibit space + increasing sales volume up to 30%Cost higher by 30 $ -100 $Price: from $ 580 - $ 630 to $ 900-1000 (Europe)from $ 400 - $ 530 up to $ 800 (Russia)We use similar calculations as for the chests with a glass straight sliding lid. Foreign chest is more profitable and we will choose it. © MARK@ 19
    • Appendix 12. Chests (continue)For Russia: normal & “tropical” version.“tropical” versionsThicker layer of heat-insulation of the box + additional capacitor.For remote trading or in outdoor cafes and in zones of moderate climate.Cost 20% higher than on the ordinary ones.10% - defect.This version isn’t profitable because of higher costs and % of defected equipment. That is why we won’t choose this variant.Customs costs (15%) of the imported productsDelivery = 50 - 200 $.Often choose imported chests: 1) small scale of production of chests (Inmarko can buy in Russia no more than 7,000 per year for delivery in the Central Federal District, North-West, South and North-Caucasus Federal District), 2) chests are not always high-quality equipment (average service life of a foreign chest is 5 years, of the Russian one - 3 years).According to quantity/price index we will choose the 3rd type of chests - The chests with a sagged (bent) glass cover (foreign)Quantity of chests = Q (consumption per year in District) * % spontaneous purchases / Average volume of chestCosts on chests = Quantity of chests * Average price * Customs duty + Quantity of chests * average price + Quantity of chests * Average cost for delivery of 1 chestDuring Summer -> rent 5,000 - 10,000 rubles per month - average = 7,500 RUR per month(We assume that we have enough chests and we won’t need to rent additional chests, because we can always move acquired chests from 1 region to another one) Quantity, Type of chest Min/max liters Average price, $ Average price, RUR Bonus Quantity/price 1 min 200 600 18960 0,33 max 700 900 28440 0,78 2 min 200 575 18170 0,35 max 600 850 26860 0,71 3 min 200 605 19118 0,3 0,63 max 600 950 30020 0,3 0,93 © MARK@ 20
    • Appendix 13. KiosksPrice: 150 – 200 thousand RURAverage = 175 000 RURWe assume that in 1 kiosk we have 2 chestsQuantity of kiosks = Quantity of chests / 2Costs on kiosks = Quantity of kiosks * Average price © MARK@ 21
    • Appendix 14. Trucks Truck Volume, sq m Loading capacity, tons Price (VAT incl), RUR FRASCOLD C415 8SP 10,8 16 2 880 000 Hyundai HD25 10,8 16 3 586 600 Hyundai HD170 10,8 9 3 002 000We will chose FRASCOLD C415 8SP trucks because for less money paid wewill get the same (16 tons) loading capacity.Quantity of truck’s roads per year required to satisfy demand in District =Q/loading capacity Q (consumption per year in District) = Share of Inmarkoin District * total consumption of ice-cream in RussiaQuantity of truck’s roads per year = quantity of required trucks because weneed not only external trips but also internal.Costs on trucks = Quantity of trucks * payment for purchasing + Averagepetroleum costs + Average wagesWe will use our own trucks to deliver products between cities and logisticservices trucks for within city delivery. © MARK@ 22
    • Appendix 15. Consumption per districtPopulation of District * Share of ice-cream Consumption * Share of Unilever-Inmarko in District* Ice cream consumption in Russia per capita consumption (3,8 liters) = Consumption in liters1 liter ice cream = 0,44 kg ice cream © MARK@ 23
    • Appendix 16. Model of own distribution network• Our goal is to achieve minimum costs• FC = sales department* + warehouse**•• * Federal and regional levels are fully equipped; territory positions are equipped on 33%. We should take additional 67%. We will take average salary, because the model is constructed such that it is applicable for every region.•• ** As not in every district there are not enough warehouses we could either buy or rent it. But to buy warehouse is not profitable because they are too expensive and every year distribution network changes. That is why it’s economically more profitable to rent warehouse. We can rent warehouses using our connections with distributors.•• VC (Q) = kiosks + chests + trucks (including petroleum and wages of truck drivers)•• TC = VC + FC ––> min © MARK@ 24