This is a project that I worked on with a group for my "Marketing Strategy" module in my masters of International Marketing and Communications. The main focus is on the process of differentiation. This report answers the following questions:
- Is it necessary to differentiate? - What are the various ways of differentiation?
Cases of Diversification<br />Kristina Schweigert, Laura Perenz, Valentine Bitouzé, Vanessa Levrat, Stephanie L. Webb<br />
Lagardère: Company Context<br />Who is Lagardère? French conglomerate specializing in aerospace and media technologies throughout France, US, Germany, and Asia since the 1960s with a goal to be in the top 3rd of international media groups transitioning from unrelated to related diversification.<br />Internationalization: International expansion program (US and Spain)<br />
Lagardère: PESTEL Analysis<br />Politics<br /><ul><li>Stable French and American Governments with minor political party changes (Socialist and Democratic)
EX: French government supported multiple company acquisitions.
EX: Matra is able to maintain their balance with the aerospace industry, as well as expand into other industries.</li></ul>Economy<br />Sociocultural<br />Technological<br /><ul><li>Interest is high based on entrance into various media sectors
EX: Internet .com boom</li></ul>Environmental<br />Legal<br /><ul><li>European Competition Commission (ECC); French and US Commissions
EX: Had to come to an agreement because of antitrust issues.
Conflicting interests between government and legal regulations
EX: Vivendi Universal Publishing Case, 2004 </li></li></ul><li>Lagardère: Management Issues<br />Problems<br />Government nationalizing defense interests within Matra. (external threat)<br />Unrelated diversification created restructuring issues (management and profitability margins) and “recentering policy”. (internal issue)<br />Solutions<br /><ul><li>Diversify into profitable market (i.e., Media).
Began restructuring program to diversify into two core businesses – aerospace (EADS) and media (Lagardère Media).</li></ul>EX: 2000/1, Releasing non-profitable activities, such as the Avantime vehicle.<br /><ul><li>Internal mergers developed to reduce expenses and management problems.</li></ul>EX: 1994, Lagardère and Matra Hachette merged.<br />
Company Context<br /><ul><li>Malaysia’sleading conglomerate company created by Tan Sri Lim Goh Tong in 1964
Business sectors High level of diversification
Originally: famous for holiday resorts, hotels & entertainement centers
Evolution: power generation, paper manufacturing, oil and gas exploration, property development, IT, e-commerce, plantations
11.000 acres of resort land, 40.000 acres of plantation land
Contributed to Malaysia being one of the very popular holiday destination in ASEAN region
Sustainable growth for 38 years, from 1994 to 2002 n°1 among Asia‘s leading companies
Sudden drop in company’s performance in 2003 (from 1st to 4th place in FEER rankings, 2003)</li></li></ul><li>PESTEL Analysis<br />Political <br /><ul><li>Malaysia was newly independent at the company’s outset
Government’s aim to develop the region, to promote tourism sector and to transform country to modern, industrialized nation
Global terrorism: September, 11th, bombings at Bali islands, Iraq war</li></ul>Economic <br /><ul><li>Global economic slowdown after 2000 in Southeast Asia </li></ul>Sociocultural <br /><ul><li>SARS epidemic</li></ul>Technological<br /><ul><li>Poorly developed infrastructure, water supply and sewage systems </li></ul>Environmental<br /><ul><li>Hot climate throughout the year
Landscape providing great potential as holiday destination </li></ul>Legal <br /><ul><li>5-year pioneer status exemption of taxes
Casino Licence limited to Genting only </li></li></ul><li>Management Issues<br />Problem 1: External<br />Lack of facilities: poorly developed infrastructure, water and sewage systems <br />SARS epidemic in 2003<br /> Economic slowdown <br /> Asia’s financial crisis <br /> Terrorist attacks <br />Solution 1:<br />Development of infrastructure and supply systems; construction of roads<br />Consolidation of new facilities and recreational services to attract tourists <br />Supported by aggressive promotional activities <br />Problem 2: Internal<br />Too high dependence on leisure and hospitality businesses<br />Solution 2:<br />Related Diversification Strategy into many businesses since 1970s (as further income source)<br />Suggestions<br /><ul><li>Push abroad: Further expansion into (neighboring) countries
Further expansion with more middle-class facilities</li></li></ul><li>Lagardère: Company Context<br />Position<br />2nd largest oil marketing company in India<br />CoolOne: <br /> Largest organised convenience store retailing chain in the country<br />Competitors: <br /> Two national and several international oil companies with same organised retailing concept<br />Evolution<br /><ul><li>In 90s preparation for post-deregulation competition
Expansion in fuel and oil retail business was limited due to the retail network expansion norm
Not enough business opportunities from the neutral growth in fuel and lubricant
RESULT: </li></ul> Related diversification to organised retailing<br />Diversification and Development<br /><ul><li>CoolOne brand was introduced in 2001, 2007-2008 there were 370 CoolOne stores across India
Retail stores offer FMCGs and wide range of services</li></li></ul><li>Lagardère: PESTEL Analysis<br />Politics<br /><ul><li>Government liberalized the fuel and oil market </li></ul>Economy<br /><ul><li>Higher competition after APM
Organised convenience retailing is key business area for petroleum companies
7-8% growth in GDP is predicted to organised retailing </li></ul>Sociocultural<br /><ul><li>Petrol stations are one of the highest traffic aggregators.
Location of petrol stations is very important to fit customer needs.
Bad reputation of retailing with regard to quality and quantity
Changes in customer orientation and needs: Want convenience and choice</li></ul>Technological<br />Environmental<br />Legal<br /><ul><li>Retail network norm
Administered Pricing Mechanism</li></li></ul><li>Lagardère: Management Issues<br />Issue 1: External<br /> Higher competition on the market after deregulation<br />Solution 1:<br />Creation of long term strategic assets to ensure uniqueness<br /><ul><li>CoolOne brand
Quality and Quantity assurance initiative</li></ul>Issue 2: Internal<br /> Internal processes need to be integrated to create synergy<br />Solution 2:<br />Restructuring of internal processes<br /><ul><li>Initiatives in retail strategy were monitored with Balances scorecard format
conventional coordination (hierarchy) coordination by mutual adjustment
Limited standardization at the operating core</li></ul>Suggestions <br />PL is easy to imitate/copy new external issue is to create additional differentiation<br /><ul><li>Further related diversification in more services
Unrelated diversification in supplier business </li></li></ul><li>