This essay Campbell Soup Co Essays, Book Reports, Term Papers has a total of 1768 words and 9 pages.
Campbell Soup Co
1. Company Overview
Founded in 1869, Campbell Soup Company is one of the leaders in manufacturing & marketing branded consumer food products with approximately 24,250 employees world wide, total revenues of 6.7 billion, 36 manufacturing plants in 10 nations, and over 2000 products on the market. Over the years, Campbell Soup Company has diversified into number of businesses – from frozen dinners to retail garden centers. However Soup has been its core business. Some major brands of Campbell Soup Co. include Flagship red-and-white canned soup, Prego Spaghetti sauces, Godiva Chocolates, Pepperidge Farm baked goods, V8, etc. In addition, since 1980, Campbell Soup Co. has undergone three different strategies under thee different CEOs who brought their own agenda in order to build value for the company and its shareholders. For example, under Gordon McGovern’s leadership (1980-1989), Campbell’s strategic focus was on developing and introducing new products and expansion of the business portfolio through acquisitions. Under David Johnson (1990 – 1997), The companies focus shifted to increasing sales growth, increase market share & share holder value through Eliminating unprofitable products & business units, focusing more on global marketing and Improving communication and technology sharing between businesses. Under the third CEO, Dale Morrison (1997 – present), Campbell’s strategy focus continued to increase sales growth, increase market share & share holder value, but focus was shifted more towards profitable businesses with the highest growth potential and divestations of non strategic businesses
2. Problems / Strategic Issues
Since 1980, Campbell’s corporate strategy and the company’s business structure have undergone three significant changes. Each strategy was implemented under the leadership of three different CEOs:
1. 1980 – 1989, Gordon Morrison:
o Expansion through acquisitions and development of new products.
2. 1990 – 1997, David Johnson:
o Increase sales growth, increase market share & share holder value.
3. 1997 – Present, Dale Morison:
o Continue to increase sales growth, market share & share holder value.
Campbell’s corporate strategy, under Gordon McGovern was expansion & development of new products to capitalize on consumer trends & improve operating efficiency. But this strategy turned out to be inefficient, as Campbell’s managers got too deeply involved in new-product development and neglected the performance of their existing products. In addition the expansion strategy led to unsuccessful diversification of Campbell’s business into industries that they had no expertise or competitive advantage. As a result, the company’s cost of production went up and profit was reduced.
Under David Johnson, the company restructured the business line and implemented a new corporate strategy. The new strategy was to eliminate unprofitable products and business units, improve communication and technology sharing between business units, and focus more on global marketing in order to increase sales growth, market share and shareholder value. This new strategy helped to increase operating margin and profits for the company. Some businesses were also able to improve their performances under David’s strategy. However, the company encountered some setbacks with its global marketing strategy. For example, the European market was harder than expected to penetrate for such products as Campbell’s soups. The company failed to detect that aggressive advertisement was needed to introduce The Soup products in Europe that caused sales to drop in those markets.
When Dale Morison took over Campbell Soup as CEO, His goal was to enhance David Johnson’s plan. He also restructured the company’s business line structure further more and planned to Continue to increase sales growth, increase market share & share holder value. But Dale focused more on profitable businesses with the highest growth potential and divested non-strategic businesses. At this point Dale was faced with the task of allocating resources to the right business units that have growth potential and favorable market shares.
3. Industry Overview and Analysis
The market size for the food processing industry is large. There is a potential for a minimum of 77.9B to a maximum of 143B of sales to be made and a potential for a minimum of 3.1B to a maximum of 6.4B of net profits to be gained. Since the market size is large, the sales and net profit can be high and large markets draw the interest of companies looking to acquire competitors with established positions in attractive industries. Not only are companies acquiring companies because of the large market size, they also do it to boost brand strength because brand strength translates into economies of scale, more shelf space in the supermarket, pricing flexibility, and line extensions, which in turn ultimately translate into earnings growth, surplus cash and superior stock performance. The market growth rate for the food processing industry is approximately an average of 13% per year. 13% per year is considered stagnant growth; it is not fast growth. Therefore since the market growth rate for the food industry is slow, there is increased rivalry between competitors and weak performers either are acquired by bigger and stronger companies.
The barriers to entry are high with so many food processing companies and little to zero capacity remaining for any more companies. The majority of the companies in the industry are large, profitable, money making companies that are well known and had taken up shelf space in supermarkets. The barriers to exit depended on the company, the size of the company, how much of the market was penetrated by that company's products.
Technological change within the
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