Discuss about the Campbell Soup Company.
Campbell Soup is an American owned company specializing in soups and related products with annual sales of approximately $8 billion (“Campbell’s® Soup Home,” 2017). Campbell soup is driven with the passion for providing healthy food to its customers and providing them with the connection in life through shared memories. The company’s famous slogan is “Nourishing people’s lives everywhere, every day.” (“Campbell’s® Soup Home,” 2017).
Campbell has clear mission and vision statement which has been the key drivers and directors of the company’s growth and progress over the years. Campbell’s mission statement is “Together we will build the world’s most extraordinary food company by nourishing people’s lives everywhere, every day.” (“Campbell’s® Soup Home,” 2017) From the mission statement, it illustrates that Campbell Soup Company is dedicated to nourishing people’s lives through offering them variety, affordable, delicious and food choices that will help them live balanced lives through a healthy diet. At Campbell food matters to them and their vision is to be word leaders in the manufacturer of high-quality beverages and foods which have been a culture for the past 148 years since the company was started. Under the current leadership of Denise Morrison, she has added more sense to the company’s vision as a way of adapting to the changing forces in the market through adding the clause that Campbell will be a leader in production through creativity and innovation in the industry.
Through conducting an external review of Campbell’s competitive environment, it is easier to predict the dynamics of the competitors, intentions, and responses which can help in understanding how the industry and the market are behaving as a way of competing effectively (Henry, 2008).
A PEST analysis will assist in identifying the opportunities and threats in the food industry as well as developing strategies that will help the company in growing even in a tough time when Campbell is reporting declining sales.
Most recent there have been strict regulations by the government on GMO foods, and this has made the consumers shift to organic foods which present as an opportunity to Campbell soup. The government has also been on the front line through signing free trade agreements which present as an opportunity to Campbell to go international.
Campbell can grow based on a stabilizing economy and the rising rate of employment in U.S and other countries it operates in. However, the increasing rate of labor in developing nations presents a significant threat to the company’s supply chain because it leads to high selling prices in the stores. Campbell must develop new strategies to mitigate against the issue.
Campbell can grow by offering high-quality products that will satisfy its customer’s lifestyle. The company also can take advantage of the increasing cultural diversity through coming up with a product mix that will meet the needs of the target customers. Campbell needs to devise a strategy that will ensure consistent growths despite the gaps in wealth.
Campbell has the opportunity of utilizing technology to produce innovative products that will help them in matching the competition. Denise Morrison has adjusted the Campbell soup company’s vision to “Creating innovative products through technology” as a way of addressing the market challenges and trends.
With increased levels of global warming, the production of organic foods is threatened by deteriorating climate conditions which present a significant threat to Campbell’s business life. From the global warming situation, it shows that Campbell needs to have a strategy that will ensure an adequate supply chain.
Campbell adopts more sound environmental policies, but it needs to improve its brand image. The recently implemented antitrust laws is a threat to the company’s mergers and acquisition missions as a way of expanding. Campbell needs to develop other growth strategies that are away from the acquisition in the U.S region.
In analyzing the external competitive environment that Campbell soup company is in the industry a Porter five forces analysis is a useful tool.
In the food industry, the competition is very stiff as companies compete for quality, health factors, price, product benefits and innovation (The Food Processing Industry, 2010). Campbell’s primary rivals are Heinz Company, Nestle, General Millis, Kraft foods, and Progresso. Campbell being a multinational company it faces competition both locally and internationally due to the production of similar products in the industry. Of concern is the rise of companies that offer soup products for lower prices which increase the pressure. Despite the tight competition Campbell continues to produce quality soup as a way of weakening the rivalry. To be on the same level Campbell has to produce superior soup and other products to distinguish itself.
The ability of a new entrant into a market depends on the existing entry barriers created by the companies in the industry (Wheelen & Hunger, 2007). Campbell Company’s primary rivals are Kraft Foods and General Mills who have created a substantial barrier through high levels of promotion and advertising. Small companies have difficulty in entering the market as they fight for shelf space in the main retailers.
The risk of companies that offer replacement products is very high in the food industry. For instance, the recent case is Campbell Soup is facing slow rates of growth due to declining demand for soup products as they are being replaced by substitutes such as Pizza which have become more popular over the recent years.
Consumers influence the industry due to their ability to influence prices, quality, and services of the food which creates a window to play competitors against each other. Pricing greatly affects the consumers purchasing decision, and for Campbell, it keeps the prices 20 to 25% higher than other brands in the market. Hence consumers opt for the generic brands. Campbell will have to lower its prices to attract and retain its customers, or it will force its customers to move to substitute products.
The quality of products that suppliers offer significantly influences their barging powers. Campbell ensures it uses quality products from suppliers and this comes at a cost which has forced Campbell to use diversity program as a way of diversifying its supplier base which now stands at $129 million (Campbell CSR, 2015).
Campbell Soup Company has consistent sales over the past five years. With more technological advancement more opportunities will present themselves. With the increased globalization levels it means more products will be sold internationally hence more market opportunities.
With high levels of inflation the gross profit and revenues were affected. The soup market is becoming more competitive as days continue.
The increasing number of emerging economies presents new markets to the company that will facilitate proper growth. The company continues to expand in other integrations such as Bolthouse presents business growth in the future.
The share capital of condensed soup is declining everyday which presents a loss of revenue in the near future. The number of laws enacted to regulate meat products are creating setbacks to the company.
Campbell soup’s top on the list competitors are Mondelez International, Heinz Kraft Foods Company and general mills. The company continues to receive worldwide competition on all its products. The competition exists in the number of products that the company delivers to its customers. The number of competitors in the industry fight for market share and the consumer dollars. The key areas of competition to the company are price, advertising, convenience, taste and brand recognition. Campbell soup lost 4% of its market share by the end of 2016 (CSI Market, 2016).
Recommendation and Conclusion
From the case study, Campbell soup has been having fears over the transition from Donald to Denise Morrison as the new CEO. In a time when Campbell is facing declining sales due to stiff market competition as it can be seen in porter’s five force model a more experienced CEO is required. Campbell is a tough time when it is facing fierce competition within the industry as major competitors are becoming stronger and the threat of substitute is high. Based on PESTEL analysis model, Campbell Soup Company has many opportunities to grow both locally and internationally. However, there are notable threats such as global warming, the rising labor cost and increasing wealth gap in developing nations. Through diversification, Campbell soup can be able to mitigate against the threats presented in the developing nation’s market. Moreover, Campbell can expand internationally as a way of addressing the antitrust law that was passed recently. In general, the PESTLE analysis shows that Campbell has the potential to grow even in the middle of tough transition process of the leader Denise Morrison.
References
Campbell Soup Company, About Us, online, retrieved 9 April 2017, https://www.campbellsoupcompany.com/about_us.asp
Campbell Soup Co Comparisons to its Competitors, Market share and Competitiveness by Segment – CSIMarket. (2017). Csimarket.com. Retrieved 9 April 2017, from https://csimarket.com/stocks/compet_glance.php?code=CPB
Food Processing Industry,(2010), retrieved 9 April 9, 2017, https://www.miti.gov.my/cms/documentstorage/com.tms.cms.document.Document_7674150a-c0a81573-2d952d95-c9439446/Chap%2019.pdf
Haberberg, A. and Rieple, A. (2001) The Strategic Management of Organizations, Essex: Pearson Education Limited.
Henry, A (2008), Understanding Strategic Management, Oxford University Press, New York United States
Strategic Management: Concepts & Cases: Competitiveness & Globalization: Competitiveness and Globalization. (2015). Florence: Cengage Learning.
Wheelen T.L, Hunger J.D, Concepts in Strategic Management and Business Policy,(2007), tenth edition, Pearson Prentice Hall, United States of America
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