'Case Analysis Raisio Group And The Benecol Essay\r'

' 1. Problem\r\nOriginated from a grain-milling company in Finland, the 57-year-old Rasio Group developed a unanimous export chore which accounted for 39% of its gross revenue by 1996. Its main products including margarine, pasta and otherwise pabulum products were manufactured, sold loc ally and exported. In 1995, a blockbuster product Benecol, cholesterol- blueering margarine, attracted the engross of pabulum processors and super grocery store groups by dint of aside the world and render a surge of investor interest. Stanol ester is the active element that provides the lower cholesterol benefit. in that location was large marketplaceing potential and profit probability for Raisio. However, its modified performance capacity, special(a) yield of stanol ester, few facilities, limited experience remote Finland, divers(prenominal) product formulation overlookments, unlike marketing channels and involved regulations in different countries challenged its further dodg ing.\r\n2. Analysis and sound judgement of scheme to date for technicalizing the knowledgeabilitys\r\nA largely self-sufficient strategy/a strategy of vertical integration: Raisio had fabricated stanol ester itself in its give birth sic using its proclaim engineering science. Its stanol ester was used sole(prenominal) in its own branded margarine, Benecol, which was produced in its own factories and marketed and distri nonwithstandinged through its own sales and distri neverthelession system.\r\nThis strategy changed Raisio to have control everyplace the technology, expurgate transactions personifys of market contracts and have superior coordination through the value chain, but it failed in meeting market subscribe home and broad due to limited production capacity and limited cater of raw material. Besides the demand, it would name a long while for Benecol to fully market in other countries. That would be risky, as it only had 18- to 24-month glide by time ever yplace its competitors. It’s impossible to open all markets by acquisition which entails high cost and various management issue. Therefore, the strategy won’t allow Raisio to realize the internationalistic launch of Benecol during the channel time, or support it meet the worldwide demand.\r\n3. Assessment of Raisio’s competitive position in January 1997\r\n supplier index finger: high. The raw material for producing stanol ester was limited, galore(postnominal) companies similar to its current supplier hadn’t had the system in place to put one over the plan sterols. Buyer power: low. Because of the smart technology’s significant work on reducing cholesterol, Benecol margarine was priced somewhat six times the price of stock margarine, even so the demand was restrained very high.\r\nThreat of entry: low within 18- to 24-month. The patent bought them that much lead time over its competitors.\r\nSubstitutes: high. A do of competing product s were available for reducing cholesterol such as naturally available plant sterols. The possibility of using plant sterols as a food additive change magnitude the risk of being substituted. A ripening array of cholesterol-reducing drugs was available on the market. There are to a fault a routine of natural food products that have the force of reducing cholesterol within the blood, including angle oil, garlic, flax seed, dietary fiber, policosanol, and guggulipid.\r\nIndustry rivalry: temporarily low. It maintained leading position for Benecol because of the mental institution. yet the product was single, not alter. The profit borderline was very low, only 4.1%. In short, Raisio had a favorable competitive advantage over its competitors, but would only within the lead time if it couldn’t figure out a suitable strategy and viable plan. 4. The alternative strategies available to Raisio in 1997\r\n(1) To work league with Johnson & group A; Johnson (J&J) to use its extensive experience worldwide.\r\nAccording to the case, it would be exclusive federation. Considering J&J’s experience which was exactly Raisio needs, the partnership was feasible for its international launch of Benecol.\r\n(2) To steering on its key ingredient, stanol ester and exploit its innovation much widely so as to produce and supply to a numeral of suppliers and food processors.\r\nAs the key competency of Benecol margarine was the key ingredient, the innovation would commute the usage of stanol ester in more kinds of drinks and food so as to make up Raisio’s competence. However, I won’t kindle Raision to provide the ingredient to more suppliers and food processor, as it would weaken Benecol products’ uniqueness.\r\n(3) To keep its production of stanol ester in-house or license this technology.\r\nAs mentioned above, this technology was the key to its success. I wouldn’t inspire license it out. 5.\r\nSummary/Proposed Strate gy\r\nestablish on the analysis and assessment, initiatively I would recommend Benecol product be diversified and defined as functional food. The diversification and raw material shortage would require more R&D. This not only reflected Raisio’s technical ingenuity, but also was key to its success. In 1996, R&D only accounted for 2.2% of its revenue. finished R&D, Raisio would probably visit more ways to produce stanol ester. It would also be beneficial if Raisio break throughed nourish more suppliers of plant stenols to increase its bargaining power as well as require stable supply of the raw material. Secondly, I would suggest Raisio establish exclusive partnership with J&J to produce, market and distribute diversified products with the new innovation in other markets other than Finland, the nigh markets and the markets which already had joint ventures. Two meaning(a) provision should include (1) all products should be under the brand of Benecol to en sure the increase of the brand value.\r\nOnce Raisio wants to buy it back, the conventional brand would be value-added for Raisio, like what many an(prenominal) international companies have done to get to a new market with complicated regulations and laws, different marketing channels and culture, etcetera; (2) J&J involves Rasio in the value chain of the brand to enable Raisio gain experience/learning fortune from J&J. The strategy would play the problems of production capacity, lack of marketing and statistical distribution experience in many countries, and would divine service avoid complicated regulatory issues. (3) Regarding different regulations and market conditions, the marketing plan should be promoted progressively. Marketing stage 1: The markets for the first stage should include the US and European Union which were the biggest potential markets for Benecol products and the regulation stain of the ii markets were relatively clear and efficient. In US, it a llowed the product to gain approval as a dietary supplement.\r\nIt was the simplest path which only took 60 days file observation with supporting evidence before commercial rollout. In European Union, it was possible to go through fast-track approval, as it had already been marketed in Finland. Marketing stage 2: J&J would probably start bring the products into the markets with huge potential simultaneously, as it would take a longer time to gain approval. Last but not least, based on the revenue partition in 1997, Raisio would allocate more recourses to the business unit of animal(prenominal) feeds, as the markets for animal feeds would be promising. For chemicals, though it represented 34% of its total sales, I would suggest Raisio take it as byproduct of its R&D. No detailed recommendation for those two units would be made due to limited information.\r\n'