Please read the "Grameen Danone Foods from Bangladesh" case from Chapter 17, and answer to the following questions.It is important for you to read the chapter carefully before attempting to answer the assignment. The learning from reading the text must be reflected in your answers. Grading criteria for case studies are listed under "course information."

1. What advantages might Danone receive from the Grameen Danone joint venture?
2. How much do you think Danone's decision to set up a social business was motivated by wanting to be socially responsible versus believing the move would help its performance? Does the answer to this make any difference?
3. Initially, Grameen Danone Foods JV was expected to make a profit by 2012. Although no official numbers are published, it seems that they had not reached that point by 2018. Should Danone continue to invest in this JV? If so, what can be done to improve the financial outlook of the JV going forward?

which refer to openness to the world. While there i debite on whether this is i loaned or an inbom The that of the brain is materialium, which refers to wor of the chamotoristics include comparing onof the importance of acquiring possessions n a means with what is In the whole world rather than with wy Appearance of success. There Is evidence of this In local Comnapolitanists may actully seek out to hal's growth and good. However theme it did it "Di products and services. The third of these brat dance that people who have always been when may Consumer ethnocentrism, which refer to protons wahbi bower materialistic behavior than those who of local to global, such as socking out loom when three when buying products and services, have Foundy become affluent, the so called nownow tohe. The pound of these with is cosmopolitanlin, Grameen Danone Foods CASE in Bangladesh 102 Professor Jon Jungblen Moon and John D. Dirig In 18:12. 4.5. President Franklin D. Roosevelt referred to an investors may recoup their original capital Input Ung Impoverished person as "the forgotten man at the bottom NGOs. charities, and not-for-profit organizat arizatlora, a woos usel of the economic pyramid." Later, the worm-short- business must sustain itself by earning profits compete aned to "Bop"-became business jargon after publication rather than receiving new contributions to carry on. In 1010 of The Fortune at the Bottom of the Pyramid. Few places hine more impoverished people than Bangla- The Grameen Bank and Foundation dush. With 169 million people In 2015, its per capita GDP at PPP was $3,501, with 43.3 percent of the population below The Grampen Bank (GB) began when Yunus lent $27 19: the international poverty Iing of $1 25 per day. Thus, Ban- group of indigent villagers who repaid the money even that glucdesh has conditions that correlate closely with poverty. he had required no collateral from them. This small beginning an adult literacy rate of 42.3 percent, a high incidence of contrary to Bangladeshi bank practices, led to GB's mics Infectious diseases, a poor Infrastructure, high underemploy. Inancing program. It has competed primarily with usurion ment, crowded conditions (imagine half the U.S. population money lenders who charge as much as 10 percent interen squeezed into the state of lowal, and more than its share of per day. GB's typical rate of 20 percent per year may sound natural disasters- especially periodic flooding- that Impede high, but Bangladesh has had an inflation rate of nearly 9 per. development. In the face of these ominous conditions, two cent, and GB supports many noninterest loans as well, Some companies-the Grampon Foundation from Bangladesh and banks outside Bangladesh, such as Citigroup and Deutsche Groupe Danone from France-formed a joint venture (JV) Bank, have since used GB's example as a model. social business to serve Bangladesh's BoP. Before GB, hardly any Bangladeshi loans wert to women, and Yunus had to convince religious opposition that the Prophet Muhammad would have supported what What Is a Social Business? he was doing. Today, about 97 percent of GB's loans goto Mohammad Yunus, founder of the Grameen Bank in 1974 women, and audits show a repayment rate of 98 percent and winner of the Nobel Peace Prize in 2006, originated (Borrowers must repay a loan in order to get a new one ] GB the social business concept, which aims to generate social uses repayments and interest to make additional loans and benefit by creating a sustainable business. The Gramoon to support the Grameen Foundation's poverty-fighting pro Danone Foods JV was established to make a profit but ects. Its loans, which in 2015 came to almost $1.18 billion, have pay no dividends. All earnings are reinvested, except that included initial financing for street vendors and construe tion of more than 600,000 houses. It provides more thanPART : and Senegal (Map 17.1 Burstmbes the International core commission and @) the essentiality of the yogurt's quality tions. ) Inspired by this new model of collaboration, come and how to maintain it. MAEs are establishing social businesses with The Crate First, the significance for seling was primarily nourish- Foundation joup. Intel plans to create software applength ment. The company engaged doctor who caplained that handheld computing devices that address. for script, children could regain any physical loss from previously Agricultural output and lack of prenatal care, BASF play deprived nutrition within 9 to 10 months by consuming only Produce long-Insting Insecticide-impregnated note to bed two cups of yogurt per week. Second, selling would help Improve the coonomy by using suppliers who would then spread of malarial. Despite the publicity and promiseel rey high profile collaborative ventures, however. Danone wil hire more people and soond within the community. Maintaining yogurt quality was essential because tow to evaluate how brand nicognition and goodwal a type homes had rodgeration, and eating a spolled product could can be hamessed for sales farther up the pyramid ineng expand to more affluent market segments, cause Theis and future silos losses. The company dem- crabrated to saltwomen how it makes yogurt, provided them with insulated bags, showed them how to use the QUESTIONS baged property, and stressed the nood for them to carry only a minimum inventory to lessen the chance of spoilage. 17-3. What advantages might Danone restive from The Ones Danone joint venture? Evaluation 17:4. How much do you think Danone's decision to set up a vo Evaluating the JV's Fruncial performance is straightforward; business was motivated by wanting to be socially moon however, assessing its social effects is challenging. For this, Jible versus believing the move would help its performance the JV has hired a Swiss-based nutrition organization (GAIN) Does the answer to this make any difference? to develop, test, and validate its performance in terms of @ 17-5. N Danone were to add products to sell to the Bop, which. mosting the objectives for poor people. Preliminary findings it's products would be the best candidates? Why? have compared children who have consumed yogurt with 17-6. Since establishment of the Gramoon Danone Foody boy and without micronutrient fortification and conclude that business, the number of social businesses worldwide by the former have grown more in height. In addition, psycho- motric losts show that the former are significantly better at Town so much that there is now an annual plotsal surg in important montal functions such as planning, concentration, Wolfsburg, Germarry. Are there types of companies that right problem solving, and conceptual flexibility. not be good candidates to establish social businesses? In what are they and why? The Future 17-7. Can you think of any other MNEs that can collaborate up. cussfuly with the Gramoon Foundation and help solve spicks Grameen Danone Foods' sales have increased steadily, from problems in Bangladesh? How can they do this? 150,000 cups In 2008 to 35.2 million cups in 2013. The number 17-8. Initially. Grameen Danone Foods JV was expected to so offemployees at the end of 2013 was 976, including 697 sales- profit by 2012. Although no official numbers are published women. Further, Danone has learned much In Bangladesh about running small-scale production officiontly and is trans- seems that they had not reached that point by 2016. Shout forring this knowledge to help with its operations in Indonesia Danone continue to Invest in this JV? If so, what can be dow to improve the financial outlook of the JV going forward? MyManagementLab Go to mymanagementlab.com for Auto-graded writing questions as well as the following Assliced-graded writing questions 17-9 What marketing pitfalls might Danone face if it tries to duplicate its Bangladesh experience to serve BoP customers in other countries! 17-10 Assume a company, such as Danone, wishes eventually to serve all income segments within a country. What advantages and disadvantages might disadvantages! it encounter by first serving the Bop? How might it later deal with anyMAP 17.1 Grameen Danone Foods Joint Venture CHAPTER IT Humming okay man KOn ME or Promotion power," and its symbol is a muscled lion that appears on the Most promotion is word of mouth; however, one promotional product and in ads. Lion-dressed mascots also visit youth winit was noteworthy. Riboud arranged for the best-known areas to describe the value of eating yogurt. Frenchman in Bangladesh, the soccer star Zinedine Zidane Shoul, to visit the plant's opening, an event that made large Distribution headlines in newspapers throughout the country. While in Bangladesh's high underemployment attracted more than Bangladesh, Zizou played with youth in the national stadium, enough women- mainly poor mothers from the target fired the comerstone of the plant, and contributed to instant sales market-to work part time selling yogurt. However, national recognition for the new JV and its yogurt. the JV had to overcome a backlash similar to the one GB faced when lending to women; the complaint this time Branding was about the impropriety of women going house-to- The JV name put Grameen first because of its high recogni- house. The next big task was to train the saleswomen on kon. The yogurt brand is Shokti Doi, meaning "yogurt for (1) the significance of selling yogurt other than to earn aCompetition-Given efforts to help the poor, comp tion may come from goverment programs, not-force MA nance. Riboud sold, "When poverty is on the rice, my gran organizations, and charities. Thus, companies my growth prospects shrink [Thil mars that combating por- outperform this competition or find means of work erty is good for my business." ooopornthily with it. Building Sales and Loyalty Abroad Strategic Thrust and Orientation Being perceived as socially responsible may improve bual- Best performance In various ways. However, there am an almost infinite number of competing ways to be socially Afor their 2005 Paris handshake, the JV began product. responsible, The amount Danone Invested in the JV was In less than two years. The partners started with a s $500.000, a small outlay for a company of that sire, and fund factory to serve only its surrounding poverty-web, Dunone good to get the money back if the cportion area. Given the JV's social objective. the partners agr became sufficiently profitable, Montover, the fact that it that product and production would be as green as pay would become one of the first majer corporations to invest Ble. Even though the factory is the size of only one perce in a social business could gonomto free postthe publicity of Danono's standard factories elsewhere, it has the ing quipment, treatment of both Incoming and outgoing with globally and solar panels to generate renewable energy. Preceding the Bangladeshi JV At a 2005 lunch in Parts, Riboud asked Yunus what Danone Product Policies might do to help the poor, Whon Yunus explained the social business concept, Fuboud Immediately said, "Let's do it." The introductory plant and two more built by 2015 and the two shook hands on setting up their JV. Although only yogurt. a product of high nutritional value for childs this JV is one of the first social businesses established in It relies on efficient small-scale production and nearby p partnership with a major MNE. Roosevelt's "forgotten man" plies of the main ingredient (milk). was not completely forgotton in the interim. Many organi- Through market testing, Danone decided to sell cations have marketed to the BoP (most notably in India Sweeter and thinner yogurt. drinkable directly from the cat- during the 1970s' hayday of the appropriate technology tainer (subsequent market feedback led the JV to include movement), with such devices as dung-powered stoves. Spoons as well. It fortifies the yogurt with 30 percent of ty These experiences offer the following lessons for com- daily need for vitamin A, zinc, and iodine, and it uses bo- panics wishing to tap the Bop, especially with a nutritious degradable technology so that containers can be corpring product to fortilizer. . Price-Low and stable prices help create and sustain sales, so companies gain an advantage by finding new means to cut and stabilize their own costs, which they Pricing then pass on to customers. To keep costs and prices low, the plant uses mostly local Product compatibility-High nutrition at a low price ingredients, mainly from small suppliers such as farm- alone is Insufficient. Products must be compatible with the target market's accustomed habits and visually ers with only one or two cows, who collect and deliver appealing and flavorful to them. So it is vital to pick the milk in jugs (thus saving refrigeration and transportation right products and adapt them to local markets. costs). Because of fluctuating milk prices, the JV nego Education-Within some countries the BOP is largely tiated longer-term contracts with farmers to better stabil- illiterate, has low access to popular media, and is lize prices; hence, the JV pays higher than market price unconvinced about cause-and-effect scientific relation- sometimes and less at other times. Fixed sales costs ant ships. Hence, it may be important to reach people in kept low by selling only on commission (about 20 percert. this segment by nontraditional means, convince them to saleswomen and 80 percent to small local stores). To that changes from nutrition are important and take time, minimize saleswomen's commissions, the company suc and convey information that they will believe. cessfully suggested their selling additional products dur Promotion-Publicity prior to the start of sales is quite Ing house-to-house visits. Personnel costs have been kept valuable, so the use of opinion leaders (those that the low since completion of its start-up phase by employing credibility. target market group accepts) is essential in developing only Bangladeshis. Although the yogurt plant lacks scale economies, its unit costs are equivalent to Danone's lange plants elsewhere.CHAPTER IN Primate and student loans and 50.000 scholarships por your. It in given noninterest loans to more than 70,000 beggars so glenn sell trinkets during their house-to-house begging behavior, with a corporate mission "to bring health through Foundation's activities have expanded into a variety of food to as many people in possible." Nevertheless, Danone arein such as telephone service, solar power porra- must gonerate profits, and its management must answer to and health care. The above photo shows a Gramoon shareholders. The Bangladeshi JV could offer several poten- are member colecting money from borrowers. tal economie advantages. Maturing of Traditional Markets poupe Danone The demand for Danone's products has been maturing In sped's largest food company. Groupe Danone (spelled wealthier countries, which have been Danone's traditional amman" for the U.S. market) operates in four product markets. Hence, It's management has been shifting moro agers dairy (world's Largest, with Danone being almost emphasis to poorer countries. Between 1910 and 2010. paric word for yogurt bottled water (ranked second the share of its sales coming from LDCs Increated from ataly, including such brands as Evian and Volvick: baby 6 percent to 49 percent. Yet, even there its sales have had acond globally under the Bledine brand); and medical centered on affluent segments, about which its chairman, weton (largest in Europe). It operates worldwide and had Frank Riboud, said, "it would be crazy to think only about my sales of 622.4 bilion ($25.2 billion). Before its JV with the peak of the pyramid." Thus, Bangladesh could serve Prem, it had no Bangladeshi operations. In fact, it aimed as a laboratory for learning about customers and ways of operating at the Bop. most of its products, such as its Activia and Actimel brands thepart, at higher-and consumers. Promoting LDC Growth Ity Invest in a Social Business? Critics complain that MNEs contribute to economic under- development by pushing poor consumers to purchase lty would Danone, or anyone, want to invest in an opera- superfluous products instead of nutritious food. In contrast, on that yields them no dividends or capital gains? Yunus Danone's products are all healthful and sanitary. Although lands that people are multidimensional and thus may one company's successful marketing of such products is an more than economic gains for themselves. He points not likely to have a significant impact on development, it is business leaders (e.g., Camegie, Gates, Rockefeller) who a potential catalyst, which perhaps also leads to favorable And their attention to philanthropy after amassing large publicity. Further, as Bop consumers move upward eco- bones. Danone's JV participation fits this multidimen nomically, they will have more to spend on other Danone ifhe vision. In fact, it has a history of socially responsible products and may favor them because of their earlier exper