GRUPO BIMBO CASE

How would you propose to address the challenges Grupo Bimbo faces in Brazil? Which specific actions
will you take and which problems would those actions solve?

Groupo Bimbo faced below challenges in Mexico:

- Cultural differences in the area of human resource management
- Per-capita consumption of industrial produced bread was very low
- Very intense competition in the industrial bread market, which lead to lower prices
- Different taste profiles than the products that were compared to Mexico
- No or Low brand recognition for Mexican food items
- Aimed at small mon and pop stores instead of increasingly dominated hypermarkets

Specific actions that I would take to solve those issues:

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- Understand the cultural differences in Mexico and Brazil. Assign the senior management of

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brazil operations with Brazilians to handle the cultural issues. This will help in solving the cultural

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differences in the area of human resource management

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- Understand the new food markets they can participate in on the basis of size, taste preferences
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and analyze the capability and additional costs to make an informed decision. Producing the
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goods based on taste of the customers in brazil will develop the brand recognition for Grup
Bimbo and will help in sales of other products manufactured by the company. Develop a
knowledge and innovation lab in Brazil to evaluate and develop products pertaining to the
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industry.
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- Rebrand with a brand name that Brazilians will associate with

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- Develop a new distribution strategy to adapt to the local market structure and deal directly with
retailers and use independent contractors to deal with mom and pop stores like the companies
do in India. This will help in decreasing the cost to deal with decrease the operating costs
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How would you propose to address the challenges Grupo Bimbo faces in the United States? Which
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specific actions will you take and which problems would those actions solve?

The main challenges Groupo bimbo faced in the Unites States are:
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1. High market power to dictate lower prices and constant supply of specialty products which
often went unsold and returned to the bread producer. It was made worse by providing a
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product for every niche consumer need. With many competitors in the USA market it would be
difficult for Bimbo to play power game in pricing. It can rationalize its product lines and
eliminate the products that impact the profitability by evaluating future opportunities of those
products in the US market.
2. Even the Grupo Brand has captured most of the Hispanic community as followers, it was not
able to penetrate much into general population. Bimbo can utilize their competitive advantage
of having a product for every income segment, a product that could be included in every meal of
the day and a product for every consumer demographic to promote its brand value by
advertising or promoting its brand on the products by redesigning their labelling.

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 3. The third challenge was the negotiating power of unionized, Teamster-affiliated truckers and
unionized production workers. Change the operations model to be more efficient by using
technology advancements or outsource the operations to third party logistics company. This
decision should be evaluated in all directions and the impact on the brand and distribution cycle.
Eliminating products that are not doing well in respective markets will help in decreasing the
costs in organizing and distributing them.
4. People change in taste towards low-carb and diet trends effected the sales of the products.
Instead of posing at as a danger, utilizing the change to launch new product offerings with
premium value might help in developing value to the customers.

Should Grupo Bimbo be going to China? Why, or why not? If Grupo Bimbo continues its expansion in
China, what (if anything) would you change about their strategy there?
Groupo Bimbo should go to China because of the following reasons:
- Performed a detailed study on china market for two years; identified promising products that
can be transplanted to Chinese market and also the products shape that will attract the

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consumers and the willingness to pay for those products by customers.

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- Operational efficiencies that will improve the productivity of the plant by 2-3 times

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- Lessons learned and experience from entering the new markets such as Brazil and US

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- Continuous study of consumer tastes through focus groups and empowering employees to
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understand the cultural gaps and training internal experts in learning the language.
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- Using employees riding bicycles to transport the products and manage the shelf space will not
be economical but will also help Bimbo not facing the issues it faced in US
- A highly fragmented market will help Bimbo to enter the market and capture a segment of
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market
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Compare and contrast Brazil, United States, and China as markets for Grupo Bimbo using the CAGE
framework described in the foundational reading.
Brazil United States China
Cultural different tastes very diverse population but huge difference in consumer
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Distance compared to mexico. with a major hispanic tastes.

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Have their own cusines minotity group Rising demand for western
and very dominated people buy from grocery foods
local food market. stores sweet tooth
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rising low carb diet and achieving trust is very

diet patterns important part of culture
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healthy living and wellness difference - chineese way

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Administrative distribution challenges effective distribution like
and Political highly decentralized through unionization of Mexico
distance distribution dominated truck drivers pricing power resides with
by local players Supply patterns dominated the company
pricing determined by by grocery stores
competition buy back agreements
pricing power with
groceries

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 Geographic proximity of brazil is an proximity of US is an proximity of china is an
distance advantage advantage issue
perception and market demand is similar commmunication is a huge
communication is problem and crucial
crucial time zone difference will
make it more difficult
Economics similar to mexico huge difference in hug middle class segment
distance huge middle class and economic conditions premium pricing possible
lower income class different income segments cheap labor
premium pricing not premium pricing not
possible possible
labor costs matter

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