Sonae SR international expansion

Presenting to the board of directors:

Jaqueline Ledezma

Mario Martinez

Daniel Felix

Mauricio Martinez

EGADE BCG 1

Mandate

Find the best expansion strategy for Sonae SR.

Challenge: Profitability in International markets by 2017 and breakeven in Spain

EGADE BCG 2 EBCG To keep Sonae growing for the next 100 years

Agenda

•Recommendation

•Analysis

•Key Issues

•Strategy

•Implementation

•Wrap up

EGADE BCG 3 EBCG

Recommendation

EGADE BCG 4 EBCG

Expand Sonae SR into South Central

Asia and turn around stagnation in

Spain to improve profitability

through capital light

Sonae SR Stores by LOB

EGADE BCG 5 EBCG

39%

20%

21%

20%

Global Stores by Business

Worten Sport Zone MO Zippy

# of

Stores

Worten 229

Sport Zone 117

MO 124

Zippy 120

Sonae SR Global Presence

EGADE BCG 6 EBCG

71%

20%

0% 3% 6% Sonae SR Presence

Portugal Spain

India Saudi Arabia

Other countries

Sonae SR

Presence #

Stores

Portugal 417

Spain 120

India 1

Saudi Arabia 18

Other countries 34

• Sonae SR with 71% of stores

in Portugal

• Worten accounts for 39% of

stores 68% of revenue

• Sport Zone has 20% of stores

and 18% of revenue

• Fashion

• Zippy and MO 20% of

stores &

• 14% of Revenue

Key issues

EGADE BCG 7 EBCG We should base our strategy accounting these objectives

Achieve profitability

Assure company

sustainability

Create local partnerships

Sonae Core Competencies

EGADE BCG 8 EBCG

Ops management

Streamlined Logistics & Purchasing

Knowledge of Portugal

market

Experienced workers

Sonae SR Competitive advantage

EGADE BCG 9 EBCG

•Experienced, competent, dedicated workers

•Ability to develop new, capital light business models for stores

•Strong ability to adapt new business models

•Ability to accommodate new business partners through franchising

•Ability to turn weaknesses into strengths

Organic Expansion vs Capital light

EGADE BCG 10 EBCG

• Expensive

• High Risk

• Long term returns

(no Short term)

Organic

• Lower costs

• Higher

profitability

• Sonae has ability

to adapt business

models

Capital Light

Improve profitability in Spain

EGADE BCG 11 EBCG

•Create partnership with Zara Brand for clothing lines Zippy and MO to expand these product lines and increase profits

Geographical

cultural proximity

Large populati

on

Success in Spain indicative of

success

Market recovering from financial

crisis

Alternatives analysis

EGADE BCG 12 EBCG

Drivers /

Alternatives Spain

South Central

Asia Latin America Middle East

Price index

Brand control

Internationaliza

tion

Sustainability

Risk

management

Expansion time

Alternatives analysis

EGADE BCG 13 EBCG Enter the new Asian market and expand in Spain

Drivers /

Alternatives Spain

South Central

Asia Latin America Middle East

Price index

Brand control

Internationaliza

tion

Sustainability

Risk

management

Expansion time

The new retail business

EGADE BCG 14 EBCG Achieving brand sustainability and Sonae

Key elements

Predictive analytics

Prescriptive analytics

Fast fashion Optimization models

Solution for demand forecast & management

EGADE BCG 15 EBCG Apply a counter disruptive implementation

Create strong partnership with MIT

IT Business analytics

Developing a successful platform

EGADE BCG 16 EBCG Hire IT personal for this objective

MIT Logistics

IT platform in Zaragoza, Spain.

IT

Business analytics of human capital

EGADE BCG 17 EBCG

MIT partnership with the Master in

Business Analytics program for project

internships and personnel feeding farm.

HR

Competency to develop brands

EGADE BCG 18 EBCG

Hire marketing personnel from Inditex

(Zara)

Brand

Marketing Savvy Local market

knowledge

Jobs to do in India and South Central Asia

Develop local supplies

Lower costs

Faster deliveries

Create brand awareness

EGADE BCG 19 EBCG

Wrap up

EGADE BCG 20 EBCG Recommendation aligned with objectives.

Achieve profitability

Assure company

sustainability

Create local partnerships