The Business process of the Ferrero organization

The Business process of the Ferrero organizationIntroductionFor my Business Process provide of the BA Business Enterprise course I looked into several companies, few sm altogether and some large. However, still undecided on which company to pursue, I took a walk to my local shop to buy my two sons a special treat. The shop has a vast array of goodies for children including some(prenominal) chocolate and toys. My two boys both wanted a Kinder storm egg as they get both chocolate and a toy. This made me think, I remember Kinder Surprise eggs when I was a sm each(prenominal) boy and how excited I use to get when I went to the shop to buy one. This made me think, how a crossway can conserve the reputation, sales and recognition from generation to generation without fading away or being challenged by competitors?With all this in mind I decided to theme my project on the Ferrero Company.During the research gathering process I subscribe compiled the following reasons why Ferrero w ill be an ideal company for my project- spacious company growth and GlobalisationMulti Generational Marketing (Kinder Surprise Egg)Devotion and relationship with all their employeesOutstanding constituent to the communityProblems the company has faced in the pastStrategic advantage over competitorsDedication to their Corporate and brotherly ResponsibilityUtilising IT discoverment to enhance disseminationRelationship with competitorsOne of the top 10 confectioners in the worldThis project (Course work 1) will introduce you to the Ferrero Company itself, its fantastic history and I will also talk about its grand global success. I will explain the Organisational structure of the company, the five levels of resources (Strategic, Tangible, Intangible, curious and Core Competences) and compile a PESTEL report.FerreroThe BeginningBorn in 1898, Pietro Ferrero began his c beer as a pastry maker in Dogliani, Italy. He opened his first pastry shop in Turin but was forced to move to Alba during World struggle II. Ferrero sought to develop recent products in order to overcome the short supply of traditional pastry ingredients. By the end of the war, Ferrero had developed a new spread which combined hazelnuts, cocoa butter and vegetable oil. Ferrero called the paste pasta gianduja which he began selling in 1946. In that course his brother, Giovanni and son, Michele joined the company which had nowa long time been incorporated as Ferrero SpA. By the end of 1946 the company had employed to a greater extent than 50 workers and had approx 200 delivery vans distributing their product around Italy. In their first year sales had topped 660, Ferrero began contracting farmers to ensure the supply of hazelnuts continued and at the same time improving their quality.1948On 4th September 1948 a extensive flood had isolated the factory and put its existence in great danger. However, due to the fantastic relationship the family had with all their workers, they all including Pi etro and Giovanni worked solidly for 4 days and 4 nights in order to save the factory.On 2nd March 1949, Pietro Ferrero died aged 51, his brother Giovanni took the Helm.The 50sBy the 1950s Ferrero had developed its own efficient distribution engagement around Italy and opened several depots. By 1954 Ferrero was a household institute in Italy.1956In 1956 Ferrero opened its first factory abroad in Stadallendorf, Germany. They produced just two products for the German market and both had an extraordinary success.1957Giovanni Ferrero died in 1957 and Michele Ferrero took the helm. Michele renewed the exertion plants in order to boost production through increase technology and sophisticated machineryThe 60sFerrero moved into France, Belgium, Netherlands, Luxembourg, UK, Austria, Denmark, Sweden and Switzerland.In 1964 Michele Ferrero created NutellaIn 1968 he launched the Kinder Chocolate, especially made for children.The 70s 80sFerrero USA opened in 1969 followed by Canada, Latin A merica, South eastern hemisphere Asia and Australia. By the 1980s Ferrero was strategically placed in all five continents.In 1985 two new production plants were opened in Southern Italy to suffice the people devastated by the Irpinia earthquake.The 90sFerrero developed into Eastern Europe including Poland, Hungary and the Czech Republic along with a new plant in Poland.Again in November a terrible flood hit Italy killing many people and damaging the Alba plant. Production was interrupted but just like back in 1948, the employees worked on base the Ferrero to rebuild the plant and get back on its feet. Some of the employees helping to rebuild the plant had just lost their homes to the flood.In 1997, Michele Ferreros sons Pietro and Giovanni became Chief Executive Officers of Ferrero International.The 2000sIn 2006 a new production plant in Canada was opened and by 2009 there was more than 20,000 employees worldwide, over 20 different products and a turnover of more than 6 billion E uros.Business UnitsYearsProduction PlantsYearsGermany1956Italy Alba1946Belgium1958Germany1956France1960France1960Italy1964Italy Pozzuolo1965United Kingdom1966Australia1974Switzerland1966Ireland1975Sweden1968Ecuador1975Austria1971Italy Balvano1985Ireland1975Italy SantAngelo1985Netherlands1980Belgium1989Spain1988Poland1992Poland1992Argentina1992Luxembourg1993Brazil1994Hungary1994Canada2006Czech Republic1994Cameroon2006Russia1997India2007Ukraine2003South Africa2007Croatia2003Russia2009Greece2005Repackaging nubYearsRomania2006United States1969USA1969Social EnterprisesYearsCanada1974Cameroon2004Australia1974South Africa2005Puerto Rico1975India2007Hong Kong1976Japan1978Argentina1992Mexico1992Brazil1994Sri Lanka2004India2004South Africa2004Turkey2005China2006Ferreros main competitors are Kraft Foods, Mars and Nestle, however you will see in Course work 2 how integrating with the competitors can be of a huge receipts to all parties and the environment.SuccessI believe Ferrero is one o f the world leaders when it comes to business growth and success, this I have measured by the following centre Phenominal add up of Global business units and Production plantsAmount of EmployeesThe annual turnoverTheir ability to develop their own production machinery in order to gain a strategic advantage over competitorsTheir use of Multi Generational marketing (Kinder Surprise)Their contribution to society and charitable workAnnual profit of 6 billionto a greater extent than 20 different productsFrom the small pastry shop in 1946, Ferrero has become according to Forbes (http//www.forbes.com/2009/05/06/world-reputable-companies-leadership-reputation-table.html) the worlds most reputable company as of May 2009. As shown by the history of Ferrero, the growth of the company has been outstanding this is mainly due to the passion and commitment of its owners and employees as well as the development of its unique brands and its commitment to develop its own production machinery to mai ntain its strategic edge.Ferrero group dedicate a lot of their time and money into other schemes such as Opera Sociale constitute up as a group to help and welcome retired employees and give them a sense of belonging.Social Enterprises, Ferreros commitment to enhancing the living conditions and develop the populations in some of the poorest areas in the world.United Kinder of the World, is set up to enhance the health and development of children and young people.Kinder + variance, developed to promote a healthy lifestyle and encourage sports. Since 2007, Kinder + Sport has involved more than 6 million children worldwide in activities in 17 countries.Has you can see Ferreros success isnt just measured by the amount of awards it has won or the amount of profit it has made. I believe the level of success that Ferrero has achieved can be seen on the faces of the people and children that the company aid as well as the commitment by all employees.The company Moto of Work, Create, Donate is a clear target of what the company aims to achieve and clearly they have achieved this, thereof successful.Organisational StructureThe table below displays the number of employees and how it is subdivided these figures are taken from the CSR invoice 2009,Number of EmployeesAs of 31/08/2009Workers12,993 (60%)Employees6,067 (28%)Executives and Officers1,724 (8%)Managers771 (4%)Total21,555Type of ContractAs of 31/08/2009Indefinite Contracts17,460 (81%)Fixed Term Contracts4,095 (Including seasonal workers 11%, interns 1% and fixed term contracts 7%)Total21,55544% of employees are women and 56% are men. 83% of staff are based in EuropeThe Ferrero Company is based around a Functional Structure with their main Headquarters being in Italy. The Ferrero board will meet and discuss initiatives and business and then forward on their decisions to each Director of each separate sub company i.e. Ferrero Belgium Ferrero Germany. The companies are run in a mirror image scenario, each sub comp any will have its own HR team, Production team, marketing and get team. However each sub company will run exactly like each other in respect of what product they are producing, how the HR Function is run and where they get their produce. The only difference will come from the marketing team because each country has a different social network and need.The Ferrero Company also works on Standardising inputs and outputs model. Each sub company are standardised to what they produce, how they produce it, how the HR Function is run, where they get their produce and how their staff are trained. Ferrero have endorsed a huge training package for all employees run by the Ferrero Learning Lab which encompasses several training packages to cover all aspects i.e. Managerial, Nutritional and technical. With this standardisation approach, Ferrero have been able to offer exactly what they do national but globally, without any major issues and disparity.PESTEL AnalysisFERRERO Pestel AnalysisPolitica l detrimentalPositiveWith any company dealing globally, the risk of countries becoming unstable and possible war is always going to be a risk to production and distribution worldwide.Ferrero has grown considerably since 1946 this has been possible due to the rapid increase in the European Union, from starting out with 6 members it has now grown to having 27 member states. This growth has allowed for the harmonisation between several countries and its overseas distributions and has allowed for easier expansion through standardised strategies.Ferreros continued support to its Social Responsibilities, mainly that of its support to trey world countries has allowed for an excellent relationship and reputation world wide, this has aid Ferrero with its continued growth throughout these countries.EconomicNegativePositiveIncrease in bath rate and import costs may have an affect on consumer purchasing and may increase the price on products due to both these increases. harm increase on prod ucts may not affect sales due to extremely strong brand reputation with the consumers.Ferrero and Mars have teamed up on a joint distribution initiative, both products will be distributed to the same warehouse and then both distributed out together. This will decrease the distribution costs.SocialNegativePositiveSales of confectionary products as a whole decrease during summer months. (see graphs below)Kinder Surprise egg utilises Multi Generational Marketing and has become a due item worldwide. Each country produces its own toys in respect to its countries niche at the time. E.g. Super mini Smurf parade issued in Germany.It is a well cognize fact that more chocolate is sold at Christmas and Easter than any other times and will continue to do so.The reputation institute in New York awarded Ferrero 1st Place as the company with the best overall reputation with the consumer public. superior long term relationships with suppliers.TechnologicalNegativePositiveFerrero enforced the SAP Extended warehouse development application which will increase distribution, decrease wastage, increase production, increase distribution timeliness and maximise storage capacities.Ferrero have developed at least 50% of their own production machinery and technology in order to hold a strategic advantage over their competitors.environmentalNegativePositiveThe prospects of global warming will always be an issue with regards to growing and producing its raw materials i.e. Cocoa, palm oil and sugar cane.Ferrero prides itself on its contribution to protecting the environment and is actively contributing to saving energy and increasing raw material production. The Corporate Social Responsibility report 2009 details all contributions and future projects Ferrero have implemented and are implementing. The 5R recycling project by Ferrero on all packaging it produces helps the environment and the companys reputation.LegalNegativePositiveThe Kinder Surprise Egg was banned in the USA since 1997 due to the Consumer Product Safety Commission deeming it being a hazard to small children because it may contain a choking hazard. The Egg also falls foul to the US 1938 Federal Food, Drug and Cosmetic act which prohibit embedding non-nutritive items in confections.Ferrero counter acted the US Laws by producing and selling the Kinder chocolate without the surprise, this was again a huge success. The Kinder Surprise egg however, is still sold illegally around the US by shops importing them in from other countries. The law as made the Kinder Egg some what a highly sort collectible in the US and as indirectly assisted in the marketing of the egg.This graph below shows the bonny sales of the Sugar and Chocolate sales throughout the year (calculated in weeks). As mentioned in the PESTEL Report the summer moves takes a clear dip in sales.The graph below shows Ferreros annual turnover in 2006 driven by season. The red line represents the average sale during the year. As you can see 80% o f sales were achieved out of the summer months and only 20% during the summer months.ResourcesStrategic CapabilitiesTangible ResourcesIntangible ResourcesUnique ResourcesCore CompetenciesProduce 50% of its own production machinery and technologyFerrero have production plants and offices worldwideExcellent worldwide reputationPowerful brand name with the Kinder Surprise and TIC TAC mintsKinder surprise has become a collectors item worldwide and will continue to do soThe new implementation of the new distribution and warehousing IT softwareAll employees are motivated and made to feel like part of the Ferrero familyHigh level of training providedDeveloped their own unique product the chocolate and hazelnut paste CreminoTeamed up with Mars to increase distribution speed and cut cost and help cut down CO2 emissionsExcellent Training and Human resource managementUnique ties with raw material sources worldwideMulti generational marketingCoursework 2CW2 will be focussing on Ferreros Value chain, Supply chain management, SWOT Analysis and I will be make my own conclusions and recommendations on Ferrero