Mabe is a global appliance manufacturer that has historically relied on revenues from Latin America and Mexico. It is looking to expand into new markets to drive further growth. The document discusses Mabe's strengths such as an educated workforce and global manufacturing assets. It also analyzes Mabe's past operations including joint ventures and acquisitions. The document provides recommendations on how Mabe can improve its strategy, including increasing its focus on local talent and markets outside of major cities to capture more market share.

1. 2015-2016 KPMG
International Case
Competition
Unicorn Consulting
Mabe Business Strategy

2. Mabe profile
a. Revenues
b. Global Occupations
c. Strengths and weaknesses

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Historical revenues show strong year on year for performance, reliant
on the Americas
• Latin America (along with Mexico) make up the core of
Mobe’s market.
• Further high growth will be difficult to achieve in these
markets
Historical revenues and projectionsGlobal Revenue by Region
Latin America and Mexico’s future growth are limited, expansion
or Joint Venture is needed in culturally similar markets
• Large growth attributed to JV and Acquisitions
• Slight decline in revenue due to GFC
• 4% Future growth estimate
10%
10%
40%
23%
17%
International
Canada
Latin America
GE USA
Mexico
Sales Performance by Region in 2011
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Mabe's Revenue (US $m) Projected
Growth
CAGR 24%

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Mabe is a global company with the core of the business in the Americas
and potential to expand to Asia and the emerging markets
Manufacturing
facility centre
Procurement
Office
Research and
Development
Centre
Representation
office
Acquisitions
Future Markets
Joint Ventures
Centre

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Human Capital
Assets
DebtGeographic reach
Synergy with
other firms
We have identified 5 indicators of performance that help outline Mabe’s
strengths and weaknesses
• Progressive hiring college graduates
has led to educated employees
• Global manufacturing
centres(through JVs and
acquisition) leaves Mabe with
considerable assets
• In 2008, Short term borrowings
were $637m, whilst long term debt
decreased to $429m
• Commanding a foothold in the
Americas, Mabe should look to
expand to Asia and the emerging
markets
• Past JVs and acquisitions have
performed well, whilst the Russian
venture underperformed due to a
combination of factors

6. Historical performance and
strategy
a. Russian market drivers
b. Areas for improvement
c. Corporate structure
d. Past operations (JVs and acquisitions)
e. Scorecard
f. Marketing

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• Russia had a
profit margin 2x
that of the
standard
operating margin
for appliances
• Required local
manufacturing
which Mabe did
not -all items from
other plants (high
transportation
cost)
• Wholesale –
• Regional
Distributor –
• Self-distribution
or acquire
distributor
• Must address
market-specific
needs
• Corruption/brib
ery in
bureaucracy
• 56% of
enterprise
owned by
government
• Few small
enterprises
• Gap between 5
big cities and
rest of country
• Few investment
banks and
private equity
institutions
• One large
central bank
operated by the
government
• Difficult to
obtain loans
• Decline in
foreign
investment (cite
appendix -$80B
outflow in 2011)
• Young twenty-
somethings that
are capitalistic
consumers,
concerned with
status
• Older Soviet
generation that
is disciplined,
hardworking
and distrusting
• Market-specific
needs must be
met in
emerging
markets
• More affordable
products
• Government
stimulus
packages
• Energy & Water
efficiency
Market
Requirements
Distribution
Chanbels
ProfitabilityDemographics
Capital Market
Institutions
Economic
structure
Market drivers in Russia are unique to the country
Russian market drivers
RegulationSupplyDemand

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Improvements can be made on current business strategy to better
position Mabe within the global appliance market
Current Strategy Recommended Action New Effectiveness
Corporate structure
(e.g. Spanish CEO in Russia)
Local talent in upper management (in
progress) ◕
Joint venture in Russia with
Spanish firm Fagor
Acquire local companies and small players
(e.g. Candy) ●
Action Learning Team
Action Learning team and a scorecard to
analyse factors outside of city business life ◕
Value proposition
Continue to trim offerings, attacking holes
in the market, target highlighted area in
scorecard and AL ◕
Marketing
(ads, demographics)
Advertise online and through social media
to target younger generations ◕
A
B
C
D
E

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Improvements can be made on current business strategy to better
position Mabe within the global appliance market
Current Strategy Recommended Action
Action
Effectiveness
Corporate structure
(e.g. Spanish CEO in Russia)
Local talent in upper management (in
progress) ◕
Joint venture in Russia with
Spanish firm Fagor
Acquire local companies and small players
(e.g. Candy) ●
Action Learning Team
Action Learning team and a scorecard to
analyse factors outside of city business life ◕
Value proposition
Continue to trim offerings, attacking holes
in the market, target highlighted area in
scorecard and AL ◕
Marketing
(ads, demographics)
Advertise online and through social media
to target younger generations ◕
A
B
C
D
E

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Corporate Structure
CEO
Upper
Management
Integration
Middle Management
Employees
Experienced
Locals
Integration of
experience and
youth
Educated
workforce
Educated
foreign
A

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Improvements can be made on current business strategy to better
position Mabe within the global appliance market
Current Strategy Recommended Action
Action
Effectiveness
Corporate structure
(e.g. Spanish CEO in Russia)
Local talent in upper management (in
progress) ◕
Joint venture in Russia with
Spanish firm Fagor
Acquire local companies and small players
(e.g. Candy) ●
Action Learning Team
Action Learning team and a scorecard to
analyse factors outside of city business life ◕
Value proposition
Continue to trim offerings, attacking holes
in the market, target highlighted area in
scorecard and AL ◕
Marketing
(ads, demographics)
Advertise online and through social media
to target younger generations ◕
A
B
C
D
E

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 304443
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Success in Latin America shows us what works and what doesn’t
RussiaLatin America
Challenges faced during Mabe’s Latin American market entry are
not unlike those faced in Russia. Global financial crisis aside,
deviating from our previously successful strategy was our
downfall, not “overconfidence”
Revenue
$80M after 4y, Double in 4y with
(14% growth rate), $400M with an
acquisition
Demographics
European yuppies, older Soviet
generation
Competition Large US Brands, local competition
External Factors
Distrusting culture, complex tax
system, global financial crisis, low
human capital
Strategy
Joint Venture, high-end niche
positioning
Revenue Brazil $1B, Mexico $650M
Demographics Working class families
Competition Large US Brands, local competition
External Factors
Mexico/Brazil clash, Corruption,
capitalist, unindustrialized, poor
education system
Strategy
Acquisition, medium-end
positioning

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Acquisitions help us to get the “local edge” that is so crucial in
emerging markets
RussiaLatin America
Acquiring companies with local insights and manufacturing helps
penetrate markets quickly, even in subprime economic conditions
Year 1
Year 5
Year 10
• Acquire Easy
• 2 plants in Mexico (Queretaro, San Luis
Potosi)
• Acquired plants in Ecuador, Argentina,
Columbia
• JVs with Ceteco and Durex (locally-based)
• Acquire Dako in Brazil
• Open new plant in Mexico (Celaya)
• Acquire ATLAS (Costa Rica)
• Acquire Bosch (Brazil)
• Open representation office
• JV with Fagor
• Shrink product mix, repositioning
Goal: “Leaders in Latin America” Goal: “Gain global competitiveness”

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A possible acquisition could bootstrap growth from the bottom up
MielCandy
In order to fully take advantage of high profit margins (exhibit 8)
and other benefits that come from local manufacturing in an
emerging market, we need factories on Russian soil.
Benefits
• A supply chain that supports our most popular products (Stoves and
Fridges NOT microwaves and washing machines)
• Snag extra 5% market share (2x current)
• Gives us access to their suppliers to grow our network in the region
• Allows us to focus on local markets instead of 5 city areas where most
competition is
• Financial statements with revenue projection from acquisition go here

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Mabe is not new to culture clashes
RussiaLatin America
Mabe’s workers may have been Russian enough, but they have not
acted Russian enough. We want to be a foreign company selling
Executives
CEO in Brazil from HR department,
action teams
Workforce
Engineers from the US, LATAM
nationals from acquisitions
Distributors Used channels from acquisitions
Consumers
Strong price competition, very
elastic demand, accepting of US
brands
Business Culture Based on charm
Executives
CEO was only foreigner, action
teams
Workforce
Split between seniors/juniors,
average age <42yo
Distributors Regional distributors
Consumers
Disparate market segments,
rural/urban divide, distrusting of US
brands
Business Culture What you see is what you get

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Improvements can be made on current business strategy to better
position Mabe within the global appliance market
Current Strategy Recommended Action
Action
Effectiveness
Corporate structure
(e.g. Spanish CEO in Russia)
Local talent in upper management (in
progress) ◕
Joint venture in Russia with
Spanish firm Fagor
Acquire local companies and small players
(e.g. Candy) ●
Action Learning Team
Action Learning team and a scorecard to
analyse factors outside of city business life ◕
Value proposition
Continue to trim offerings, attacking holes
in the market, target highlighted area in
scorecard and AL ◕
Marketing
(ads, demographics)
Advertise online and through social media
to target younger generations ◕
A
B
C
D
E

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 304443
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A weighted scorecard might be used in conjunction with the
ActionLearning to provide a more swift and accurate view on market
entry
Country
FDI and
Market Size
Market Entry Profitability GDP
Discretionary
Income
Total
Brazil
2 3 2 2 2 11
Russia
1 2 3 1 3 10
India
2 3 2 1 1 9
China
3 1 3 3 1 11
South
East Asia
? ? ? ? ? ?
$13 (B) Market Size
$1.5 trillion
State Ownership (>50%)
(10-12% marginal
contribution– 2x Margins)
16-18% marginal
contribution
6-8% marginal
contribution
Weak Capital Market
Institutions (56%)
$1.4 trillion
$2.2 trillion
$5.7 trillion
Low barriers to entry
$50B in direct foreign
investment
$1 (B) Market Size
$104 (B) Market Size
$12.5 (B) Market Size

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Improvements can be made on current business strategy to better
position Mabe within the global appliance market
Current Strategy Recommended Action
Action
Effectiveness
Corporate structure
(e.g. Spanish CEO in Russia)
Local talent in upper management (in
progress) ◕
Joint venture in Russia with
Spanish firm Fagor
Acquire local companies and small players
(e.g. Candy) ●
Action Learning Team
Action Learning team and a scorecard to
analyse factors outside of city business life ◕
Value proposition
Continue to trim offerings, attacking holes
in the market, target highlighted area in
scorecard and AL ◕
Marketing
(ads, demographics)
Advertise online and through social media
to target younger generations ◕
A
B
C
D
E

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firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 304443
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Mabe needs to focus marketing efforts outside five major cities (local
areas) to capture larger market share
Use to increase
market share by
targeting customers
in local towns
Local Media
Commercials of
products to establish
familiarity with
operations
Television
Advertisements of
Mabe’s product line
integrated in model
homes
Social Media
Incorporate Mabe
Logo to increase
public presence
Physical Media
Local
entertainment
channels to
target the youth
Stations
Daytime
Programming
Time
Targets
majority of
youth on
internet
Age
Integration of
model home
appliances
appeals to youth
Content
Public Areas:
Local Parks,
Shopping
Centers, etc…
Locations
The Mabe logo
on billboards
encourages local
brand
recognition
Content
Incorporation of local media campaign targeting the new youth
demographic will increase market penetration
E

20. Moving forward

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• 18% Growth Rate
• Risks: Low discretionary income, not culturally-
familiar to the firm
Why we should stick with the Russians
Russia
China
India
• 4% Growth Rate (Possibly higher with acquisitions)
• Risks: Locals still resent foreign firm intrusion
• Benefits:
• 10% Growth Rate
• Risks: Extreme competition, no first mover
advantage, low discretionary income
-
1
2
3
4
5
6
2013 2014 2015
Millions
Emerging Markets Revenue Projections
Russia India China
-
1
2
3
4
5
6
2013 2014 2015
Millions
Emerging Markets Revenue Projections
Russia India China
-
1
2
3
4
5
6
2013 2014 2015
Millions
Emerging Markets Revenue Projections
Russia India China
4%
10%
18%

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In order to address Mabe’s concerns and gain global competitiveness
from Russia, we will target 3 key areas of development
Seize market share/access
to local manufacturing
through acquisitions
Appeal to the Russian
working culture AND
consumer culture
Develop a “market
scorecard” to help assess
future market entries
• Candy and Miel (~5%)
• Take advantage of low manufacturing
costs/regulation
• Ad campaign to be run locally
• Distribution channel that is more local than regional
distributors?
• Focus on quantitative AND qualitative factors
• Composed of internal experts instead of external
newbees

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A five year plan should include these steps to secure Mabe’s future in
the global appliance market
Year 1 Year 2 Year 3 Year 4 Year 5
Acquire Miel and Candy
Switch distribution channels
Assess new markets with scorecard
Begin local manufacturing
Run local ad campaign

24. Appendix
a. Market Size Projections
b. Income/Revenue Projections
c. Balance Sheet Projections

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A. Market Size Projections
Market Size (units)
'05-'10
CAGR 2011 2012
'11-'12
CAGR 2013 2014 2015
China 10% 114,926,187 126,808,111 4% 131,880,436 137,155,653 142,641,879
India 18% 15,778,473 18,573,298 4% 19,316,230 20,088,879 20,892,434
Russia 3% 12,933,784 13,278,939 4% 13,810,097 14,362,501 14,937,001
Model Drivers
Russia Acquisition!
Market Share % 3.00% 4.00% 4.90% 10% 12% 14%
Market Share $ 0 517,351 650,668 1,381,010 1,723,500 2,091,180
Sales 70,000,000 80,000,000 14% 176,000,000 197,120,000 224,716,800
Average Purchase $ 135.30$ 122.95$ 127.44$ 114.37$ 107.46$
India
Market Share % 3.00% 1.00% 2.00% 4.00% 6.00% 8.00%
Market Share $ - 157,785 371,466 772,649 1,205,333 1,671,395
Sales 21,348,993 45,671,947 98,468,718 137,856,206 179,606,942
Average Purchase $ 135.30$ 122.95$ 127.44$ 114.37$ 107.46$
China
Market Share % 3.00% 0.50% 1.00% 1.50% 3.00% 4.00%
Market Share $ - 574,631 1,268,081 1,978,207 4,114,670 5,705,675
Sales 77,750,188 155,911,284 252,108,546 470,602,620 613,127,984
Average Purchase $ 135.30$ 122.95$ 127.44$ 114.37$ 107.46$
Key Assumptions
• All three markets normalize to a 4% growth rate after 2012
• Russian acquisition helps to double market share (from ~5% to 10%)

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B. Income/Revenue Projections
Key Assumptions
• Mabe revenue growth rate of 4%
• Russian market is fully recovered from global financial crisis by 2014
• Cost of Goods Sold increases at half the rate of revenue growth (2%).
• In order to be conservative, we expect a small currency loss growing 1% each year.
Income Statement
Model Drivers
December 31st (000s USD)
'06-'08
CAGR 2009 2010 2011 2012
'09-'012
Average
'09-'012
CAGR 2013 2014 2015
'13-'15
Average
'13-'15
CAGR
Total Revenue 3.86% 3,540,995 3,682,635 3,829,940 3,983,138 3,759,177 4.00% 4,142,463 4,308,162 4,480,488 4,310,371 4.00%
YOY % Change #NUM! 3.85% 3.85% 3.85% 3.85% 3.85%
Cost Of Goods Sold 1.18% 2,549,642 2,600,635 2,652,648 2,705,700 2,627,156 2.00% 2,759,814 2,815,011 2,871,311 2,815,379 2.00%
YOY % Change 1.96% 1.96% 1.96% 1.96% 1.96%
Gross Profit 12.55% 991,353 1,082,000 1,177,293 1,277,437 1,132,021 8.82% 1,382,649 1,493,151 1,609,177 1,494,993 7.88%
Selling General & Admin Exp. 17.74% 710,412 738,828 768,381 799,116 754,184 4.00% 831,081 864,324 898,897 864,767 4.00%
Operating Income 0.06% 280,942 343,172 408,912 478,321 377,837 19.41% 551,568 628,827 710,280 630,225 13.48%
YOY % Change 18.13% 16.08% 14.51% 12.29% 11.47%
Interest Expense 3.07% -90,272 -93,883 -97,638 -101,544 -95,834 4.00% -105,605 -109,830 -114,223 -109,886 4.00%
Interest and Invest. Income -3.06% 12,112 12,596 13,100 13,624 12,858 4.00% 14,169 14,736 15,325 14,743 4.00%
Net Interest Exp. -4.17% -78,208 -81,336 -84,590 -87,973 -83,027 4.00% -91,436 -95,094 -98,898 -95,143 4.00%
Currency Exhange Gains (Loss) 329.38% 10,000 10,100 10,201 10,303 10,151 1.00% 10,406 10,510 10,615 10,510 1.00%
YOY % Change 0.99% 0.99% 0.99% 0.99% 0.99%
Other Non-Operating Inc. (Exp.) -53.09% -7,072 -7,355 -7,649 -7,955 -7,508 4.00% -8,273 -8,604 -8,948 -8,609 4.00%
Income Tax Expense -11.49% 28,261 29,391 30,567 31,790 30,002 4.00% 33,061 34,384 35,759 34,401 4.00%
Net Income to Company -62.55% 177,401 235,190 296,307 360,906 267,451 26.71% 429,203 501,255 577,290 502,583 15.98%
YOY % Change 24.57% 20.63% 17.90% 14.37% 13.17%

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C. Balance Sheet Projections
Balance Sheet
December 31st (000s USD)
'06-'08
CAGR 2009 2010 2011 2012
'09-'012
Average
'09-'012
CAGR 2013 2014 2015
'13-'15
Average
'13-'15
CAGR
ASSETS
Cash And Equivalents 17.22% 213,078 221,601 230,466 239,684 226,207 4.00% 249,271 259,242 269,612 259,375 4.00%
Total Cash & ST Investments 17.22% 213,078 221,601 230,466 239,684 226,207 4.00% 249,271 259,242 269,612 259,375 4.00%
Accounts Receivable 1.22% 949,285 987,256 1,026,747 1,067,816 1,007,776 4.00% 1,110,529 1,154,950 1,201,148 1,155,543 4.00%
Other Receivables 0.00% 22,789 22,789 22,789 22,789 22,789 0.00% 22,789 22,789 22,789 22,789 0.00%
Total Receivables 2.48% 972,074 1,010,045 1,049,536 1,090,605 1,030,565 3.91% 1,133,318 1,177,739 1,223,937 1,178,332 3.92%
Inventory 14.33% 550,463 561,473 572,702 584,156 567,199 2.00% 595,839 607,756 619,911 607,836 2.00%
Prepaid Exp. -24.95% 7,477 7,776 8,087 8,410 7,937 4.00% 8,747 9,096 9,460 9,101 4.00%
Total Current Assets 7.30% 1,743,092 1,800,895 1,860,790 1,922,856 1,831,908 3.33% 1,987,175 2,053,834 2,122,921 2,054,643 3.36%
Net Property, Plant & Equipment 2.20% 725,869 747,645 770,074 793,176 759,191 3.00% 816,972 841,481 866,725 841,726 3.00%
Goodwill -8.97% 160,276 157,071 153,929 150,851 155,532 -2.00% 147,834 144,877 141,979 144,897 -2.00%
Other Long-Term assets 32.02% 378,383 393,519 409,259 425,630 401,698 4.00% 442,655 460,361 478,775 460,597 4.00%
Total Assets 7.07% 3,007,620 3,099,129 3,194,053 3,292,513 3,148,329 3.06% 3,394,636 3,500,553 3,610,401 3,501,863 3.13%
LIABILITIES
Accounts Payable 4.60% 1,009,708 1,029,902 1,050,500 1,071,510 1,040,405 2.00% 1,092,941 1,114,799 1,137,095 1,114,945 2.00%
Accrued Exp. -16.37% 3,364 3,499 3,639 3,784 3,572 4.00% 3,936 4,093 4,257 4,095 4.00%
Short-term Borrowings 242.76% 657,006 676,716 697,018 717,928 687,167 3.00% 739,466 761,650 784,500 761,872 3.00%
Curr. Income Taxes Payable 19.85% 50,989 53,029 55,150 57,356 54,131 4.00% 59,650 62,036 64,518 62,068 4.00%
Other Current Liabilities 4.31% 14,130 14,696 15,284 15,895 15,001 4.00% 16,531 17,192 17,880 17,201 4.00%
Total Current Liabilities 29.47% 1,735,198 1,777,842 1,821,590 1,866,474 1,800,276 2.46% 1,912,523 1,959,771 2,008,249 1,960,181 2.47%
Long-Term Debt -23.51% 446,419 464,276 482,847 502,161 473,926 4.00% 522,247 543,137 564,862 543,415 4.00%
Pension & Other Post-Retirment Benefits -12.39% 113,492 118,032 122,753 127,663 120,485 4.00% 132,770 138,080 143,604 138,151 4.00%
Def. Tax Liability, Non-Curr. 20.00% 41,419 43,076 44,799 46,591 43,971 4.00% 48,454 50,393 52,408 50,418 4.00%
Other Non-Current Liabilities 10.06% 99,511 103,492 107,631 111,937 105,643 4.00% 116,414 121,071 125,914 121,133 4.00%
Total Liabilities 9.00% 2,436,040 2,506,717 2,579,621 2,654,825 2,544,301 2.91% 2,732,409 2,812,452 2,895,037 2,813,299 2.93%
Common Stock -1.73% 525,537 516,453 507,525 498,751 512,066 -1.73% 490,130 481,657 473,330 481,706 -1.73%
Minority Interest #NUM! 17,110 17,110 17,110 17,110 17,110 0.00% 17,110 17,110 17,110 17,110 0.00%
Total Equity -0.17% 571,581 592,412 614,432 637,687 604,028 3.72% 662,227 688,101 715,364 688,564 3.93%
Total Liabilities And Equity 7.07% 3,007,620 3,099,129 3,194,053 3,292,513 3,148,329 3.06% 3,394,636 3,500,553 3,610,401 3,501,863 3.13%
Key Assumptions: Most items growing at the rate of revenue (4%), Inventory/Accounts payable (2%), Investment in PPE (3%)

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