strategic international marketing plan

8/3/2019 Strategic International Marketing Plan

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STRATEGIC INTERNATIONAL

MARKETING PLAN

FOR THE INDIAN MARKET WITH ACTIVIA

December 2010

Alena Lutzke (109099)

Aaron Buder (126510)Silke Piepenpott (109745)

Corinna Kaul (108989)


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Introduction

With the ambition of starting a company every entrepreneur wants to become a player in

the international world of business and trade.

How difficult it is to expand to new markets especially to new countries we want to show in

our report. To be specific we focus on the dairy products of the companies DANONE and

UNILIEVER.

For knowing how the two competitors are doing, we give an insight on the international

strategy of our two companies at the beginning of our report.

After comparing and analysing we will select the firm, which we think has it easier to enter a

new international market of the dairy industry.

As a following step after choosing the company and India as our new market we will develop

an international business plan with respect to all marketing, financial, human resource, legal,

and CSR factors.

Finally the conclusion will highlight all our aspects we took in consideration and how we

want to enter the dairy sector in India.


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Tableofcontent

1. MarketingPlan1.1 External Analysis1.1.1 Demographic

1.1.2 Economic

1.1.3 Political

1.1.4 Social

1.2 Target market

1.3 Entry Strategy

1.4 Marketing goals

1.5 Marketing strategy

1.6 Marketing Mix

1.6.1 Product1.6.2 Place

1.6.3 Promotion

1.6.4 Price

33

3

4

4

4

5

6

6

6

77

8

9

9

2. FinancialPlan2.1 Financial Statements

2.1.1 Consolidated Balance Sheet

2.1.2 Income Statement

2.2 Financial Forecast

2.3 Financing Decision

10

10

12

12

14

3. DANONEHRMAspects3.1 General Aspects at Danone Europe

3.2 Recruitment aspects at DANONE Europe

3.3 Selection method at DANONE Europe

3.4 Indias HR history

3.5 HRM practices for India with the DANONE Company

15

16

16

17

18

4.CorporateSocial Responsibility Policy of Danone in India 21

5. Legal Aspects for India 20

6. Conclusion 25

7. Literature 28


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1.MarketingPlan

1.1ExternalAnalysis

In the following we are examining the most important issues of the external Analysis (PEST)

of India demographic, economic, social and political in order to find out whether or not India

is an attractive choice to launch our product Activia.

1.1.1 Demographic

India, as belonging to one of the BRIC countries, is the second most populous country in the

world with a population of more than 1.18 billion people (as of 2010), which is more than a

sixth of the worlds population. Already containing 17.31% of the world's population, India is

projected to be the world's most populous country by 2025. India has an astonishing

demographic dividend where more than 50% of its population is below the age of 25 and

more than 65% hovers below the age of 35. It is expected that, in 2020, the average age of

an Indian will be 29 years.

In total, there are 1,652 languages and dialects spoken in India, with Hindu being the

principal official language and English being the secondary official language. For us, this is

definitely an advantage and therefore of course a positive aspect to consider India for our

expansion. Indias population growth rate represents 1.548% and an unemployment rate of

7.8%. Both rates show again, that India is again a favourable country, with a relatively low

unemployment rate and as well as a higher growth rate compared to Singapore e.g.

Indias age structure is as following:

014 years: 30.8%, male: 188,208,196, female: 171,356,024

1564 years: 64.3%, male: 386,432,921, female: 364,215,759

65+ years: 4.9%, male: 27,258,259, female: 30,031,289 (2007 est.)1

1.1.2 Economic

The economy of India is the eleventh largest economy in the world by nominal GDP and the

fourth largest by purchasing power parity (PPP). India is an emerging economic power with a

very large pool of human and natural resources, and a growing large pool of skilled

1 Wikipedia website, Demographic of India, Nov. 25 2010

from:http://en.wikipedia.org/wiki/Demographics_of_India


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professionals. By 2008, India had established itself as the world's second-fastest growing

major economy with an per capita income is 40,745 (US$ 924.91) just ahead Japan and

behind U.S. and China. According to the estimates by the Ministry of Statistics and

Programme Implementation

2

, the Indian economy has registered a growth of 7.4 per cent in2009-10, driven by robust performance of the manufacturing sector on the back of

government and consumer spending.

1.1.3 Political

India is the second populous country in the world and has the worlds largest economy. The

country consists of 28 states. The Prime Minister is the head of the India nation.

Laicism the separation of state and religion is one of the most important aspects in Indians

political system.

1.1.4 Social

India is still an emerging country. More than 40% of the population have not enough money

and live from 1$ a day. Due to the poverty large parts of the population have nutrient

deficiency. Particular outside of the big cities like Mumbai and New Dehli, on the countryside

the people are poor. Due to the bad living situation on the countryside more and more

people move to the cities with the hope of a better life. For this reason the population on

the countryside is decreasing and also the number of worker. Consequently child work is

common in India.3

1.2Targetmarket

After having analyised and evaluated different target markets, Danone Groupe has decided

to enter the Indian market to target its probiotic product Activia. Since Danone has already

built up a joint venture with the Japanese company Yakult in India, both companies believe

that India has great potential as a successful probiotic market with a fast growing population

of one billion, an economy that grew by 7% in 2004 and a long tradition in probiotic

products. 4 Not surprisingly belongs India to one of the BRIC countries, whereby India will

become one of the four most dominant economies by 2050. Since our mission is to bring

2 Ministry of Statistics and Programme Implementation3Wikipedia website, Facts about India, Dec. 1, 2010, from: http://de.wikipedia.org/wiki/Indien

4 (2005) nutraingredients Danone, Yakult choose India to expand rapidly, Nov. 27, 2010 from:

http://www.nutraingredients.com/Industry/Danone-Yakult-choose-India-to-expand-jointly


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health through food to as many people as possible5, India is not surprising a very appealing

market being the fourth largest economy in the world. Furthermore, Asian countries are also

experiencing Westernization of their diets.6

Through heavy research of the Asian market, we

found out that Asian consumption, especially in developing Asia, has been expandingdramatically with income growth, changing demographics (population growth, urbanization),

and the dietary changes in many Asian countries. Besides, the Indian market is not saturated

as a probiotic market. In the dairy sector, other players such as Nestle and Britannia are

focused heavily on the plain milk business, while our focus is on value-added products.

Besides, we will not launch products that are not perceived as healthy.7 Since the Asian

market is very large, with a population of more than 1 billion, the launch of Activia will be

addressed mainly to people within the age of 15-64 ages at the middle-income state, since

this group represents the most powerful group. However we have to be very sensitive, since

dairy products are still not a common consumption pattern in Asia. Therefore, our main

focus will be aimed to people that are conscious about their health. More precisely, we do

not only want to sell dairy products, but rather create benefits for our customers that will

stay in their mind. Possible consumers of Activia can be families with children as well the

elderly and young generation.

1.3EntryStrategy

Through the enormous success of our joint venture with the Japanese group Yakult that we

contracted with in 2004, we are already operating in the Indian market. Therefore, we will

stay with the close tie and use our current alliance with Yakult to launch our probiotic

productActivia. Through the joint venture, we opened together with Yakult our new Yakult

Danone India Private Limited8, which is located at Rai, Sonepat (Haryana). Hence, it is just of

advantage to produce domestically at our current facility to save costs on the one hand, but

also to make use of the know-how. Since our new enterprise has experienced great success

with the launch of the probiotic drink of Yakult, we will also use the know-how of Yakults

R&D for the launch ofActivia. Yakult has just granted our company a license for its YIF-Scan,

5 Danone company website, Nov. 27, 2010, from: http://www.danone.com/en/our-brands/know-it-all-about-

danone.html6 Dairy Markets in Asia: An Overview of Recent Findings and Implications Sept. 2005, from:

http://ageconsearch.umn.edu/bitstream/18303/1/bp050047.pdf7 (2010) Business-standard: Danone India sees wealth in health, Nov. 27, 2010, from: http://www.business-standard.com/india/news/danone-india-sees-wealth-in-health/392640/8 Yakult company website, Nov. 27, 2010 from:

http://www.yakult.co.in/index.php?option=com_frontpage&Itemid=1


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a high-precision system that quantifies bacteria, targeting gene sequences (RNA and DNA)

specific to particular intestinal bacteria.9 Since the intestinal microbial flora of Europeans

differs from the Indians influenced by diet and lifestyle, we can benefit from using their

technology in order to adjust our probiotic product to the Indian lifestyle. Another veryimportant aspect for choosing the intermediate mode over direct export or FDI is the fact

that the Government of India has permitted duty-free import of up to 30,000 tones of milk

powder and 15,000 tones of butter oil. The imports are, however, subject to tariff rate quota

(TRQ) arrangements allowing only certain designated agencies to bring in these goods at nil

duty10.

1.4Marketinggoals

Since India is a relatively new market within the probiotic segment as well as a growing

market, our main goal is create awareness of our product in order through high emphasis on

advertising. We will focus on communicating the benefits of Activia in order create

awareness and loyalty. As Indian consumers are still not aware of the healthy benefits of

probiotics, educating the consumers will be the key role in developing the probiotic market.

We see high potential in the Indian market with the launch of Activia, since the market is at

its growing stage. Of course our long-term goal is to boost sales and market share. It helps

preserve a sound financial structure by spreading fixed costs across larger volumes. It also

ensures continuing demand for suppliers of raw materials who need to sell their output,

particularly when it is perishable. And, most obviously, it preserves industrial jobs. On that

point we have a responsibility not only to our employees, but also to society at large, since

cutting jobs contributes to the downward spiral in consumer demand.11

Precisely, we aim to

gain 2% market share in the first year and double it by the end of the second year. To

measure our performance we will make a market research at the end of the first.

1.5MarketingStrategy

Since we experienced great success with the adaptation of our overall marketing strategy

last year, we will stick to our strategy as well for the Indian market. The success of our

9 (2007)Asiafoodjournal: Groupe Danone, Yakult Honsha cemet relationship, Dec. 01, 2010, from:

http://www.asiafoodjournal.com/article-4301-groupedanoneyakulthonshacementrelationship-Asia.html10 (2010) Business line: milk powder, butter oil imports liberalised, Dec. 02, 2010 from:http://www.thehindubusinessline.com/2010/03/17/stories/2010031750841700.htm11 Danone company website: Annual report 2009, Dec. 03, 2010,from:

http://danone09.danone.com/en/fb/data/catalogue.pdf


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strategy is particularly evidence for our growth in sales of 3.2%. Therefore we will continue

with our marketing strategy for entering the Indian market.

To review, we will:

1. Reweighing product portfolios and adjusting prices to ensure that prices in each country

are just right: attuned to market realities, consumer purchasing power, and brand value;

2. Put increased emphasis on promotion and point-of-sale events.

3. Put emphasis in consumer advertising to highlight product quality in terms of taste,

pleasure and well being in addition to functional benefits. By combining this reset strategy

with major productivity initiatives, Danone has already consolidated its market shares.

1.6MarketingMix

1.6.1 Product

As our results from 2009 proved, Activia belongs to one of our most successful brands on our

portfolio. This is of course due to our adaptation strategy to different markets as well as in

depth R&D in different markets where we are already operating. Due to that, we already

launched Activia very successful in different markets with different sizes and flavors. In the

U.S e.g., flavors differ from plain and flavored semi-solid yogurt in regular and "light" (fat

free), whereas in South Africa flavors include pear, mango, dried apricot, kiwi, fibre and

prune. There is also a fiber-enhanced yogurt with added cereal and a bottled yogurt variety.

Packaging options include a 24 oz. pack that is not available in European markets. Therefore,

we will also react to the needs of the Indian market carefully. Research showed, that the

average family size accounts for 5-6 members. Therefore we are going to offer our probiotic

product Activia in sizes of four and eight packs. Another reason for offering those two

different types of packs is the fact, that we are already experienced with the production of 4

and 8 packs in Europe, Central America etc. Although we have a broad experience with

different flavors and products within the Activia portfolio, we will only introduce three

different types of Activia products and 2 different flavors in the beginning. First, the people

in Singapore are not used to many different tastes of milk. Second, Activia should be

considered as a unique healthy beneficial product rather than just a tasty low fat yogurt. As

such, we will introduce Activia Low fat yogurt, Activia Fiber, a combination of low fat yogurt,fiber and cereals and finally Activia Lightwith fewer calories and zero fat.


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Since Mango is the national fruit of India, Mango will of course be one of the flavors. Further

research on taste preferences showed us, that Indians prefer most Guava and Papaya next

to Mango. Activas overall appearance with its green color has been a great success

worldwide. Hence, we are going to introduce Activia in green as well in India, as the color

also stands for hope and life.

According to Census of India in 2001, more than 1 million native speakers speak 29

languages. Since the principal official language is Hindi and English is the secondary official

language, the communicative language on the Actvia products will be Hindi and English.

1.6.2 Place

Since the Asian market has a different purchasing behavior compared to Europe, we have to

take those differences into account. We decided to introduce Activia in the most well known

supermarket chains in India and just in a limited number of cities with a population of more

than 1.000.000 inhabitants like Delhi, NCR, Jaipur, Chandigarh, Mumbai, Pune and Bangalore

in the beginning. Since many people shop their groceries after work and choose those

grocery chains that are conveniently located, we will only negotiate with those stores that

are open until 22.00 pm and convenient. Concerning a research food and grocery is the

largest segment and it occupies around 74 per cent (US $ 200 billion) of total retail market in

India12. Such formats of grocery chains in India include Hypermarket, Supermarket,

Convenient stores, and Cash and Carry wholesale.Therefore we have to be very careful with

the selection of grocery stores. Since many Indians still rely on small domestic grocery

stores, we are going to cooperate with domestic as well as with international grocery chains.

Such chains will include: Big Apple, Food Bazaar, Reliance, Shoprite and Tesco. After having

introduced Activia successfully into the market, we will continue to negotiate with further

grocery chains. Since Activia is considered as a healthy product, we also make them

available in hospitals. Another system that will be used to distribute Activia is bringing our

12 Retail Mantra: Grocery chains- Largest segment of reatil Dec. 03, 2010, from:

http://india.retailmantra.com/2009/02/grocery-chains-largest-segment-of.html


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products directly to our customers at their doorstep. The system was already introduced in

1963, where Yakult has successfully used it to deliver its products worldwide through a

network of over 80,000 ladies. As this system was very successful with the distribution of

Yakult, we are going to introduce a similar system, through which we can bring Actviadirectly to our customers every day and help them to fully understand the benefits.

1.6.3 Promotion

In order to reach a broad target group in India we will set up a marketing campaign the

addresses a variety of different people with different ages, lifestyle etc. Since the Internet

and TV are media that are broadly spread in India, we will of course make use of those two

media to promote our product. In detail, we are going to operate different TV commercials

with a celebrity of India to promote Activia, since we experienced great success with TV

commercials in Europe and the U.S using celebrities to promote Activia. Furthermore we will

create an homepage in two different languages, English and Hindi, where people can find

our different products and flavors, nutrition information as well as information about our

company. Other media that will be used are billboards and magazines to address the people

in between. Since Activia is a new product on the India market it is important that it is not

only communicated via different media such as magazines, TV and the Internet, but also

through direct marketing. Therefore we will also employ trained sales personnel in the

grocery chains that give free samples to and explain the benefits.

1.6.4 Price

Research conducted that the average spending of Indian consumer is Rs. 8000, which equals

approx. 131 Euro. Therefore we have to be very careful with the price setting for Activia.

Since India is a complete new market for us, we will use competitive pricing, setting the price

for Activia at a similar stage to that of our direct competitors such as Nestle and Yakult, since

Activia has to be considered as a healthy product. We believe that this pricing strategy is

best for India, since we are operating in a complete new market where yogurt products are

not common yet. Therefore it is important to reach a broad target group in the beginning.


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2.FinancialPlan

2.1FinancialStatements

2.1.1 Consolidated Balance Sheet As of December 31, 2009(In millions) Assets

2008 2009

Brand names

Other tangible assets net

Goodwill net

3,846

380

12,320

3,903

365

12,927

Intangible assets net

Property, plant and equipment, netInvestments in associates

Investments in non- consolidated companies

Long- term loans

Other long-term financial assets

Deferred taxes

16,546

3,0831,267

237

73

137

639

17,185

3,180805

521

27

127

621

Non-Currentassets 21,982 22,446

Inventories

Trade accounts and notes receivable

795

1,534

765

1,682

Cost price 0,65

Profit margin 25% 0,16

Cash sales price 0,82

Cash discount 2% 0,01

Target sales price 0,83

Discount 10% 0,08

List sales price 0,91


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Other accounts receivable and prepaid expenses

Short-term loans

Marketable Securities

Cash and Cash equivalents

Assets held for sale

950

26

441

591

546

645

41

454

644

176

Current assets 4,883 4,407

Totalassets 26,865 26,873

LiabilitiesandShareholdersequity

Share capital

Additional paid in capital

Retained earnings

Cumulative translation adjustments

Treasury stock

Net income realized directly in equity

128

297

10,399

(1,121)

(1,225)

166

162

3,596

11,137

(869)

(1,027)

256

Shareholders equity attributable to the Group 8,644 13,255

Minority interests 56 54

Shareholders equity 8,700 13,309

Non- current financial liabilities

Retirement commitments

Deferred taxes

Other non- current liabilities

11,435

208

1,109

515

5,958

219

937

594

Non- current liabilities 13,267 7,708

Trade accounts and notes payable

Accrued expenses and other current liabilities

Current financial liabilitiesLiabilities held for sale

2,189

2,024

65233

1,981

2,173

1,702-

Current liabilities 4,898 5,856

TotalLiabilitiesandShareholdersEquity 26,865 26,873

Figure 1, Consolidated Balance Sheet 2008/ 200913

13http://finance.danone.com/phoenix.zhtml?c=95168&p=irol-regulatedAMF


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2.1.2 Income Statement: In millions

2008 2009

Net Sales 15,220 14,982

Trading operating income 2,270 2,294

Trading operating margin 14.91% 15.31%

Current net income

(attributable to the Group)

1,313 1,412

Net Income


1,313 1,361

Underlying diluted EPS


2.66 2.57

Figure 2: Income Statement 2008/ 200914

From 2008 to 2009 the Group had no necessary to mention changes in the assets total. As

the Group was able to reduce its debts, non-current financial liabilities from 11,435 to

5958 from 2008 to 2009 the Group needed other financial sources to finance new

investments.

However the Group could strengthen its financial structure through an increase in share

capital and the repurchase of company bonds.

By selling additional stock to currently holding shareholders in two steps in April and June

2009 the Group had increased its share capital by 4.609 millions.

The increase in share capital and the repurchase of company bonds enables the Group to

decrease its debt levels from 11.0055 millions to 6.562 millions.15

2.2FinancialForecasts

In comparison to the recent years, we want to improve our financial position or at least

achieve similar results compared to 2008 and 2009.

We have still expected the environment to remain difficult due to financial, economic and

social factors. The business couldnt expect a rapid recovery of the economic crisis in 2010.

Additionally because of the economic crisis changes in consumer trends of the western

14(2009) Danone_Documentde_ Reference 2009, p 17 from: http://www.danone.de/danone.html#daten-fakten15

(2009) Danone_Document_de_Reference_2009, from: http://www.danone.de/danone.html#daten-fakten


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countries are expected. Secondary weak currencies in emerging countries and an expected

raw material crisis could weaken our financial results16.

However despite the difficult environment the forecasts of the business for the year 2010

still include growth potential.The priority goal of the business is continuing increasing cash flows of 2009. During the year

2009 we were able to increase its free cash flow by 20.6%. In 2010 we follow the objective of

increasing the cash flow by still at least 10%. The minimum target of an operating cash flow

in 2012 is 2 billion. In addition the company tries to hold the operating margin at the

constant level of 2009. The third forecast of 2010 is an increase in growth revenue of 5%

compared to 2009.

The strategy followed in order to achieve these targets is increasing sales volume worldwide.

After cutting prices in 2009, responding to the economic situation of its customers, we have

to gain our revenues through the sale of high product volumes. By responding to consumer

trends, this should enable us to increase our market share in key countries. Secondary the

growth in cash flows should be achieved by optimizing general, operating and administrative

costs and the reduction of financial expenses through restructuring the companys debts.

As the company can expect a 5.2% growth in sales volume in 2009 for all divisions the

financial forecasts of Danone for the next years wont change for worse.17

Particularly in the dairy products sector we are the worlds leading manufacturer measured

in sales.18 Through entering the Indian food market we expand our international operations

and hope to increase the Groups profit. As the price of our Activia product is in Euro 0, 91

for four yoghurts and the cost prices are Euro 0, 65, we would have a profit margin of 25%.

Additionally the Group has to take into consideration additional costs for investments in new

plants or machines.

On the basis pf calculations the Groups assumes to achieve a rate of return of the

investment of about 16%.

In 2009 the Group had a turnover of 14.982 billion, which means an increase of 3, 2%,

despite the economic crisis Danone was able to increase its turnover due to the new

developed strategy in 2008. 19

16 (2009) Danone_document_de_Referncing2009, p.107 from:http://www.danone.de/danone.html#daten-fakten17(2009) Danone_document_de_Referncing2009, p.107, from: http://www.danone.de/danone.html#daten-fakten18 (2010) Annual_ Report_09, from: http://www.danone.de/danone.html#daten-fakten19

(2010) Danone company website: http://www.danone.com/en/company/introduction.html


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2.3FinancingDecisions:

Financial Position

In millions

2008 2009

Net debt 11,055 6,562

Stockholders equity

(including minority interests)

8,700 13,309

Debt/ equity ratio 127.1% 49.3%

Table 3 Financial Position

It is obvious that our Group could reduce its debts from 2008 to 2009 by more than 40%.

This gives the company the ability to invest into new businesses.

During 2008 the debt to finance the operations of the business exceeded the stockholders

equity used to finance. For that reason the debt/ equity lied at 127.1% in 2008. During the

year Group was able to improve the equity/ debt ratio to less than 50%. Until the end of

2009 the amount of debts could be reduced while the stockholders equity increased to

13,309 million .

We have already formed a Joint Venture with the Japanese company Yakult to enter the

market for probiotic dairy products. At the beginning only products of the Japanese

producer Yakult were offered on the Indian market, however it was planned that Danone

should follow selling the products on the Indian market. For that reason the decision to

enter the Indian market with our probiotic yogurt Activia could be a relatively cost effective

decision, as Danone could use the production facilities, as well as the distribution channels

of the already existing Joint Venture with Yakult in India.

Additionally to that Danone could use the income of the year or again increase the

outstanding debts of 6,562million in order to finance its new operations in India. In case

that the Group wants to held its cash made through operations in the recent years, but

doesnt want to make debts again at any bank, the Group could issue additional shares to

receive more capital to invest for entering the Indian market.


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The advantages of issuing new shares or increasing share capital is that the company doesnt

have to finance new investments with making new debts on which interest cost have be

paid.

3.DANONEHRMAspects

At this point we want to describe human resource practices and strategies of DANONE and

compare them with HRM policies in India. When companies begin to enter new markets that

strongly differ from their home market, HRM practices often need to be adjusted. How well

the company integrates itself into the new market can strongly depend on adaptation of HR

practices.

3.1GeneralHRMaspectsatDANONEEurope

We are strongly involved into several campaigns like social operations Grameen DANONE

Funds or DANONE Nations Cup.

Those social operations around the world and the companys award for Great Place to

work show our strong commitment to improve quality of life, which is also reflected by our

HRM policies.

According to DANONEs culture it is the quality of each employee, the enthusiasm, and the

dedication of every single one, which makes the difference when it comes to satisfy the

demand of our customers. The values integrated in the corporate culture are lived in

practice. This means that low hierarchies within the organization, create the path for an

open and direct contact among all hierarchies, no ties required and trainees can address

their superior by the first name.

Prime principle is a transparent communication, humanity, being reachable, to support and

motivate each other all these are values, which reflect the corporate culture.

Our global business strategy is Bringing health through food to the maximum number of

people this statement shows that social responsibility is indivisibly related with our business

operation.


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3.2RecruitmentmethodDANONEEurope:

We use a centralized recruitment system rather than decentralized.

Whenever there is an open position for a particular job, a job description is prepared with

the consultation of the HR department. The department head provides all the requirementsof the job and this information is used to prepare the essential qualifications to be included

in the advertisement. Besides running the recruitment through HR departments, we are also

using outside agencies to acquire new employees.

Because DANONE is a huge organization with a lot of employees, HR departments follow

internal and external recruitment methods to ensure the efficient and effective

performance of goals and objectives.

Internal

The internal recruitment method is used when the work related activity for the open

position is at a higher level and requires a high level of familiarity with the current

operations and functions. Then, an external recruitment method would be a second option.

We have very good experience with this recruitment form. It is time saving and employees

who are familiar with our culture tend to fulfill the challenges better.

External:

The external recruitment method consists of two elements;

The referral approach and the external search approach which includes, press

advertisements, and e-recruitment. The main reason for referral approach is to find

competent and self-devoting employees. The referrals are given priority but they also have

to go through the whole procedure, like submitting CV, initial interview and final interview.

DANONE does not use application forms on their web site because it would restrict the

applicants to give out any additional information or skills, which could highlight or underline

their application. The additional information is seen as a support in the selection process

therefore, CVs are preferred over application forms

3.3SelectionmethodofDANONEEurope:

After the candidates CVs have been read and the information fit the positions criteria, thefollowing steps in the selection method take place:


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-> Phone call to applicant, before taking interview in front of committee.

-> Committee consists of department head, HR Director or an HR manager

In some cases a direct hiring takes place and department head are not involved

During the interview various points regarding personality, work-passion, consistency,

communication, general knowledge and educational skills are checked.

For some positions there are no further selection steps needed and if the interviewer seems

to be confident the applicant gets hired.

Sometimes applicants have to go through a second selection phase after they have reached

70% of the required skill in the previous interview.

Depending on the position, a conversation regarding salary and future projects round of the

selection process at DANONE.

Additional we use the SelectionToolKit listed below to support the selection process:

Preliminary selection

Employment test

Verification of references

Medical evaluation

Supervisory interviews

Realistic job previews

Assessment centers

3.4 Indias HR History

When companies begin to enter new

markets that strongly differ from their

home market, HRM practices often need to

be adjusted. How well the company

integrates itself into the new market can

strongly depend on adaptation of HR

practices.


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From a Human Resource perspective it important to know how HRM developed in the

country the company is about to enter and what the major key factors were that set the

countries vision of HRM

There are a couple of key factors that shaped Indias image of HRM. One of the firstmanagement books, titled Arlhshastra, written three millenniums before Christ, contains

many aspects of human resource practices in old India and were used in practice in

organizational thinking for centuries. A further powerful effect on the managerial history of

India was given by the British system of management. But also values and cultural practices

have strongly characterized HRM in India. To this also belongs the caste system. The cast

system consists of five levels.

Brahamin

Kashatriya

Vaishya

Sudra

Untouchables

For certain cast levels the government is sensitive about reserving seats in colleges and job

opportunities. In urban India, people of all castes meet socially or for business.

Discriminating against anyone because of his or her caste is against the law. In management

positions like recruitment, promotion and work allocation managers have to deal with these

cultural traditions and the government regulations.

3.5 Best HRM practices for India with the DANONE Company

Considering the cultural aspects and HRM trends to socio cultural roots we need to ask

ourselves what human resource practices are the best to reach our goals and objectives for

the location in India.

An Indian Professor named Ashok Som has made several surveys on HRM practices in

traditional Indian and European companies. What Mr. Som wanted to know was whether

firms that implemented innovative HRM practices did better than those that did not. He alsowanted to know which particular HRM practices were considered the most effective and if


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there were any synergies between individual HRM practices. From the public and private

sectors 69 companies participated in survey.

The core question asked to these organizations was:Compared with the performance of best performing organizations in your sector/industry

or in your line of activity in India, how does your organization rate on each of the following,

five years ago and now? The five-year period was 1997 to 2002

Innovative role of the HRM department

Innovative recruitment practices

Innovative retraining and redeployment practices

Innovative performance appraisal

Innovative compensation and reward policies

These practices were judged in the context if the use of innovative HRM practices improved

organizational efficiency and output?

The results of Mr. Soms survey showed that those organizations that had introduced

innovative HRM practices had indeed improved their performance. However, the research

could not find any evidence of synergies between individual HRM practices, which to

western eyes may seem surprising! Although India differs strongly from Europe with its

history in Human Resource Management the firms are becoming much more sophisticated

in their approach to HRM.

Mr. Som himself says: Indian firms are using flexible hours, competency-based payment

systems and clear remuneration policies to attract and retain talent.

As we from DANONE are considering doing business in India, we need to realize that

innovative HRM practices are becoming much more professional in particular in relation to

recruitment and reward strategies and that HRM in Indian organizations is undergoing a

change.

DANONES European HRM methods could therefore also be used in India and would not

collide with Indias HR history.


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4. Corporate Social Responsibility Policy of Danone in India

We are already very engaged in protecting the environment and focus on different labour

standards which need to be fulfilled of all business units, business partners and suppliers20

.

These social principles are based on conventions of the International Labour Organization.

The most important standards are:

Prohibition of child labor

Prohibition of forced labor

Prohibition of all forms of discrimination

Freedom of association and the right to collective bargaining

Protection of the physical integrity of employees in the workplace Application of national law on working hours

Application of national law on minimum wages.

As an example of the green marketing, Danones most important environmental activity is

focused on the protection of water resources and reducing

their own water consumption21.

One of our strategic issues is to manage water in terms of quantity and quality so that they

currently exploit around one hundred springs worldwide.

Due to the fact that in India still 24% live under the poverty level in slums or bondages

Danone could be reached a lot in direction to a better water availability in the mountain

regions of the Himalaya and in the north east of the dry regions in Rajasthan and Deccan.

20

(2010), Respect of fundamental social principles, 15th

Nov. 2010, from:http://www.danone.com/en/index.php?option=com_content&task=view&id=44&Itemid=83&lang=en21

(2010), Spring water: a national heritage that must be preserved, 15th

Nov. 2010, from:

http://www.danone.com/en/sustainable-development/water.html


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21

Because of the bad conditions for living and farming on the country side more and more

people flee to the big cities with the hope of getting a job.

But obviously there are not enough employments and some of them are additionally paid

with dumping salaries.We need to use their high knowledge and technology about making water available. Due to

this, living conditions would became better and easier for many people living in India.

Additionally women are still in an inferior position towards men although they are politically

seen as equal. Especially in the working environment women are on a lower level so that

men mostly get the precedence.

To support the position of the women we especially try to employ women for each kind of

jobs we are offering. So, we focus and act on positive discrimination. Another important

fact is the education. Supporting the education of children as well as the further education

of their own personnel brings a huge advantage for both Danone and the people in the

country. The employees need to have the chance to move on in their career, because

everybody wants a certain degree of development and change in their life to stay motivated,

especially in the work placement.

As we said in our strategic marketing plan our location of retailing would be concentrate on

the markets in the big cities. So due to the International Labour Organization, to which

Danone sticks, also the working conditions and terms of payment in the groceries have to

fulfill these standards.

For Danone being consequent with their working conditions is very important, especially in

India where also corruption is well known particularly in doing business.

Getting into touch with publicity of corruption would have a negative impact on their

reliability in general and the relation to our alliance partner Yakult.

5.Legal Aspects for India

In respect to the legal aspect, for Danone it would be easier to invent Activia due to the

alliance with Yakult. But also for production in Asia they need to import certain products like

milk powder or butter oil.

Concerning importing and producing those comestible goods, there are many facts, which

need to be taken into account.


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Registration

International Agreements

Preferential Treatment

Customs Procedures

Customs Value

Requirements for Import Formalities

Currency and Payments

Packaging and Labelling Requirements

Abbreviations

Political risks

Staring business in India everything started with the official registration. All importers have

to apply for a code at the Directorate General of Foreign Trade (DGFT), which is relevant for

any kind of import.

Furthermore, economic operators must obtain a Permanent Account Number (PAN) from

the Income Tax Department for tax purposes. This PAN is necessary to all documents which

are related to financial transactions.22

But of course the different needed documents vary from the product and also to the country

that wants to import. To participate in the international trade India singed several

agreements and contracts like for example the Asia-Pacific Trade Agreement (APTA), the

South Asian Association for Regional Cooperation (SAARC), the South Asian Free Trade Area

(SAFTA), the South Asian Preferential Trade Arrangement (SAPTA), the World Customs

Organization (WCO), or the World Trade Organization (WTO). Goods, which are originating

products in the sense of a member state from the agreements stated above, may benefitfrom preferential treatment in India. Obviously France and Japan are not included in those

preferential treatments. But since 2004 India became on of the strategic partners of the

EU. Although India and the EU already launched negotiations for a Free Trade Agreement

(FTA) in 2006, the online magazine Business Standards published an article on the 13 th Dec

22 (2010), Overview of the import procedures, 17th Nov. 2010, from:http://madb.europa.eu/mkaccdb2/viewPageIFPubli.htm?datasetid=MAIF-IN10-

03v001&filename=overview.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF-IN10-

03v001/&imagepath=/egif/prod/MAIF-IN10-03v001/&country=India&page=overview&countryid=IN#kap06


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2010 that the EU and India expect the FTA by spring 201123

. This Free Trade agreement

between India and the EU would make doing business and trade much easier for both sides,

so that the huge trade potential of India could be used more efficient.

At the moment the Government of India has permitted duty-free import of up to 30,000tonnes of milk powder and 15,000 tonnes of butter oil. The imports are, however, subject to

tariff rate quota (TRQ) arrangements allowing only certain designated agencies to bring in

these goods at nil duty24

. But for agencies which do not refer to countries of the Free Trade

Agreements there are import tariffs of 30%. Till now those tariffs apply also for the EU.

But in case of the FTA with the EU in spring 2011 this import barrier will drop.

Furthermore, another import barrier is described as the customs procedures. The customs

law of India allows for a number of customs treatments of imported goods. Imports into

India may be entered under any of the following categories:

Home consumption

Transit

Temporary importation

Warehousing

Use in a special economic zone.25

Our product Activia would fall into the category of home consumption. So, this fact requires

the presentation of a bill of entry, which may be presented in paper format or as an

electronic document. But of course the bill of entry is not the only document that is needed.

For the required import documents there is a difference between general requirements

and specific requirements. Next to the mentioned bill of entry there are nine more general

documents required:

23 (2010), Anand Sharma & Karel De Gucht: Partners in trade, partners for growth, 13th Dec. 2010, from:

http://www.business-standard.com/india/news/anand-sharmakarel-de-guchtpartners-in-trade-partners-for-growth/417950/24 http://www.thehindubusinessline.com/2010/03/17/stories/2010031750841700.htm25 (2010), Overview of the import procedures, 17th Nov. 2010, from:http://madb.europa.eu/mkaccdb2/viewPageIFPubli.htm?datasetid=MAIF-IN10-




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Commercial Invoice

Pro forma Invoice

Packing List

Air Waybill

Bill of Loading

Certificate of Origin

Exporter/Importer Code

Import General Manifest

Letter of Credit

Especially for the milk powder and the butter oil the Indian government wants two specific

documents before the goods can be imported. Due to the fact that products are produced

with animal products we need an Import Permit for Livestock Products and an Veterinary

Health Certificate for Animal Products.

Concerning the aspects of payments and abbreviations, these two parts are dependant upon

the incoterms and other agreements about law and court that are written in the contract

between exporter and importer.

In case we are producing Activia locally with its strategic alliance with Yakult we face some

restrictions on packaging which they need to keep in mind for being able to sell Activia in

India.

In general, the labelling of imports should be done in English using clear and legible

letters.26

The following details are to be included on each of the small yoghurt packages:

Name and address of the manufacturer

Name and kind of the product

Brand name or trade mark

International details and signs which should be observed in the course of

transportation and handling

Kind and name of ingredients and percentage of each

Net content of volume in terms of weight

26 (2010), Overview of the import procedures, 17th Nov. 2010, from:http://madb.europa.eu/mkaccdb2/viewPageIFPubli.htm?datasetid=MAIF-IN10-




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25

Country of origin

Production date

Expiry date

Batch number

As a last legal point especially the political risk plays a huge role for the question where to

import. Some countries face a certain degree of corruption so that it is may be hard or even

impossible to do business. According to Geert Hofstede, who ranked certain countries on his

five different cultural dimensions, India has its Power Distance Index as the highest

dimension for their culture. With a ranking of 77 compared to a world average of 56.5, India

shows a high level of inequality of power and wealth within the society.27

This high Power

Index also leads to a conclusion that corruption is involved in day-to-day business. But

looking to the giant trade countries like the USA, Russia or some European countries there

are also enough corrupt people operating in the business environment. Important for the

international relations is, that the Indian government sticks to its rules and legislations

concerning import and export. Due to the facts that we already operate on the Indian

market and the Free Trade Agreement between India and the EU will be signed in spring

2011 the legal entry into the market becomes easier so that corruption will become less

attractive.

6.Conclusion

We decided to enter the Indian market with one of our probiotic dairy products Activia.

We analysed our future target market and took external factors as political, social or legal

aspects into consideration. Additionally we analysed the labour market in India and the

financial situation of the Danone Group.India seems to be a suitable market to enter for different reasons.

First of all our company Danone has already formed a Joint Venture with the Japanese

company Yakult. Until now we havent sold any Danone products in the Indian market.

However we decided to use the Joint Venture for entering the Indian market with Activia

because of financing reasons and experiences with India

India is an attractive market, as it is one of the four fastest growing nations until 2050.

27(2010), Geert Hofstede Cultural Dimension India, 15

thNov. 2010, from: http://www.geert-

hofstede.com/hofstede_india.shtml


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After analysing the Indian market we decided to sell a probiotic product, however we have

to make some adjustments to the product mix.

As we want to enter the market via our Joint Venture with Yakult, the investments needed

to enter are not that high compared to other investments. In order to finance the entry inIndia we have to alternatives, we can increase our long-term debts again or increase our

share capital.

After informing about the labour market in India and its HRM policies in the companies, we

came to the decision that we dont have to make a lot of changes to our HRM policies in our

European units. For sure we have to adapt or HRM policy in some way to the Indian because

of Indias HRM history, but the impact wont be that high, since India seems to get more and

more similar to the European HRM.

We are already active in corporate social responsibility issues, however if we enter the

Indian market, we wish to take actions in India as well, since India is still an emerging

country in which more than 24% of the population live under the property level. We decided

to support employment of women and exploiting of water.

When entering the Indian market we have to take as well some legal aspects into

consideration. Since we enter the market as Danone Yakult, we can use the facilities of our

Joint Venture in India, but we still have to import milk and powder for the production of

Activia. For the import of these products we have to consider tariffs or quotas and the

documents that are needed for the import.

In order to guarantee the success of our project in India, Danone needs to measure the

actual sales compared to the targets on a regularly basis. We need to evaluate the project to

see what progress has been made during a specific period of time and to identify

weaknesses and strengths in order to improve our weaknesses and use our strength to build

up a competitive advantage in the Indian market.

Additionally the external factors influencing our operations in India need to be analysed

after a specific period of time, since the environment is continuously changing and we need

to identify threats and opportunities in order to take advantage of these or reduce their

impact on our business.

Through the regular evaluation we are able to compare our performance and to makedecisions about staying in the Indian market or leaving. The Group needs to know how


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profitable the operations in India are and if the projects results justify the projects inputs

and investments.


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7.Literature

Books

Martin, M. and Jackson, T. (2005). Personnel Practice 4h edition. Chartered Institute of Personnel

and Development

Kerin, Hartley, Berkowitz,Rudelius. Marketing 8th edition. New York:McGraw-Hill/Irwin. Pages

42-68.

Internet

Wikipedia website, Demographic of India, Nov. 25 2010from:

http://en.wikipedia.org/wiki/Demographics_of_India

Wikipedia website, Facts about India, Dec. 1, 2010, from:

http://de.wikipedia.org/wiki/Indien

(2005) nutraingredients Danone, Yakult choose India to expand rapidly, Nov. 27, 2010

from: http://www.nutraingredients.com/Industry/Danone-Yakult-choose-India-to-expand-

jointly

Danone company website, Nov. 27, 2010, from: http://www.danone.com/en/our-

brands/know-it-all-about-danone.html

Dairy Markets in Asia: An Overview of Recent Findings and ImplicationsSept. 2005, from:

http://ageconsearch.umn.edu/bitstream/18303/1/bp050047.pdf

(2010) Business-standard: Danone India sees wealth in health, Nov. 27, 2010, from:

http://www.business-standard.com/india/news/danone-india-sees-wealth-in-

health/392640/

Yakult company website, Nov. 27, 2010 from:

http://www.yakult.co.in/index.php?option=com_frontpage&Itemid=1

(2007)Asiafoodjournal: Groupe Danone, Yakult Honsha cemet relationship, Dec. 01, 2010,from: http://www.asiafoodjournal.com/article-4301-

groupedanoneyakulthonshacementrelationship-Asia.html

(2010) Business line: milk powder, butter oil imports liberalised, Dec. 02, 2010 from:

http://www.thehindubusinessline.com/2010/03/17/stories/2010031750841700.htm

Danone company website: Annual report 2009, Dec. 03, 2010,from:

http://danone09.danone.com/en/fb/data/catalogue.pdf

Retail Mantra: Grocery chains- Largest segment of reatilDec. 03, 2010, from:

http://india.retailmantra.com/2009/02/grocery-chains-largest-segment-of.html


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(2010), Respect of fundamental social principles, 15th

Nov. 2010, from:

http://www.danone.com/en/index.php?option=com_content&task=view&id=44&Itemid=83

&lang=en

(2010), Spring water: a national heritage that must be preserved, 15th Nov. 2010, from:

http://www.danone.com/en/sustainable-development/water.html

http://madb.europa.eu/mkaccdb2/viewPageIFPubli.htm?datasetid=MAIF-IN10-

03v001&filename=overview.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF

-IN10-03v001/&imagepath=/egif/prod/MAIF-IN10-

03v001/&country=India&page=overview&countryid=IN#kap06

(2010), Anand Sharma & Karel De Gucht: Partners in trade, partners for growth, 13th Dec.

2010, from: http://www.business-standard.com/india/news/anand-sharmakarel-de-

guchtpartners-in-trade-partners-for-growth/417950/

http://www.thehindubusinessline.com/2010/03/17/stories/2010031750841700.htm

(2010), Overview of the import procedures, 17th Nov. 2010, from:



-IN10-03v001/&imagepath=/egif/prod/MAIF-IN10-

03v001/&country=India&page=overview&countryid=IN#kap061

(2010), Overview of the import procedures, 17th Nov. 2010, from:



-IN10-03v001/&imagepath=/egif/prod/MAIF-IN10-03v001/&country=India&page=overview&countryid=IN#kap06

(2010), Geert Hofstede Cultural Dimension India, 15th Nov. 2010, from: http://www.geert-

hofstede.com/hofstede_india.shtml

(2010), How new HRM policies are impacting Indias economy, from:

http://humanresource.org.gh/site/index.php?option=com_content&view=article&id=205:ho

w-new-hrm-policies-are-impacting-indias-economy-&catid=37:articles&Itemid=97

(2010), Human Resource Management in India: Where From and Where To?, from:

http://rphrm.curtin.edu.au/2007/issue2/india.html

(2010), How new HRM policies are impacting Indias http://www.essec.edu/sites/essec-

insight/2009/fall/expert-ideas/expert-ideas-02.html

(2010)Current trends in HRM, from: http://www.chillibreeze.com/articles_various/human-

resources.asp

( 2010) Danone Annual Report_09, 18rd November 2010, from

http://www.danone.de/danone.html#daten-fakten


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(2010) Danone_ Document_ de_ Reference, 28th

November 2010, from

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(2010) Danone company webside, 3rd December 2010, from

http://www.danone.com/en/company/introduction.html

strategic international marketing plan

Documents