Story Board - A market entry strategy for Pierre Robert Group in Denmark

A market entry strategy forPierre Robert Group in Denmark

EMBA 2009/2010Thomas Blomqvist

Introduction

• PRG has decided upon a significant growth scenario to be realized within 3 years.

• Creating significant growth in its home markets is a challenge.

• PRGs vision is strongly linked to Scandinavia as their home market.

• PRG is not present in Denmark .• PRG has adressed the need of a full market entry

strategy for Denamark.

Todays presentation is diveded in 3 parts and adress the following questions:

Part

1 Is the industry attractive and which are the competitive advantages of PRG?

Part

2What is the problem, the strategic options and finally the recommen-dation.

Part

3What needs to be done in terms of leadership and how to manage change in order to ensure success in the process?

The situation The problem,the strategic issues& recommendation

Implementation

The industry is attractive, but due to limited access to the sales channels its difficult to achieve economies of scale.

• The market has experienced a CAGR of 8,6% in 2005-2008, +4,9% units above apparel, and the market is predicted to continue to grow.

• High buyer power – low supplier power• Threat of new entrants is high, but due to limited

access to distribution it remains difficult to achieve economies of scale.

• The total accessible market is approximately 52% ($289 million) of the total market.

The winners in the market are the low priced grocery retailers and low priced

fashion trade chains.

2 different sales channels, but similar key success factors!

• Fast product turnaround• Scale• Low cost operation• High volumes• Buyer power• Low price points

PRGs focus on the grocery trade, their strong innovations and heavy investments in media has contributed to the success.

• Innovation – a key tool for creating growth.• PRG apply different assortment strategies

depending on product groups, and each strategy is linked to the limited space in the grocery stores.

• PRG apply a full service concept to all its customers which allow for higher margins and it tend to exclude competitors.

• The sales channel enable a high level of distribution.

Conclusion part 1Pa

rt 1 Is the industry

attractive and which are the competitive advantages of PRG?

Part


Part



Implementation

Conclusion part 1Co

nclu

sion - Attractive

industry.- Grocery trade are the winners.PRGs competitive advantages: service concept, the sales channel, distribution level, innovation

Part


Part



Implementation

PRG should consider 3 strategic options: Enter Denmark on its own, entry by an aquisition or entry by a joint venture.

• The options are linked to the problem:What can be done in a 3-year period in order to achieve a position among the Top 3 players in the market, and an EBITA margin of minimum 15%?

• By using the TOWS framework to match external T & O with internal S & W and by analysing the winners KSFs and KPIs with PRG, we are able to conclude on the options.

Acquisition is the only viable alternative for PRG.

• An aquisition of either Jbs or Hb Textil would solve the problem.

• To reach the target on its own, the company needs initiatives that at least enable a turnover of $30 million in year 3. (62% market share of the accessible market s within the grocery trade.) NOT VIABLE

• A joint venture would not solve the problem due to the risk of not achieving the growth and profitability target. NOT VIABLE

RecommendationPRG should consider buying Jbs.

• PRG would improve its market share and competitive position in Scandinavia.

• It would remove a strong competitor on the market.

• The M&A would also allow for entering new sales channels in DK, as well as in NO and SWE.

• The product portfolios supplement each other.• Financially Jbs is strong.• Previous aquisitions of Orkla imply an upper

price level of $25,5 million.

Conclusion part 2Co

nclu

sion The industry is

attractive &PRGs competitive advantages are- ajsfjf- jjafljf

Part


Part



Implementation

Conclusion part 2Co

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Conc

lusio

nThe problem is how to achieve PRGs ambitious growth targets. Acquistion is the only viable strategic option. Buy Jbs

Part



Implementation

Part 3Co

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Conc

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Part



Implementation

• Low success rate in M&As.• Combining separate organizations, cultures and

different management systems is one of the key explanations.

• The acquiring management need to learn about the company before designing and implementing major changes.

• The strategy of Orkla supports the preservation strategy approach.

PRG should consider a preservation strategy approach to integration.

• Even if a preservation strategy is proposed, there is a need for adaptive change.

• I suggest that PRG adopt a process perspective on change managment, in combination with Hays generic model of change.

• Developing a sense of urgency in order to get ”buy in”.

• Securing the powerful stakeholders and form a guiding coalition

• Create a vision for change

PRG should apply a change management perspective and plan for change.

• Focus on communicating the fundamental issues• Perform regular audits of the communication in

order to assess if the objectives are achieved. • Remove potential obstacles in order to empower

employees to act on the vision.• Implement a BSC based appraisal system in order to

monitor and review the effects of the change process.

A successfull implementation strategy depends on a clear communication strategy, the removal

of obstacles, and setting clear goals.

• The chosen strategies and an open dialogue suggests that the process will not be perceived as a large threatening change process.

• By establish a sense of urgency, but still not rushing the process, will help the employees to digest the change.

• The project team should ensure that the operational managers prepare and secure the appropriate feed back to each individual.

The preservation strategy, a clear communication strategy and an open dialogue

will contribute to sustaining the change.

Conclusion part 3Co

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Conc

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Implementation

Conclusion part 3Co

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Conc

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nPRG should apply a preservation strategy, build a critical mass of support for change and adapt a process perspective on change management.


Implementation

Thank You!

Documents

Story Board - A market entry strategy for Pierre Robert Group in Denmark