International Business Strategy

MBA(IB) 20-22 FT(K) Batch

Term Paper

Name: GROUP 8

Sharath MK
Shivangi Dutt
Shriyanshu Khare
Srijita Pal

Roll No.: 220KD, 221KD, 222KD and 223KD

Section: D
Britannia Industries Ltd
 Contents

11 Firm basic facts

22 CAGE framework

3 Global Responsiveness Matrix

4 Global Strategy Framework

5 Influence of non market factors

6 Strategic gaps & suggestions

 Firm Basic Facts

Name of the Firm: Britannia Industries Limited

Industry/ies: Food Products

Home Country: India

Product Portfolio: Biscuits, Bread, Cakes, Rusk, and Dairy products

Host Countries: UAE

Listing Status: Listed

If Listed, SEs: NSE, BSE

 Vision, Mission and Values

Vision: We demand the best of ingredients and package their natural

goodness in our products, without compromise with core emphasis across
portfolios on healthy, fresh and delicious food.

Mission - To deliver superior value to our stakeholders on the four pillars

of-
• Customer Centricity
• Sustainability
• Team Empowerment
• Innovation
Values –

Inviting
Igniting
Make Things Happen
Creating
Respecting
 Financial Highlights

List important financial highlights for the firm

Total Turnover: : ₹1,599.55 Cr

Net-Profit Ratio: 13.1%

% of Home sales to Host sales: 3.54%

(Host Sales - Rs. 1556.78 Cr)
(Home Sales - Rs. 43,977.02 Cr)

% of Host Net Assets to Home Net Assets- 3.13%

(Parent Company Net Asset in Home Country – Rs. 28734.20 Cr)
(Host Country Net Asset – Rs. 899.38 Cr)
 CAGE Analysis
CULTURAL DISTANCE
• Religion: Saudi Arabia is officially a Muslim nation, with
93% population practicing Islam. Official language is
Arabic.
. • Political Relations: No political hostility exists between
• Language: Although Arabic is the official language, English
is extensively utilized in the workplace.
• Ethnicity: There are 11.6% Emirati Arabs, 59.4% South
Asians, 7.4% Egyptians, 6.1 percent Filipinos, and 12.8
percent Others in the country.
• Uncertainty Avoidance
- India: Scores 40 on this dimension and thus has a
medium low preference for avoiding uncertainty. In India,
there is acceptance of imperfection, India is traditionally a
patient country where tolerance for the unexpected is
high. Rules are often in place just to be circumvented and
one relies on innovative methods to “bypass the system”.
- Saudi Arabia: High score of 80 on this dimension and
thus has a preference for avoiding uncertainty. Countries
exhibiting high Uncertainty Avoidance maintain rigid
codes of belief and behavior and are intolerant of
unorthodox behavior and ideas.
ADMINISTRATIVE DISTANCE
• Colonial Linkage: There is no colonial linkage, Saudi
Arabia was never colonized
• It has monarchy form of government
the two nations
• Absence of shared monetary or political association
• India and Saudi Arabia enjoy cordial and friendly relations
reflecting the centuries old economic and socio-cultural
ties.
• Trade Relations:
• Saudi Arabia is India’s fourth largest trade partner (after
China, the USA and UAE) and a major source of energy as
India imports around 18% of its crude oil requirement and
30 % of its LPG requirement from the Kingdom.
• Both nations have taken cooperative steps to secure
availability of agro-products in cases of emergency
situations.
• The Delhi Declaration (signed in 2006 on the sidelines of
H.E. King Abdullah’s visit to India) and Riyadh Declaration
(signed in 2010 during the Prime Ministerial visit)
emphasized on energy cooperation between our two
friendly countries.
.
 CAGE Analysis
GEOGRAPHIC DISTANCE
• Distance & Climate:
• Countries are close together and have nearly identical
climates and temperature zones. In terms of climate,
Western India is nearly same to the Saudi Arabia.
• India and Saudi Arabia are around 3500km apart
• Lack of a common border
• Both have well developed logistics systems & are well
connected via regular flights
• Both have access & connectivity via the Indian Ocean
• Land Border: The Arabian Sea separates the countries
• Time Zone: A little time difference of roughly 90 minutes
separates the countries
ECONOMIC DISTANCE
• Natural Resources: Both countries have advantages, but
the UAE is particularly wealthy in petroleum and natural
gas.
• Per Capita Income: India's GDP per capita is $2,010, while
the UAE's is $43,005
• Quality of Human Resource: India's Human Development
Index is 0.640, whereas the UAE's is 0.863.
• India's GDP is close to 3.5x times of Saudi Arabia's GDP
• Saudi Arabia's GDP per Capita is however almost 12x
times of India's per capita GDP
• In terms of GDP growth, India's is 6.8% while Saudi
Arabia's is 2.4%
India
Saudi Arabia
 CAGE Interpretation

High Impact
Geography has the biggest impact on the CAGE distance. The physical distance, and the differences of size &
population make it difficult for inter country operability of firms

Culture also makes a higher impact due to the differences in religion, and ethnicities

With different major religions, the belief & value systems are also a major challenge

The uncertainty avoidance and indulgence figures for the Hofstede Framework also throw a light on variations in
cultural expectations

Medium Impact

Medium Impact
• The administrative & economic factors have a medium impact on the CAGE distance
• The nations have strong trade relations, with Indo-Saudi bilateral trade reaching $27.48 billion in the
financial year 2017–18, up from $25.1 billion in the preceding year
• Though Saudi Arabia has 12x times the GDP per capita, India has 3.5x times the overall GDP,
thereby making them the ideal partners for trade
 Global Responsiveness Matrix
Global Integration Score 3.7
Local Responsiveness Score 4.2

GLOBAL FACTORS  Interpretation of Score: 1  Interpretation of Score: 5  Score

A To what extent customers have similar demands for functionalities and design across countries Very different Very similar  4

Low proportion of standard High proportion of standard

B To what extent products or services have a high proportion of standards components across countries components components  4

To what extent customers (or distributors) are themselves operating in different countries and are buying centrally
C your products or services Buying locally Buying centrally  2

To what extent significant economies of scale in your industry are important for the cost of the product (i.e. one
D Low economies of scale High economies of scale  5
needs very high volume to obtain low cost)

E To what extent the speed of introducing new products worldwide is important for competitiveness Speed is not that important Speed is very important  4

To what extent the sales of your product or service are based on technical factors or alternatively on cultural
F Highly cultural Highly technical  3
factors

G To what extent experience gained in other courtiers by a ‘sister’ subsidiary can be successful if applied in other No great benefits Yes, highly beneficial  5
countries

To what extent competitors in your industry operate in a ‘standardized’ way across countries and we successful in Competitors are successful in
H doing so Competitors are localizing standardized approaches  3

I To what extent customers ‘behave’ the same way across countries Customer behavior is very different Customer behave in the same way  3

To what extent innovative activities (R&D, design) require concentration of expertise in order to be effective
J (critical mass) Low critical mass High critical mass  4

LOCAL FACTORS Interpretation of Score: 1 Interpretation of Score: 5 Score

Pricing has to be coherent across

K To what extent pricing can be different from country to country without introducing dysfunctionalities borders Pricing can be very different  4

L To what extent distribution channel management differs from country to country Not so different Yes, very different  4

To what extent business regulations and contexts differs from country to country requiring a high degree of local
M practices Not too different Highly different  5

N To what extent products or services require a high degree of interaction with customers (customization) Low customization High customization  3

O To what extent transportation costs or customer interface are such that local operations are needed Not so different Local operations are essential  5
 Global Responsiveness Matrix

 Britannia needs a Transnational approach for their global strategy

 These kind of companies are characterized by high integration & responsiveness
 On the corollary, Britannia doesn’t have many subsidiaries, rather it exports from a central
location. This is peculiar of the firms of this category
 Britannia does not have a subsidiary in Saudi Arabia, it has subsidiaries in Oman and UAE
(Strategic Food International llc, Dubai, UAE and Al Sallan Food Industries Co, Sohar, Oman) to
cater to west Asian markets including Saudi Arabia and use the country as a springboard to look
at African countries like Nigeria, Angola and Ghana.

Global Transnational

International Multidomestic
Global Strategy Framework

GLOBAL GLOBAL
AMBITION BUSINESS SYSTEM

GLOBAL
STRATEGY

GLOBAL GLOBAL
POSITION ORGANISATION
 Global Ambition

 Global Ambition is measured by calculation of Global Revenue & Global Capability Indices
 These are further used to classify the company’s global ambitions amongst Regional player,
Regional Global Dominant Player, Exporter, Global Exporter & Global Sourcer
 From the chart we can observe that Britannia is a Regional Dominant Player

Distribution of Sales Europe North ROW Asia   X Axis Y Axis

America
Company Name GRI GCI
Industry (Ix) 0.32 0.19 0.20 0.29
Britannia 32.90% 38.91%
GM RX 0 0 19% 81%
CumRX (2) 0 0 19% 100%
CumRX-n (3) 0 0 0 19%
CumRX+cumRX 0 0 19% 119%
Ix *(cum RX + cum RX 0 0 3.84% 35.07%
− n)

GRI = 38.91%
North
Distribution of Sales Europe ROW Asia
America
GCI
Industry (Ix) 0.30 0.20 0.45 0.05
GM RX 0 0 7% 93% 32.90%, 38.91%
CumRX (2) 0 0 7% 100%
CumRX-n (3) 0 0 0 7%
CumRX+cumRX 0 0 7% 107%
Ix *(cum RX + cum RX 0 0 1.40% 31.51%
− n)
GRI
GRI = 32.90%
 Global Positioning

Global
Global Standardization
Positioning
Multiple
Segments
Key Countries India, being the main manufacturing
base

Emerging • Nigeria, Egypt, Myanmar,

Countries Bangladesh
• African Markets, due to high
growth opportunities

Local Single
Adaptation Segment
Platform Saudi Arabia & UAE are springboards
Countries to look at African markets like
Nigeria, Angola and Ghana Compete on Compete on
Costs/Price Differentiated/Value
Advantages Advantages
Marketing North America and Europe, for
Countries export potential
Britannia competes on cost, across multiple
Sourcing India & South East Asia, for segments like Snacks, Milk Shakes,
Countries procurement of raw materials Croissants, Cream Wafers, Cakes & Cookies.
It also has globally standardized products.
 Global Business System

Research & Sourcing & Customer

Marketing Finance
Development Production Services

• Identification of the • Global Sourcing • Subsidiaries and joint •Information •Controlling

target. • Britannia has ventures are used to System, Policies, Cash Flows
• Invested in areas of begun a sell globally. and Procedures Around the
automation greenfield plant • It has a huge •Loyalty World
&technology in Nepal, infrastructure set up programs for
Global upgradation for the focused on that in India, and small customers
launch of new products local market and units in the Middle
in existing categories exports East, which it is
beginning to use for
furthering global
exports
• Intelligence in the • Regional Sales, Distribution, and • Customer • Debt
Region. Sourcing Promotion by Service and Financing
• Most of the time, Strengthening core Logistics (Regional)
standard, although • Regional brands with activation
regional variants might factories and
be added as needed. advertising
Regional

• Britannia Industries Ltd • Local Sourcing • Management of • Identifying • Borrowing

launched its research • Local factories Retailers and assisting (Local)
and development example: Bidadi • Leveraged organized with
center in Bidadi, near factory retail channels. requirements
Bengaluru
Local
 Global Organisation

 Britannia has a number of subsidiaries globally for production as well as for

distribution of their products in export markets
 This shows that Britannia has taken steps towards a global organization

India Nepal Oman

 Britannia Nepal Private Limited  Al Sallan Food Industries Co.

 Boribunder Finance and
SAOC (65% stake)
Investments
 Britannia Dairy Private Limited
 Flora Investments Company Dubai Mauritius
Private
 Ganges Vally Foods Private  Strategic Food International Co.
Limited  Britannia and Associates
LLC,
 Gilt Edge Finance and Investments (Mauritius)
 Britannia and Associates (Dubai)
 International Bakery Products  Britannia Dairy Holdings Private
 Strategic Brands Holding Company
Limited
 B Mangharam Foods Private
Limited
 Manna Foods Private Limited Bangladesh
 Sunrise Biscuit Company Private
 Britchip Foods Limited (60% stake)  Britannia Bangladesh Private
Limited
 Influence of Non-market Factors
POLITICAL
• For Britannia, the raw materials,
manufacturing and selling of its products
require right government policies, GST
regulations etc. as well as associated
government incentives. There is approval of
investment of up to 100% foreign equity in
single brand retail and 51% in multi brand
retail.
TECHNOLOGICAL
• With the emerging digital technology such
as AI, cognitive intelligence and handy
smart phones trend, FMCG companies like
Britannia stands in a good position..
• Online order and delivery mechanism is
leading to exponential growth of Britannia by
reaching a wider market than through only
brick and mortar stores.
SUPPLIERS
• The significant supplies of Britannia
bakery items are wheat and sugar. It also
includes the other agricultural products.
On the other hand, considering the dairy
items, the supplies are milk
ECONOMIC SOCIAL
•
Children usually have the power to
• Per-capita income India has a low influence their parents to buy products like
consumption rate. As a result, there is biscuits, cakes etc. Society impacts the
room for expansion. choices and buying decision of
• With the inflation and unemployment consumers.
going down, it has a positive market • People usually prefer safe and hygiene
stand with rising consumer demand for eatables for them now as Covid-19
its products. pandemic spread..
LEGAL ENVIRONMENTAL
• Companies face a lot of regular scrutiny
• The consumer protection law and even by environmental agencies like NGT etc.
the protection of intellectual property for anti-environment related activities
rights can affect Britannia. and processes which leads to
• Consumer petitions and many other environmental disturbance.
challenges from authorities can • Even the products packaging in the form
influence the FMCG companies. of plastic is not allowed in many
countries..
COMPETITIORS NEW INITIATIVES
• Major investments by competitors in • The Company while pursuing energy
infrastructure to produce high quality efficiency programs in the factories also
products and higher media spends takes initiatives for recycling of wastes
continue to pose challenges for the generated during production.
 undertakes various initiatives to improve
Company’s business.
the lives of the lower socio-economic
sections of the society
 Strategic Gaps and Suggestions

Gaps

High dependence on Indian market: Scaling down new product launches:

• Though Britannia has made forays into other
international markets, it is still dependent on
the Indian market for a majority of its
revenues.
• Though the company exports its products to
many countries, the revenue contribution of
regions other than India is too low to confer
any significant geographical diversification
benefit on the company.
• High dependence on India makes Britannia
vulnerable to the market conditions in this
region.
• While Nestle continues to launch new products in
market, Britannia in a cautious move has suspended
its projects and is focusing on existing brands,
expecting consumers to be less
experimentative(due to Covid-19) than they usually
are.
• However, according to a recent study by McKinsey
on perspectives on retail and consumer goods with
findings representing consumer sentiments from
over 45 countries, while it is true that consumer
behavior is evolving, but food products (groceries &
snacks) is the least impacted category.

Suggestions

Increase Exports: Britannia should aim to be a Global Exporter, and therefore should export more to overseas
markets like the Americas & Europe
Greenfield Projects: It should also invest more in greenfield projects outside India like the one in Nepal
Global Sourcing: Britannia should step up global sourcing of raw materials for higher quality export products
 References

 http://britannia.co.in/milestones/details
 https://www.eoiriyadh.gov.in/page/india-saudi-business-
relations/
 https://www.imf.org/external/datamapper/
NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD
 https://www.business-standard.com/article/companies/
britannia-to-have-overseas-operation-in-two-markets-in-next-
two-years-118111301346_1.html#:~:text=FMCG%20major
%20Britannia%20Industries%20has,a%20top%20company
%20official%20said.
 https://www.ukessays.com/essays/marketing/britannia-
industries-limited-is-one-leading-bakers-marketing-essay.php
 https://www.business-standard.com/article/companies/a-tale-
of-two-companies-britannia-nestle-draw-up-contrasting-
strategies-120021501258_1.html
 https://www.financialexpress.com/archive/britannia-finalises-
go-to-market-plan-for-saudi-arabia/658197/
 http://www.bakerybazar.com/2010/08/britannia-to-enter-
saudi-arabia-bakery.html
 https://www.arabnews.com/news/448073