Strategic Planning

Examples of Strategic Benchmarking

Prof. Pablo Pinto Cornejo, Ph.D.

 Job 1

§ Job 1: Strategic Comparative Analysis (benchmarking)

§ Objective: Review the strategy of two companies to determine which of
the companies have developed a more consistent strategy and, therefore,
is in better condition to show better future performance.
§ Characteristics of companies: National or international companies,
with public information (open or closed S.A.), available through
company sites, third-party specialists or of which your group
provide information. It must belong to the same industrial sector
selected. The company must be selected from the list of
proposed alternatives (see list below), however, they will be accepted,
other options.
§ Groups: 4 members, with a minimum of 3 participants per group. No
There are organizational restrictions.
§ It should be reported by Monday, May 4, the group and the companies to
compare. Companies cannot be repeated between groups. A will be enabled
online system for group entry.
 Work 1

§ Work 1: Strategic Comparative Analysis (benchmarking)

1. Descriptive phase. Present basic information about the company, which
include:
§ a. Corporate information: Mission, Vision, Philosophy, Organizational chart and
Company business.

2. Analytical phase 1: general analysis of each company.

§ a. Strategic and financial commentary in analyst format
investments, with a summary (graphic and/or in data tables) of the
company, its main businesses and financial results and
shareholders from the last 5 years (summary balance, state of
results, main analysis and risk ratios (e.g. beta).
 Job 1

3. Analytical phase 2: analysis of a U.E.N. by company.

Once the general aspects of the Corporate Strategy have been made explicit,
select a strategic business unit (SBU or U.E.N.) for which
deberá diseñar estrategias e iniciativas para dos de los tres cuadrantes del
Modelo Delta (∆), lo que debe incluir:
a. Define strategic positioning (vision and values) - how are we going
To compete? Delta (∆) model and customer segmentation – what is the
segmentation criteria?, identification of customer segments, which one?
What is the value proposition? (example, canvas model).
b. Decide the competitive domain and identify the desired changes for the
negocio (misión): – ¿a dónde queremos llegar? – ¿cómo llegaremos ahí?́
c. Understand industry trends (external analysis) - threats and
opportunities - 5 forces of Porter
d. Define the competitive positioning (internal scrutiny) - Strengths and
Weaknesses. BCG/McKinsey matrices and Value Chain should be used.
e. Conduct comparative analysis.
 Job 1

4. Conclusions.
In this phase, answers should be provided to the following questions:
a. What are the success (failure) factors of these companies?
b. Which company is in the best position to win in the
market?

Submit the final report and presentation electronically to ppinto@[Link].

to be presented in the course.
 Work 1

Background of the presentation:

a. The presentation will be made in PowerPoint. Each group must create
your presentation in a maximum time of 15 minutes, with 5 minutes for
consultations.
b. All members of the group must present, with a distribution
of similar time. If a member is absent, the group's grade will be deducted.
in 1.0 point, and the student or students will be considered with a minimum grade (1.0)
in the presentation. The final work will be weighted equally among the
written report and presentation. It will only be graded with the group grade only,
unless considerable differences were observed within the group, in which case
a differentiated rating will be granted.
c. The presentation will take place on the Zoom platform.
d. The group members must dress formally for the
presentation. For students who do not present on the day, it will not apply.
this regulation.
 Nike and Reebok’s Annual Sales

Sales Per Year ($MM)

10,000 9,489
8,777
Nike

8,000
6,471
6,000

4,000 3,405
Reebok
3,023 3,479
2,900 2,993
2,000

0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Nike Reebok
 Sales

300,000,000

250,000,000

200,000,000

150,000,000
Carozzi
Lucchetti
100,000,000

50,000,000

0
1995 1996 1997 1998 1999 2000 2001 2002
Years
 COCA-COLA EMBONOR S.A.
CLASSIFICATION REPORT
JANUARY 2018

Dec. 2016 Dec. 2017 As of September 2017, the income of the

Solvency AA- AA
Foundations the company reached $391.410 million,
Perspectives Establish Stables The upgrade in rating from 'AA-' to 'AA' registering an annual increase of 0.4%,
Details of the classifications in Annex
assigned to Coca Cola Embonor S.A. reflects its associated with an increase in prices
solid financial position, associated with its strength average sales in the local market. The
Relevant Indicators and stable capacity for generating flows the previous one was compensated by the lower
of cash. This has allowed it to cover its dynamics of the demand for beverages
2015 2016 Sep. 17
investment requirements and the distribution of carbonated in both markets, due to the
Ordinary Income (MM$) 508.483 544.012 391.410 dividends without generating greater pressures high level of precipitation y low
Operating Margin 12.1% 13.5% 10.7% about the level of debt temperatures regarding of periods
Ebitda Margin 17.3% 19.0% 16.8% maintaining a liquidity position previous.
Total Debt 1.0 1.0 1.0 robust, even in scenarios of lesser
economicdynamism. At the same period, the stock of financial debt
Financial Indebtedness 0.6 0.6 0.6 reached $216.8 billion, which implied a
Ebitda / Financial Expenses 9.4 8.6 9.2 The rating also takes into account the current plan. increase of 2.8% in consideration of
FCNO/ Financial Debt
68.3% 70.0% 46.4%
of investments (mainly focused on September 2016.
Net increase productive efficiency), together

Example Analysis
Financial Debt / Ebitda 2.4 2.0 2.2 with relevant deadlines for the upcoming The company presented an EBITDA relationship to
Net Financial Debt years what they should have to be cutlery financial expenses of 9.2 times (8.7 times as of
1.5 1.3 1.7
Ebitda
mostly, through resources third quarter of 2016) and a debt ratio
Current Liquidity 1.4 1.5 1.4
originating from the operation. net financial debt over EBITDAof 1.7 times.

of Investments
Business Profile: Satisfactory The classification of shares remains at As of the third quarter of 2017, Embonor has
"First Class Level 2". with a liquidity rated 'Robust'. This
consider a cash and cash equivalents level of
Main Aspects Embonor is the second largest bottler. $44.526 million, and a generation of funds
Evaluated
of the Coca-Cola system in Chile, with a (FCNOA) which, on an annual basis, reached

Coca Cola_2018
market participation, in the territories $79.852 million, compared to
Brand strength
where it operates, around 63.3% in the short-term financial debt maturities
Sensitivity to the economic cycle
segment of soft drinks. Meanwhile, deadline for about $16.111 million.
Higher relative risk of your
operations in Bolivia In Bolivia, it is the main bottler of this.
Franchisor Condition brand, with a market share of
81.6% in the year 2016. Outlook: Stable
Financial Position: Solid BASE SCENARIO: It is expected that the company
Its competitive position is based on the
maintain a conservative financial profile
strength of its brands, distribution networks
mainly supported by its strength y
Main Aspects and support provided by the franchisor. No
established generation capacity, in accordance with
Evaluated however, it also implies a position
what has been evidenced over the last few years.
marginally weaker than that of a
Profitability and Generation of Likewise, the outlook considers a plan
company that operates its own products.
flows focused on investments, primarily in
Indebtedness and coverages Historically, The Coca-Cola Co. (KO) has
characterized by maintaining relationships obtain greater efficiencies.
Liquidity
stable y long term with its LOW SCENARIO: It is considered little
franchisees. likely. However, it could occur in the presence of
events such as a change in their condition
Embonor shows a positive evolution in its
from the franchisor with The Coca-Cola Company
income in recent years, with increases
or before a structural deterioration on its
sustained both in sales and in
solvency indicators.
volumes, even in periods of lower
economic dynamism, a reflection of its strength UPWARD SCENARIO: It is considered little
market position y fortress of its likely.
brands.

BUSINESS PROFILE: SATISFACTORY FINANCIAL POSITION: STRONG

Key Factors Key Factors
! Leadership in its markets and strength of its brand, ! Solid and stable generation of flows, with policies
associated with its status as a franchisor. conservative financiers.
Analyst: Esteban Sánchez ! High dependence on The Coca-Cola Co. ! Exposed margins a price variation
[Link]@[Link] international of their main inputs.
! Operations in Bolivia, whose sovereign risk is
(562) 2757 0482
larger compared to Chile. ! Structured maturity profile in the medium term
Claudio Salin and long term.
[Link]@[Link] ! Relative stability of demand, with less
sensitivity to economic cycles. ! Robust liquidity position.
(562) 2757 0463
 COCA-COLA EMBONOR S.A.
CLASSIFICATION REPORT - January 2018

Solvency AA BUSINESS PROFILE SATISFACTORY

Perspectives Stables

! Coca-Cola Embonor S.A. is a soft drink bottler that markets,

essentially, soft drinks, waters, and juices licensed by The Coca-Cola Company, in
Chile and Bolivia.
Property
! In Chile, the company holds concessions in regions XV, I,VII,VIII, IX, XIV, X, and a large part.
The controlling shareholder of Coca-Cola from the V and VI Regions, serving more than 7.3 million inhabitants. For this, the company
Embonor is the Vicuña family through It has 4 bottling plants and 23 distribution centers in the country.
from Libra Inversiones Ltda. and others ! In Bolivia -through its subsidiary Embol S.A., the company concentrates the majority of its sales
companies, those that jointly own of Coca-Cola products, with approximately 96% market share (81.6% if we
50.63% of the property. consider the total of carbonated drinks). The operation encompasses the provinces of La Paz,
Cochabamba, Santa Cruz, Sucre,Tarija, Oruro, and Potosí, with a coverage of 10.4 million
The important percentage of the shares inhabitants.
from series A (83.52%) maintained by
the controlling shareholder empowers him to ! The income mainly comes from the marketing of soft drinks and, in
smaller measure, water and other non-carbonated beverages, although the latter have
choose six out of seven directors.
evidenced a greater potential for development in recent years.

Example Analysis
Growing importance of Bolivia in sales
ToFigures in millions of unit boxes Leadership in their markets and strength of their brands, associated with their

300
Coca-Cola franchisee condition
! Embonor is the second largest bottler of the Coca-Cola system in Chile, with a

of Investments
250
market share around 63.3% (in the territories where it operates) in the segment
200 of soft drinks. Meanwhile, in Bolivia, it is the main bottler of this brand,
150
achieving a market share of 81.6% at the end of 2016 (75.5% in December of
2015), mainly supported by the strength of The Coca-Cola Company's brands.

Coca Cola_2018
100 (KO).
50 ! His status as a franchisee allows him to market products with a high
0 brand valuation and recognition worldwide, which stems from the high
2012 2013 2014 2015 2016 Sep.16 Sep.17 market share and wide global geographical coverage of KO, which operates through
Chile Bolivia
of more than 300 franchises for bottling and 500 brands.
! On the contrary, it also implies a marginally weaker position than that of a
Unit boxes = 5.678 liters a company that operates its own products. However, KO has been characterized by maintaining
Product range concentrated in beverages stable and long-term relationships with its franchisees, which in the case of Embonor has
soft drinks the granting and constant renewal of licenses since 1962.
Figures in millions of pesos

600,000 Consistent operational performance in a high-intensity scenario

500,000
competitive and restrictive economic cycles
400,000 ! The market for non-alcoholic beverages is characterized by demonstrating a demand
highly stable and not significantly affected by economic cycles
300,000 adverse.
200,000
! This is reflected in the continuous growth of physical sales both in Chile and in
100,000 Bolivia, which at a consolidated level reached 6.4% annually, for the period between the
years 2010 and 2016. The above has involved a strong and stable generation of internal flows
0
2012 2013 2014 2015 2016 Sep.16 Sep.17 of cash for the company.
Carbonated Drinks Waters and Juices Others ! In this sense, selling in returnable containers becomes a strategic factor in countries with
lower per capita income levels (due to the lower final price associated with this format),
also constituting a strong barrier to entry for new [Link]
In Chile, about 51.7% of the sales made by Embonor are in packaging format.
returnable, while in Bolivia, this percentage reaches a level close to 33.0%,
according to the figures presented by the company as of December 2016.
! Coca-Cola Embonor faces a scenario of high competitive intensity, with players that
they present strong business profiles and distribution networks (key factors in this
industries) such as CCU in Chile and Cervecería Boliviana Nacional in Bolivia. Both
companies bottle, sell and distribute products licensed by Pepsi Co.

Reproduction in whole or in part is prohibited without the written authorization of Feller Rate. [Link] 2