BIC: Honor the Past, Invent the Future Essay
BIC: Honor the Past, Invent the Future
There are many things one can do with a BIC product: writing, flicking, shaving etc. BIC is a French consumer product multinational company that is in the business of disposable stationery, lighters, shavers, water sports and promotional products. Every BIC product follows the company’s vision: BIC products are simple, inventive and reliable for everyone, everywhere. Founder Baron Marcel Bich launched the BIC ballpoint pen in 1949; since then BIC has become a global brand and it is recognized throughout the world.
BIC produced some 5.23 billion units of stationery products, 1.09 billion units of disposable lighters and 2.1 billion units of men and women’s shavers in 2005. Despite these enormous sales numbers, BIC is facing severe competitions from companies such as Gillette, Newell Rubbermaid and Zippo in each of its three main markets. In this paper we are going to introduce BIC’s current position relative to competitors, analyze its markets and strategies over the past couple decades, and propose a number of strategies, such as:
1. introducing a new product line
2. utilizing e-commerce
4. acquiring new companies in luxury product lines
These strategies exploit BIC’s current advantages, which we believe will help BIC to advance in the “quality product for affordable prices” philosophy further.
BIC is selling in 160 countries with 8400 employees and 24 manufacturing facilities. Some 3,200,000 retail outlets include stationery stores, tobacco shops, drug stores, supermarkets, hypermarkets, and office supply stores. Every BIC product follows the company’s vision: BIC products are simple, inventive and reliable for everyone, everywhere. According to the company’s data released recently, in 2005 BIC produced some 5.23 billion unit stationery products such as pens, pencils, highlighters, markers, crayons, and correction products that generated about 43% of the company’s yearly revenues.
In the same period, the company produced 1.09 billion units disposable and special addition lighters that generated another 49% of the revenue and finally production of 2.1 billion units of men and women’s shavers in 2005 accounted for the 8% of 1.38 billions euros income of the company. The gross profit in 2005 was 674 million euros which showed a little growth over 624 million euros made in 2004. The company also makes surfboards and wakeboards through its BIC Sport division. Other source of income is through BIC Graphic subsidiary that imprints customer advertising on BIC products such as pens and lighters.
BIC focuses on three core categories: stationery, lighters and shavers. In its organizational structure, BIC has three Category General Managers who have overall responsibility for marketing, development and manufacturing of each category across the globe. Product distribution is then organized by continent, with country managers reporting to a continental manager.
This structure enables BIC to enjoy an effective global distribution network. There are four continental managers for Latin America (incl. Mexico/CA), Europe, Middle East/Africa/Asia, and North America/Oceanic. BIC’s policy has been to keep its production in house to have 100% quality control checks over its products. BIC’s products come out of a number of “superfactories” located in different continents on a very large scale. Then, the products are shipped rapidly to global markets at competitive prices hence meeting the criteria of affordability and universality.
BIC maintains a matrix structure that enables it to target geographic markets more effectively. BIC’s matrix is based on two reporting lines: product and geographical area. By using geographical area as one part of the matrix, BIC is able to create a product portfolio that is both appropriate to a global strategy and yet it meets local markets needs. The company implements “Think Globally, Operate Locally” strategy perfectly by operating in a multi-local way. Any new product added to the product basket also follows this suit and is producible within the same scheme.
Exhibit 1 in the appendix summarizes BIC’s history since it was founded.
BIC’s products are affordable, universal and functional, i.e. they are designed to perform a specific function such as shaving, writing, etc. These characteristics appeal to global markets because everyone needs functional products at affordable prices. Disposability is another quality BIC products
share. BIC’s new products follow the same trend and have the same characteristics. Detailed product basket of BIC is shown in Exhibit 2 in the appendix.
1. BIC has a firm and devoted business motto of selling and distributing products that are cheaply made, disposable and briefly used.
2. BIC has an excellent reputation for a comprehensive line of inexpensive ball-point pen products. BIC is also responsible for the successful marketing, manufacturing and distributing all of its products.
3. Variety of the products – BIC offers a variety of products in its three product lines, for example: different color pens, different point sizes pens, shaver for men, and shaver for women, etc.
4. Excellent employee and company relationship – great benefits, pay and working environments. Each worker is encouraged to develop pride by understanding every step of the process.
5. Dedication to strong management, efficient decision making by hiring well-built teams.
6. Large portion of work force is involved in control check – BIC believes that the quality is a key to its success; and only by having a strict control system, can a company achieve the level of perfection that BIC boasts.
7. Strong marketing and advertising strategy, which includes point of purchase display, packaging forms and trade-consumer promotions.
8. BIC operates in large volumes, reducing risk of increasing costs of raw material and labor and raising the turnover ratio.
9. Can utilize already existing channels and outlets as ball-point pens for new products, which they did for the disposable lighters.
10. Global positioning and distribution – the company utilizes its “superfactories” in different parts of the world in order to cut the cost of distribution.
11. Geographic location involvement – if they have poor performance in one area, their sales in another area may be enough to keep their market share up.
1. Competing with companies that are much more concentrated on a product line – when BIC is involved in 3 markets.
2. Preferred to use own cash and has aversion to borrow money – this reduces the chances to invest and expand and increase chance of a takeover.
3. Putting their eggs in few baskets and dependence on few brand products to generate considerable income of the company.
4. BIC is not aggressive enough in terms of expansion – a global sized company that sells in more than 160 countries yet only has around 8000 people does not look very forward -looking with expanding.
5. One corporate structure while competition in three markets – possible lack of flexibility.
1. Globalization – BIC has yet to go to China or India, for example, a place for both demand as well as manufacturing power.
2. Further cost reducing by outsourcing – because of the high volume, can utilize cheaper labor, cheaper raw material, etc, in other countries such as China.
3. Reputation – has yet to be fully exploited. BIC can use the name to expand into other product lines that fits the product portfolio in addition to pens, lighters and shavers.
4. Acquisition – can buy smaller companies that concentrate on the products and utilize this synergy to further reduce cost and concentrate on advertising and expansion.
5. E-Commerce – utilizing the power of internet to sell.
1. Strong competitors that concentrate on one of BIC’s products – Schick’s shavers, Pentel’s pens, etc. or other powerful competitors such as Gillette or Faber-Castell.
2. Raw material, fuel and labor cost increase
3. Environmentalist’s concern of disposable products.
4. Counterfeiting of lighters in some Asian countries. Some companies duplicate BIC’s lighters with lower quality and flood the market.
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Competitive Advantages and Disadvantages
BIC’s competitive advantages over other competitors include
1. Brand Reputation
2. Lower Cost with Plastic Molding Technology
3. Multi-National Sales
4. Strong Management and Efficient Structure
5. Strong marketing department
BIC’s competitive disadvantage over other competitors include 1. Weak when competing with company that concentrates on one product. The employments of these advantages are explained in the strategy section.
The stationery industry is a market of over 10 billion USD therefore it attracts many competitors. BIC’s products compete well with their rivals since they have lower price and a good quality. Currently, BIC has about 8% share in world’s stationery market. This is BIC’s primary market where the company shows the most consistent growth. BIC is a major brand as it holds the second highest percentage of the market since the company products are available in over 160 countries. Other leading competitors in the market are Newell Rubbermaid, Pilot, Pentel, and Crayola.
Newell Rubbermaid controls 17% of the market share. Some of the competitors such as Stabilo (operating in Western Europe), Pentel (operating in Japan) have a smaller share of the world market because they are not available in many countries. There are areas of the stationery market where BIC does not offer a product. For example BIC does not offer any product in the permanent marker segment where Sharpie products, a subsidiary of Newell Rubbermaid thrive. BIC also does not compete with Crayola in the washable marker segment as well.
A Fortune 300 company with nearly 50,000 employees worldwide, Newell Rubbermaid makes everything from strollers and power tools to picture frames and pens. The company’s products touch millions of consumers at home, work and school and in airports, hotels and other commercial venues. Its major strategy is to acquire other companies, with seven major acquisitions in the past five years alone, including Rubbermaid in 1999 and the Gillette Stationery Products Group (SPG) in late 2001, which added 10 locations in the Asia-Pacific and Latin American regions. It is currently the market leader in stationeries of the world (17%), while BIC trails behind with 8%.
Despite not being number 1 in the market place, BIC has not given up. It keeps trying to drive productivity gain in all areas through even deeper market penetration by “being everywhere”, in all markets, whether it be high or low GDP, classic segments to offices or added value segments to children. BIC had entered the coloring market by capitalizing the Disney brand, which can lead to potential ancillary products such as scissors, rulers and pencil cases. It also attempts to drive the production cost further down by plant consolidation, standardization of technology, etc. From this we can see that BIC is fairly optimistic about this competition.
The disposable lighter market offers about 2 billion USD. BIC holds a larger percentage of this market than stationery. BIC’s major advantage in lighter’s industry is its dedication to safety and quality. In lighter business, much of the competition comes from unsafe and cheaper Asian products. However, most of these Asian lighters do not meet the US safety standards, which resulted in BIC’s dominance of the market in the US. Counterfeiting of lighters is another problem BIC faces in some countries as other companies (mostly in Asia) duplicate BIC’s lighters with lower quality and flood the market. The Brazilian government responded to the issue by stamping branded lighters so consumers can differentiate between counterfeits and authentic lighters.
It is most famous for its windproof refillable lighters, which are sold in more than 120 countries today. Zippo’s main strategy is to make every one of its lighters to be a unique, collectable item that represents a person’s style and taste. It is refillable so that normal consumers would not throw it away, but would instead buy the refills, replacement wicks, etc from Zippo, forming an after-sell service business model. Clearly, collectors were the key to growth, and Zippo has successfully captured that value.
BIC’s lighters are cheap, disposable and simple; by no means are they collector items. Although BIC has been coming up with limited edition lighters that would serve the same purpose, these two competing companies have yet to raise a major war in the lighter market. In response to the counterfeiting problem, BIC has been lobbying local governments to adopt stricter policies regarding the issue.
BIC holds about 20% of the 800 million USD shaver’s market. BIC is competing with companies that specialize in shavers and blades such as Gillette, American Safety Razor and Schick. Gillette and Schick razors are long-term razors with replaceable blades, which create a high switching cost for the customers to use other brands. In 2003 BIC introduced Comfort3 triple blade shaver for men and in following year Soleil triple-blade shaver for women designed to compete with Gillette and Schick’s triple blade shavers. In 2005, BIC introduced new Soleil Scent triple blade shaver for women with scented handles. BIC is trying to increase sales of higher-margin razors by introducing Comfort and Soleil series, as demand for its single-blade brands falls.