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Charoen Pokphand
Food
Kitchen of
(FDI)
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Kitchen of
Foreign DirectInvestment
Kitchen of
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ha t is FDI?
Internationalization strategy
Developed countries will benefit from natural resource, cheap labor, and avoid trade barrier.
Developing countries will benefit from capital,knowledge and technology.
Does not include stock echange investment
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!orizontal FDI
"ertical FDI
#onglomerate FDI
Types of FDI
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! orizontal FDI
Firm will invest in the same business as the firm does in their own countries.
$ample% &oyota factory in 'entucky, (nited )tate
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Forward and backward In forward vertical FDI, the firm will play a
role as a supplier and send finished goods through subsidiaries or dealers to host countries.
$ample% "olkswagen sell though many car dealer instead of using only one main dealer.
"ertical FDI
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Forward and *ackward In backward vertical FDI, the firm will inves
t in the industry that support their business.
$ample% Ford #ompany build engine facto
ry in +eico in order to decrease their cost.
Vertical FDI
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+ ethods of FDI
reenfield
*egin everything from zero$% *uying land
+ergers and -cuisitions /oining between two firms
$% *uying local firm asset
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0ros 1 #o ns of FDI
0ros For developed countriesDecrease cost and increase profit
For developing countries#apital, knowledge and technology
#ons &he host countries may lose their natural reso
urces because of non strict laws.
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$ffects of FDI
)timulate nation economy
)tability of FDI
)ocial development
Infrastructure development and technology transfer
2#rowding in3 and 2#rowding out3
)cale and pace of investment
)kewed distribution
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Company Prole
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*rief 4verview
$stablished in 5678
-gro9industrial *usiness#ore *usiness
-nimal Feed
Farming
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&w o + ain 4 perat ions
&hailand +anages all operation in &hailand
Distributes in domestic4verseas
4verseas 4peration in 55 countries
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: + ain 0roduct #ategor ies
Feed
Farm *reeding, Farming, and basic meat proces
sing
Food
)emi, fully cooked meat, and frozen products
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0rodu cts of #0F
#onsumer products ;eady9to9eat products
;eady to cook products Fresh products
-gricultural products Feed *reed
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#onsum er 0roduct
;eady9to9eat1 ;eady to cook products -ppetizer, and ;eady meal
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Fresh 0roducts #hicken
$ggs
Consumer Product
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-gricultural 0rod uct
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-gricultural 0rod uct
Feed > Feedmill plants
!igh ?uality Feed
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-gricultural 0rod uct
*reed @FarmA
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ReuirementsConsidering FDI
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Factors to # onsider
-ssessment of internal resources
#ompetitiveness
+arket analysis1 $pectation
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-ssessm ent of Internal ;esour
ces
Internal resources
Internal supportDomestic performance
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#ompetit iveness
#ompetitor !ow well they do
+arket share#ompetitive advantage
#omparison
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+ arket -nalysis 1 $pe ctat ion
+arket research
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CPF!s "istoricalDevelopment
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# aroen 0okp and ,roup
Found by #hia $k #hor and #hia )eow !ai in 56B5
)tarted a small shop2#hia &ai #hung3
$panded *usiness to !ong 'ong, #hina, +alaysia
and )ingapore
International Trading(#$%#$')
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In 56C, /aran started feed business knownas 2#haroen 0okphand3.
&hai $conomic Development 0lanDhanin worked for the governmentEs slaug
hterhouse @56C8956=:A
eneral manager
#$4
Mr. DhaninChearavanont
nimal Feed(#$'$*+)
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0oultry farming
/oint venture @=>%>A with -bor -cres
2&he contract farming system3.#0 became a maor player in agro9indust
ry
Integrated gro&Industry(#$*+$*$)
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0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
1994
199
5
199
6
Frozen Shrimps Exported (1994-1997) (Million US$)
Source: !n" o# h!il!nd
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)ausages 1 +eatballs
2#hester ,ri l led3
) rimp Farming
)iam + akro 1 7955
Infrastructure )ector
#able &" Getwork
Future Integration , Diversication(#$-+s&Present)
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CPF!sInternational
./pansion
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International $pansion
#0F invested in 55 countries around t e worl
d%
&urkey&aiwan
#hina
India
Indonesia
0hilippine
+alaysia
"ietnam
;ussia$ngland
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)trategy - maor food producer in the world
$pand distribution channels
- country that has high rate of population
;esearch and development
International ./pansion
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+ain 0roducts
#hicken feed
*reed farming, livestock farm and meat process manufacturer
semi9cooked food and ready9to9eat
International ./pansion(Turkey)
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&he biggest and most successful nation of #0FEs FDI is in &aiwan, called 2#0$3.
4ne of the leading manufacturers in &aiwan
ain maor market shares
2;eady9to9eat3 is very popular
International ./pansion(Tai0an)
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+r.Dhanin #hearavanont stated that %
International ./pansion(China)
CPs investment in China focuses mainly uponagriculture. Whether it is producing animal
feed, or raising livestock such as pigs, thelatest technology and management systemsare utilized. (Dhanin, 2011)
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!ighest rate of population and potentials.
+ain products are feed, farm and food.#0F ust took over #00 @)econd largest m
arket shares in #hinaA and become the
maor shareholders @7.58HA.It will boost the net profit and enables gr
owth in the future.
International ./pansion(China)
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)econd largest rate of population.
overnment supports foreign investors.
+ain products are feed and farm.#0 brand in India is well9known
&rade with local wholesalers and retailer
s
International ./pansion(India)
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)ome products in domestic consumption,supplies are less than demands.
International ./pansion(India)
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Characteristics tothe 1verall 2ro0th
and Internali3ationProcess
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Fully9Integrated 0rocess
(nderstanding +arket
Finding ood )trategic 0artner
Characteristics
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&he ability to integrate everything from feed material production to retail distribu
tion channels.
Fully Integrated 4usiness
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Fully Integrated 4usiness
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Fully Integrated 4usiness
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(nderstand markets in developing count
ries #reates opportunities
Invest in developing countries
+arketing and distribution strategy
2'now9!ow3 2'now9What3
5nderstand 6arkets
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7trategic Partners
-merican agricultural multinational 2-bor -cres3 +odern technology
Import chicken breeding stock from ()-
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1verseaInvestment Risks
R I S K
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Foreign countriesE rules and regulations
$conomic conditions
0olitical changes
+inimum wage
Foreign echange
$tc.
1versea Investment Risks
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Investment 0olicy% #ontrol and Follow9up system -ppointments of ;epresentative of +anaging Direct
or and Finance eecutive
#onduct feasibility studies thoroughly $nsure that the investment is profitable and it is wo
rth the risk.
+eetings in &hailand with 4verseas operation management teams @$very = monthsA ;eviewing performance and updating plan.
Risks 6anagement
8"igh risk9 "igh return:
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Kitchen of
1perating Results
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ThailandOperation
OverseaOperations
1 i R l f . h
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1perating Results of .ach4usiness ;ine
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Conclusion
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Thank
You!