What Motivated Yli To Expand Globally

Prince Arthur Alagao

Professor Whitcomb

BUS 4150-06

10/04/17

Yili Case Assignment

1. Several factors motivated Yili to expand globally. One key among them was the fact that there was high consumption of dairy products in the developed countries like those found in Asia, Oceania and America. Many people had learned about the health benefits of milk and it meant that there was increased intake of milk. The little that was being produced locally could not meet the demand for milk. That is one reason why Yili felt motivated to expand globally since there was a market for its products. Another motivating factor was the fact that developing countries had shown a steady increase in demand for dairy products. Though the steady demand was low, it indicated

The global area also provided a platform upon which the firm would create partnership and acquisitions that would make it grow. The new partnerships would lead to increased market share of the global market. One of the new global partners that was willing to work with this firm was Sterilgarda, meaning that global expansion was beckoning. Opportunities were also knocking on the doors of Yili to make new acquisitions abroad, for example Oceania Dairy Limited (ODL) was willing to be acquired by Yili. ODL was also ready to be acquired first and then be paid later. It meant the issue of having the whole amount of money required by ODL was removed and that Yili could commence its operations and then pay later. There was political goodwill for foreign acquisition shown by the support given by the prime ministers of China and his counterpart from New Zealand. This political goodwill exhibited by the leaders of these two countries must have provided a bigger impetus for Yili to see the need to expand its global appeal. Yili must have known that with political good will in the mix, the issue of finances could be sorted without any problem. The Corporate Social

Yili’s internationalization strategy was pronged: to ensure food safety, come up with innovative products and have a global brand under its wrap. The food safety aspect came about due to the health scare that emanated in China, due to Sanlu firm, which led to deaths of six infants and hospitalizations of many of them. Yili wanted to be trusted by coming up with products that would meet the internationally accepted standards of food safety. Yili wanted to have innovative products dealt with new products, appealing more to the clients and having a global brand entailed segmenting a good market for itself. The company is close to ranking in the top five companies by the many acquisitions that it has made all over the world. It means that with due course, it would lead to increased market share thus it would be the name on top of the dairy market industry. My recommendation to the chairman of this firm is that he should slow down on the many acquisitions that his firm is making at the moment. The reason for saying is, to give time to the already acquired firms to grow and cut a given market for themselves. These new acquisitions should also be given time to ensure that they have fully established themselves before he moves to more acquisitions. In doing so, he would be laying a solid foundation for his firm that would be difficult to be demolished if an economic crisis hit