Strategy Formulation

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For Campbell's to achieve sustainable competitive advantage in food processing industry, strategy formulation which derived from the objective and mission is undertaken. Porter (1980) argues that competitive strategy is about developing a defendable position in an industry which enables a firm to deal with the five competitive forces and thus generate a superior return on investment for the film. Hence, to achieve superior value that is recognized by the consumer, Campbell's needs to provide unique and superior value to the customers in terms of its products quality and value added up services.

It is appropriate to relate differentiation strategy to the Campbell's Soup Company as the company's goal is very straight forward, which is "Together we will build the world's most extraordinary food company by nourishing people's lives everywhere, every day." Campbell has always focused on providing superior, healthy and nutrition food by expanding their icon brands in simple meals (especially soup). The Campbell's latest plans are to enhance more than 60 percent of its condensed line with product improvements, further sodium reduction, more contemporary packaging, improved shelving systems and new marketing aimed at the simple meals category.

Nowadays there are increasing numbers of consumers who are very concerned with nutritional values of foods they eat. The Campbell's Soup Company which is having superior research abilities has been taking advantage of this avenue and further develops this product line. According to Douglas R. Conant, Campbell's President and CEO in the recent press release, Campbell is going to fire up the important condensed soup business and step up the competitive posture of their ready-to-serve products. The improvements and innovations of Campbell's has made over the past several years has made Campbell outwit most of its rivals in the condensed soup category. Their well-balanced simple meal helps consumers make more informed choices. Hence, Campbell is confident that their continued investments will make Campbell's condensed soup even more relevant and contemporary for today's consumers.

Furthermore, there is the shift tohealthy living in recent years. Hence, Campbell focused on its consumer groups by providing lower calorie content which qualifies it has a healthy meal alternative. The younger, low-calorie conscious consumers can help Campbell's to gain more profit. Low-sodium products are pivotal to Campbell's long term success as the majority of Campbell's consumer base isbaby boomers. The majority of baby boomers' diets are comprised of low sodium. A recent study shown that high cholesterol, attributed to high levels of sodium intake, is the number one diagnosed health condition for the baby boomer generation.The condensed soups have one of the highest sodium contents of all processed foods in existing market. Therefore Campbell's low-sodium products have differentiated themselves with many rivals. The success of Campbell's low-sodium soups will be important to Campbell's in order to hold on to the majority of the soup market. Besides sodium, Campbell's also has to focus on other aspects such as MSG and low calories of its soups by hoping that these healthier offerings will help gain market share among younger, more health conscious consumers.

Campbell understands that the company must continuously improve its quality control processes to ensure that their products meet the quality specifications and regulatory standards and deliver excellent value as all these would help the company to earn the consumers' trust and loyalty. Campbell's Worldwide Quality Standards has defined the company's requirements for food safety and quality.

Besides, Campbell understands that creating a quality product begins with quality ingredients. Campbell purchases most of the ingredients from domestic farmers in countries where they manufacture products and also obtain certain ingredients from carefully selected suppliers around the world. Any ingredient that does not meet the quality requirements will not be used in a Campbell product to ensure superior product quality.

On the other hand, providing value-added services help Campbell's to outwit its existing rivals. Campbell continually experiments with new programs to provide consumers with useful information on meal ideas, health and wellness, and other tips. For example, each day their Campbell Meal-mail program delivers nearly 500,000 recipes electronically to busy Americans who are hungry for convenient, great-tasting meal ideas that will please their families. Consumers can access the Campbell's Kitchen website at any time to download recipe ideas that have been tested and approved by Campbell's nutritionists. Consumers also have the opportunity to share their ideas and comments on recipes with one another on the Campbell's Kitchen website.

It is suggested that the Campbell Soup Company to improve the flavour of its soup products to attract more demand. Besides, Campbell can try to create more contemporary design for its existing soup products instead of the familiar red and white colour design in order to stand out from various types of products in the market.

3.2 Corporate Level Strategy

The corporate level strategy of The Campbell Soup Company deals with three key issues: i) The firm's overall orientation toward growth, stability, and retrenchment. ii) The market in which the company competes through its products and business units iii) The manner in which management coordinate activities and transfer resources and cultivates capabilities among product lines and business units

The Campbell's operates with four products divisions: North American Soup and Away from Home, North America Sauces and Beverages, Biscuits and Confectionery, and International Soup and Sources. Besides, Campbell spread all over 3 segments of condensed soups, ready-to-serve soups and dry soup, and has expanded its product to microwavable soups to make customers more convenient for preparing soup without container.

Obviously, the Campbell Soup Company, which is a decentralized company, has been using a related diversification multiproduct strategy. Its strategy is to diversify its business to produce several products, and expanding its market share. Campbell used its engineering support and diversified production to support customers with convenient, good taste and quality food. To support its operating system, department such as Research & Development (R&D), product development, engineering systems, are required to produce high quality and stable operating system to avoid the unexpected shut down.

Campbell has tried to use unrelated diversification strategy under the leadership of McGovern as Campbell's CEO with the aim of rapidly expand product line to increase profits and revenue. Campbell has tried to acquire other firms to quickly gain access to new products and new markets. Instead of acquiring only food products, Campbell began to use the unrelated diversification strategy to acquire firms that it felt were positioned to capitalize on the consumer's trend and also bought firms involved in all types of business. For example, the triangle Manufacturing Company, a fitness products maker, which is clearly unrelated to the firm's core products.

A major reason for Campbell's failure to generate financial economies while using the unrelated diversification strategy is that the firm's approach to managing its core products divisions never changed. At the same time, corporate headquarters personnel didn't implement the strong financial controls necessary to efficiently manage an internal capital market. David Johnson who replaced McGovern decided that Campbell should not longer use the diversification strategy but to reduce the level of diversification by using related constrained strategy to create value through operational relatedness. Campbell's related constrained diversification strategy involves transferring core competencies which lead to competitive advantage and start with value chain analysis to identify ability to transfer skills or expertise among similar value chains and on the hand, to exploit ability to transfer activities. Campbell should enhance more than 60 percent of its condensed line and be more committed to accelerate the performance of their existing portfolio, most notably in U.S. soup, and continuing to lay the foundation for superior long-term growth.

External acquisitions and partnerships

Through value-creating external development, Campbell's is able to increase its market presence throughout its product lines. For instance, Campbell's Baking and Snacking segment is positioned to grow due to the company's recent acquisition of Ecce Panis, a manufacturer of artisan breads. This acquisition allows Campbell's to enter into the thriving artisan bread market.

Capturing new geographical markets

While Campbell's is currently dependent on mature US market for the majority of its sales, the company renewed its focus on Russia and China. In F2009, Campbell's entered into a strategic partnership with Coca-Cola Hellenic Bottling Company S.A. in order to expand distribution channels in Russia. For China, expansions were made in Shanghai, with continued investment in market research to strengthen their client propositions in the region.

With the ever growing foreign population in America, it is suggested that Campbell's should consider products that have more of the ethnic background of these immigrants. The brand could quite possibly extend the depth of the line with consideration to the vast number of different tastes in the society today.

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