TRANSILVANIA UNIVERSITY OF BRASOV FACULTY OF ECONOMIC SCIENCES AND BUSINESS

CASE STUDY:NAPOLACT S.A

Subject: Strategic Management Student: Dobrin Marian Ilie Department: Business Administration Group: 8801 Year: 3

Coordination professor: Prof. dr. Bogdan Bcanu

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Table of Contents

1.Introduction ..................................................................................... 3 2. Fresh dairy market in Romania ........................................................ 3 3. Napolact S.A Company(A century of dairy) ..................................... 4 4 Products ........................................................................................... 5 5. General and competitive environment analysis .............................. 7 5.1 Industrial Milk Chain ................................................................... 7 5.2 Competition in Romania of Napolact S.A .................................... 8 6.Financial Analysis ........................................................................... 10 6.Corporate social responsability ...................................................... 11 7.Conclusion ...................................................................................... 12 8.Bibliography ................................................................................... 12

1.Introduction

Napolact can be tracked back in time in Vlads workshop. Documents about it exist since 1905. The producer of butter and cow cheese, the Vlad workshop manufactures yoghurt for the first time and introduces it on the market in Cluj. Starting 1936, he produces fermented and melted cheese that he exports to different countries, among them the USA. After nationalization in 1934, Vlads workshop turns into The Manufacturing and The Industrialization of Milk Cluj, that, after 1990 is also known as S.C. Napolact S.A. In 2004, Napolact is bought by the Dutch Friesland Foods. In 2009, it merges with Campina, forming FrieslandCampina.

2. Fresh dairy market in Romania

Acidic dairy products are extremely popular worldwide because of the pleasant sensory characteristics and potential they have for maintaining and even improving the health of consumers. Consumption of dairy products in general and particularly acidic dairy products, has reached a new dimension in recent years due to its beneficial effects on health, effects demonstrated by numerous nutritional and medical research. Correlations between consumption of yogurt and kefir and proper functioning of the digestive, immune and even circular are just some of the reasons that consumers worldwide are increasingly drawn to these foods. In general, Romanian consumers are not aware of too clear differences between yogurt, sana, buttermilk, kefir and that their therapeutic qualities because it has not promoted anyone. Slightly sour taste makes them similar. If they make a test "blindly" for sana, buttermilk and kefir, the difference between brands belonging to different manufacturers would be more difficult to see, which is not the case with various brands of yogurt, for example. Regarding fresh dairy based cultures (sana, buttermilk, kefir), with some exceptions, there is no premium brands, the commercial bids in uniform qualitatively and commercial aspect. In fact, this is
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consistent with the pulse of the market, few consumers are willing at this time to pay for the products image lacto-acidic. For an analysis with a high degree of specificity Categories Laco-acid elements are grouped into the following subdivisions: yogurt and buttermilk; sana and kefir, sour cream and cream.

3. Napolact S.A Company(A century of dairy)

Napolact is a Romanian dairy company . SC Napolact S.A. has two factories in Cluj Napoca (Baciu) and of Taga village. One of the largest dairy producers in Romania, Napolact has a history going back more than a century. It began in 1905, when certified in Cluj-Napoca dairy firm, Vlad workshop where they made butter and cottage cheese. Vlad workshop develops over time and reaches in 1936 to produce yogurt and cheeses. After nationalization in 1948, Vlad becomes "Milk Industrialization Company Cluj", and in 1990, the company turns Napolact, Dutch holding company subsequently purchased FrieslandFoods in 2004. It merged in 2009 with Campina, forming FrieslandCampina, one of the largest dairy companies in Europe. Most pronounced development of the company was registered in the period 1960-1975, when it was built new milk processing plants and existing ones were upgraded. Until 1989 the company has grown continuously modernized and production capacity. In 1991 the organization changed its business, becoming a limited company owned by the state, and in early 1996 the company became a joint stock company fully 51% of which is owned by business managers and the employees. Today, Napolact is a leading brand of the Dutch and Romanian dairy market benchmark Napolact brand was awarded in last 3 years more Effie Awards for effectiveness of communication campaigns, and new product ranges "Tastes of old" (Silver Effie 2009) and "opportunity time" (Gold Effie 2010), developed the rebranding campaign started in 2008. In
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2010, the successes scored by previous years Napolact won a Gold and Sustained Success category, prizes for all activities in recent years under the conceptual umbrella "as before". Traditional spirit as he caught the company slogan, "The past" and Napolact new identity products, is the force that guides employees in everything I do, whether it is communication existing products, revival of traditional products or developing new ones. Napolact aims not to make any compromises. He also proposes that the respect for quality, perfect flavor for dairy products to be found equally across the range Napolact. Offering high quality to meet the high standards imposed by the European Union wants the company to obtain a turnover and a profit as high as possible and maximize customer satisfaction and loyalty. That's why the company invests in modern technologies of production and milk collection and staff professional development in order to maintain its quality standard products already recognized internationally.

4 Products

Napolact brand portfolio is part of Friesland Romania campaign, which is the largest producer of milk consumption market in Romania. Friesland also owns international brands Oke, Dots, complete and local brand Napoca. Napolact products are a continuation of traditional products from farms, aiming at keeping their classical form, natural, no preservatives.Local tradition continues and the Taga famous cheese, which is matured for centuries in a cave. Napolact Romanian traditional products made of the highest quality, high standards imposed by the European Union. The company invests in modern production technologies and milk collection and staff professional development in order to maintain its quality standard products already recognized internationally. The best recognition of the company to continue Romanian tradition is that the list of Romanian traditional products offered for certification in the European Union, the company

Napolact be found in 10 products: cheese Nasal, Taga, Manastur, county, Alpina, cheese and Dej Bobalna , bellows fermented cheese, cottage cheese and yogurt Cedra Huedin. The product range includes all kinds Napolact specific dairy industry:

Milk from the heart of Transylvania Simple yoghurts: Jus Good yoghurt, Gentle yoghurt, Mighty yoghurt Buttermilk Sana Kefir Butter Sour cream: Gospodar, Prima Tastes from long ago range yoghurt with green nuts jam, yoghurt with sour cherries jam, yoghurt with black currant jam, rose jam. Reason for a break range - sana with honey and walnuts, sana with honey and hazelnuts, sana with black currants, buttermilk, sana, kefir and Gentle yoghurt.

Cheese:

Classic: Moeciu fermented cheese, burduf cheese, cottage cheese, Boblna and Tarnia (smoked) yellow cheese, Mozzarella, Huedin cow-milk white cheese. Delicacies: Nasal, Trnava, Alpina, Smoked Alpina, Montana. Cedra range: Huedin sheep-milk white cheese, Huedin buffalo-milk white cheese, Dej cow and sheep milk yellow cheese, Sacele sheep-milk yellow cheese.

Napolact SA was always concerned to produce and distribute the highest quality milk. The raw material is currently collected exclusively from its partners in Transylvania and Napolact products are manufactured to high standards in manufacturing in the region of Transylvania. Also Napolact is a trusted brand traditions built pevalorile Transylvania "said Szautner, quoted in the press release. The range includes cheese from the cheese nasal Taga, a product with protected designation of origin in the European Union and Alpina Alpina Smoked cheese, and Montana and Trnava.
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These are soft cheeses fermented paste of cow's milk, certified as traditional products. Cheese is packed in wooden box to keep special flavor longer. Following the rebranding have changed the names of six products in the range of thirty Napolact that the company sells the present. Thus, yoghurt Extra called soundly, yogurt Classic, only good and cream Napoca called household. In February of 2010, Napolact went through a rebranding process, focusing on the refresh link with the past. Under the slogan "The past" Napolact took off ramp 100-year history, altering their packaging and product names. The company has placed on shelves and only healthy yogurts' Good, cream and yogurt Easy Thrifty. Napolact products are present nationally in all major international retail chains and is appreciated by consumers across the country.

5. General and competitive environment analysis

5.1 Industrial Milk Chain
Romania has about 270 dairy factories that process over 1.8 million tonnes of milk annually. In April 2011 compared with April 2010 production growth was recorded in acidified milk (yoghurt, drinking yoghurt, buttermilk and others) to 1893 tonnes (+ 18%).

Company of Cluj-Napoca, Napolact continues tradition existing company in 1989, from which geographical coverage over the area surrounding the city, followed by a process of expansion in Transylvania and the path of large networks. He developed a range of classical, they have a principal place cheese, sour fermented dairy products, but also some original products such as yogurt and sheep's milk or buffalo milk cheese Nasal Cedra.

The company processes 53 million liters of milk annually in the three dairy companies he owns to Huedin, Baciu and Taga. In Cluj county are over 20,000 cattle breeders who have contractual relationships with the company. They receive from the firm 6.200 per liter at which over 20% is added with cooling expenses, collection, transport to the factory, higher than in neighboring counties.

Napolact company is also supplying appropriate quality milk in the Netherlands. There, and in other Western countries, manufacturers are organized in farmers associations. They control production until the finished product or the power to negotiate the actual price of the product. Cattlemen in Romania have tried to protect their business and were Cattle Breeders Association....

5.2 Competition in Romania of Napolact S.A

Romanian dairy market, a sector currently booming and investments to increase and diversify production have increased in recent years, exceeding 300 million euros.Competition in this market is very strong and is increasing more and more, due to the large fir sites or new products launched under the same brand, appearing on the shelves of distributors. In these circumstances, manufacturers are trying to ensure that they meet all consumer categories, so the market are constantly new products and new brands. In these circumstances, manufacturers are trying to ensure that they meet all consumer categories, so the market are constantly new products and new brands. Competition is conducted at the brand but also between products of the same brand:

Fig.1 Dairy firms competitive level

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Market competition is fierce and enhanced by many new brands or products launched under the same brand which invades shelves, baskets, televisions and refrigerators consumers. Besides the above mentioned companies, Napolact compete with other companies on the Romanian market such as Albalact, Covalact, Dorna Lactate. Danone-largest yogurt producer in the world, founded in 1996 BSN Sunbeam name. Danone is present in 120 countries and is number 1 in the production of yogurt and number 2 in the production of bottled water. Danone Corporation announced that aimed at attracting local farmers by providing them with modern technology to deliver milk to the detriment of other competitors in the market. "We know that Friesland is a strong competitor, but it is necessary that farmers have at least two sources where able to deliver milk," said Ponty, director of Danone Romania. Milli and Oke-brands Covalact individual firm, it supports national media publicity, even if it relies on classical differentiation but rather on one image, the company's products are fixed in the lower range of prices. Covalact aa company in recent years followed a process of economic recovery, surviving shocks of the profound transformation of Romanian agriculture and food industry. Albalact-largest dairy company in Romania with Romanian majority and the third largest player in the domestic market for dairy products. Today the company produces the highest quality milk in one of the largest and most modern greenfield investment in Central and Eastern Europe. The company also produces a variety of cheeses from Delhi Moldovan rare plant, which he purchased in 2008. Prodlacta-domestically, SC Prodlacta SA holds against the competition, a strong position with a market share of approximately 60% of total dairy market. Other competitors on the Romanian market are Brenac Napolact and Covalact, along with various local brands. Napolact S.A. is a company with tradition in the dairy market, but had to adapt to the requirements of recent years increasingly competitive market that have made a series of multinational companies, which bring with them a great managerial experience .

After analyzing the dairy market in Romania and competition in this field, we can consider that company for Napolact SA is ranking among the top ten producers of dairy market in Romania, with national distribution and a profitable product portfolio effectively defining a major brand.

6.Financial Analysis
Napolact`s worth on the market is over $ 230 million Napolact milk sold in 2010 to USD 689.6 billion, with 56.6% over 2009. In real terms, the turnover of the company rose by 16.9% from U.S. $ 20.29 to 23,730,000. Napolact obtained last year a net profit of 69.05 billion lei, up 28.6% over 2009. Company's current liabilities increased by 12.4% from 44.3 to 49,900,000,000 lei while medium-term loans decreased by 22.9% from 11.1 to 8,570,000,000 lei.

2012 BALANCE SHEET Indicators

TOTAL Fixed assets TOTAL Current assets, of which: Stocks Receivables Petty cash and bank accounts Prepaid expenses TOTAL Liabilities Deferred income Provisions for risks and expenses Capital - Total, of which: Subscribed and paid capital Indicators from the PROFIT AND LOSS ACCOUNT Turnover

Th. RON 36.422.576 82.374.880 7.598.253 4.381.505 70.395.122 78.144.326 16.191.820 395.589 37.094.118

2011 Th. RON 45.294.595 60.077.796 6.623.753 5.282.649 48.171.394 72.753.393 16.191.820 358.546 28.840.922

2010 Th. RON 45.498.947 67.954.212 16.036.973 2.754.170 49.163.069 68.842.444 16.191.820 367.313 40.297.734

2009 Th. RON 39.481.424 52.252.982 10.614.174 15.361.076 26.277.732 68.263.649 16.501.135 245.856 23.224.901

2008 Th. RON 26.930.097 109.292.620 7.754.571 24.103.261 77.434.788 124.721.267 16.501.135 N/A 11.000.138

213.144.313 233.278.354 241.605.524 193.382.061 163.002.205 255.817.438 250.247.617 256.245.339 211.030.825 181.459.205

213.632.213 221.345.441 230.821.274 186.122.433 147.006.406

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Total revenues Total expenses Informative Data

42.185.225 35.539.268

28.902.176 24.511.501

25.424.065 21.061.338

24.908.392 20.482.543

34.452.799 29.056.097

Number of employees

386

389

471

466

483

Evolotion of employment at Napolact

600 500 400 300 200 100 0 2008 2009 2010 2011 2012 Nr employees

Fig 2.Evolution of employment at Napolact

6.Corporate social responsability

Over the years Napolact got involved in some social responsability activities like sponsorship for some events and even created a guided tour of their factory and cave at Taga for children and turists that want to see for themselves how the products are made. As for the employees they are treated like part of the recipe for Napolact because they consider that if you give respect to ur employee then he will also respect the products of the company.Social responsability needs to come from within the company and has a very important purpose for the well development of the activities.

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7.Conclusion
Napolact is a company that values tradition and natural taste of their products and has tried to perfect their recipes over the years.Being a very old recipe for their products many of the primary ingredients have stayed the same but have been perfected in order to fullfil the demands of sanitary and comercial standards. The unique aspect of this dairy product company is that they still use the original cave of the village called Taga . At aga, Cluj County, in a natural cave from the Middle Ages, Napolact manufactures several types of cheese in microbiological conditions that are unique in the world. The rock of the cave and the Brevibacterium linens bacteria which developed in it, the constant temperature and humidity, act on the cheeses produced here. The financial aspect is improving from year to year the uniqueness of their products catches the eye of the consumer in a very interesting way. The constant demand for dairy products also helps the financial status. Napolact is a true Romanian brand that prefers to stick to tradition and uniqueness in order to be a competitor on the Romanian market.

8.Bibliography

Gerry Johnson, Richard Whittington, Kevan Scholes (2011), "Exploring Strategy", Financial Times Prentice Hall imprint of Pearson Bogdan Bcanu Practici de management strategic, Ed. Polirom Bogdan Bcanu Tehnici de analiz n managementul strategic, Ed. Polirom www.napolact.ro www.wikipedia.org/wiki/Napolact www.wikipedia.org/wiki/Cluj-Napoca_Companies www.globalens.com

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