Dia Group - Evaluation Of The Management And Performance (2012)

DIA Group - Evaluation of the management and performance (2012)

Table of Contents

Introduction 2
1.1 Industry Analysis 2
1.2 Peers Analysis 2
1.3 DIA Corporate 3
Service/Product 4
Critical Success Factors 5
Internalization Strategy 6
Franchising Activity 7
1.5 Conclusions 8
Bibliography 9
Appendices 10
Appendix 1- Carrefour and Tesco – Financial data 10
Appendix 2 -Strategicgroups of retailers in international discount 11
Appendix 3- DIA in numbers 12
Appendix 4- DIA Financial Data 2011 12
Appendix 5- Share Price Evolution 13
Appendix 6 -SWOT Analysis 13
Appendix 7 - Internet Exposure 14
Appendix 8- Efforts towards optimizing cost and quality 15








Introduction

DIA is a Spanish food retailer that has competed in the discount food retailing groupsince 1979 and has adopted an internationalization strategy through an intensive model of proximity, own and franchise stores, and exposure to the emerging markets.
The purpose on this assignment is to evaluate the management and performance of DIA in the race to international expansion, though the analysis of the food retailing industry and discount food retailing, an internal scanning of thebusiness, including their internationalization strategy and an special mention to the franchising activity.
1.1 Industry Analysis

In recent years, this sector has evolved due to changes in the habits of life, which the consumption behavior and saving trend in society has more directly influenced on this sector. Food industry, as part of light industry group, is driven by intense competition andmarket saturation in general, which makes supermarket chain to find revenues worldwide, as per Kumar (2008) explanation. The supermarket industry is known for being highly competitive and it thin profit margin. Livingstone and Tigert (1987) explained that the challenges for market share in the supermarket industry would be to convincing customers that their stores have a meaningful difference, astheir main drivers for customers the followings: value, convenience, variety and shopping experience. Drivers in the industry are: customer loyalty, acceptance of private label, preparing meals in store, demonstration on-site, use of ERC standard method, one-shopping, self- check outs and selling organic product among others. (Kumar S 2008).

1.2 Peers Analysis

During the 90s decade thediscount food retailing experienced a considerable expansion and took and important place in the industry. Certain discount retailers have fail whilst other success both in their domestic country and abroad. Colla (2003) on his study of European discount retailers in the international arena identified three strategic groups of discount group (Appendix 2), which can be defined as DIA´scompetitors.
Looking to the food retailing industry, Tesco and Carrefour are the major competitors (Appendix 1). Britain’s grocery supermarket Tesco has an international influence: 3 continents across 14 countries, where Asian contingent is being specially profitable alongside U.K’s presence. On the other hand, the French hypermarkets chain Carrefour has spread it business worldwide, having wide andunique untouched market in Middle East and South America, that confirm its fierce position in the retailing industry. Whereas Tesco is a direct competitor of DIA in the emerging markets, Carrefour is in DIA’s mature markets and potential markets such as Latin America. Their strategy is also different: while their major competitors have a generic strategy by offering a wide variety of products (food,clothes, devices, services) and different store formats (hypermarkets, supermarkets, discount stores..), DIA is mainly focus on customers day-to-day necessities (food and clean and drugs products) and in the discount format making them very experienced in their field of battle.
The market share in food retailing environment in the parental country (Spain) is concentrated in 4 learders: Mercadona...