Management of Capability in Organisations: Danone Group - Case Study Example

MANAGEMENT OF CAPABILITY IN ORGANISATIONS By Student’s name Course code and name Professor’s name University name City, State Date of submission Table of Contents Table of Contents 2 1 Aims and objectives 4 2 Introduction 4 3 Part 1: Importance of Capabilities and How They Contribute To Competitive Advantage at Research in Motion. 4 3.1 Capability 4 3.2 Strategy 4 3.3 Competitive Advantage 5 3.4 Resource-Based View 5 3.5 Research in Motion’s Competitive advantage 5 3.6 Research in Motion’s capabilities 6 4 Part 2: Analysing Resource, Competencies, Core Competencies and Dynamic Capability 7 4.1 Resources 7 4.1.1 Tangible Resources 7 4.1.2 Physical Resources 7 4.1.3 Intangible Resources 8 4.2 Reputation 8 4.3 Brand Equity, Customer Retention and Supplier Loyalty 8 4.4 Leverage 9 4.5 Human Resources 9 4.6 Competencies 10 4.7 Core competencies (C.C) 10 4.8 Dynamic capabilities (D.C) 10 5 Part 3: Diagnosing and Evaluating Strategic Capability 11 5.1 Stakeholder approach 11 5.2 Value Chain (V.C) 11 5.3 Benchmarking 12 5.4 Corporate Social Responsibility for Danone 12 5.5 SWOT analysis 12 5.5.1 Strength 13 5.5.2 Weakness 13 5.5.3 Opportunities 13 5.5.4 Threats 13 5.6 Ratio analysis 14 6 Conclusion 14 References 15 7 Appendix 1 17 1 Aims and objectives This report is intended to analyse the resource and capability of the Danone group. The report also aims to carry out an analysis of the financial ratio of the Danone group (Group, 2013). 2 Introduction Danone is a food company that manufactures health products such as fresh dairy, baby food, waters, and medical nutrition. Danone Company primarily operates in 140 countries and its headquarters are mainly located on Paris, France. Danone started their business in Barcelona in 1919. They have since been growing fast by increasing their offer to their customer base with a core objective of meeting the consumer expectations. It is estimated that their full year sales increased dramatically by 4.8% to hit €21,298 million in 2013. Almost half of their sales were generated outside the European region. 3 Part 1: Importance of Capabilities and How They Contribute To Competitive Advantage at Research in Motion. 3.1 Capability Brahma (2011) suggested that the resource and capability are important factors. For a company to succeed it be should both valued and rare in order to reach the competitive advantage. Capability includes the ability of the organisation to meet the client’s needs without necessarily struggling as per the set traditions. Capabilities may also be economic, strategic and technological through uniqueness that the organisation has been bequeathed with. 3.2 Strategy Danone’s strategy is to provide their staff with the opportunities to attend different trainings in order to gain information with the latest knowledge management systems. It will be of great help to the company to have their own knowledge management culture which may be introduced to new employees too. By so doing, the staffs will gain confidence when they have a clear strategy which will help them to fulfil their core objective. As well the company will compete with the rivals when their employees are capable of innovating more new products to sustain them on the competitive edge (Celine, 2013). Planning helps the company to implement their strategy so as to improve the staff knowledge management and expand their businesses. The company has also developed strategy of staff recognition as a way of fostering and maintaining a good relationship between employees and the organization’s management. As a result the line managers have a clear vision on how to achieve their goals and objective by supporting their employees as a way of allowing them to contribute on the company’s growth. This helps Danone to set their strategy clear and use it as tool to be on the competitive advantage and being suitable in this stage. 3.3 Competitive Advantage Nowadays most companies are competing with their counterparts using different techniques like differentiation and cost leadership both aimed at helping them to achieve a competitive advantage as a means of sustenance (Brahma, 2011). The primary resource-based view is defined by a different founder Penrose (1959). In her research, she suggested that resource-based view has different kind of resource approach such as the managerial skills and other professional skills. Wernerfelt (1984) clearly described the resources of an organization as tangible and intangible asset which aids it to obtain a competitive advantage in accordance to the assets they own and how they used them (Brahma, 2011). 3.4 Resource-Based View The resource-based view plays an important role on the organization to enable the company meet the stakeholder’s expectation as well the customer expectation by generating more revenue. Every company has resource but they differ from each. These resources also use it difference according to company product and what they want to achieve on. The resource-based view is aimed at clarifying their tactic approach according to the resources and capability. 3.5 Research in Motion’s Competitive advantage The competitiveness of the research in motion aspect has caused the business to thrive in a competitive environment due to unique innovation of health and medicinal dairy products which beat competition. Research in motion principle has been embraced by Danone which has come up with products preserved through stringent patenting ensuring that they are not produced by other companies. They also offer technical support to absolutely each and every piece of product with a dedicated budget to this effect. Consistency also applied as a competitive advantage and also doubled as a capability due to the strong servers that they own for purposes of communication with their clients. This ensures that the products are dependable and reliable in the long run thereby maintaining a huge client following. When it comes to transferability, the products traded by Danone are packaged in various sizes for affordability purposes. This transferability strategy is to ensure that the customers get satisfied through cheap substitutes to the main products sold. The transparency aspect is maintained through indication of the ingredients used in the manufacture of their products so as to ensure clients know what they are consuming (Froud, 2013). 3.6 Research in Motion’s capabilities The notable capabilities of Research in Motion are majorly organisational such as the ability to produce unique milk products which are also labelled as innovative. Research in motion focuses on continuous improvement of internal processes that are responsible for a huge client following. The specific competencies that have been created by research in motion in their bid to achieve an upper hand over their competitors include real-time communication with the clients and documentation of complaints. The company also ensures that the research and development department is well catered for in terms of financing and other necessary forms of support. Due to their high liquidation capabilities, Danone has also achieved consumer confidence which gave them an upper hand against the dwindling fortunes of their competitors. This can be equated to the stock market performances of the company. Other forms of organisational capability noted from the existing cases on Danone show that the company is dedicated to high responsiveness, maintaining customer relationships round the clock and offering a quality service which includes service centres across all geographical locations in which they transact. The congruency in customer and employee expectations is also intertwined through a shared mind-set, unique management practices that have seen the chief executive of research in motion make it to the Forbes as the best and a transformational organisational leadership (Ulrich & Smallwood, 2004). 4 Part 2: Analysing Resource, Competencies, Core Competencies and Dynamic Capability 4.1 Resources Organisational resources are widely classified as tangible, physical, intangible and reputational resources. These resources create leverage through creation of the main product in order for consumers to be satisfied in the long run. Figure 1: Flow of resources for product creation (Author, 2014). 4.1.1 Tangible Resources While tangible resources are quantifiable, this case capitalises on root assets that are deeply rooted in the firm’s history. The financial data that is readily available shows that this market leader has a total asset of €30,830 million in property capacity as shown in the balance sheet for 2013 long-term loan and other long-term financial assets which amount to €252 million for non-current assets. Their current liabilities are €10,517 million. It is shown in the balance sheet that their short-term loans are € 38 million for current asset. 4.1.2 Physical Resources With respect to definition, physical resources include plant, equipment, size, location, technology flexibility, market value of fixed asset, scale of plants and alternative uses for fixed asset. Plant and equipment amount to €4,438 million with an inventory of €1,363 million. Danone headquarters located on France the company operate on 140 countries around the world here some of the biggest turnover sale for the Danone: Russia, France, United States, China, Spain, Indonesia, Mexico, Argentina, United Kingdom, and Brazil. 4.1.3 Intangible Resources The intangible resources include technology patent, copyright, knowhow, research and development facilities and scientific employees. The total amount for intangible resources is €16,820 million with a brand totalling of €4,487 million. Danone has increased its spending on sales forces as will on research and development. This organisation gives its employees the opportunity to innovate new products that are likely to beat their competition. In addition Danone uses their scientific and new technologies to make the employee enthusiastic about developing the new healthy product for their customers. 4.2 Reputation The reputation of Danone as an organisation is entirely dependent on the brands, customer loyalty and company relation with suppliers, customers and government. The brand of Danone most valuable brands it is considered to be distinctive to provide their product around the world and trying to focused more on poor country to provide them with health food and water. Their brands give the consumer the thought of quality product due to their production transparency. Furthermore, brand explanations help the customers to be confident about the product quality. For example Evian Water is a famous brand of water which gives consumers more craving to purchase based on quality. Danone has in the recent past established customer loyalty called Dannomics its aim to attract consumers even as the economic is on a crunch down. With this loyalty program customers can save around $15 as a voucher or a redeemable code that is sent to them via email whenever they come back to buy more of Danone products (Address, 2014). 4.3 Brand Equity, Customer Retention and Supplier Loyalty This refers to the brand equity influences of sales by entering new market within or outside the regions of operation. Danone has ventured into expansion through strategic merging with other large companies around the world. This expanding held Danone to growing on their market by increasing the sale almost 15.7%. (Frampton, 2014). Regarding customer retention, Danone has partnered with Coupons.com in an old-fashioned move to create a cutting edge out of their products. The coupons are easily redeemable given that they are available on the internet and on mobile applications; a strategy that has been applied by very minimal number of world leading companies (Moore-Ede, 2014). Danone has also established long-term and equitable relationships with their suppliers in a vigilant move to outdo the competitors (Danone, 2009). 4.4 Leverage Danone is well leveraged to beat its competition owing to the advantages that emanate from its marketing capabilities, product management and innovativeness. The leadership of Danone is well placed to steer the company through competitive jungle despite emergence of the Chinese economy. The current leadership is actually venturing into a joint venture that shall see the company own 20% of the Chinese dairy product market with an investment of about € 325 million. In a recent article by Askew (2014), Danone has continued to supply the United States with Yoghurt despite the competition due to innovativeness in their products thus leveraging a high market breadth. 4.5 Human Resources The human resources aspects that are associated with the company include training, experience, adaptability commitment, employee loyalty, employee qualification, pay rate and turnover. As far as Danone is concerned, the employees are the main resource asset for the company. The company gives the employees opportunities to contribute in the growing economy of the company in order to gain sustainability. Staff development is the main concern for the top management team who provide them with the opportunities to learn and gain knowledge. It will be also help the organization to retain the talents for both men and women and assure that these employees are loyal to the organization. As a result it helps the organization to expand their influence on consumers who in turn buy the healthy products by offering them new innovation in the market to get them satisfied. Because of the staff development priorities, the directors frequently meet during the year to make sure that all the staffs are gaining new ideas that will help them reach their primary objective. Also to evaluate the employee performance and what further progress need to be take on consideration to achieve the core objectives. This helps the management to promote the staff who deserve and have a clear responsibility to the higher vacant position within the organization. Danone group contributes to improvement of their services by encouraging their senior staff to perform better in their management skills and junior staff perform better professionally. 4.6 Competencies The competencies that Danone possesses are largely affiliated to the items that they trade within their area of expertise. A past market analysis carried out by Voigt (2007) shows that this company is dedicated to customer satisfaction through transformation of customer knowledge with the research and development in order to come up with innovative products that beat competition. The company integrates the external and internal knowledge together with the value chain in order to satisfy the complementary products market. Therefore innovation emerges as the key competitive edge for Danone as a whole. 4.7 Core competencies (C.C) Danone has established core competencies in areas that are highly competitive (dairy industry) through a combination of pharmaceutical solutions with nutrition solutions. The core product Nutripharm-Gastro for example has been developed into two business units including Activia and Actimel. Danone has exploited these two units to form unbeatable core competencies (Voigt, 2007). Core Competencies Nutripharm-Gastro Core Products Digestivum Essensis ® L. Casei Defensis Business Units Cream Pudding Yoghurt Milk Drink Curd Cream Cheese End products Activia Actimel Table 1: Danone’s core competencies (Voigt, 2007) 4.8 Dynamic capabilities (D.C) The dynamic capabilities uphold an expanded paradigm that needs to be explained in order to look into how the competitive advantage is gained. From this point of view, Danone has portrayed timeliness and flexibility when it comes to product innovation. The company has put in place aggressive measures that are aimed at accumulating valuable technological assets that are vital to innovation. They have also indicated capabilities when it comes to adapting to external organisational skills, functional competencies and reconfiguring internal strategies for the purpose of increasing the competitive edge (Group, 2013). 5 Part 3: Diagnosing and Evaluating Strategic Capability 5.1 Stakeholder approach Stakeholders are trying to improve share value which will have a good result at the end for the company and partner in balance in the achieving the company growth. The discussion between the partner building an important relationship and overcome the discourse to what it called ‘co-creation’ project (Rismont, 2013). This co-creation primarily occurs for the precise development and it depends with the local condition. Since these projects should be supported by finance so the board of directors and social responsibility will help to operate these projects. Danone invent a new driver on 2001 called Danone way to keep their progress and expand their business. This program helps to spread the social improvement with the important of the group. This will be ensuring by measure the performance for every division and according to the social environment. The evaluation of measure performance and how they achieve certain target for all this division will allow them to develop their policies and improved. Stakeholders are happy to have this kind of program because it’s help to evaluate their external financial investment and also will help all the division to keep progress in their business (Brahma, 2011) 5.2 Value Chain (V.C) Figure 2: Danone’s value chain analysis. 5.3 Benchmarking In benchmarking, Danone has covered a great deal of geographical locations thereby branding themselves as a leading trademark among its competitors. Danone in conjunction with Citibank has completed critical steps in its expansion plans by entering the highly coveted Chinese market. This structure has optimised Danone’s treasury activities thus putting it ahead of its competitors. Danone has also enhanced the global its global liquidity through a pilot scheme that offers prerequisites across the borders. Danone has set trends in inter-company contracts especially with its acquisition and expansion moves. These solutions have been achieved in a record time thereby making it realise the benefits before its major competitor venture into these strategies (Gehin, 2013). 5.4 Corporate Social Responsibility for Danone Danone understands that the driving force emerges from improvement of the lives of the communities where they transact. The company’s slogan on corporate responsibility is clearly stated on their official website, “Dannon Cares: We love yogurt. And we enjoy making foods that are nutritious, delicious and fun to eat. We also have some very deep-seated beliefs, which are expressed and realized through our commitment to sustainable development” (Dannon, 2014). The company is dedicated to the health of its customers and as such they have dedicated their resources towards achieving this important act of social responsibility. Their dedication to nutrient rich foods has attracted a large client following despite the market competition. Danone abides to the best environmental practices in a bid to ensure sustainability of all products that they provide. This company is also dedicated to the human aspect of its resources and affirms that they are the DNA that forms Danone the organisation. 5.5 SWOT analysis In order for Danone to achieve sustainability and a competitive advantage in the market, the company needs to do its best to be successful among their competitor. The best way is to analyse this situation is to focus on strengths, weaknesses, opportunities and threats that are faced in the day to day running of the company. 5.5.1 Strength Danone Company the first founders of the fresh diary product on the world and they are the leading on this product. The company also ranked the second for baby food and waters, Danone also leading on medical nutrition product on Europe (France, 2013). It employed in the region of 102,401 people as of December 31, 2012 internationally. Danone recruits peoples in different position senior and junior who concern to be promoted to higher position by assigning them with new responsibilities. The company is also highly concerned with its corporate social responsibility for further brand recognition. Other than innovation, the company is known for its healthy and good quality products. 5.5.2 Weakness There are two main weaknesses identified with regard to Danone as an organisation. First all the company is susceptible to competition from big market players such as nestle, Unilever, Kraft foods and PepsiCo. This kind of competition translates to very minimal market share of the company does not implement strategies and policies that are likely to steer it to the next level of technology and innovativeness. Another major weakness is high branding switching that poses as a problem to forecasting and even developing better products due to the dynamism that the market experiences. 5.5.3 Opportunities Some of the opportunities that are presented to the company include product line expansion owing to the innovativeness of its research and development departments. Due to continuous calls for worldwide investment in the growing countries, Danone is presented with a diverse choice of acquisitions and mergers throughout the world and especially in emerging African economies. Apart from mergers and acquisitions, the company is also represented with a market share expansion opportunity in the emerging economies. 5.5.4 Threats The threats that are associated with Danone are largely affecting the competitors too hence a standard measure has to be deployed. Acquisitions by competitors pose as a major threat to the organisation’s market sustainability coupled by stiffening competition. In other areas, the company experiences hiked prices for raw materials such as milk and its products that are largely used for production. 5.6 Ratio analysis Looking at the financial ratios it is evident that Danone has beaten its competitions hands down with some of them even lacking to post this important news. Nestle stands at a gross margin of 47.9% while its closest competitor Kraft foods stand at 37.5%. This in comparison to Danon which has a gross margin of 48.5 % shows that the competition is very tight. The moving net income at Danone reflects €1,422 million as at March 2014, in comparison to nestle whose income €8,195 million and Kraft at €1,981 million. It is however indicated in the same website that growth is inevitable and given time and expansion Danone is likely to surpass all these two groups. While Danone has been working on a negative capital base it has been making remarkable amounts in profits. 6 Conclusion Danone has over years gained importance within the food market as one of the highest market supplier of dairy products. This company’s bid to amass the largest market share has however been faced by a huge opposition from its competitors who include nestle, Unilever, Kraft foods and PepsiCo. The unrelenting effort towards innovativeness has however been helpful in keeping Danone on top of the game. The company has a lot of capabilities ranging from organisational to external capabilities which have arisen from the corporate social responsibility. Danone has been able to couple health and pharmaceutical solutions (Gastro) which they have gone ahead and patented thereby closing out the competition. Danone has been sustainable within the competitive market given its benchmarking abilities and continuous research and development. From the SWOT analysis carried out it is indicated that Danone as a company has a lot of opportunities in waiting, while on the other hand they have continued to grow stronger by the day with their recent merger with the chief financier Citibank. Financing will therefore not be a big problem to the company that seeks to achieve growth in a competitive environment. References Address, A. L. (2014, Jun 17). just-food. Retrieved March 22, 2014, from Danone luches Dannon loyalty programme: http://www.just-food.com/news/danone-launches-dannon-loyalty-programme_id107727.aspx Askew, K. (2014, March 21). CAGE 2014: Danone leveraging breadth of offering in US yoghurt. Retrieved March 31, 2014, from Just-in: http://www.just-food.com/news/danone-leveraging-breadth-of-offering-in-us-yoghurt_id126310.aspx Brahma, S. S. (2011). From Industry to Firm Resources: Resource-Based View of Competitive Advantage. . 7-21. Celine, D. E. (2013, July 26). Employee Development. Retrieved March 15, 2014, from Danon training and development: http://www.danone.com/en/for-you/candidates/growing-in-danone/your-development/ Danone. (2009). Danone Business Conduct Policy. Paris: Danone. Frampton, J. (2014, July 15). Interbrand Creating and managing brand value. Retrieved March 2014, 22, from Danone: http://www.interbrand.com/en/best-global-brands/previous-years/2012/Danone France, D. (2013, July 26). Danone histoory. Retrieved March 15, 2014, from Danone histoory: http://www.danone.com/en/# Froud, J. (2013). Research in Motion ltd – Strategic Analysis. Manchester Business School. Gehin, Y. (2013, July). Danone Asia, Highly Commended, Best in Class Benchmarking. Retrieved March 31, 2014, from Treasury Today: http://treasurytoday.com/adamsmith/2013/winners/danone-asia-highly-commended-best-in-class-benchmarking Group, D. (2013, September 15). Retrieved March 15, 2014, from http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/ Moore-Ede, P. (2014). The power of Coupons: Danone and Coupons.com partner up to reward loyal customers. Retrieved March 31, 2014, from Barefoot SEO: http://www.barefootseo.com/power-coupons-danone-coupons-com-partner-reward-loyal-customers/ Morningstar. (2014, March 31). Danone ADR DANOY. Retrieved March 31, 2014, from Morningstar: http://financials.morningstar.com/ratios/r.html?t=DANOY Morningstar. (2014, March 31). Kraft foods group Inc. KRFT. Retrieved March 31, 2014, from Morningstar: http://financials.morningstar.com/ratios/r.html?t=KRFT Morningstar. (2014, March 31). Nestle SA ADR NSRGY. Retrieved March 31, 2014, from Morningstar: http://financials.morningstar.com/ratios/r.html?t=NSRGY Prahalad, C. K., & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review, 79-92. Rismont, S. (2013, November 20). Governance shared with stakeholders - Danone. Retrieved March 18, 2014, from http://www.danone.com/en/for-all/management/governance/governance-shared-with-stakeholders/ Ulrich, D., & Smallwood, N. (2004, June). Capitalizing on Capabilities. Retrieved May 31, 2013, from Havard Business Review: http://hbr.org/2004/06/capitalizing-on-capabilities/ar/1 Vago, E. R. (2013, Jan 20). Danone. Retrieved Marhc 2014, 22, from Danone: http://html.rincondelvago.com/danone_1.html Voigt, T. A. (2007). Knowledge Combining Competencies for Leveraging Core Products – The Case of Function Food. MIBES, 422-435. 7 Appendix 1 FINANCIAL RATIOS FOR NESTLE SA ADR   2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue CHF Mil 86,769 91,075 98,458 107,552 109,908 107,618 109,722 83,642 92,324 92,373 92,373 Gross Margin % 58.3 58.3 58.6 58.1 56.9 58 58.2 47.2 47.6 47.9 47.9 Operating Income CHF Mil 8,672 10,800 13,302 15,024 15,676 14,970 16,194 12,471 13,932 13,068 13,068 Operating Margin % 10 11.9 13.5 14 14.3 13.9 14.8 14.9 15.1 14.1 14.1 Net Income CHF Mil 6,717 8,518 9,197 10,649 18,039 10,428 34,233 9,487 10,611 10,015 10,015 Earnings Per Share CHF 1.7 2.04 2.36 2.76 4.84 2.91 10.12 2.96 3.32 3.13 3.13 Dividends CHF 0.71 0.8 0.59 0.66 0.78 1.41 1.26 1.8 1.62 1.7 1.7 Payout Ratio % 42.8 37.6 25.3 24.1 16.1 48.5 12.5 60.9 48.8 54.4 54.4 Shares Mil 4,035 3,999 3,931 3,868 3,725 3,584 3,382 3,205 3,195 3,200 3,200 Book Value Per Share USD 8.53 8.95 10.44 1.23 13.12 13.61 20.32 19.53 21.29 22.66 22.57 Operating Cash Flow CHF Mil 10,412 10,205 11,676 13,439 10,763 17,934 13,608 9,763 15,772 14,992 14,992 Cap Spending CHF Mil -4,031 -4,133 -4,889 -5,590 -5,454 -5,041 -4,984 -5,026 -343 -5,330 -5,330 Free Cash Flow CHF Mil 6,381 6,072 6,787 7,849 5,309 12,893 8,624 4,737 15,429 9,662 9,662 Free Cash Flow Per Share USD 1.39 1.15 1.42 1.79 1.33 3.48 2.73 1.57 5.29 3.4   Working Capital CHF Mil 6,168 5,947 2,826 -7,556 -175 3,787 8,851 -1,908 -3,548 -2,851   Table 2: Financial ratios of Nestle (Morningstar, 2014) FINANCIAL RATIOS FOR KRAFT FOODS GROUP INC.   2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue USD Mil             17,797 18,655 18,339 18,218 18,218 Gross Margin %             33.8 31.6 31.8 37.5 37.5 Operating Income USD Mil             2,965 2,923 2,670 4,591 4,591 Operating Margin %             16.7 15.7 14.6 25.2 25.2 Net Income USD Mil             3,534 1,839 1,642 2,715 2,715 Earnings Per Share USD             5.98   2.75 4.51 4.51 Dividends USD                 0.5 2.05 2.05 Payout Ratio %                 18.2 45.2 45.2 Shares Mil             591   596 599 599 Book Value Per Share USD                 6.03 8.7 8.7 Operating Cash Flow USD Mil             828 2,664 3,035 2,043 2,043 Cap Spending USD Mil             -448 -401 -440 -557 -557 Free Cash Flow USD Mil             380 2,263 2,595 1,486 1,486 Free Cash Flow Per Share USD                 4.35 2.48   Working Capital USD Mil               700 1,217 1,498   Table 3: Financial ratios of Kraft foods (Morningstar, 2014) FINANCIAL RATIOS FOR DANONE ADR   2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue EUR Mil 13,690 13,014 14,073 12,776 15,220 14,982 17,010 19,318 20,869 21,298 21,298 Gross Margin % 53.5 49 48.7 50.1 52.9 55 53.2 50.6 50.1 48.5 48.5 Operating Income EUR Mil 1,704 1,705 1,874 1,546 2,187 2,511 2,578 2,729 2,747 2,128 2,128 Operating Margin % 12.4 13.1 13.3 12.1 14.4 16.8 15.2 14.1 13.2 10 10 Net Income EUR Mil 316 1,669 1,353 4,180 1,313 1,361 1,870 1,671 1,672 1,422 1,422 Earnings Per Share EUR 0.13 0.58 0.55 1.74 0.55 0.5 0.61 0.55 0.55 0.48 0.48 Dividends EUR 0.24 0.14 0.16 0.2 0.22 0.2 0.15 0.25 0.21 0.23 0.23 Payout Ratio % 197.5 30.5 32.7 53.7 50 35.7 25.1 46.1 39.4 47 47 Shares Mil 2,579 2,503 2,447 2,399 2,393 2,472 3,080 3,020 3,016 2,942 2,942 Book Value Per Share USD 2.31 2.36 2.95 5.13 4.68 4.93 5.13 5.26 5.4 5.05 5.02 Operating Cash Flow EUR Mil 1,784 1,846 2,169 1,611 1,754 2,000 2,476 2,605 2,858 2,356 2,356 Cap Spending EUR Mil -623 -606 -692 -726 -706 -699 -832 -885       Free Cash Flow EUR Mil 1,161 1,239 1,477 885 1,048 1,301 1,644 1,720       Free Cash Flow Per Share USD 0.61 0.59 0.8 0.54 0.61 0.75 0.71 0.74       Working Capital EUR Mil 1,014 1,557 1,906 -2,419 -15 -1,449 -1,308 -850 -1,630 -2,757   Table 4: Danone’s financial ratios (Morningstar, 2014) Read More