tools

By: Dominik Bundschuh, Kim Graves, Amelia Lak and Helge Ratvik

March 16th, 2013

Presented to:

Lauren Bruce – Pia Ghosh – Andy Nesta – Tim Tong

History Key Challenge RecommendationsFinancial Implementation

Cirque du Soleil

Presented to Daniel Lamarre CEO and President of Cirque du Soleil

March 13, 2008

JDRC Consulting


March 4th 2011

By Jedi Consulting

Presented to Bjorn Magnusson

Ready, Steady, Grow

Presented to:

By: Lauren Bruce, Andy Nesta, Pia Ghosh and Tim Tong

March 1st, 2013

7

Executive Summary

Mission to India

Questions to consider

Strategy

Where you want to be

Capture a maximal market share in the rapdidly growing, largest dairy market in the world

Fonterra needs to develop a strategy to break into the Indian market both short-term and in the long-run, while accounting for key players

Break into India with non-cooled products

Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline

How do you minimize industry and government

reluctance?

How do you match lack of supply and growing demand?

How do you establish brand presence in

India?

Co-ownership of plant with IFFCO in

Nellore

Develop own production in the

long-run

9

How can you overcome these burdens?


To account for all these barriers and capture a maximal piece of the pie, your strategy needs to fulfill several requirements:

Reliable supply chain

Rapid entry

Local support

Strong brand

presence

Breaking into the Indian market with strong brand presence and local support will secure Fonterra in a

favorable and competitive position

We need a solution that….

Analysis Alternatives Recommendation Implementation

GenerationFu

el B

reak

dow

n

Coal

Oil

Gas

Biomass

2010

Need a clean, reliable, profitable and renewable solution to achieve 2040 vision.

2040Need a solution that is:

CleanReliable

ProfitableScalable

Gas

Biomass

16%

31%

19%

34%

67%

33%

Analysis Alternatives Recommendation Implementation

Decision Criteria

Reduce CO2 and other emissions

Clean

Flexible to match volatile demand

Reliable

Financially feasible

Profitable

Not depleted by useScalable to match increasing population

Scalable

12

2 - 5 years 5 years onwards


Recommendation

1

2

3

Enter with non-cooled products

Right now

Collaborate to form a co-ownership plant with

IFFCO in Nellore

Milk the market by developing autonomous production,

processing and distribution channel system in the long run

• Rapid market entry• Establish brand

presence• Simplified channel

system

• Government and industry support

• Positive perception

• Permanent establishment as a strong market player in India

13

Why enter with non-cooled products


Urban agglomerationPurchasing power

Export Quick implementationLow resource commitmentHow?

Who?

Product?

Middle Class

Urban centres

Premium powder

Where? Easier initial distribution system

Less time-sensitive supply chain

Choosing cities to target middle class


Indian Cities Within top 10 biggest

Within top 10

wealthiest

Near the coastline

Rank

Chennai ✓ ✓ ✓ 1

Pune ✓ ✓ ✓ 2

Delhi ✓ ✓ 3

Punaji ✓ ✓ 4

Greater Mumbai ✓ ✓ 5

Mumbai ✓ 6

Chandigarh ✓ 7

Bangalore ✓ 8

Goal: gain rapid entry and establish brand presence

Analysis Recommendation Implementation Results

Choosing the airports for travel retail expansionTop European Airports Total Airport

Traffic (2012)(mm)

Traffic CAGR %

(2010-2012)

Retail EUR/Passenger

(2012)

Rank

Paris/Charles de Gaulle 60.7 (2) 5% (2) 4.15 (2) 1

London/Heathrow 69.4 (1) 4% (3) 3.71 (4) 2

Amsterdam/Schipol 49.7(4) 6% (1) 6.17 (1) 3

Frankfurt/Main 56.3 (3) 3% (4) 3.63 (5) 4

Munich 37.6 (6) 3% (4) 3.89 (3) 5

Madrid/Barajas 49.5(5) -8% (5) 3.53 (6) 6

Roma 37.4 (7) Na 1.24 (7) 7

Weight 50% 25% 25% 100%

Charles de Gaulle, Heathrow, and Schipol are the most attractive airports for Toms to reach the widest international audience.


Short-term strategy

• 3 year membership program • All access card to attend Cirque shows worldwide• Price: $700

• 90% occupancy within two years• Increase in profits by over 10%• Sell pass to 8% of current visitors• Increase revenues for MGM

Idea in brief:

Metrics for success:

• Increase in occupancy rates• Increase in loyalty• Subsequent increase in profits

Impact on company

A B C


A brief history A B C

1980 1984 1987 future

Le Grand Tour du Cirque du Soleil was a pivotal point in the company’s history

Reve

nue

s


The Generosity Card

1. Offering a free Welcome Generosity gift to entire customers to join loyalty program.

2. Year-round automated rewards scheme. €5 gift for every €100 spent.

3. Limited time offer seasonal promotions during holidays.

Compel guests

Incent card usage

Effective execution

The Generosity Card Value Proposition

Financial goals

3. Limited time exclusive offers for high loyalty/high profit customers.

Q1 Q2 Q3 Q4

X

X X X X

X X

X X

Source: Paytronix, 2010


Moving into new markets

Use data to eliminate the barriers

Largest impediment to international growth is low bargaining power with distributors

Increase the likelihood of success in internationalexpansions by correctly applying data

Use push tactics in markets with high likelihood to buy

Use data as evidence of customer loyalty in negotiations

Unknown geographical market demand

Distributors don’t know Toms’ brands


Prorated first year financial results

Revenue EBIT COGS Customer Loyalty Costs

Loyalty Card

Launch

In-store experience

Airport Retail Space

Promotions

7%1%4%

15%

26%

42%6% Incremental

Revenue:DKK 39.7 Million

Variable Costs

Fixed Costs

Other Costs


Resulting financial strengths and synergies

Increased sales in travel retail

More loyalty cards

Toms’ strategies form a positive feedback loop which can achieve

scalable growth

Availability

Preference

Loyalty

Awareness

Familiarity

Personality

Associations

Travel retail

Sampling strategy

Generosity Card

Ad Campaign

Experience store

Affordable luxury

Fun, Danish, Luxury

The total 5 year NPV of the travel retail and loyalty programs is DKK 44.1 Million

Units 2013 2014 2015 2016 2017Incremental Revenue 19847.8 46,485.9 53,414.5 60,485.4 67,703.0Incremental Costs 18143.6 39,701.6 38,329.5 42,352.8 46,459.6Incremental Profits Thousand DKK 1,704.1 6,784.3 15,085.0 18,132.6 21,243.4

Pros and Cons of Toms Sales Channels

Traditional Retail

Travel Retail

Exports -Standard

Exports - Tailored

Boutique Stores

Online

-Large volume

- Targets desired

segments

-More accommodat

ing sales displays

- “Traveller exclusive”

-Widespread reach

-Exposure to world’s largest

retailers

-Full control over sales displays- Gives

consumers the full

experience

-Low capital investment

-Widespread reach

- Low bargaining power with customers- Little consumer insight

- Limited ability to be

frequent customer

-Low volume-Standard

batches

-Limited in scope

- Require large orders

- High fixed costs

- Unproven revenue

generation

-Little leverage of

brand equity- Misses impulse

nature of chocolate

PRO

SCO

NS

IndirectDirect

Timeline for Action

• Partnerships with Las Vegas Sands and Dubai World• Sold 20% equity stake to Dubai investors

1994 2008 2010 2012 2014

Las VegasUnited States

MacaoChina

&TokyoJapan

DubaiMiddle

East

LondonEurope

Singapore

SE Asia

Cirque has already begun expansion efforts abroad while forging select partnerships

A B C


Finding partnership in London comparable to MGM’s Profitability?

Top Choice

• Official City of London funding

• London Cultural Olympiad

2nd Choice

• Major Hotel Chain• E.g. InterContinental,

Ritz-Carlton

3rd Choice• Private Investor

Historical IRR 16%+

Capital needed $100-200M

High return on capitalStrong history in

LondonOpportunity to be

first hub in Europe

Value proposition to funders:

Partnership options:

A B C


Leveraging the ability to test markets

Travel Retail• Develop customer loyalty• Create brand awareness• Uncover customer data

Traditional Retail• Established presence• Stable revenue• Frequent customer touch points

Export Market• Direct market access• Small commitment• Market testing

Toms has the ability to use each sales method as a testing platform to make successive steps towards becoming a more integrated international player

6% CAGR

Recap


How will you establish brand presence in the

short-term?

Export non-cool products to the

middle class

Middle class familiarization and

adoption of Fonterra products

Question Solution Outcome

Step 1: Non-cooled products

27

Win-win through co-ownership


Co-op

• Avoid tariffs• Access to farmland• Gain consumer knowledge• Large scale market entry

with shared risks

Fonterra

• Pooling of technology• Reliability in product

quality• Gain education to improve

profitability and productivity

Entry barriers can be reduced through government and industry support

28

Co-ownership

Pros

• Pooling of Resources & knowledge

• Large-scale market entry without high risk

• Avoidance of import tariffs• Lower foreign exchange risk• Stronger government

support

Cons

• Shared profit• Investment cost• Lack of complete control

increases quality risk• Limited flexibility• Politicking with other

owners

CONTROLING BRAND IMAGE

Unilever’s Brand Management Team

Consumers

Unilever’s Brand Management Team

Consumers Consumers Consumers

Dove Brand Image Dove Brand Image

TRADITIONAL “REAL BEAUTY”

With Internet as a marketing channel, Unilever can no longer have full control over Dove’s brand image

How will you deal with corruption?

30

Corruption

Ensure strict process controls, working with all levels of

government

Risks Mitigation

Medium

Severity

Medium

Likelihood

Risk of Uncooperative International Retail Stores

Risk

Impact

Mitigation

International Retail Stores refuse to allow Toms to increase retail space

Loyalty Program: Smaller rolloutTravel Retail Sales: Same as before

Anthon Berg Brand: Uncertain

Move to the next most attractive airport

Consider sharing a 2.5% spread in margin

32

Educate Nellore’s farmers Educate farmers on

On-farm management skills

Milk quality

Productivity

Stronger acceptanceIndian Farmers Fertiliser Cooperative Limited:• 40,000 farmers

Pivotal link: IFFCO

33

Controlling the value chain


Feasibility Study

IFCCO farms

Government Approval

Build Plant

Own farms, if needed

National milk quality standards

PlantDairy supply Distribution Retail

Cold Star Systems

Warehousing

Strong city connections

Large retailers

Push towards middle class

Premium positioning


Where the Outputs Go

FertiliserBiogasRecycled ProductsSolid Fuel

Transportation Method

Channel Partner

Destination

Land transport

Severn Power Station

CHP Plant

Pipeline

Severn Power Station

CHP Plant

Solid Transport

FCC Environment

External Site

Solid Transport

FCC Environment

External Site

2. How it works


An acquisition strategy would favour competitors

Trend of consolidation among confectionery producers bid up prices

Suitable acquisitions are scarce

Recent 2012 acquisitions compromises financial flexibility

Acquisitions force Toms to fight a battle it cannot win

Without deep pockets like its competitors, Toms’ 5 year strategy cannot purely rely on acquisitions

Acquisitions Organic Retail Growth

Opportunities to expand through:

Detailed analysis of H&M’s competitive positioning

36Source: BCG analysis, Team Jedi analysis, H&M annual report 2009

Things to leverage Things to mitigate

Internal Strengths Weaknesses

• High international brand awareness• High ROIC (35%) to sustain constant new store

investment• Diversified brand portfolio with high growth potential• Strategic partnerships with high profile designers• Sales stronghold in Western Europe• Top 12 organic brand – focus on green initiatives• Consistent customer experience and uniform branding

across all markets• Lease locations to enable flexibility • Experienced, talented employee pool

• Weak position in high-growth Asia Pacific markets• Lack of integration across offline and online channels• Product cycles that are 5x longer than best-in-class benchmark• Lack of coordination in competitor identification • Lack of recruiting strategy for business students

External Opportunities Threats

• Trends of trading up and trading down – disappearance of the middle market

• Growing importance of expression and individuality in clothing choice

• Growing popularity of e-commerce and online brand interaction

• Demand for innovation in product dev’t• High growth in menswear and accessories• High growth in Asia-Pacific markets • Growing trend for sustainable products

• Low switching costs and low brand loyalty in retail industry

• Mature to declining growth in Western Europe and North American markets

• Vertical integration of competitors decreases their lead time and cost pressure

• Barriers to entry are low for new designers


What does the recommendation accomplish?

Build the foundation Capture the travel retail space

Chart your course Loyalty program

Take OffInternational

1

2

3

• Leverage Toms’ existing brand equity in Anthon Berg• Use International travel Retail Stores

• Use loyalty programs• Gather customer data

Grow Anthon Berg in travel retail markets while preparing for international, traditional

expansion in the future

Goal Growth in short run, niche leader in long run

Consolidation a result of highly competitive industry

• Supplier size and independence• Quality control• Switching cost

• Low cost of entry • Suppliers accessible • Low IP involved

• Direct to consumer• Indirect (eg. through a parent)• Available information about

attributes

• None• (non-branded clothing)

• Highly fragmented industry• Experiencing consolidation

Suppliers

Threat of new entrants

Buyers

Substitute products

Rivalry

Unattractive market force Attractive market force

Implementation TimelineMonths 0 3 6 9 12 15 18 21 24 27+

Preparing for expansionSecure debt or internal financing

Negotiate with channel partners

Submit Environmental Impact Assessment

Construction and beyondBreak Ground in Severn Power

Complete 1st commercial plant

Reduce natural gas inputs

Seek additional landfills and expand construction

tools

Documents

indian market

nellore milk

milk financials timeline7how

strong market player

largest dairy market

maximal market share

milk indiastrue potential

long runanalysis