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Peugeot Mills

Strategic Directions for a


Sustainable Strategy
Plan
I. External Analysis
 - Environment of the Company
 - Mill Industry and PSP
II. Internal Analysis

 - Key Success Factors in the Mill Industry


 - Core Competences of the Company
 - Business Model of PSP


Plan
III.Where Should PSP go from here?
 - SWOT analysis
 - Strategic Directions

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I. EXTERNAL ANALYSIS
Environment of the Company
Analysing Environment
Pestel Analysis
PESTEL – Economic Factors

• Decrease of purchasing power of the


consumers with economic slow down
since 2001 and decrease of market
growth rate which is linked to it
How did this affect turnover of PSP?

Evolutiondu chiffred'affaires total enmilliers d'euros

30000
25371
25000

20000 16050
15792
15000 19069
10314 10969
15625
10000 12018
9868
5000
4085
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
PESTEL – Economic Factors

lWith globalization and increasing export/


import rates; all markets has
internationalized as so as “art de la
table” industry
lPSP is working in China and we face a
global economic slowdown.
Consequently, increasing inflation rate
and labor cost in China can be a risk of
increasing cost of production for PSP in
long-term.
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PESTEL – Socio-Cultural Factors

lNew cultural tendencies:


¡Loss of concept of “Dinner Table”
¡Loss of fix meal times
  Tendency to buy less complicated/simple
products
¡Emergence of “Nestling” “Slow Life”
 Authentic and sophisticated products
¡
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PESTEL – Socio-Cultural Factors

lThe new way of thinking: "Buy cheaper to


change more often to keep up with the
fashion is the new way of living…”
lThis is especially shopping habit of young
consumers
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PESTEL – Technologic Factors

le-Commerce: Emergence of a new


market place: Firms have to adapt the
new rules of e-Commerce.
lNew mass production technologies; low
cost, high volume, shorter product life-
cycle (IKEA, Fly etc.)
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PESTEL – Environmental Factors

lAt the end of twentieth century, people


have became more sensible about
environmental responsability, therefore
they are more oriented to buy recyclble
and environment friendly products.
PESTEL – Key Drivers of Change

lTwo dimensions:
Managerial Dimension:
Behavioral Dimension:
Managing costs in
an Being Innovative
International and Fashionable
network
Mill Industry and PSP
Analysing Mill Industry
5 Forces Framework
Five Forces

New Entrants

Competitve Buyers
Suppliers
Rivalry

Subsitutes
Five Forces - Potential entrants
l"Arts de la table" is a mature market
lLow level range is still attractive
 But still :
 BARRIERS TO ENTRY
lKnow-how of distribution and supply chain
lTechnological Barriers:
¡ Creation
¡ Tradition
¡ Brand
lInnovation
¡
Five Forces - Suppliers

lMill producers are small players in term of


buyer: Low volume of order raw
materials (wood and metal).
lProduction in China: High switching cost
because of cultural and legal
differences.

 Conclusion: Low bargaining power


against suppliers
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Five Forces - Buyers
lMain buyers of Mill Industry: Retail stores.

 (90% of PSP’s turnover)


¡Atomized distributors networks with varieties
kind of stores and retailers

Five Forces - Buyers
 But:
lE-Commerce is developing in “art de la table”
market
lIncrease in groups and franchise retailers, also
in brand stores like IKEA, Habitat or Fly.

 Conclusion: Heterogeneous distribution


market is now concentrating on fewer type
of retailers and these retailers will demand
more regular supply with a high profit
margin for themselves

Five Forces - Substitutes
Mills 25,20%
Metal boxes 0,30% lDifferentiation
Packets 2,10% between salt/pepper
Plastic boxes big size 32,10% mills and their
Plastic boxes small size 5,70% substitutes is mainly
Glass bottle big size 6,20% based on
Glass bottle small size 28,40% packaging.
Breakdown of pepper sales in terms of packaging

¡
High threat of substitutes
Five Forces – Competitive rivalry
 A big majority of employees are blue collars
Manufacturing in countries with cheaper

 labour like China, is a must for all


segments
 Competition is based on – in…
Ø Low Level Range: Cost minimization
Ø Middle Level Range: Good quality with
 reasonable price

Ø High Level Range: Brand reputation


CONCLUSION
lA vulnerable industry under pressure of big
 suppliers and high-profit seeking buyers
lThreat of Substitutes and no-named branded
newcomers remain
lPSP created barriers and positioned itself with
innovations but still financial power of company
couldn’t reach a high degree
lNot to Forget: Specialty of French market which
keeps old values of “art de la table” and which
is more sensitive to brand reputation and public
relations via fairs and events(importance of
Marketing)
II. INTERNAL ANALYSIS
Analysing PSP
Key Success Factors
Core Competences
Business Model of PSP
Analysing PSP
Key Success Factors
Core Competences
Business Model of PSP
Key succes factors

lWhat do consumers want from PSP?


¡High quality with reasonable prices
¡Authenticity and fashionable design
¡Wide range of products
¡Availability
¡
Key succes factors

lWhat do retailers want from PSP?


¡Regular and well-organised supply ability
¡High profit margin

¡
¡
Analysing PSP
Key Succes Factors
Core Competances
Business Model
KSF’s – Core Competences

Key Success Factors Core Competences

High quality products with reasonable Innovation capabilities


prices Brand Management
Cost Minimisation
Authenticity and fasionable design Brand management

Wide range of products Innovation capabilities

Availability Broad Distribution Channels

Supply abilities Production Management

High Profit Margins Cost minimisation


Bargaining with Suppliers – Buyers
Can PSP fit what consumers and
retailers want?
Innovation Capabilities Research and Development

Concentration on Innovation
R&D was founded in 2000
Catalogues of PSP renewed by 70%
Altéa, 2 Zest, 6
Rythme d'innovation et évolution du chiffre d'affaires Paris, 32 Zéphir,6
en milliers d'euros Paris,9 Bistro duo, 8
Provence, 3
30000 Aix en Provence, 1 Hélis, 2
Evian, 12 Tahiti, 16
Vittel, 6 Paris, 34 25371
Florac, 6
25000 Sochaux, 2
Versailles, 4
Fidji, 41
Vendôme,10 Tresses, 2
20000
Senlis,4
16050 19069
Liévin,2 15792
Commercy,6
15000
Reims,6 15625

10969
10314 12018
10000
Riquewhir, 6 Mise au point d'un moteur
9868
électrique rechargeable
Système de pré-hachage du
piment et du sel de Guérande
5000 Dépôt de brevet Système de réglage de la
mouture du sel et du poivre
4085
Dépôt de brevet

0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Brand Management Marketing Department
Broad Distribution Channels

Marketing Department of PSP is


successfully communicating on reputation
of brand through events and fairs like
“Maison et Objet” in France or “Ambiante”
in Frankfurt
Strong partnerships with new type of
retailers or direct sales via web are
options that should be taken account,
since the company has enough resources
to finance them
Production Management Production Department
Cost Minimization

- Like all other mill producers, cost


minimization is made through manufacturing
- They Manage complex network
operations from Asia to Europe America
- Using high-tech software systems would
help to manage it better
Bargaining with Suppliers Sales/Purchasing
and Buyers

-Sales department should take into account the


new type of retailers for revise their objectives and
relations in a long term and work with marketing
department to follow the trends

- Purchasing Department should relate with


suppliers via long term contracts and to help
to manage the supply chain
What’s happening in PSP?
III. WHERE SHOULD PSP GO
FROM HERE?
SWOT ANALYSIS
To Sum Up:
Strengths
World Market Leader Weaknesses
Strong Brand Name Low bargaining power
Qualified R&D Department against suppliers
Wide Product Range Low profit margins
Cost Minimization Financially not so powerful
Exp. Marketing Department

Opportunities Threats
E- Commerce Substitutes
New Shopping Habits New Dining Habits
Software Technologies Asian Competitors
New entrants with
lower costs
Strategic Directions
What Opportunities Can PSP have with its
Strengths?
lThe Job of PSP’s marketing Department is to
develop communication with e-commerce options

using wide range of products thanks to advantage

of strong brand name with market leadership

lPSP’s R&D Department should fit and reshape


the needs of that new kind of consumer and the

company needs to manage relations with retailers

who
will to touch to these consumers


What Opportunities can reduce PSP’s
weaknesses?
lSoftware technologies allows to manage a
supply chain eliminating inefficiency and

unnecessary expenses, selling via web can

also help to have a fresh air under the

pressure of buyers. These opportunities

would conclude in higher profit margins

while strength company financially


What Strengths of PSP are reducing
threats?
lPSP is already created strong barriers for
new entrants with lower costs same as no

named Asian competitors. Reshaping

dinner
habits with breakthrough innovations could

create also inability to chase after for plastic

box and glass bottle substitutes.


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 Questions?
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 Thanks for your Attention…