A Term Report Presented to the Faculty of Business Administration in Partial Fulfillment of the Requirements for the Degree of Master of Business Administration

1. Strategy:
“Strategy is a high level plan to achieve one or more goals under conditions of uncertainty.
Strategy is important because the resources available to achieve these goals are usually limited.”
“Strategy is also about attaining and maintaining a position of advantage over adversaries
through the successive exploitation of known or emergent possibilities rather than committing to
any specific fixed plan designed at the outset.”
“Strategy is often the difference between:
 Success and failure, between mediocrity and excellence.
 A great manager and average managers.
 Stumbling through life and moving ahead with purpose.
“Henry Mintzberg” from McGill University defined strategy as "a pattern in a stream of
decisions" to contrast with a view of strategy as planning.
While “Max McKeown” (2011) argues that "strategy is about shaping the future" and is the
human attempt to get to "desirable ends with available means".
So we can say, a method or plan chosen to bring about a desired future, such as achievement of a
goal or solution to a problem, is strategy. The art and science of planning and marshalling
resources for most efficient and effective use.
1|Page

2. Most Strategic Management Model:
Strategic management model refers to the pattern or mode of strategic management. According
to the strategic management model, a number of steps are taken to achieve the objectives of a
company. Strategic management model is also known as strategic planning model. A strategic
planning model is selected for the purpose of formulating and implementing the strategic
management plan of a particular organization. There are eight (8) different strategic management
models. Different strategic management models are chosen by various companies according to
their conveniences. The eight different strategic management models are describe below:
1. PEST Analysis: PEST analysis stands for "Political, Economic, Social, and
Technological analysis" and describes a framework of macro-environmental factors used
in the environmental scanning component of strategic management. PEST analysis
describes a framework of macro-environmental factors used in the environmental
scanning component of strategic management.
2. STEER
Analysis:
STEER
analysis
systematically
considers
Socio-cultural,
Technological, Economic, Ecological, and Regulatory factors.
3. Porter's 5 Forces: Named after Michael E. Porter, this model identifies and analyzes 5
competitive forces that shape every industry, and helps determine an industry's
weaknesses and strengths.
 Competition in the industry.
 Potential of new entrants into industry.
 Power of suppliers.
 Power of customers.
 Threat of substitute products.
2|Page

3. 4. Strategic Group Map:
 Extent of product (or service) diversity.
 Extent of geographic coverage.
 Number of market segments served.
 Distribution channels used.
 Extent of branding.
 Marketing effort.
 Product (or service) quality.
 Pricing policy.
5. SWOT Analysis:
 Strengths: characteristics of the business or team that give it an advantage over
others in the industry.
 Weaknesses: are characteristics that place the firm at a disadvantage relative to
others.
 Opportunities: external chances to make greater sales or profits in the
environment.
 Threats: external elements in the environment that could cause trouble for the
business.
6. Blue Ocean Strategy: is a business strategy book first published in 2005 and written by
W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute at INSEAD.
The book illustrates what the authors believe is the high growth and profits an
organization can generate by creating new demand in an uncontested market space, or a
"Blue Ocean", than by competing head-to-head with other suppliers for known customers
in an existing industry.
3|Page

4. 7. Open innovation: is a paradigm that assumes that firms can and should use external
ideas as well as internal ideas, and internal and external paths to market, as the firms look
to advance their technology.
8. McKinsey – Seven S-Models: A model of organizational effectiveness that postulates
that there are seven internal factors of an organization that need to be aligned and
reinforced in order for it to be successful. The 7S Model was developed at McKinsey &
Co. consulting firm in the early 1980s by consultants Tom Peters and Robert Waterman,
authors of the management bestseller "In Search of Excellence." The McKinsey 7- S
framework is a popular model used in organizations to analyze the environment to
investigate if the company is achieving its intended objectives.
i.
Business Environment/Strategy: Competition, Economy, regulation/taxes, labor
& supplier issues, Short-Term vs. Long-Term Goal etc.
ii.
Shared Values: How would you describe the mission of this company to your
prospective buyers?
iii.
Structure: Organization Chart, Departments, the number of management layers
iv.
Staff: the strengths and weaknesses of the organization's key people.
v.
System/Infrastructure: reward system, manufacturing system, technology,
customer feedback
vi.
Skills: key knowledge and skills are needed to succeed in this business/organization
vii.
Style: Emphasize on quality, encourage teamwork, reinforce standards
4|Page

5. Company profile:
BEIERSDORF
5|Page

6. Introduction
Beiersdorf AG is a German personal care company based in Hamburg, manufacturing personal
care products. Its brands include Elastoplast, Eucerin (makers of Aquaphor), Labello, La Prairie
and Nivea. Although its shares are publicly listed, Beiersdorf is controlled by Tchibo Holding
AG (parent company of Tchibo), which directly owns 50.49 percent of shares.
History
He Company was founded in 1882 by pharmacist Paul Carl Beiersdorf in Hamburg and sold to
Oscar Troplowitz in 1890. The patent of 28 March 1882 for Paul C. Beiersdorf is regarded as
foundation date of the company. He received the patent for his development of a new
manufacturing process of medical plasters.
In 1911 Troplowitz launched the new product called Nivea, a stable fat moisturiser, after he had
already sold a white soap in 1906.
With BSN medical the company started on 1st oft April 2001 an independent subsidiary. It is a
Joint Venture of the soon to be only German-based, Majority (soon to full) American-owned
company Beiersdorf (Hamburg) and the now only British-based, American-owned Smith &
Nephew (London) and serves on the market of surgical dressing, orthopaedics and phlebology.
BSN Medical had 350 employees in Germany and 3.400 worldwide in 2004. The turnover
received 504 mn euros and its operating income reached 70 mn euros. In 2006 BSN medical was
sold to Montagu Private Equity for 1.03 bn euros.
With "Beiersdorf Shared Services GmbH" (BSS, a ltd. company) in 2003 another subsidiary had
been founded. BSS operates independently but internal as a partner for the whole Beiersdorf
group in which IT and accounting services were outsourced. They have 275 employees in
Hamburg and 350 in total worldwide.
In the same year a two years lasting bidding war ended. The American company Procter &
Gamble had a high interest in the now only German-based, majority (soon to full) Americanowned company Beiersdorf and offered the then owner of 19.6% of the shares, Allianz
insurance, a takeover deal. Fears rose in Hamburg that Procter & Gamble is only interested in the
6|Page

7. brands in fact and not in the company as a whole. Therefore a Hamburg solution was preferred
by many in the city. The city of Hamburg with its HGV state owned share holding company
managed it to create this solution. The German family the Herz family, owner of the German
company Tchibo, who already had a stake in Beiersdorf increased the part of shares to 49.9%,
Allianz still hold 3.6%, Beiersdorf company bought back 7.4% of shares and 3% were given to
the Beiersdorf-pension fund. Another share holder, a private family, assured to hold their share.
By this alliance of the city and some of their families the headquarter was rescued for Hamburg
and is still providing hundreds of jobs and taxes of approximately 200 mn euros a year. In June
2009 Allianz announced, to have reduced its part of shares from 7.2 to 2.88 percent.
On 22 December 2008, the Beiersdorf AG has been admitted to Deutschen Aktienindex (DAX).
Mission Statement
“We at Beiersdorf understand our consumers and delight them with innovative products for their
skin and beauty care needs. This strengthens the trust and appeal that our brands enjoy. Every
day. Worldwide.”
Vision Statement
“We have dedicated ourselves to meeting our consumers‟ individual needs and are considered to
be the inventors of modern skin care. Our research and development expertise, innovative
products, and strong brands are the reasons for our success. We want to be the number one skin
care company. we are now committed to Vision 2015 which will take us 'from the Summit to the
Stars'. This vision is supported by our values, balanced scorecard and cascading departmental
objectives which ensure that everything that we do is focused on achieving our vision”
7|Page

8. Organogram of Beiersdorf:
Chairman
Board of Directors
Executive Directors
Non-Executive Directors
Chief Executive Officer and
Executive Director
Chief Operating Officer
Chief of the Departments
8|Page

9. Market share:
Market share
Procter & Gamble
Avon
Johnson & Johnson
Beiersdorf
Unilever
Others
9|Page

10. PESTEL Analysis of Beiersdorf:
POLITICAL
Trade
agreements,
tariffs
restrictions.
Market regulations.
Tax levies and tax breaks.
ECONOMICAL
or
SOCIAL
High purchasing power of people.
New source of employment.
Walfare enhancing in the field of
education
ENVIRONMENTEL
Changing weather.
Climate change.
Contribution per capital growth.
Increasing demand for FMCG.
Strong association between cosumer
sector
growth
and
FMCG
development .
TECHNOLOGICAL
Growth of FMCG infrastructure.
Shortage of innovative product and
non brand Goods.
skin care based product is available.
LEGAL
Changing customer law
Changing employment law
FMCG law
10 | P a g e

11. SWOT Analysis of Beiersdorf:
• Strong Brands
• Existing distribution
networks
• Skilled workforce
• Strong,
increasing
focus on research and
development
• Experienced
management
•
•
•
•
Low debt rating
Too many taxes
Low productivity
Moderate
brands
image with other
brands
• High loan rates
Strengths
Opportunities
• Venture capital
• Income level is at a
constant increase
• Growing economy
Weaknesses
Threats
• Increasing rates of
interest
• Technological
problems
• Limited
financial
capital
• High competition
11 | P a g e

12. PORTER’S 5 FORCES Analysis of Beiersdorf:
SUPPLIER POWER
 High competition
 Concentration of suppliers
RIVALRY
BARRIERS TO ENTRY
 High initial cost
 Government
regulation
 Moderate high switching
cost
 Low exit barrier
THREATS OF SUBSTITUTE
 High
price
market
 High switching
 Brand identity
BUYER POWER
 High bargaining power
 Buyer volume
 Price sensitivity
12 | P a g e
sensitive

13. SWAN ANALYSIS & TWOS MATRIX:
SWAN Analysis
Strengths
The Beiersdorf is capable of offering its all kind of product in worldwide with low cost.
Weaknesses
Could not acquire the market likes of its competitors did.
Achievements
The company has more than 20 million customers and serves individual consumers, enterprises
and others providing various kinds of product last hundred years
Next step
To address the needs of the entire market and widen its customers.
13 | P a g e

14. TWOS Matrix:
Internal analysis (CPM Matrix)
Strengths
Weaknesses
 Weak competitor brand image
 Brand image
 Distribution
 low cost entry
 Lack of competitive strength
 product variation
 Limited Budget
 Networking
Opportunities
Threats
 Presence of innovative product
 Political destabilization
 New specialist application
 New entrants
 New market
 Market demand
 Seasonality , weather effects
External analysis (EFE Matrix)
14 | P a g e

15. Value Chain Analysis:
Primary
Activities &
Cost
Value Chain
Supply Chain
Operation
Distribution
Customer
Retailing
Management
ma
Supportive
Activities &
Cost
Product R & D, Technology and Systems Development
Human Resource Management
General Administration
1) Primary Activities:





Supply Chain Management
Operation
Distribution
Retailing
Customer
2) Support Activities:
 Product R & D, Technology and Systems Development
 Human Resource Management
 General Administration
15 | P a g e

16. ViSA Model & SMARTER Model:
ViSA model:
VI – Vision:
By 2020, be amongst the top 3 most valued FMCG companies, providing
Information, new innovation product and services, and being the industry benchmark in
Customer Experience, Employee Centricity and Innovation.
S – Strategy: to provide the latest product and facilities to every people at the low price level.
A – Action Plan: Started sales promotion as a strategy to reach out to a mass audience and grab
attention
SMARTER– Model:
Specific: Increase market coverage.
Measurable: Explosive growth in usage by 25%
Achievable: Major Performer in the global market - system presentation, lively invention, a
comprehensive and influential brand, focused global extension and ongoing formation of new
growing prospects.
Realistic: Frequently advance product excellence of facility.
Time: Fiscal target for 2020
Encompassing: Assessing the position in the market centered on the accessible facilities.
Reviewed: Customer‟s needs are met with modified, personalized offers together with
reasonable incentive for their reliability.
16 | P a g e

17. Business Growth Rate (Market Growth)
The BCG Matrix:
Reliance Communications
Relative position (Market share)
Comment: Beiersdorf is one of the market leaders of FMCG business in world. It has a high
market share but low growing market. They have share of 3% and are growing at the rate of 9 %.
But it still needs support for promotion. So the position of Beiersdorf in BCG Matrix is the
CASH COW.
17 | P a g e

18. PURE Objectives & GREAT Models:
Positive:
Beiersdorf exposes positive attitude towards portion their regulars by determining their needs
and wants with widespread marketing research and developing the marketing mix and service
ideals according to the discoveries that makes the company very much customer focused.
Understood:
Performance: Their facility distribution recital as well as fiscal recital is very acceptable.
Style: emphases on assessment obsessed facility plan and distribution.
Jargon: They try to escape their practical terms or management Jargons while
collaborating with the customers through commercial.
Culture: Ironic operational philosophy due to the expanded HR and Worldwide tasks.
Recorded:
Beiersdorf preserves highest of all their activities through appropriate documentation.
Ethical:
Ethical standard of Beiersdorf is sponsored by the code of conduct of the organization that
includes management-employee relations, management-customer relations, employee-customer
relation, internal stakeholder relation and external stakeholder relation and ethics in conducting
business and the management strictly follows the COC.
Great Model:
G – Goals: Proceeding towards a goal of achieving two third of the world's market.
R – roles: designing the company„s offering and image to occupy a distinctive place in the mind
of the target market.
E – Expectations: become the top 3 among FMCG business by 2020.
18 | P a g e

19. A – Abilities: They reached out aggressively to rural areas that contributed substantially to their
customer acquisition.
T – Timing: They are doing the right work in right time to achieve their target.
Market Analysis including Market Segmentation:
Geographic segmentation: divides markets into different geographical units. There are four
main cellular segments.
 Metro – the metropolitan areas of country are under this category.
 Category A circles – mostly analogous of the European and North America countries.
 Category B circles – mostly analogous of the African country.
 Category C circles – mostly analogous developing countries
Demographic segmentation: the buyers are divided into different groups on the basis of
variables such as their age, family size, family life-cycle, gender, income, occupation, education,
etc. Like the PCOs are senior citizens, unemployed youth, small shop owners, kirana stores and
existing PCOs owners.
Psychographic Segmentation: Skin care product is for those groups of people who caution
about their skin.
19 | P a g e

20. EFE Matrix:
KEY EXTERNAL FACTORS
Weight
Rating
Weighted
Score
OPPORTUNITIES
Political Support.
0.15
3
0.45
Huge potential customer in rural area
0.05
4
0.20
Income level is at a constant increase
0.09
3
0.27
Could develop new product
0.10
4
0.40
increasing rates of interest
0.20
4
0.80
technological problems
0.15
3
0.45
limited financial capital
0.12
4
0.48
high competition
0.14
3
0.42
THREATS
4 = The response is superior
3 = The response is above average
Rating
2 = The response is average
1 = The response is poor
TOTAL
1.00
3.47
20 | P a g e

21. CPM Matrix:
Beiersdorf
Avon
J&J
Critical success factor
Weight
Rating
Score
Rating
Score
Rating
Score
Advertising
.06
4
.24
3
.18
2
.12
Quality
.o8
4
.32
2
.16
2
.16
Price
.09
3
.27
4
.36
3
.27
Management
.07
3
.21
4
.28
3
.21
Financial Position
.09
4
.36
3
.27
2
.18
Customer loyalty
.07
3
.21
4
.28
3
.21
Branding
.08
3
.24
4
.32
2
.16
Market Share
.11
4
.44
2
.22
1
.11
Infrastructure
.05
4
.20
2
.10
1
.05
Technology
.06
4
.24
4
.24
2
.12
Global expansion
.07
4
.28
3
.21
2
.14
Distribution network
.o4
3
.12
3
.12
2
.08
Product line
.04
4
.16
3
.12
2
.08
R&D
.03
4
.12
2
.06
2
.06
Consumer feed back
.o6
3
.18
4
.24
3
.18
Total
1.00
3.69
3.16
2.13
Score system: 4= major strength, 3= minor strength, 2=minor weakness, 1=major weakness
The CPM matrix of Beiersdorf is completed by taking two more FMCG company Avon and Johnson &
Johnson. In order to complete this CPM matrix of Beiersdorf some critical success factors are identified.
Weight is assigned to each of the success factors and maximum weight is given to Advertising, Quality,
Price etc. and total weight is 1.00. Rating ranges from 1 to 4 where 1 = major weakness and 4 = major
strength. Score is given by multiplying each factor by its weight and rating. Total score for Beiersdorf is
3.69, Avon is 3.16 and J & J is 2.13 so competitive positions of Beiersdorf are better than Avon and J & J.
21 | P a g e

22. QSPM analysis:
22 | P a g e

23. Financial Analysis:
Net Income
Year
Net Income (in millions of Euros)
2012
451
2011
259
2010
326
Net Income
500
450
400
350
300
250
Net Income
200
150
100
50
0
2010
2011
2012
23 | P a g e

24. Earnings Per share
Year
EPS (in Euros)
2012
0.82
2011
3.67
2010
3.96
EPS
3
2.5
2.48
2
1.95
1.93
1.65
1.5
1.4
EPS
1.1
1
0.5
0
2007
2008
2009
2010
2011
2012
24 | P a g e

25. Ten - year overview
25 | P a g e

26. Competitor Analysis:
The competition is high in the industry which has forced competitor to indulge in both price and
non-price competition. Consumer product retail is leading factor in industry‟s revenue stream.
Market share
Procter & Gamble
Avon
Johnson & Johnson
Beiersdorf
Unilever
Others
Competitors: L’Oreal
 Incorporated: 1939
 Headquarters: Paris, France
 Employees: 52,403
 Net Income: $2,237 million (2006)
 Company Type: Public
 Brands: Lancôme, Maybelline, Garnier, Redken, and Matrix
26 | P a g e

27. Competitors: Johnson & Johnson
 Incorporated: 1887
 Headquarters: New Brunswick, New Jersey, USA
 Employees: 116,200
 Net Income: $11 billion (2006)
 Company Type: Public
 Brands: Band-Aid, Tylenol, JOHNSON'S, Neutrogena, Clean & Clear
Competitors: Avon Products
 Incorporated: 1886
 Headquarters: New York, New York, USA
 Employees: 40,300
 Net Income: $477.6 million (2006)
 Company Type: Public
 Products Lines: Avon Color, Anew and Solutions, Skin-So-Soft and Naturals
27 | P a g e

28. Breakeven Analysis:
The break-even point (BEP) is the point at which cost or expenses and revenue are equal: there
is no net loss or gain, and one has "broken even". A profit or a loss has not been made, although
opportunity costs have been "paid", and capital has received the risk-adjusted, expected return. In
short, all costs that needs to be paid are paid by the firm but the profit is equal to 0.
Beiersdorf had reached their Break Even point within their 5 years of operation since its
inception. If we analyze its last 3 years date, we can see that Orange is facing a downward
slopping revenue line due to the tremendous level of global competition. As we can see in the
graph, in 2010 it had revenue of 326 Million Euros which was much higher than their cost curve
which had later equal to the cost at 2011 and went down below the cost line last year (2012).
This is a strong weakness as well as a threat for Orange FMCG to work on seriously either to
increase revenue or to reduce their costs to place them above the cost line in the break even
diagram. Although Orange telecom is facing downward revenue, they are still holding the
market leader position in terms of customer satisfaction of service quality in different
dimensions.
28 | P a g e

29. KSF Analysis (Industry key Success Factor):
Technology-related KSFs
Beiersdorf is among the top three providers of new product services in the world. Beiersdorf has
all kind of FMCG product and they launched new product for new segment.
Manufacturing-related KSFs
Beiersdorf, a subsidiary product 0f FMCG which main target to provide low cost product to all
of their customer. Identified the high potential employees and develop as the leaders for future
business requirement. Those can help them for good manufacturing.
Distribution-related KSFs
Because of strong network of wholesaler Beiersdorf able to reach million of individual,
enterprise and carrier customer. Beiersdorf World platform which gives ready access to the
customers.
Marketing-related KSFs
Beiersdorf got several national and international awards that make it a brand company. One of
the World largest FMCG Company.
Skills & Capability-related KSFs
Company introduced several other employee related initiatives aimed at enhancing productivity,
morale and motivation with greater focus on development and retention of the „Quality‟ talent.
29 | P a g e

30. Strategy Evaluation and Contingency Plan:
Strategy Evaluation: The Company‟s strategy for consistent growth in future will always be
sustainable value creation for all stakeholders of the Company. Contract with new and existing
operator had been an effective strategy for their cost saving and improving better quality of
service. Beiersdorf is to deliver sensible growth with long term profitability as the ultimate
objective.
Contingency Plan:
 Both Kind of product.
 Combination of global and enterprise business.
 Product diversification.
30 | P a g e

31. Recommendation:
One of the weaknesses of Beiersdorf is high turnover rates amongst employees. Its means their
employees are not satisfy with their jobs. So Beiersdorf has to give more emphasis on Employee
Satisfaction, by designing better salary structure, incentive for performance etc. also Increase
returns and inventory turnover, Increase marketing for low sales rate products.
They can Decrease the over reliance on Europe, increase Strategy for demographic trends in the
US, Prospective of growth in Men‟s personal care sector, Clear geographical focus to deal with
the price war
As the request for FMCG and other related services are intensely cumulative in the Asian area
Beiersdorf should conduct a widespread marketing investigation on that to know the possibility
of business development in this area.
31 | P a g e

32. Conclusion
Beiersdorf is Europe's leading skincare company. It continually seeks to grow through
developing its products and its markets. Beiersdorf UK‟s development of the NIVEA brands fits
in well with Igor Ansoff's ideas. The company continues to build a successful business by
developing new and existing products and markets as well as diversifying into new markets with
new products.
32 | P a g e

33. Reference:
1. www..google.com
2. http://www.beiersdorf.com
3. www.wikipedia.com
4. http://www.beiersdorf.com/about-us/our-history/chronology
5. http://www.beiersdorf.com/brands/overview
6. www.unilever.com
7. www.loreal.com
8. www.jnj.com
33 | P a g e