Profitability in Mexico is optimal, partly due to its vending distribution through small, independent mom-and-pop stores.In addition, its product development and incorporation of a wrapping system that’s allows consumers to see and feel the freshness of the product has created a competitive advantage in comparison to its consumers which had used wax materials for years. A broad portfolio of products enables Bimbo to attract new customers along with retaining the existing ones, and also allows it to enhance revenues by offering volume discounts to retailers. However, across the northern border, although the market and Hispanic population are large, profitability has been difficult to attain.Issues: In the United States, the growing of popularity of grocery store usage has made it difficult for Bimbo to attain profitability as these wholesalers are able to dictate lower.
Furthermore, although various brands had been successful for Grupo Bimbo, the success of these brands was not enough to carry the weight of all the other unprofitable brands it owned in the United-States. The naming of the company also disturbed brand recognition. Although the name Bimbo is positively viewed by Hispanic consumers, Americans found it awkward.In the meantime, delivery trucks carried the local brand name on them instead of publicizing Bimbo’s name.
States with unionized contracts for truckers also interfered with the satisfaction of its customers. These contracts scheduled deliveries on weekday mornings, however the trend had evolved and wholesalers had increasingly asked for shelves to be restocked later during the day or even during the weekend. Because of these unions, this did not allow for appropriately restocking and in the end interfered with customer satisfaction.In South America, Grupo Bimbo was negatively affected by the urprising cultural changes found in various regions and countries in the continent. Meanwhile, the cost structure in China made it difficult for Bimbo to adapt after its Beijing acquisition done after only two years of practice in the market.
Alternatives: There are three approaches to address the worldwide issues listed above. In an aggregation approach, Bimbo can decide to operate the way it does in Mexico across all borders. By doing so, it would benefit from its efficient local practices in manufacturing and distribution but will ignore local or regional needs.In an arbitrage approach, Bimbo can take a transnational approach, maintaining their current products while taking each region or country’s needs in consideration and doing business in local markets with the product and delivery system that meets their necessity. In an adaptation approach, Bimbo could take the specific needs of each location seriously and customize their products, distribution channels, marketing, and various efforts in order to specifically satisfy each market individually. Recommendations: I recommend that Bimbo take a transnational approach.
This arbitrage approach can offer an effective balance.Bimbo can do what it does best globally, as well as other business functions that are similar across the globe, but specify address their attention regionally to operations they do less well or that require a lot of specification due to the nature of that local market. Rationale: A global approach would not satisfy enough markets; meanwhile, a multi-domestic approach would be too expensive and is not practical for a business of their size. Meanwhile, a transnational or arbitrage approach is the best to balance all the strengths and weaknesses throughout the business.
