Analysis of a Group of Food Industries Essay Example

demand. According to Ghemawat ; Collis (2001), the economy is also a significant factor as companies in the food processing industry must be prepared to incur high costs in order to compete effectively.

Furthermore, the slow market growing rate for the nutrient processing industry contributes to the high barriers to entry and acquisition between companies. There are many nutrient processing companies and limited capacity for any more companies to enter the market.

The competition from other industries offering substitute products is intense for nutrient processing companies. For example, Dunkin' Donuts and Campbell Soup Company operate in different industries but both offer soup. Consumers have the option to go to Dunkin' Donuts and get similar soups to what Campbell Soup sells.

Consumers have the power to influence the nutrient processing industry. They can pressure for lower prices, demand higher quality products and services, and create competition among rivals.

The food processing industry's buyers hold significant bargaining power due to the wide range of options available and their preference for lower-priced items. For instance, Campbell's soup products are priced at a premium of 20 to 25% compared to generic brands found in grocery stores, causing some consumers to opt for cheaper alternatives. Moreover, consumer preferences play a crucial role in determining the profitability of food processing companies. If consumers perceive prices as excessively high, they may cease purchasing these products or switch to substitutes, thereby pressuring companies into reducing prices.

On the contrary, suppliers also possess bargaining power within the food processing industry by having the ability to raise prices or compromise on product quality.

When it comes to high-quality merchandise providers, Campbell has consistently bought excellent ingredients from local farmers despite the

rising cost of materials due to inflation. In 2006, they created the Supplier Diversity Program with the aim of improving their supplier base and better representing the markets they serve. Despite aiming to spend $121 million with diverse providers in 2007, Campbell actually spent $129 million.

( Campbell 's CSR 2008 ) Swot Analysis: A swot analysis allows Campbell's to assess the fit between its capabilities and the demands of the external environment. According to Henry (2008), the company can align its strengths and weaknesses with the opportunities and threats in the competitive food processing industry. The Campbell's products portfolio includes soups, sauces, biscuits, and cocoas with a strong research function in new product development.
Internal Analysis-Strengths: Campbell has always embraced innovation in every aspect of its business. In Napoleon, Ohio, and Paris, Texas, the company uses an innovative method called overland flow to treat effluent at its manufacturing plants. In terms of product introduction, Campbell consistently brings new products to the market quickly.

To illustrate, Campbell frequently updates the appearance of their soup products, such as the first portable soup merchandise, Soup at Hand, as well as newer microwaveable options like Chunky and Select. Additionally, Campbell has installed their popular gravitation fed postponing system at 24,000 retail merchants nationwide. This system has been credited with rejuvenating the soup aisle, expanding the category, and greatly improving the shopping experience. Campbell is also innovative in assessing consumer satisfaction and expectations.

Weaknesses: Worsening Market Share. According to Campbell's Corporate Social Responsibility Report 2008, Campbell's market share in the soup industry decreased from 60% in 2007 to 49% by October 2009. This decline is attributed to the rise in

popularity of private labels that offer high-quality products at lower prices. As a result, some consumers have switched to these private labels, leading to an additional 11% market share for them. Moreover, Campbell's has faced tough competition from rival brands like General Mills' Progresso and Nestle.

( Campbell Soup Co Form 10-Q Quartery Report 2010 )
External Analysis-Opportunities

Demand for Wellness Products

The demand for wellness products presents an opportunity for Campbell's Soup Company. In recent years, two consumer groups have shown a growing interest in adopting a healthier lifestyle. The younger generation seeks low-calorie and convenient meals, while the older age group aims to reduce sodium intake for better health. To meet this demand, Campbell offers healthy options such as soups and bakery items. Moreover, they plan to expand their successful sodium reduction program by decreasing sodium levels in 23 of their condensed soups by up to 45% in the upcoming fiscal year. This expansion will allow them to further cater to the needs of health-conscious consumers.

Threats: Intense Competition

Campbell's profitable soup category has faced fierce competition, resulting in a loss of market share to rivals like Progresso and private label brands from companies such as Wal-Mart. Other divisions within Campbell's have also struggled to consistently generate profits. According to Wolpert (2002), the ever-changing consumer habits and preferences necessitate continuous innovation and cost reduction efforts to retain loyal customers in an evolving environment.

Extensive Laws:

To comply with various local and international laws and regulations related to food safety and environmental standards, the company must meet numerous requirements. For example, before Campbell's can sell its food products, they must undergo inspections mandated by the Federal Food, Drug, and Cosmetic Act.

According to

Campbell's CSR 2008, if the company violates laws and regulations, it may face penalties, legal action, recalls, and fines. Benchmarking is recognized as important by Campbell for evaluating performance. In order to do this, the company has studied various leading companies in the food and beverage manufacturing industry in areas such as sustainability, supply chain, consumers, community, and workplace. Additionally, Campbell has focused on the strategies used by companies to achieve their goals and their notable past achievements. When it comes to community outreach, Campbell has given priority to nutrition and environmental programs through collaborations with non-profit organizations, universities, and Think Tanks for research and development of new products.

Furthermore, Nestle has partnered with environmental experts to develop advanced solutions for protecting the environment. For example, they have established programs targeting malnutrition and obesity in children and adolescents from lower-income households. Similarly, General Mills has dedicated 5% of their pretax profits to charitable causes. The Campbell's company has set benchmarks for promoting nutritional and hunger elimination programs, as well as promoting micronutrient products for lower-income households and environmental initiatives. According to Campbell's Annual Report 2009, Nestle, Coca Cola, Pepsi.co, and General Mills have also implemented successful workplace-related programs.

Pepsi CO offers job opportunities for individuals with disabilities, while General Mills has decreased its lost-time injury rate by 25% over a five-year span. In contrast, Campbell has implemented workplace programs that focus on four key areas:

1. Ensuring diversity in the workforce to bring a wide range of talents and perspectives to the business - helping employees achieve personal and professional growth.
2. Ensuring the health and safety

of employees both at home and work.

Campbell strives for an injury-free workplace through a robust health and safety program backed by high employee engagement. They provide training to ensure employees carry out their tasks safely and responsibly with regard to the environment. (Campbells CSR 2008)
Strategy Formulation
To gain sustainable competitive advantage in the food processing industry, Campbell develops strategies based on its objectives and mission. According to Porter (1980), competitive strategy involves establishing a defendable position within an industry, effectively managing the five competitive forces, and ultimately generating superior returns on investment.

Business Level Strategy-Differentiation

Campbell's aims to differentiate itself by providing unique and superior value to its customers through product quality and value-added services. The company's goal of becoming the world's most extraordinary food company aligns with a differentiation strategy. Campbell focuses on expanding their iconic brands, particularly in the simple meals category like soup, to provide superior, healthy, and nutritious food. Their plans include enhancing over 60 percent of their condensed line, reducing sodium content further, improving packaging and storage systems, and implementing new marketing strategies for the simple meals category (Campbell Growth Plan 2010). Currently, more consumers are increasingly concerned about the nutritional values of the foods they consume.

In order to enhance its competitive position and revitalize its condensed soup business, the Campbell's Soup Company has been utilizing its superior research abilities to further develop its product line. According to Douglas R. Conant, President and CEO of Campbell's (Campbell's 2009 annual report), the company is focused on leveraging continuous improvements and innovations in order to outperform

most competitors in the condensed soup category.

With a consumer base consisting primarily of baby boomers, Campbell's heavily relies on low-sodium products as a key factor for long-term success.

According to a recent survey, the majority of baby boomers consume diets that are low in sodium. High cholesterol, which is linked to high levels of sodium intake, is the most commonly diagnosed health condition among this generation. Among all processed foods available today, condensed soups have one of the highest sodium contents. As a result, Campbell's low-sodium products have successfully set themselves apart from their competitors. In addition to reducing sodium, Campbell's also focuses on other factors such as MSG and low calorie content in their soups. They believe that offering these healthier alternatives will help them attract younger consumers who prioritize their health. Furthermore, Campbell's recognizes the importance of using quality ingredients to create a superior product (Source: Campbell CSR Report 2008).

Campbell sources most of their ingredients from domestic farmers in countries where they manufacture products. They also obtain some ingredients from carefully selected suppliers worldwide. Any ingredient that doesn't meet quality requirements is not used in Campbell products to ensure superior quality. Additionally, providing value-added services helps Campbell surpass their competitors. They continuously test new programs to offer consumers useful information on meal ideas, health and wellness, and other tips. One example is their Campbell Meal-mail program, which delivers approximately 500,000 recipes electronically each day to busy Americans seeking convenient and delicious meal ideas for their families. Consumers can visit the Campbell's Kitchen website anytime to download recipes that have been tested and approved by Campbell's dietitians.

Consumers also have the opportunity to share their

thoughts and feedback on recipes with each other on the Campbell's Kitchen website (Campbellsoupcompany.com). It is suggested that the Campbell Soup Company improve the taste of its soup products to attract more demand. Additionally, Campbell can try to create a more contemporary design for its existing soup products instead of the familiar red and white color scheme in order to differentiate itself from various types of products in the market. The corporate level strategy of The Campbell Soup Company focuses on three key issues: the company's overall approach to growth, stability, and retrenchment; the market in which the company competes through its products and business units; and the manner in which management coordinates activities, allocates resources, and cultivates capabilities among product lines and business units. Campbell operates with four product divisions and has expanded its products to include microwavable soups to make it more convenient for customers to prepare soup without a container (Campbell's annual report 2009). Clearly, as a decentralized company, The Campbell Soup Company has been employing a related diversification multiproduct strategy. Its strategy is to diversify its business by producing multiple products and expanding its market share.

Campbell utilized its technology support and diverse production to support clients with convenient, flavorful, and high-quality food. To support its operating system, departments such as Research & Development (R), product development, and technology systems are necessary to produce a reliable and high-performing operating system that avoids unexpected shutdowns. Under the leadership of McGovern as Campbell's CEO, the company attempted to utilize an unrelated diversification strategy in order to quickly expand its product line and increase profits and revenue. Campbell aimed to acquire other companies to

gain access to new products and markets. Instead of solely acquiring food products, Campbell also pursued the unrelated diversification strategy by acquiring companies that were well-positioned to capitalize on consumer trends and engaged in various types of business.

For example, the Trigon Manufacturing Company, a fitness products manufacturer, is unrelated to the company's main products (Ireland, Hoskisson; Michael 2006). The main reason for Campbell's failure to achieve financial economies with the unrelated diversification strategy is that the company's approach to managing its core product divisions remained unchanged. Additionally, the corporate headquarters did not implement the necessary strong financial controls to efficiently manage an internal capital market. David Johnson, who replaced McGovern, decided that Campbell should no longer use the diversification strategy, but instead reduce the level of diversification by implementing a related constrained strategy to create value through operational relatedness.

Campbell's growth plan in 2010 involves reassigning core competences and focusing on value chain analysis to identify the ability to transfer skills and expertise within similar value chains. The company should prioritize enhancing more than 60% of its condensed line and accelerating the performance of its existing portfolio, particularly in the U.S. soup market. This will lay the groundwork for long-term growth. (Campbell Growth Plan 2010)

External Acquisitions and Partnerships

Through value-creating external development, Campbell's can expand its market presence across its product lines. For example, the recent acquisition of Ecce Panis, a manufacturer of artisan breads, positions Campbell's Baking and Snacking segment for growth.

This acquisition allows Campbell's to enter the thriving artisan bread market. With the increasingly diverse population in America, it is suggested that Campbell's should consider products that align with the cultural backgrounds of

these immigrants. The brand could potentially expand its product line to cater to the wide variety of tastes in society today.

Strategy Implementation

Having a clear mission statement is crucial for providing focus to an organization and is essential for setting objectives and formulating strategies ( Haberberg and Rieple 2001 ). In order to thrive in a highly competitive market, Campbell's needs to define their identity, values, and what sets them apart from their competitors.

Throughout all countries and divisions, at all degrees in the company, it is essential for the successful execution of the mission statement that this is clear. Campbell's implementation of their scheme involves planning the organization's structure, allocating resources, developing information and decision-making processes, and managing human resources, including areas such as the rewards system, leadership approaches, and staffing. According to Wheelen and Hunger (2007), the process of implementing the strategy involves various management activities that are necessary to put the strategy into action, implement strategic controls to monitor progress, and ultimately achieve organizational goals.

Management Issue: Restructuring

Restructuring


In the food processing industry, one year is relatively indistinguishable from the next from a macroeconomic perspective. Since 1980, Campbell's corporate strategy and management structure have undergone several restructuring efforts. On April 28, 2008, the company announced a series of initiatives aimed at improving operational efficiency and long-term profitability. These initiatives included selling certain salty snack food brands and assets in Australia, closing certain production facilities in Australia and Canada, and streamlining the company's management structure.

As a result of these efforts, the company incurred a reconstituting charge of $175 million in 2008. This charge included a net loss from the sale of certain

Australian salty snack food brands and assets, costs related to employee layoffs and benefits, including the estimated impact of pension charges, and charges for property, plants, and equipment damage. This restructuring activity cost the company significantly.

Workforce Diversification

Campbell strives to fulfill their commitment to "Campbell Valuing People, People Valuing Campbell" by providing employees with the necessary resources for job success, competitive compensation and benefits, opportunities for growth and learning, and advancement through their work. The Campbell Board of Directors currently consists of 14 independent members and one company executive, CEO Doug Conant. The operations of the board are overseen by an independent, non-executive Chairman.

The Board recognizes the value of having diverse managers with different backgrounds and positions, as it contributes to strong corporate governance. Currently, the Board consists of three female managers, one manager from India, and one Afro-American manager. The CEO of Campbell's Board of Directors strongly believes that workforce diversity is crucial in achieving the company's strategic objectives. As a result, Campbell's is committed to attracting a diverse group of talented employees and providing all associates with opportunities for growth in a supportive culture that fosters advancement and enhances their overall quality of life. Additionally, the managers are compensated annually based on the average compensation paid by similar food and consumer products companies.

Approximately 50% of each manager's fee is paid in cash and 50% is paid in common stock. Director stock ownership requirements have been in place at Campbell since 1993. Currently, the managers beneficially own over 44% of the company's common stock. (Carlin, M & Harris R 2008) Despite successfully implementing workforce diversification, it is recommended that the company also offer stock options

to their rank-and-file employees.

Employee stock options provide workers with the chance to buy portions in their company at a designated price. The price should be linked to the stock's value at the time of offering. Employees can choose to purchase the stock at a fixed price and sell it later.

Employee Engagement

Campbell believes that employees will feel more valued when they are well-informed, comprehend the company's business goals and plans, and are regularly encouraged to provide feedback.

In America, Campbell was recognized by Gallup as one of the 'Best Places to Work' in 2007 and 2008. The company believes that its work environment has contributed to their high employee retention rate and improved market performance. Campbell conducts an annual employee survey to develop action plans for improving the workplace and strengthening business practices.

Marketing Issues

Campbell understands that successful marketing execution is influenced by various marketing variables.

Market Segment

The company's 2009 financial reports separate their business into four main categories: US Soup, Sauces and Beverages; Baking and Snacking; International Soup, Sauces and Beverages; and North American Foodservice.

With approximately $3.8 million in gross revenues, US Soup, Sauces and Beverages contributed to half of the gross revenues in FY 2009 and drove most of the company's net profits. Key brands such as Campbell's, V8, Swanson, and Prego experienced a combined growth of 4% due to innovation, consumer trade-downs, and improved distribution channels. The selling strategy and product line of Campbell's focuses on providing healthy and nutritious options. The product line offers a wide range of choices with different sizes and flavors, making it suitable for different consumers. Additionally, the packaging is designed for individual or multiple item purchases and effectively conveys

a message of wellness by using well-known athletes. The pricing of the brand's products is consistent with its positioning, aiming to give the perception that one can eat healthy without paying more.

Distribution

• Campbell 's brand is extensively distributed throughout the United States and many foreign countries.
• In the distribution process, Campbell 's works with wholesalers and retailers to create the supply channel. This is a profitable concept as long as communication channels remain open. Catalog selling is also employed due to the products' long shelf life.
• The products are easily available in any marketplace within the US. Promotion
• By featuring the latest sports figures in their advertisements, Campbell 's successfully maintains their position as a healthy choice.
  • When retail merchants use the concerted advertisement technique, it helps promote their products from various perspectives.

  Campbell's effective marketing strategies have established them as a leading brand in their product lines. In comparison to their competitors, Campbell's places significant emphasis on engaging with the public through activities such as sweepstakes, giveaways, and education. Their efforts in public relations have positioned them as one of the most socially conscious brands in the

industry.

Conclusion: Strategic analysis is especially relevant for strategic management at the business unit level of large multinational companies like Campbell Soup Company.

During the strategic analysis phase, the company conducts internal and external environmental scanning using Porter's 5 forces model and SWOT analysis. Additionally, benchmarking is utilized to evaluate performances. Strategy preparation is then undertaken based on the company's objective and mission, outlining both business-level and corporate-level strategies. Business-level strategy focuses on the market competition, while corporate-level strategy manages the business portfolio. The final stage of strategy implementation includes addressing management issues, staffing, and marketing variables that can impact the company's profit margin.

List of Mentions

1. Campbell Soup Company, About Us, online, retrieved 2 March 2010, hypertext transfer protocol: //www.campbellsoupcompany.com/about_us.asp
2. Henry, A 2008, Understanding Strategic Management, Oxford University Press, New York United States
3. Porter, M. E. (1996) What is Strategy, Harvard Business Review, 74 (6):61-78
4. Food Processing Industry, 2006, retrieved 6 March 2010, hypertext transfer protocol: //www.miti.gov.my/cms/documentstorage/com.tms.cms.document.Document_7674150a-c0a81573-2d952d95-c9439446/Chap % 2019.pdf
5. Wheelen T.L, Hunger J.D, Concepts in Strategic Management and Business Policy, 2007, 10th edition, Pearson Prentice Hall, United States of America
6. Ghemawat, P., Collis, D., Pisano, G. and Rivkin, J. (2001) Strategy and the Business Landscape: Core Concepts, Upper Saddle River: Pearson Education.
7. Campbell's Corporate Social Responsibility Report 2008, retrieved 6 March 2010, hypertext transfer protocol: //www.campbellsoupcompany.com/csr/documents/Campbells_CSR08.pdf
8. Campbell Outlines Growth Plans for U.S. Condensed Soup Business, retrieved 5 March 2010 hypertext transfer protocol: //investor.shareholder.com/campbell/ReleaseDetail.cfm?releaseid=445289
9. Carlin, M; Harris R 2008, Mm!Millimeter!Good!

The text is a reference to a source titled "Long-Term, The Story of Campbell Soup Company's Long-run Compensation Strategy" by Haberberg, A. and Rieple, A., which is associated with New Jersey.

(2001) The Strategic Management of Organizations, Essex: Pearson Education Limited.

out of the invention box, Harvard Business Review, pp.77-83.