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Campbell Soup Company Internal and External Environment

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 1948 words Published: 26th Feb 2020

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Internal Environment

The Internal environment of Campbell Soup Company is comprised of several individuals who have only recently been added to the organization. Keith R. McLoughlin has served as an independent director of the board since 2016. As of May this year he has been named interim Chief Executive Officer. To facilitate a smooth transitional process of finding a permanent leader, Mr. McLoughlin will maintain his position on the board. Given the tentative nature of his position, his $3.6 million annual salary is unconventionally constructed to focus on short term cost saving measures.  Previously, Mr. McLoughlin worked with Electrolux AB, which is a global manufacturer of large household appliances. Starting with the company in 2003, he ultimately retired in 2016 as President and Chief Executive Officer. Before joining Electrolux AB, he spent 22 years in various senior leadership roles at Dupont, both internationally and domestically. As a present and former chief executive officer for a global enterprise, Mr. McLoughlin possesses valuable leadership experience and significant expertise in international business operations. His previous additional exposure to retail sales, strategic planning, and marketing provide valuable insights to guide the actions of the company. Mr. McLoughlin graduated from the United States Military Academy at West Point with a Bachelor of Science in engineering (Global Data, 2018). Luca Mignini joined the company in 2013 as President of Campbell International and later served as President of Global Biscuits and Snacks until 2015. As of April 2018, Mr. Mignini accepted the position of Chief Operating Officer with a salary of $3.1 million. His experience comprises two years at the Findus Italy division of IGLO Group as the Chief Executive Officer. Prior to that, he served more than 20 years at SC Johnson in multiple international and regional roles throughout Europe, Greater China and South East Asia, as well as Latin America (Campbell, 2018). Diego Palmieri has been brought on by the company to fill the role of Vice President and Chief Marketing Officer as of July 2018. Overseeing the U.S. Meals & Beverages segment, his role encompasses all aspects of marketing and consumer touchpoints across the division’s portfolio of brands. Prior to joining Campbell, he served in roles ranging from general manager of SC Johnson's Greater China business to the management of Glade Home Fragrance business for all international markets. Utilizing his MBA from the Duke University, Mr. Palmieri has an established career with a deep understanding of brand value capable of marketing and selling consumer products both in the U.S. and international markets (Campbell, 2018). In May 2018, the company appointed Roberto Leopardi as President of Meals and Beverages. Mr. Leopardi previously worked with SC Johnson for 24 years, with responsibilities of leading and transforming that company’s operations around the world. He graduated from Bocconi University in Italy with a bachelor’s degree in business, economics and statistics and earned his graduate degree from the Senior Executive Program at INSEAD, one of the world’s leading and largest graduate business schools. Capitalizing on his education, he gained extensive general manager experience driving market share growth through increased sales for SC Johnson’s portfolio of brands in the United States and Canada. As a publicly traded company, Campbell Soup faces scrutiny from investors to maximize shareholder value. Several missteps have highlighted the company in a negative way and have caught the attention of activist shareholders seeking for a change of direction for the firm. Third Point, a hedge fund in Manhattan, has spent the past several months imploring shareholders to reshape the board of directors or even sell the company outright (Lombardo, 2018). This proxy fight could cause the organization to incur substantial costs while occupying management's attention and precious company resources. These activities create an adverse effect by disrupting operations through lowering business opportunities and limiting the ability to attract new customers, employees, suppliers and other strategic partners. For the short-term, this issue is set to be resolved by vote of the shareholders at the company’s annual meeting at the end of November.

External Environment

The company’s external environment is largely affected by economic issues. Given the nature of the business, the cost of distribution is one of the largest drivers of expenses. Any increase or decrease in transportation and logistics cost provide a material impact on the company’s profitability. As a canned product manufacturer, many of the source materials, such as steel, may be impacted by new or recently proposed tariffs. Additional exposure is witnessed in the manufacturing of food and beverage products such as the raw materials used including vegetables, beef, poultry, and dairy products. These items are subject to price fluctuations from various factors such as changes in crop yield due to disease and pests, demand for raw materials, commodity market speculation, energy costs, drought, and extreme temperature variations (Wang, 2015). Most recently, the company has been negatively impacted by a changing customer landscape. Campbell’s business is concentrated largely in traditional retail grocery chains. Unfortunately, consumer trends have been moving away from a traditional retail grocery supply chain causing the company to experience slower growth than other retail channels, such as drug stores, dollar stores and online retailers.  Additionally, retailers with increased buying power are seeking more favorable terms, including increased promotional programs funded by suppliers, while also utilizing more shelf space offering competing private label offerings. The company also faces broader economic risks related to the potential of a recession. Consumer demand for the company’s products may be directly impacted by weakened economic conditions. Similarly, any disturbances in the company’s ability to secure short-term financing may impair their ability to manage commercial relationships with creditors or suppliers. Tax and interest rate exposure in the company’s various countries of operations, also expose the company to added economics risks that must be considered in the due course of operations. Campbell’s is also affected by the potential for legal issues. If food products are mislabeled or tampered with, a recall would need to occur. The result would be the company possibly experiencing product liability claims and certain damage to their brand equity. Any extensive product recall would result in direct significant losses due to the associated costs of the recall as well as the expenses incurred in the destruction of returned inventory. The unavailability of inventory would also materially impact sales until new product could be replaced on store shelves. Food product manufacturing is subject to extensive regulation. Multiple laws provide oversight for issues including processing, storing, and distributing the company’s products. These legal constraints also include the health and safety of company employees as well as establish environmental guidelines. Along with regulatory oversight of the Food and Drug Administration and the Department of Agriculture in the United States, the company faces additional scrutiny from similar agencies abroad. Any changes in legal or regulatory requirements negatively impact the company through increased costs of compliance as well as additional allocated expenses to allow the company to adhere to local governing policies. The company’s largest exposure to technological issues stems from the possible impact of a security breach to its informational systems. Given the scale and scope of the company’s operations there is a tremendous reliance on the effectiveness of technology systems to manage and securitize generated data such as logistics and product development as well as the accounting and administrative functional areas. A successful attack on Campbell’s systems could result in the acquisition of both upstream and downstream proprietary data, thereby providing insight and allowing competitors to negotiate more favorable terms. Social issues impact the company in the broader brand equity perception of the firm. Campbell’s has a long history involving iconic brands espousing family-based values. Through the Campbell Soup Foundation, the company seeks to provide financial support to those that inspire positive change in communities throughout the company’s footprint. Through grants the foundation focuses on strengthening and empowering healthy communities by increasing healthy food accessibility, encouraging healthy living, and nurturing Campbell value based neighborhoods.



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