Company examination of NUMICO

NUMICO had become in the entire year 1896 when Mr Martinus truck der Hagen secured all rights of a formula for child milk from cow's milk. His operation was based in The Hague in The Netherlands. In 20th century company improved the called to Nutricia however in the year 1997 when company received the designation 'Royal' then its name improved to NUMICO NV.

Recent Recent of NUMICO

Strategic Corporate Development History

For almost 5 generations NUMICO worked with corporate and business strategy of wanting to build themselves on only one baby product with limited exports. In 1946 company presented another product but in the neighborhood market only. NUMICO for a long period tried to develop the new strategy after their first preliminary success in 19th century. Launching new product had not been an excellent idea though it was a sustainable decision. Usually companies spend millions of dollar developing the merchandise which would take some years to recuperate.

As product development was not enough to increase in multiple folds so company made many acquisitions in various geographies. The result at the end of time 2006 was NUMICO's presence in more than 100 countries with variety of products to market. Products were bifurcated among different divisions like specialized medical nutritional products travelled under brands such as Nutrison, peptisorb etc. Earnings and profit margin both increased because of acquisition.

Acquisitions can get a restricted and desired level of success and also to keep growing even NUMICO spent heavily in research & development. Proper alliance with industry giants, universities and federal government helped NUMICO's cause. Research & development wing of NUMICO seduced the best and on a regular basis submitted for the patents.

NUMICO Acquisition strategy in 1998, 1999 & 2000

To exploit linkages between your organisation and its own environment NUMICO used 'Medical Program Marketing'. NUMICO transferred from supermarket cabinets to practitioner's clinics. Now, products for prone people were recommended by doctors. Expenditures on research and development were forcing NUMICO to attain new places to recover the price. In 1998 annual record NUMICO was a multinational company focusing on the development, creation and sales of dietary medical concepts with a great value addition.

Strategy of NUMICO as per annual report of 1998 pointed out in the case review* by Eppink was as follows

"The strategy of NUMICO is targeted on specialisation, continuing internationalisation and profitable growth, partially by acquisitions as wll as by strategic alliances, and safeguarding the best quality in all stages of production and services. "

As per the turnover in 1998, NUMICO's major income creating business still was infant food which was sold maximum in Western Europe which was experiencing the major falling labor and birth rates and an ageing populace. After analysing the marketplace NUMICO bought few European companies to broaden in profitable areas.

In 1999, NUMICO obtained a firm bigger than them in conditions of production & earnings. When NUMICO bought Standard Nutrition Companies (GNC) of Pittsburgh (USA) it was the greatest manufacturer of healthy product on the planet with a stronghold in sports-nutrition market. It had been a win-win situation for both the organisations where GNC was attaining from NUMICO's research to improve their product range & NUMICO could gain from the distribution network of GNC. Press release explained the reason why of this acquisition which was to attain the global market dominance. 1

Acquisition was on the cards for the third 12 months as well when NUMICO snapped Enrich International & Rexall Sundown in 2000. Unlike GNC Enrich was in the business of natural supplements & personal maintenance systems with an internal R&D department for product development. Again unlike GMC, Enrich was at 10 more countries with a global circulation system.

Rexall Sundown another US based organisation was attained by NUMICo. Rexall like Enrich was a producer of nutritional supplements as well as consumer health products. NUMICO received another business which has got nothing to do with their main business interest like GMC.

A press release describes the reason of acquisition that was again to have the pole position on the market. 2

Acquisition of new businesses far from NUMICO's main business made NUMICO its own competitor because NUMICO already possessed the presence in the market. However, Rexall could exploit the Western european market because of NUMICO's distribution network within Europe.

At nowadays, NUMICO was perplexed in their procedure because two competition (Enrich & Rexall) were working under one roofing and providing the same market. Strategist may have analysed the greater competition & less co-operation among the two brands. To create operation smoother and to serve their customers better NUMICO merged the Enrich & Rexall in one new different entity by the name Unicity.

Strategy evaluation:

From day one and for a long time frame NUMICO controlled with one product because of which they never realised their potential as a standalone entity to increase.

After not getting desired success till the end of 20th century NUMICO realised exclusively they cannot get the global position in market. At this position, they could have done PEST analysis to guage the environment impacting them. Even SWOT could be utilized as a tool to learn the strong areas where they can build the near future empire.

PEST might have shown them that they are not useful in future market segments where they can increase faster than their current strong carry markets like American Europe. Infestation can cover issues from demography to cultural & scientific changes like declining beginning rates to e-commerce. By applying SWOT, one can know that NUMICO always regarded as the R&D as an important activity which they won't quit no matter what. Thus, they determined R&D was their power where they can build their future.

Michael Porters 5 causes theory could also have applied in this case study to know why NUMICO only followed the acquisition way. As the research study points out NUMICO was operating in such an environment where the small players can have changed the entire game. The menace from existing players and new comers was massive furthermore small players were taking your competition to all or any geographies. Hence to improve the global position on the market NUMICO adopted the acquisition route.

Acquiring GMC was a practical move it was reducing your competition and on the other palm it was enhancing the performance but acquiring Rexall & Enrich was not at all an excellent move. Reason being, it exercises the operational efficiency because NUMICO was not in the same website with them.

*case research (Do the Harvard referencing because I am not aware of the source)

1) Just the previous brand need referencing from the research study.

2) Press release in the event study

Current Strategic Situation:

Acquisitions in a field which was not related to their main business interest left them in a position between your pharmaceutical market and the food market. In order to avoid the stuck in the middle situation usually organisations adopts the Michael Porters (1998), general strategies which is really as follow

Figure: Competitive advantage

Source: tutor2u. net

(Accessed on: 20/03/2011)

Cost Management: In this plan, organisation is designed to be the cheapest cost producer to get the maximum talk about in the market. To do this position company drive the price down through sourcing the cheapest raw materials & labour cost. NUMICO was not trying to attain the cost control because case study shows that these were targeting high margin business. Hence, cost leadership is not NUMICO's domain name.

Differentiation: As the name implies, in this plan, organisations aim to be different from their competitors. Differentiation offers a competitive advantage to organisations which helped these to charge a premium price for his or her products & services. If we check out NUMICO research study we will see that they started with one product & scheduled to patents they presented the bottom for long time. One product was sufficient with a patent to produce the differentiation but later they obtained so many organisations which could provide them circulation network & penetration in the international market.

Acquisition which they made had not been only in their own domain and at this time they started losing the gained differentiation. From excellent stores cabinets to general practitioner prescription, move was certainly followed to make a differentiation but anticipated to diversified businesses it perplexed the distribution tips. Differentiation didn't pay back well because by 1998 their major earnings generator was still infant formulation.

Niche strategies: Here the organisation function in one specific portion and try their finest to be the best specialist of products & services. To work in this type of strategy organisations need to be either cheap or different from other players like Rolls Royce in the car market.

NUMICO's acquisition exercise had taken them into various domains but nonetheless they attempted to call themselves a 'Medical System Marketing'. One system for medical attention to those who find themselves vulnerable didn't work well because of plethora of products. However, from NUMICO's point of view they centered on specialisation with profitable expansion.


NUMICO got involved with series of acquisition related & unrelated to their main business interest because of which they are simply facing the stuck in the centre situation. To simplify the problem they tried to bring all the diversified business passions under one roofing. Things remain complicated because they wished to build on dietary field but due to acquisitions they will work in nutritional supplements fields as well.

Moreover, they bought two rivals (Enrich & Rexall) and remaining them in the field to contend with each other. It took time to bring both of these under one brand name and by that time both of them did enough damage to each other.

Now, NUMICO is trapped between the pharmaceutical market & the meals market because of their confused approach. Lot of unwise decision made which led to at once collusion with giants of pharmacy & food business like Novartis & Nestle. NUMICO always wished to sell medical & diet foods but because of their acquisitions they aren't concentrating on their main stream business. NUMICO bought the US operations never to sell what they were doing before acquisition e. g. vitamin supplements. Instead of turning them into NUMICO's regular business NUMICO began looking after their procedures.

First an industry expert pointed out that NUMICO is facing troubles because they are not accomplishing only in their traditional marketplaces. Company was jammed in the centre since it was facing problems from giants & minnows at the same time. New marketplaces where these were operative credited to acquisitions were full of small players. In addition to that hazard from new entrants was considerable. NUMICO's strategy needed an assessment before they lose the global position.

Strategy review:

In the year 2000, NUMICO's mother board of directors accepted the potential risks from existing strategy. NUMICO due to acquisition was not paying enough attention to their cash cow i. e. infant products and today durability of NUMICO is making them susceptible. NUMICO is a Western european company they maintain balance sheet in euro and any PEST have an effect on in USA procedure can cause serious problem with their business characters.

Operation overseas involves exchange risk as well. Previous but not minimal even NUMICO's board realised they are confused in methodology.

NUMICO was not all stuck in the middle because organisations who face this kind of situation usually subject to a takeover or merger. Finally when NUMICO's panel realised the downside from the strategy they must take this opportunity to reduce or eliminate the risk.

Strategy review scheduled to certain happenings:

In the entire year 2001, after 12 months of realisation, company observed themselves in hot waters credited to monetary slowdown in america. In addition to slowdown, demand for diet & natural remedies were plummeting too with an elevated competition from good deal manufacturers. It is not only NUMICO which was facing heat but the whole sector was sacrificing the success.

If NUMICO could have done the PESTEL research then they could have avoided this slowdown and competition because they never saw this slowdown coming into the picture. It is necessary to explore the competitive environment to develop sustainable competitive edge.

NUMICO reaction to events:

NUMICO's respond to the situation had not been in any way proactive. NUMICO response was reactive that to after negative expansion. CEO was asked to mind the traditional & home based business but not for taking another big assignments. US operations gave back to rear management problems to CEO which led to his resignation in May 2002.

New CEO bifurcated the procedures in three divisions and for the first time they adopted a specific approach to deal with each brand. In other words, NUMICO changed the corporate strategy to unit level strategy to manage each business. In the entire year 2002, NUMICO got bad media from all the quarters of business and make the situation worse exchange rate folks money was changing frequently against euro.

Finally, NUMICO released the sales of Rexall Sundown & GNC to concentrate on high-growth/high-margin businesses of baby food and clinical nutrition. Both brands increased the performance of its new owner.

Strategic Direction for future years:

After divestment, NUMICO should take into account the future. Company may use BCG Matrix to determine what is to be done to remaining product profile. NUMICO already dumped the low-growth/low-margin products, so now; they can focus on permanent value creations through producing high-growth/high margin products.

Stars of NUMICO:

NUMICO's star was infant product but scheduled to whole lot of coverage in low birth rate countries their business was declining at an alarming rate. NUMICO can utilise the some cash that they received from divestment to develop in those countries where birth rate is much better than Western countries like India & China. For newborn products, way back when NUMICO used to demand prime price because of R&D & patents.

Cash Cow of NUMICO:

NUMICO should turn their toddler product into cash cow by offering cost command. After gaining the price control NUMICO can get back to their golden days. To attain the cost control NUMICO does not have to invest seriously on supply chain because they have everything which it takes to get the benefit.

Dogs of NUMICO:

NUMICO already sold the Canines using their company product stock portfolio now they should not repeat this miscalculation by taking over another non-business interest investment.

Question marks of NUMICO

NUMICO should avoid this block by focusing on cash cows & superstar blocks. Picture a scenario; if indeed they don't pay much attention now on finding new markets for baby products then they might end-up in this stop because european market has dropped in term of labor and birth rate and they already sold the utmost distribution things of GMC & Rexall in USA. Hence, they ought to take actions on immediate basis to avoid question tag.

Figure: BCG Matrix

Source: www. tellingthestory. typepad. com

Accessed on: 20/03/2011

BCG matrix can help in understanding the mistakes done in former to fit an all procedure technique for future. BCG matrix is not free from flaws but it certainly explains what to do & what not to do.

To bring back the growth back into the catalogs of NUMICO they have to adopt Ansoff Expansion Matrix. As per Lynch (2006), "the marketplace options matrix examines the options open to the company from a broader strategic perspective than the simple market/product matrix (called in a few texts the Ansoff Matrix)".

Figure: Ansoff matrix

Source: www. cipher-sys. com

Accessed on: 20/03/2011

As per Ansoff matrix, NUMICO can go for market penetration. It'll be like without troubling the business's existing selection of products or services as well as perhaps it can draw in current customers as well. Things can backfire if market penetration is planned for clients only. For instance, mobile companies offer fantastic price ideas to retain the existing customer.

Market penetration is even when the marketplace keeps growing. Existing organisations with low relative market show in a flourishing market have little to reduce but NUMICO has high comparative share and if they don't draw in their current as well as new customers they might lose whatever they may be possessing till now.

Market development using existing products is actually a strategic route but for this process they shouldn't disturb the existing customer concentration. In NUMICO's case, they have to take child products to prospects countries where beginning rate is preferable to Western European countries and USA. NUMICO can marginally repackage the product & then can promote to a new market section.

Product development for the existing market can be possible for NUMICO because they have got their own R&D centres where they can form new principles. NUMICO must do optimum utilisation of the all resources to counter competitive entrance. NUMICO's R&D centres can help them to keep up the company's stance as innovator.

Diversification is not needed according to research study because they may have just done the sale of GMC & Rexall.

Other Strategic Options:

Organic growth: NUMICO should start the change from with-in and build itself from nothing which time they ought to adhere to the center business.

Acquisitions & Mergers: NUMICO can acquire the rival business or merge with one of its rival from main business market to get the lost momentum.

Strategic Alliances: NUMICO can make some proper alliances with few specialists in producing countries.

Licensing: NUMICO can sell their patent license or rent to its opponents to build a business off their intellectual properties.


NUMICO must pursue a rise strategy in a set up way the techniques by which the market opportunities associated with strategy options might be achieved. NUMICO should treat their R&D outputs as their resources that they can sell in market to declare a label of future business. Traders like to affiliate themselves with future markets because they know their money may take those to new strategies with high results.

NUMICO was a leader in R&D and child products but all was lost because of acquisitions in foreign un-related market segments & products. This time they should build themselves related with their core-strength. For R&D, they employed PHD passed-outs however they never shown themselves as a good organisation which they should focus this time. Current generation wish to connect themselves with smart organisations like Google & Apple. NUMICO should shoot for future parents who will buy their products & services.

Given the quantity of analysis that can potentially be carried out, merger with other opponents is highly recommended. Mergers act like acquisitions like merging two companies. However, merger can happen in one circumstance where both the parties cannot dominate each other. This is often a friendly hand but still a special care and attention will be always required. Merger should be sone before figuring out the tactical issues.

Mergers should never be meant to lose the total control of the company but to gain new markets & new customers. None of the evidence suggests till time frame that merger is a value addition but neither has it advised any failure when both partners are same in proportions. Merger might not a large value to NUMICO but it can boost the performance.

Although NUMICO can still grow as a stand alone business but to take their research in right avenue they desire a right partner. Partner especially with same business interest but with an increase of distribution factors in desired locations can do wonders for NUMICO.

NUMICO always had R&D centres nevertheless they never capitalised on that asset perhaps a partner may take that benefit or turn it into their competitive gain.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)