BRAC Business School

Summer’20
BUS: 301, Section: 03
Final Term Paper
Team Wanderer

Serial no. Name ID

1. Ayesha Aktar Piya 18304147
2. Nafisa Ahmed 18104285
3. Syeda Tasnim Islam 17104189
4. Ahmad Saleheen 17304074
5. Ar-rafi Zaman 16204047
6. Md. Ashikur Rahman 16204098

Submitted to,
Ms. Fabiha Enam
Senior Lecturer and Assistant Proctor, BRAC Business School

Date: 21st September, 2020

 Acknowledgement

In carrying out our research on DANONE company (Country: Spain), (Industry: Food and
Beverages) successfully, we took help and instructions from our respected faculty. We would
like to show our greatest to Ms. Fabiha Enam course instructor of International Business of
BRAC University, without her constituent help and guidelines it would be extremely difficult for
us to complete the term paper. We also would like to show our most profound appreciation to
those individuals who have directly and indirectly helped us in this project.

Regards,

Ayesha Aktar Piya

Nafisa Ahmed

Syeda Tasnim Islam

Ahmed Saleheen

Ar-rafi Zaman

Md. Ashikur Rahman

 Letter of Transmittal

21 September, 2020

Fabiha Enam,

Senior Lecturer and Assistant Proctor,

BRAC Business School,

Subject: Submission of Final Term Paper of BUS301

Madam,

With due respect and regard, we state that we are very much grateful to you as you have given us
the opportunity to make a term paper based on Country Analysis and Firm & Industry Analysis
of DANONE company. We have had a great chance to learn and research a lot about it. While
preparing the term paper we attempted to give our best to find out accurate information of this
company.

There may have been numerous oversights and errors on our part. However, we tried our level
best to prepare this to the required standard. We are looking forward to your kind assessment on
the term paper.

Regards,

Ayesha Aktar Piya

Nafisa Ahmed
Syeda Tasnim Islam
Ahmad Saleheen
Ar-rafi Zaman
Md. Ashikur Rahman
 Executive Summary

For this term paper, we have chosen Danone, a Food and Beverage company based in based in
Paris, founded in Spain. It is currently a big player in 4 main industries- Essential Dairy and
Plant-Based Products, Early Life Nutrition, Medical Nutrition and Waters. Throughout this paper
we will analyze and expand on not only the operations of Danone but also its reasons and
outcomes of globalization. To be more specific, we will expand on Danone’s business model,
comparative advantages, regulatory environment, ethical concerns, institutional perspective,
cultural uniqueness, prospects for future, etc. We will also evaluate how successful it has been in
its attempt at globalization. Firstly, DANONE is a transnational company, meaning it operates
in several countries by merging or acquiring local booming businesses, while keeping their
prices competitive. Danone’s focus is on providing nutrition for all, and it does that also by
providing local brands with customized preferences according to the host countries. With the
help of the OLI paradigm, it will later be described more in detail how Danone picks and chooses
the countries it invests in. Due to the broad range of products it provides and countries it operates
in, Danon has a huge advantage already in the form of cost leadership. It can successfully utilise
economies of scale and advanced resources to provide high quality, highly customized products
at the best prices- which sets differentiates them from their competitors. In terms of regulatory
environment, and since Danone sells baby formulas, its main concerns are the WHO Code
(governs the marketing of formula milk) and the MAIF Agreement and INC Code (self-
regulatory code of behavior for producers and importers of baby milk formulas in Australia and
New Zealand). From an industrial perspective, Danone is building a portfolio with huge array of
food products which are domestically relevant across the globe. Additionally, Danone’s
Alimentation Revolution program focuses on providing healthy nutritious food to all walks of
life. This also in turn fulfills the modern consumer’s demand for more ethical and sustainable
brands. However, there are still ethical concerns that arise in terms of cultural relativism, health
of the elderly, and environment concern. Danone also aims to invest €2 million in the following
3 years in a wastewater device at its dairy plant in Tres Cantos, Spain, which will increase their
water autonomy by 80% and boost sustainability. Finally, the prospect of strengthened trade
relationship and opportunities are a huge potential which would both benefit individual
customers and SMEs.
 Contents
Letter of
Transmittal………………………………………………………………………………………3
Executive Summary………………..………………………………………………………..
………………4
Introduction…………………………… ………………………………………………………………5
Reason behind choice of being targeted by the firm of choice..................................................5
Focal Point of Globalisation Effort..............................................................................................7
Comparative Advantages:…………………………………………………………………..
…………………..7
RegulatorygEnvironment……………………………………………………………………….8
Institutional Perspective……………………………………..
………………………………………………..11
Cultural Impact/Uniqueness:.....................................................................................................13
Ethical Concern:..........................................................................................................................14
Danone's Business Model:...........................................................................................................14
FDI (Pattern):...............................................................................................................................15
International Trade Theory:......................................................................................................16
New Trade Theory:…………………………………………………………………………………………………………………….….
………………………..16

Why it should Globalize

Now………………………………………………………………………………………………17
Evaluation of Globalization Efforts
…………………………………………………………………...………………………………18
Prospects For Future…………………………..
……………………………………………………………….19
Conclusion………………………………………………………………………………..……..31
References…………………………………………………………………………...………….32
 Introduction:

DANONE is a world leading global food & beverage company founded by Isaac Carasso who is
a Sephardic Jewish doctor. This company is a European Multinational food-products corporation
based in Paris and founded in Barcelona, Spain. In 1919 Isaac Carasso began producing yogurt
in Barcelona, Spain. He named the company after his son Daniel Carasso. The company was
moved from Spain to France in 1929, opening a plant in Paris. Then he moved the company to
NEW York in 1942.The company merged with bottle maker BSN and started to expand
internationally in 1973. They have become a world leader in four business which are, Essential
Dairy and Plant-Based products, Early Life Nutrition, Medical Nutrition and Waters.

To meet the requirement of healthier and responsibly produced products of the consumers, this
company offers diverse choices of healthy products and solutions for different occasions and
moments of the day. In 2018 the company sold products in over 120 markets and generated sales
of €24.7 billion. DANONE brands which present worldwide are, Activia , Alpo, Danette,
Danonino, Danio, evian, Volvic, Nutrilon/Aptamil, Nutricia. DANONE brands which present in
local markets are, Aqua, Bledina, Cow & Gate, Bonafont, Horizon Organic, Mizone, Oikos,
Prostokvashino, Silk, Vega. It is listed on Euronext Paris and on the OTCQX market via an ADR
(American Depositary Receipt) program.

This company is a component stock of leading social responsibility indexes adds the Dow Jones
Sustainability Indexes, Vigeo, the Ethibel Sustainability Index, MSCI Global Sustainability,
MSCI Global SRI Indexes and the FTSE4Good Index. Danone also got B Crop Certificate in
2018 and in 2020 Danone became the first listed company to adopt the “Entreprise a Mission”
model created by France law in 2019. DANONE is working with a wide range of partners,
designing and deploying sustainable solutions with researchers, consumers, NGOs, health
professionals, farmers, suppliers, retailers and government agencies

The choice of being targeted by the Firm-of-Choice:

Our group chose DANONE company because this company is very interesting as it is a world
leading food company who offers fresh dairy products as well as plant-based products and
beverage. This company is 100 years old and started with yogurt in Barcelona in 1919. They sold
products over 120 markets. Their main dedication is to bring health through food to as many

people as possible. Their vision is “One Planet, One Health” which shows that they have a strong
belief, that the health of people and the health of planet are interconnected which is why they
focus on high-growth and health-focused categories, and they also commit to operating in an
effective, sustainable and responsible manner.

In 2018 the company got B Crop Certification which is a key component of the company’s long-
lasting commitment to deliver financial success along with social and environmental progress.
DANONE is able to satisfy the growing demand for natural, nutritious and environmentally
friendly products as well as the needs of flexitarians, as most of the consumers looks for
diversified products for their source of protein and plan-based products became an alternative for
meeting those people’s needs. This company is also one of the world’s leading company for
bottled water and Aquadrink, which shows that they have keen eye for consumer trends, constant
innovation and a desire to fully embed healthy hydration into their business strategy. They are
doing awareness campaigns to develop healthy hydration habits by reaching millions of people,
which shows their commitment to help the people.
Their specialized nutrition composes Early Life Nutrition and Advance Medical Nutrition which
are science based nutrition solutions arranged to positively impact health by food for people who
need it most, and in their lives most critical time from preterm infants to old age. They even have
world class research and development facility, Nutricia Research. This company not only
achieved one of the leading position in food processing industry but also maintained their
mission of helping the people all over the world by providing them quality food. Their strategy
of doing business and their achievements as well as their sincerity towards improving people’s
health is amazing and worth praising. It is not easy for any company to achieve such success and
maintaining their social and environmental responsibilities accurately, which attracted our
interest regarding this company.

The focal point of Globalization Efforts:

To understand this part, we must first look into why businesses choose to go global in the first
place. There are several benefits for businesses to expand and provide their service and goods
across an array of countries. For example:

 Bigger market share and recognition: Expanding into global economies means a larger
market share and creating a bigger loyal customer base, ultimately increasing profits.
 Cheap labor: Bigger companies benefit from using cheap labour which are available in
developing nations and decrease their cost of production- maintaining competitive prices.

 Economies of scale: Through expansion they can enjoy the benefits of economies of scale
and have higher profits.

 New opportunities: Globalization will ultimately bring about many different business
opportunities for a business that wishes to expand and operate across several countries. This
comes in the form of mergers and acquisitions, and also a wider product portfolio and
differentiation as a result of suiting host country’s demands.

In the case of Danone, the focal point of globalization is a combination of these factors and
more. Being a company that was founded in Spain and is now based in Paris, Danone first started
out as a business that made yoghurt, back in 1919. In 1929, the company was moved from Spain
to France, opening a plant in Paris. From then the company established its operations in America,
also slowly expanding from just producing yoghurt to partnering up with leading a fresh cheese
manufacturer (Gervais) in France and taking on the name Gervais Danone, and also merging
with BSN- which specialized in bottle making. The expansion started out in the form of vertical
integration- first acquiring the largest customers of BSN, Evian (mineral water company) and
Kroonenberg (brewery business). In 1987, the company acquired an European biscuit
manufacturer General Biscuit, and by 1989, the operations of Nabisco were brought out. Over
the years, the company had renamed itself to Groupe Danone, and has chosen to focus on the 3
core product groups of the brand: dairy, beverages, and cereals. This meant selling of significant
amount of shares of its other businesses such as glass bottles, brewery, and sauces into other
international markets.

As of now, Danone’s main focus is on providing nutrition and well-being through healthy food
in many different countries to many different consumers- babies to the elderly. It’s mission
statement is “Bringing health through food to as many people as possible.”- and it is doing
just that by providing a vast array of products in many different countries, especially developing
countries like Bangladesh, India, and now expanding its ventures in Africa. Danone is committed
to being a household name by providing all kind of food products that are domestically relevant-
from baby milk formulas, to yogurt, and even mineral water. It is continuing to emphasize on the
health benefits of yogurt, and carrying out active research on dairy fermentation. Apart from
operating as joint ventures, Danone also has its own local brands in specific countries. This huge
reach of the company allows Danone to operate across borders in a cost-effective manner. They
are also self-sufficient due to their huge variety of resources available- one which can only be
achieved through globalization and acquiring already well-known local brands. Danone also has
a strong sense of commitment to not only global health and well-being but also sustainability.
This shows that for Danone, the focal point of globalization is not only promoting global well-
being but essentially taking over the world market in the food and beverages industry through
active expansion and committed CSR efforts.

COMPARATIVE ADVANTAGES:

Porter suggests that there are two basic means that of achieving competitive blessings in
strategic business unit will have lower prices than its competitors or it delivers an improved
service that is exceptionally Valuable for shoppers, that are willing to pay further compared to

the competitors. Porter developed the generic competitive ways. which is able to be mentioned
shortly.

 Cost leadership: Refers to economies of scale. this could be obtained by lowering input
prices from example working class and raw materials. Danone is penetrating in rising
countries were labour is wide accessible and cheaper than in western countries.
  The second choice is economies of scale: Rising countries have a growing socio-
economic class. Danone focuses itself on these markets attributable to their giant
population that have an outsized potential of double-digit growth By economies of scale
Danone builds associate expertise curve and discovers at what rate the assembly is
perfect so the foremost price effective approach of production will be used. This lowers
input and unit prices.
 The third choice is expertise: This could be a key resource of prices potency As
declared before, by manufacturing every unit Danone learns to supply additional
economical. this can be a competitive advantage since Danone uses its information from
different markets once getting into a replacement market. the primary entrant had a
bonus of these World Health Organization enter later since Danone is already
establishing a learning curve and reaching for cost-advantage.

 The last choice is product/process style: This selection means Danone includes a
alternative of the standard of merchandise it creates. Danone will be selected from high
finish inputs of low finish. this may have an impact on the merchandise. in line with
Danone's annual reports the assembly includes a smart and property quality, Danone
helps farmers do their jobs so quality of staple ar of a relentless quality that Danone uses
in its production method.

Differentiation: Differentiation refers to the distinctiveness on some dimensions that are valued
by shoppers to justify a premium worth. Danone has brands that vie at intervals each business
division that are valuable for each the corporation and shoppers.
 Dairy products: Activa, Danio Danonino and Actimel
 Water division: Volvic and Evian
 Early life nutrition: Nutrilon, SGM and Bledina
 Medical nutrition: Nutrini, Fortimel and Nutrison (Danone, 2015)

Cost focus: Supported being cheaper than competitors by doing it in different ways in which
then competitors. E.g. Iceland sells frozen foods that usually is provided recent by competitors
like Aldi.
Differentiation focus: Focus is about on targets that competitors satisfy part or not in the
slightest degree (Johnson, et al. 2012) The competitive advantage as doing things higher than a
contender. There ar some ways during which an organization will stand out. The competitive
blessings take a protracted time to develop and isn't simply traced. the simplest blessings ar those
who ar property over time. Porters generic ways ar the foremost common, nonetheless there ar
additional potentialities that ar applicable for Danone. For instance: Vertical integration, Danone
works beside NGO's to enhance its business. Danone has set plenty of goals regarding with
international growth, development of merchandise for higher health, a property organic
phenomenon and creating the merchandise accessible for as many folks as potential. one
amongst the vertical combination is that Danane helps farmers with higher production of raw
materials and animal welfare (Danone, 2015).

Culture, style and style of an associate organisation Danone includes a distinctive management
style that mixes strong values. its decentralized entrepreneurial approach to business
development (Grant & Amodio, 2012) Looking at the latter info It will be declared that Danone
uses a value leadership approach as associate competitive advantage. though the margins were
decreasing the last years, Danone continues to be market leader or high three contender in three
of its business divisions. Danone has additional blessings like its business culture and integration
of the worth chain.

As is delineate on top of Danone includes a competitive advantage at intervals its sector, it's
property since competitors cannot copy the distinctive options of Danone. thanks to the
organisational culture/structure that is unusual within the sector. Danone has created associate
corporation that has competitive advantage in price leadership, differentiation, vertical
combination. the mixture of those factors with all the distinctive resources and capabilities show
that Danone includes a competitive advantage at intervals the sector of food and beverages.

REGULATORY ENVIRONMENT:

Danone is proud to strongly advocate breastfeeding for healthy developing babies and stand
behind moms to develop baby life across Australia and New Zealand. They are proud to do the
right thing to ensure the fair selling of our breast milk substitute products as parents want to
choose an alternative to breastfeeding for whatever cause. Bringing health through food doesn't
solely have faith in healthier product and promoting healthier behaviours.

Their mission additionally needs that their own business practices facilitate to create a healthier
future. Maintaining and building trust with their customers and stakeholders is core to their
ability to fulfil our mission. a technique that trust are often preserved is by making certain that
they're accountable once human activity with their customers – particularly youngsters – and to
create food safety of our prime priority all over and in the least times.

The following material is a reference to Danone Nutricia 's dedication to great governance
practice in the selling of our goods and a description of key codes and agreements that reference
our business.

The WHO Code: The Foreign Code for the Marketing of Breast Milk Substitutes (WHO Code)
is a series of recommendations that govern the marketing of breast milk substitutes for babies
from birth to 6 months (0-6 months).

The WHO Code was developed in reaction to inadequate infant feeding practices in the 1970s-
80s that adversely impacted infant growth, health and development growth of infants which were
the major causes of morality.

In Australia and New Zealand, the WHO Code is introduced by state regulations (Food
Standards Code and Australia and NZ Market Law) and the following voluntary business
agreements:
 Marketing in Australia of Infant Formula (MAIF) Agreement - Australia (0-12 months of
age)

Infant Nutrition Council Code of Practice (INC) Code - New Zealand (0-6 months of age)

The MAIF Agreement and INC Code: The MAIF Agreement and the INC Code include a
reciprocal self-regulatory code of behaviour for producers and importers for the sale of baby
milk formulas in Australia and New Zealand, respectively. Danone Nutricia is a signatory to
these Agreements.

The Aim of the MAIF Agreement and INC Code: The aim of the MAIF Agreement and INC
Code is to contribute to the availability of safe and adequate nutrition for infants, by protective
and promoting infant feeding and guaranteeing the correct use of substitutes once these square
measure necessary, victimisation the subsequent key principles:

Manufacturers and importers of babe formulas shouldn't advertise or in the other approach
promote babe formulas to the final public

Marketing personnel from babe formula firms shouldn't obtain direct or indirect contact
with pregnant girls or with folks with infants and young kids

Infant formula samples shouldn't incline to the public; but, samples for care skilleds ar
acceptable provided they're requested for the aim of professional analysis

The provision of scientific and academic data materials on babe, innings and specialty
formula to care professionals is suitable, provided they are doing not idealise babe
formula.

Institutional Perspective:

The approaches of Danone flow from their mission, bringing fitness through meals to as many
human beings as possible. they are building a portfolio aligned with long-term healthier food
trends, with a mix of each global and nearby brands. They favour to offer products that
consumers simply consider as at least domestically relevant, and greater importantly, regionally
made, prepared, related or rooted.

Essentially from shoppers switching to their categories. They have chosen classes that are
amongst the pinnacle 10 fastest-growing in the meals house globally, whether or not that’s water,
child food, clinical nutrition, plant-based products, organic merchandise and sparkling dairy.
People are adopting them as section of their diets – that is the place most of our boom will come

from (Faber,2017). Consumers have special expectations of manufacturers today. They desire
extra transparency and to be capable to have faith brands. And they are searching for humans at
the back of these manufacturers who are proper activists. they agree with that ingesting and
consuming properly contributes to higher health, and they favor to promote healthier and greater
sustainable consuming and ingesting practices that nourish the fitness of humans as nicely as the
planet (Faber,2017). This is the Alimentation Revolution that Danone wishes to encourage and
drive.

They attempt to be a recreation changer to foster superb solutions. For example, they are
growing the wide variety of picks they provide customers via initiatives such as the Danone
pledge on sustainable agriculture and transparency in the US, and providing greater alternatives
about the use of GMOs or not, whilst additionally bettering transparency with clear statistics on
product labels. They additionally actively have interaction in the round financial system for key
assets like milk, water and plastics. And they have dedicated to grow to be a carbon-neutral
company. Meanwhile, their partnership with B-Lab underscores their long-standing dedication to
commercial enterprise success and social progress. By certifying as a B Corp, they will be
making sustainable enterprise mainstream ( Faber, 2017 ). This is additionally a clear pass in the
direction of bettering the transparency of their actions.

Several societal and client traits have led them to speed up their program of localization. They
have 30 clusters, which are small businesses of international locations in seven regions, that
function as the spine of Danone. If any person desires to be suit for the world they function in
today, s/he wishes regionally rooted decision-making. That’s why they delegated company-wide
choices to the regions (Fabler, 2017).

Improving execution in the whole thing they do is presently a key priority. They are creating new
merchandise and paying even larger interest to placing them in the market in a most reliable

manner. The huge mission for them is preserving the stability between self-discipline and
freedom, pace and preparation. It’s a serious one due to the fact they are dealing with elevated
nearby opposition that is now not very disciplined however is surely very agile, and additionally
from corporations a great deal better than them that are probable no longer as agile however an
awful lot extra disciplined (Fabler, 2017) . So they ought to be positive to put a very, very robust
focal point on their execution.

Cultural Impact/Uniqueness:

The globalization of the world economy has heightened worldwide connections, with expanding
significance of social measurements which has become so significant as of late as associations
begin to look abroad to grow their organizations. As the world turns out to be increasingly
interconnected, the worldwide economy has framed business conditions that expect associations
to take a gander at business from a coordinated worldwide point of view. Alongside others,
perhaps the greatest test looked by associations that work in worldwide business sectors is social
contrasts. This, obscure to associations who are wrapped up with the home culture and accepted
they are pertinent in other setting, can result to clashes and emergencies that can devour
associations and their ventures outside their home surroundings.

 Political Philosophy: As Danone hopes to invigorate and grow its exercises into
developing business sectors, which frequently have shifting strategic policies and morals,
securing the honesty of the Danone Culture becomes about ensuring the brand character
of one of France's most esteemed corporate fortunes.

 Economic Philosophy: The inquiry for Danone was the way to enable privately drove
development, both effectively and morally, catch piece of the pie, and evade the sort of
notoriety discoloring SNAFUs which keep on discoloring the organization's adversaries.
To meet the organization's objectives, Danone put down its wager on individual’s
advancement, looking to make the up and coming age of pioneers with a more profound
comprehension of the current business condition and solid administration abilities.

 Educational impact: In Spain, instruction fills in as a significant instrument in public

reconciliation by advancing equivalent open doors just as equitable, social and social
qualities. Be that as it may, Spain has generally spent less on instruction than other
western European nations. Essential training is free and obligatory and there exists a
broad organization of tuition-based schools. Some of which are financed by the
legislature and offer essential instruction free or at a diminished charge. There are
likewise a significant number of strict schools, which regularly offer a high caliber of
instruction. The nature of private area schools shifts incredibly and the same number of
them are seriously underfunded. Private schooling isn't really connected with first class
instruction, as is frequently the situation in other western European nations. So in order to
do business there, home nation must be aware because this can impact on our business.
  Social Structure: So as to endure, develop and prevail in the global business field,
supervisors of worldwide ventures should consider the social settings of their unfamiliar
business activities, and look to adjust their tasks to their unfamiliar business home culture
to stay away from various social difficulties that can disable and demolish their whole
business tasks and make a condition of entropy. Presentation Business exercises like all
other human exercises are directed inside the setting of social orders, and no association,
either large or little works in a vacuum. Today, the promptly accessible data, expedient
progression in innovation, work cost factor, economic accords, normalization, complex
dissemination strategies and channels, alongside other administrative and operational
advancements have cleared path to an influx of corporate globalization (Mohammad,
2015).

 Aesthetic Impact of Host Country: Because of expanding impact of globalization, high

innovative turn of events and extreme serious weights, an ever-increasing number of
associations have begun looking abroad to grow their organizations. As business
associations extend and enhance their activities, they find and direct their tasks in social
orders with individuals who have various tastes, values, convictions.

Ethical Concern:
At the point when we venture out from home and cross our country's limits, moral lucidity
frequently obscures. Without a setting of shared perspectives, and without recognizable laws and
legal strategies that characterize norms of moral lead, conviction is tricky. Should an
organization put resources into an outside nation where common and political rights are
disregarded? Should an organization oblige a host nation's prejudicial business rehearses? On the
off chance that organizations in created nations move offices to creating countries that need
severe natural and wellbeing guidelines, or if those organizations decide to fill the board and
other high-level situations in a host country with individuals from the nation of origin, whose
norms ought to win? (Thomas, 1996)

Indeed, even the best-educated, best-intentioned chiefs must reevaluate their presumptions about
business practice in unfamiliar settings. What works in an organization's nation of origin can fall
flat in a nation with various principles of moral direct. Such challenges are unavoidable for
finance managers who live and work abroad.

According to cultural relativism, no culture's morals are better than any other's; accordingly
there are no worldwide rights and wrongs. On the off chance that the individuals of Indonesia
endure the pay off of their public authorities, so what? Their mentality is no preferable or more
regrettable over that of individuals in Denmark or Singapore who will not offer or take
kickbacks. Moreover, if Belgians neglect to discover insider exchanging ethically disgusting,
what difference does it make? Not implementing insider-exchanging laws is no pretty much
moral than upholding such laws. (Prasad, 2007)

The social relativist's doctrine, “When in Rome, do as the Romans do” is enticing, particularly
when neglecting to do as local people do implies relinquishing business openings. The deficiency
of social relativism, be that as it may, becomes obvious when the practices being referred to are
more harming than frivolous pay off or insider exchanging.

For about 100 years, Danone, has looked to bring matured dairy items to whatever number
individuals as could be allowed the world over.

 Main Concern is the health of aged people: This desire is established in the firm
conviction that aged dairy items like yogurt add to a sound eating routine by giving
fundamental supplements and the decency of aged nourishments just as the satisfaction in
pleasurable taste and surfaces.
  Supports healthier eating practices: At Danone, their main motivation is to support
more beneficial eating practices, and they accept this must be accomplished by thinking
about food in the more extensive sense: a social, social, passionate and physiological
experience, where both nourishment and pleasure assume a key part to continuing
wellbeing.

 Long term beneficial food habit development: Dietary staples for over 5,000 years and
a piece of food societies over the world, yogurt and matured dairy items are progressively
well known with purchasers and related with sound eating regimens and ways of life.
Furthermore, yogurt has everything the traits required to keep making a positive
commitment to more advantageous eating for a long time into the future.

 Sustainable relationship with producers to guarantee this quality: Since Danone

gathers in excess of 8 billion liters of new milk every year, it must guarantee a feasible,
excellent gracefully at stable costs. The Company sets up frameworks to shield or
streamline creation and admittance to this fundamental crude material. It frames close
legally binding associations with neighborhood makers in the region of creation locales
so as to restrict coordination’s costs, ensure the ideal nature of the milk and better deal
with its dairy auxiliaries.

 Maintainable associations with makers, to ensure their quality:

The connection among Danone and its accomplice dairy ranchers is based on four corresponding
endeavors:

1. Improve the quality and healthful parity of the milk,

2. Empower advancement of the dairy ranches,

3. Ensure nature,

4. Raise the status of dairy cultivating as a calling.

5. A relationship of trust that offers long haul perceivability to the two players.
 Environmental Concern: Companies should be encouraged to treat the environment
with respect. And Danone is the best organization for that. We must ensure few things
before doing business there. This may include:

 The adoption of and compliance with a robust environmental policy.

 A clear policy to limit and evaluate the use of antibiotics, pesticides and
herbicides.

 A responsible approach to the use of genetically modified food.

 Policies to reduce the company’s carbon emissions, and evidence of their

efficacy.

 This could involve giving preference to locally grown produce, and a policy of
reducing

 Sales of imported or out of season foodstuffs.

 Policies that support bio-diversity (e.g. evidence of respect for living organisms).

 Avoidance of bad practice (e.g. the destruction of original forests to make way
for food plantations).

 Respect for traditional land tenure practices and the rights of small farmers.

 Awareness of the problems of producing unwanted foodstuffs and consequent

waste products.
 Danone’s Business Model:

Danone has in multiple countries. And for these countries, they follow Transnational business
entry model. Because they have both international brands and local brands. Additionally, they try
to keep their product price less.

Transnational: In this business entry model, the company has high pressure for cost reduction
and high pressure for local responsiveness. Form their slogan, “One planet, one health” it is clear
that they focus on reducing malnutrition problem and for that they try to reach every group of
people in the society. Among them, their main target is deprived people. So, one of their major
focus is to produce affordable food.

 Bangladesh: One of the examples is “Shoakti Dai”. This brand is customized for local
people of Bangladesh. And they tried to keep it affordable for children, which costs
around 6-euro cents, a price that studies found to be affordable for the poorest families.
To make successful their project, they merged with Grameen Bank in 2006 (Ahmad, R
2006).

 India: In India, 2012, they had acquisition with Wockhardt Group. Their aim was to
offer a range of specialized foods for different age groups of people (Vijayraghavan, K.
2012). Danone decided to focus on the local nutritional needs of Indian consumers by
innovation and science to support them healthier choice.
  China: Danone declared the will spend 10 million Euros to strengthen the specialized
nutrition which includes medical nutrition (Reuters, 2020). In China they also have dairy
products and beef meet products specially customized for Chinese people. Because, they
faced difficulties to introduce infant products in China. So, the dah to open research
center and customize their products according to Chinese people and their preferences.
Midzone is the local brand od Danone here.

 Russia: In Russia, they have introduced their dairy products with variety of finished
goods. But they have introduced as local product. That means, local brand, local name,
and unique packaging for local customers. Prostokvashino is the most popular local
brand od Danone here. Almost 100% of Russian consumers know Prostokvashino brand.
(Danone, 2020)

 Other countries: Danone has locally customized brands and products for most of their
hosting countries. Like - AQUA (Indonesia), Blédina (France), Bonafont (Mexico and
Brazil), Cow & Gate (UK), Horizon Organic (USA), Mizone (China), Oikos (North
America), Prostokvashino (Russia), Silk (USA), Vega (USA) and Damavand (Iran).

On the other hand, they also have international brands too. Danone's international brands
include: Activia, Actimel, Alpro, Aptamil, Danette, Danio, Dannon, Danonino, Evian, Nutricia,
Nutrilon, Volvic.

From the information above, it is clear that though Danone has international brands, but they
have introduced many local brands according to the preferences and need of the local people in
almost every hosting countries. And their target is to ensure nutritious food to all. It clearly says
that they have pressure for reducing cost as well as pressure for local responses. So, Danone
follows Transnational business entry model.

International Trade Theory:

We will try to relate with international trade theory with Danone’s work. And try to find out,
how they execute their businesses throughout the world. We will consider here OLI paradigm
and Internalization theory to see their invest in the host countries and new trade theory to relate
their export process in other countries.

 OLI paradigm and Internalization theory:

There are 3 parts of OLI paradigm and Internalization theory. For foreign direct investment, its
necessary to have the presence of all of these 3 parts.

1. Owners Specific: Which can be transferred to host countries.

2. Location: For Foreign Direct Investment (FDI), location is a big concern. There has to be
specific advantage of the location.

3. Internalization: It is important to maintain entire value chain within the organization.

When Danone invest in host countries, they mainly focus on acquisition or merging with other
existing companies. Mostly with local companies. And we will try to relate this strategy with
OLI paradigm and Internalization theory to see, dose it actually supports or not.

1. Owners Specific: Danone do their production and introduces brands according to the
local preferences beside international products. They also consider the technology supply
chain, to start the business and set up their factories. For that, they mainly go for
 acquisition or merging with local stablished brands. As a result, the not only get their
existing customers, but also, they can use their technology and existing supply chain.
They also Design products according to the local preferences. So, they do the best
utilization of their own and the merging companies’ technology, supply chain, product
features, brand value, distribution channel, client base.
2. Location: As Danone collaborates with local existing brands, so the already get the
location benefits from the early days of their business in host countries. Because, all
stablished brands locate their business in the possible best location in the country. And
they have their running distribution and supply channel. Which helps them to reduce cost
and time consumption. And Danone gets all of these benefits by collaborating with
existing local brands.
3. Internalization: Danone has 2 types of product, international and local. For international
products, they do not change their product design and features mostly bring some variety
on them. But for local products, they highly prefer the local preferences, local taste and
consider the scarcity of the nutrient partials and then customize the product to ensure
better health and acceptance. They also consider the sufficient supply of their raw
materials. And their focus is to ensure same quality and healthy food for everyone. As a
result, they highly concern of maintaining their product quality and production process.
So, they have internalization in their host country businesses.

Moreover, according to the OLI paradigm and Internalization theory, even missing of a single
element of O, L, I, refers, the company cannot go for direct investment. Danone has business in
many countries. Some countries may offer them all of these benefits, but some countries may
not. Considering all the govt rules, regulation and restrictions of entering into a market, Danone
chose either acquisition or merging but they invest only if they get all benefits of OLI.
Otherwise, they export products form these countries to other countries.

New Trade Theory:

In new trade theory, there are 2 main factors. And according to new trade theory, if a company
enjoys all of these 2 benefits, then they will go for exporting to other countries.
 1. First mover advantage: Introducing the business first at a place, Region, Country, or
world.

2. Economies of Scale: Bulk production at a cheaper rate.

First mover advantage: No doubt, Danone was the first mover (1919) in the industry of baby
food, coffee, dairy products, dairy-free products, bottled water, dietary supplements. Even their
biggest competition Nestle started their journey in 1966. So, Danone got the best opportunity to
make their brand value over the world.

Economies of Scale: As Danone has factories in multiple countries and along with those
countries, they export their product all over the world, they have to produce a lot of products.
And as a result, they have become expertise in the food industry. As well as, their production
cost has been reduced. Which helped them to reach economies of scale with the first mover
advantage. Not only that, they also have multiples of product varieties. And mostly they
customize them according to local customers preferences.As if, they have reached economies of
scale and have the first mover advantage, we can say that, it supports new trade theory for their
exporting goods.

Evaluation of globalization efforts and Why it should

Globalise:

Danone will invest €2 million all through the following 3 years in a brand-new wastewater
device at its dairy plant in Tres Cantos, Spain. The funding will permit the ability to boom its
water autonomy to 80%, and furthers Danone’s aim to turn out to be self-enough on the webpage
north of Madrid. The pass will make the Tres Cantos manufacturing facility extra inexpensive
with its water usage – currently, it makes use of 800 cubic meters of water each day to help
ability of four million yogurts and custards.
The new waste product system will capture residual water from the manufactory’s activities,
storing it associate degreed making ready it for utilize later on. once being filtered and purified,
the water is reused for functions as well as cleaning, with the 80% water autonomy being phased
in over the approaching 3 years.

This is an innovative and pioneering project for the corporate with a bold goal – to be for the
most part self-sufficing in our water needs,” explained Tres Cantos factory manager Alexandre
Biau. “We are doubtless proud to undertake a project of this magnitude. Our challenge is, and
can still be, to hold out our operations with most potency and sustainability. Tres Cantos is that
the best manufacturing plant in Danone’s European farm business; the continuous plant spans a
region of over 60,000 sq. meters and churns out virtually fifty individual product lines.

On the other hand, due to this corona virus issue Emmanuel Faber, CEO of Danone, announced
on Thursday that the salaries of all Danone workers will be secured for the next 3 months,
regardless of the employees’ ability to work from home. This is also one kind of revolutionary
example what Danone actually did for its employees. Danone engages in support activities that it
conducts ethically and transparently with the interests of the buyer in mind and with the need to
satisfy public health goals adore fighting obesity, deficiency disease or undernutrition. All
employment contracts secured and wages guaranteed for the 100,000 Danone employees
worldwide until June 30. Extensive coverage health, childcare, quarantine for all employees
worldwide. Specific bonus for all employees working on site during the pandemic.

Financial support of € 300M, financed by Danone's cash flow, to the 15,000 small businesses in
our global ecosystem (farmers, suppliers, service providers), to the entrepreneurs of Danone
Manifesto Ventures’ portfolio, and to the communities of Danone Ecosystem.

As a part of Danone’s dialogue with stakeholders and smart business conduct, the corporate
interacts with public authorities and non-governmental players. Danone’s policy on advocacy
activities describes the behaviors expected of Danone’s staff who work with these stakeholders.
The policy conjointly states that the corporate doesn't use any corporate funds or assets to create
political contributions or freelance expenditures on behalf of candidates or parties. Danone’s
advocacy action must even be compliant with the Code of Business Conduct and the Integrity
Policy.

FDI Patterns:

In this section, we shall discuss the patterns of foreign direct investment flows and trade-
investment inter-linkages in Spain. FDI approach proposed is the use of various international
locations to draw countrywide establishments and to sell investment. Foreign Direct Investment
flows record the value of cross-border transactions related to direct investment during a given
period of time, usually a quarter or a year. Financial flows consist of equity transactions,
reinvestment of earnings, and intercompany debt transactions. In terms of Danone company
which belongs as an origin country of Spain had followed some strategy to expand their business
using FDI.
Danone Monday signed a settlement with Wockhardt Group to collect its vitamins commercial
enterprise and therefore coming into the child vitamins and clinical vitamins markets in India.

Under the settlement, Danone will collect Wockhardt’s vitamins commercial enterprise and types
in addition to its associated commercial operations from Carol Info Service (placed in Punjab,
India) for a complete of approximately €250 million. The robust emblem cognizance of
Wockhardt’s Dexolac, Farex and Nusobee child vitamins merchandise and their credibility with
healthcare specialists will boost up Danone’s access into the country’s child vitamins
marketplace. With over 25 million youngsters born every year, India is the fastest-developing
little one vitamins marketplace withinside the world. In addition, the dietary complement
emblem Protinex will deliver Danone a robust basis for growing its clinical vitamins commercial
enterprise. The acquisition will offer Danone get admission to to a distribution community with
national reach.

Danone institution deciding on the use of allying with neighborhood enterprise to reaching
access overseas marketplace. For Danone institution, to go into a brand-new overseas market’s
way widespread boom of its sale. Generally, exclusive varieties of nations shall have exclusive
categories. For example, United Kingdom marketplace are much more likely transition economic
system marketplace; however, China is a growing and marketplace are extra like rising
marketplace, identical with Indian, Bangladesh. There is exclusive access mode, and Danone
pick out to allying with neighborhood enterprise. The blessings are it's going to clean to have
logo respective. In China, Wahaha is a totally well-known logo, because its best friend with
Danone, make humans is aware of approximately Danone quick, additionally, it has already got a
big marketplace percentage round Chinese marketplace, because of best friend, make Danone
growing its marketplace rapidly. To scanning the environmental and the “SWOT” evaluation for
a firm, are from both outside or inner aspect. To see the possibilities and threats can also
additionally face is from outside, and the strengths and weak point is from inner. To dialogue the
case of Danone, its electricity is it have a significant economic clout, and its professional at their
manufacturing, and complex advertising and marketing skills. In the alternative hand, Danone
favor to best friend with neighborhood companies, which have already got a mature marketplace
in neighborhood area. This may also help it quick selling his personal logo.
The weak point of Danone is that he did now no longer do sufficient studies of every united
states approximately their political, culture, criminal surroundings and distributions specifically
in China. Danone depend on his partner, however now no longer consider what if the
relationships fall apart. Besides, Danone don’t have sufficient logo respective in different nations
examine with it in France. The possibilities of Danone are that Danone believes rising marketing
presently produce one-1/3 of its sales-offer. So, to evolve the rising marketplace way a
widespread boom of its sales.

However, the threats additionally exist, entails that unexpected with different nations law,
political. Also, opposition comes from overseas united states enterprise. In Danone case, the
threats it face is environmental problems. Danone now no longer trouble to evaluation the
political, criminal and different aspects, and it triggered his failure in China and Indian
marketplace. For a multinational cooperation, it has needed to face numerous demanding
situations include: Possible lack of high-satisfactory control; Establishment of capacity
competitor in united states markets; Possible lack of possibilities to go into the licensee’s
marketplace with FDI later; Risk of generation being stolen.

Prospects for Future:

There exists friendly connection among Spain and Bangladesh rather it is seen uncommon global
just as respective connection of these two nations and we discovered extensions for drawing in
worldwide exchange for both of the nations. Spain is a nation fit for delivering for instance, a
great deal of electronic items. In Bangladesh, there are developing interest for a portion of the
top recorded merchandise like vehicles, apparatuses and then some. The excess of these
merchandise assuming any, sent out to that nation, a colossal unfamiliar cash might be
accomplished and subsequently the nation might be monetarily profited to adapt to the current
market downturn. Then again, there are some top recorded trading merchandise of Bangladesh
including garments, work, cowhide, and that's only the tip of the iceberg. Spain may get
monetary preferred position somewhat from worldwide exchange with Bangladesh.

Hence, from both side fare import exchange relationship of these Small and Medium Enterprises
(SMEs), the two nations can be financially profited and accordingly Spain can get answer for
diminishing existing downturn somewhat and Bangladesh can locate a doable answer for
accomplish the vision 2021 of computerized Bangladesh and 2041 of being a created nation on
the planet. Once more, there will be a two-sided connection between these two nations. This
examination endeavors to legitimize the pertinence and attainability for Spain of the merchandise
to be sent out to and imported from Bangladesh. The discoveries of this subjective examination
show that there are potential extensions and fields to make a serious deal among Spain and
Bangladesh and hence the global exchange for SMEs would decidedly add to the financial
improvement of the two players. In conclusion, we can say that choosing Danone as our host
country was the best choice because the future prospects are pretty good.

Conclusion:

From being a small company that started out making yogurt, Danone is a global giant now which
has successfully “dipped its toes” across a number of industries. It is continually and actively
expanding into more countries. The brand’s commitment to contribute to global well-being is not
only opportune for the brand itself but also in improving trade relations between the countries It
has opened up a way of communication between the countries it operates in and an open line of
using resources. It also gives us a look into what improved trade relations and opportunities
would look like between Spain and Bangladesh, and further opportunities regarding FDI.
Bangladesh already ranks 6th as a trading partner (bilateral trade engrossing 2.4 billion dollars)
for Spain, and it well on its way to becoming the 5th.

The ventures of Danone are ever increasing, keeping the 3 main product categories in the focus.
The current and persistent challenge that the company is dealing with is more and more savvy
consumers who demand to know just where their food is coming from and how ethically and
sustainably it has been produced. Danone is constantly thriving to provide their foods which are
more natural, more local, and more authentic to the country they are operating in. In the age of
ample choice, and an over-saturated market, the company is currently tackling how to convert
the initial use of a product to a regular, more staple household item which is in perpetual
demand. Although it has its struggles and concerns regarding maintaining reasonable prices, and
now more than ever because of the Corona virus pandemic, Danonr is keeping its people
(customers and employees) at the forefront and managing its businesses accordingly.

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