Lucchetti

1
Lucchetti

• By Glen C. Reed
• Toya Straugher
• Lexe Wilson
• Sarah Salem

2
Organization of Lucchetti

• Founded in the early 1900s
• Purchased by the Luksic group in 1965
• Luksic groups initial activities were mining
  industry, and principally copper.
• Lucchetti strategy revolves around making the
  most of its brand names with holding while
  building a strong market.

3
5 Forces Model

• Threat of new entrant
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of substitute products
• Rivalry among competing firms

• Neutral
• High
• High
• Neutral
• High

4
Competition

• Carozzi
• - Lucchettis main competitor in Chile.
• - Bought Molitalia, a Peruvian company with 18
  of the market
• Chile
• - Had growth of the overall market rather than
  from gains in the market share.

5
Competition

• Romero Group
• -Bought La Fabril, largest company in the food
  market
• -Merged La Fabril and Peru-Pacifico, 2nd largest
  producer of edible oils
• -Romero Group created Alicorp S. A. becoming the
  3000 lb gorilla of the Peruvian Market

6
General Environment

• Political
• 1990 Alberto Fujimori elected president
• Fujishock term used for his economic shock
  program
• Overthrew his own government due to congressional
  opposition
• Levels of violence down
• Difficult life for domestic manufactures and poor
• Economy up and inflation down

7
General Environment

• Sociocultrual
• 90 of market mom pop stores
• Plant was built next to Pantanos de Villa, a
  protected wetlands and park
• 1999 environmentalists file lawsuit against
  Lucchetti

8
Resources, Capabilities, and Competitive
advantages

• Reorganization in 1996
• 93.7 percent consolidated subsidiary of Quinenco.
• Lucchetti was launching new products under its
  household brand names such as Napoli, Talliani,
  Romano, El Dorado, etc
• Lucchetti had a relatively high profit margin.

9
SWOT ANALYSIS

• STRENGTH
• Lucchetti head of operation calculate the
  stoppage of US 3.5 million which represent an
  increase in the forecast investment
• December of 1988, Lucchettis pasta product
  ranked second in terms of net sales by sales
  volume in Peru.

• Weakness
• Lucchetti pasta manufacturing operation had not
  reached the point of operating profit breakeven
• Lucchetti focused more on highly quality pastas
  which lead to a higher cost.

10
SWOT ANALYSIS

• Opportunities
• Lucchetti advertise in local new papers, while
  maintaining it compliance with the enviromental
  standard set out by the government.
• 1998 Lucchetti immediately responded by suing the
  city of lima for restitution of permits, saying
  it had a right to build and produce.

• Threats
• Alicorp accused Lucchetti of economic dumping and
  filed suit.
• Lima city council, under guidance of Andrade held
  that Lucchetti could not operate in an
  environment protect area.

11
Main Issue

• Lucchetti main issue is with the Peru.
  Luchetti's plant is over there and are they are
  losing money. The company is confuse on what
  action they should take, in Peru. The CEO was in
  a scandal with the government and even the entire
  Luksic group has been losing money in the last 3
  years.

12
Three Potential Strategic

• Creating and implementing an ethical code in
  Peru.
• Strengthening the employees personal conduct
  code which appears to be the best way to assure
  correct ethical behavior.
• Have the business people in Peru focus more on
  ethical behavior rather than business decisions.

13
Recommendation

• The Catholic Church, the main Peruvian Business
  Schools and Large Private Corporations should
  create and reveal an ethical code as a way to
  obtain a healthier business environment.

14
Implementation

• Observe how Carrozzi, Lucchetti main competitors
  in Chile are entering the market.
• Lucchetti should reconsider buying small
  companies ex. Molitalia so they can a higher
  percentage in the market.
• Lucchettis strategy should be based off of
  Chiles growth, profitability, and sustanability.