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H.J. Heinz Company

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Lauren Natale

on 16 October 2012

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Transcript of H.J. Heinz Company

H.J. Heinz Company Lauren Natale
Katie Hatch
Amanda Puccinelli
Derrick Hutek Creating an Organic Frozen Food Line Corporate Level Strategy Environment Social Strong Weak Human Rights Policies & Systems Regulatory Compliance Employee Safety End of Life Product Management The company has a very strong program to reduce the use of packaging materials. The company aims to reduce total packaging used by 5% by 2010 and 15% by 2015 from a 2005 baseline. Heinz has staked out its position as a human rights leader among its peers. Although Heinz only faces a minor controversy involving its use of palm oil, the company has established a comprehensive human rights policy. In recent years, the company has paid moderate environmental fines. Heinz has established an employee safety policy for its facilities worldwide through its Heinz Safety Process. None of the company's facilities are certified by a recognized standard. Heinz History Our recommendation is for Heinz to use their strong reputation and innovative culture to enter the growing market of frozen organic foods.

We chose the organic frozen food strategy over our alternative strategy, which is to diversify Heinz's product line to include an herb & spice segment. Executive Summary Largest prepared food supplier to the US food service market
Two core businesses: meal enhancers and meal & snacks
Food service industry-flat growth but is expecting a strong growth in demand
Processed food industry- grown significantly
4 Key Initiatives for Growth Strategy Case Summary Current Business
Level Strategy Ketchup & Sauces Current Corporate
Level Strategy Government regulations
Economic turbulence
Increases in cost of inputs
Highly competitive conditions 5+7= (cc) image by anemoneprojectors on Flickr Creating Herb & Spice Line Tangible Resources

Physical Resources:
Strong Manufacturing Facilities

Financial Resources:
Strong financial performance
Sales of $10.7 billion in 2011 highest ever

Organizational Resources:
Heinz Global Performance System (HGPS) created 2008
Internal system designed by a Six Sigma Black Belt
Project Keystone
Further organizational efficiencies gained by current conversion of ERP to SAP. SWOT Internal Resources SWOT External Resources Corporate Level Strategy Business Level Strategy 1869 2002 1965 Diversification- Operational Relatedness Diversification- Operational & Corporate Relatedness Meals and Snacks Diversification- Related Constrained Ketchup & Sauces Meals and Snacks Cost Leadership Cost Leadership Heinz Company was founded Heinz famed makers of 57 varieties celebrates 57 years 1926 Heinz acquires Ore-Ida, frozen potato brand 1972 Heinz reaches the billion-dollar mark in sales 1978 Heinz acquires Weight Watchers International Del Monte Merger 1999 Heinz acquired 19.5% interest in The Hain Food Group Intangible Resources

Reputation:
The Heinz brand name is highly reputable and trusted

Innovation:
100,000 sq. ft. innovation center in Pennsylvania

Human Resources:
Strong commitment to training and development of employees.
Talent Development Program offers a range of educational training programs, free to employees. General Environment

Global Segments
Expanding the Heinz product line in the global market - OPPORTUNITY

SocioCultural
Trend towards a health-conscious society - OPPORTUNITY

Technological
Expand organic product line using frozen food technology - OPPORTUNITY

Economic Segment
Effects of climate change on physical resources - THREAT

Demographic Segment
Loyal customers; Heinz as a brand is reputable - OPPORTUNITY SWOT Analysis Strengths Weakness Opportunities Threats Manufacturing plants in US
Lack of diversity in revenue stream
Poor relations with LGBT community Health-consciousness trend
New niche growth markets exist
No large brands in some markets
Growth of emerging markets 5 Industry Factors

Buyers: Weak bargaining power of buyers - Customers are fragmented and have little influence on the price or products.

Suppliers: Limited supplier bargaining power - Food supply industry is large, so amount of buyers gives the supplier strong bargaining power. However, Heinz as a company is so large, it would be detrimental to the supplier to lose Heinz as a customer.

Substitutes: Low to moderate threat of substitutes. There is no strong substitute for ketchup; however, fresh food is a substitute for the frozen food segment. Trend of "on-the-go" society looking for convenience makes this substitute less threatening.

Potential Entrants: Given the amount of capital investment needed to enter this market, the threat of new entrants is low.

Rivals: While some consumers prefer the Heinz brand, switching costs are low. Therefore, there is a high degree of rivalry. Questions & Answers Strong reputation
Innovative
Financial stability
Stable distribution channels for
current technology Using innovation and reputation to enter market of "healthy" food
Using strong financial resources to expand product line globally
Using stable distribution channels for ease of product development into new markets, to include organic food Infant & Nutrition Focused Cost Leadership Infant & Nutrition Unrelated Diversification Suppliers Critical Stakeholders -Significant costs could be associated with switching suppliers
-We are asking for unique products, which gives us less bargaining power
-We need to ensure high quality/low cost suppliers to be strong in cost leadership and to protect reputation Buyers -Low switching costs/relatively small expense/availability of rival or substitute goods gives buyers bargaining power
-Fragmented market keeps bargaining power low
-Can provide something unique that will be perceived as valuable to increase our bargaining power (our name/reputation alone does that to some degree)
-Can offer lower prices through cost leadership where products are similar Internal Factors External Factors Business Level Strategy Integrated Cost Leadership & Differentiation Pros Cons Similar Technology
Niche Market
Changing Consumer Needs
Environmental Responsibility Expensive to Produce
Organic Quality Regulation Diversification- Operational Resources Cost Leadership Heinz Performance Analysis Pros Cons Low Cost
Economies of Scale
Distribution Capabilities Strong Competition
High start up costs
Lack of differentiation Develop new products in emerging/niche markets
Attempt to strengthen relationship with "alternative lifestyle" groups Social Trends Industry Trends Focus on Health
Environmental Consciousness
Fast Paced Lifestyles Highly competitive food industry
Emerging organic market growth Social Trends Industry Trends Financial conscious consumers
Increasing Ethnic Diversity Highly competitive market
Industry growth over recent years Lobby to ensure that government regulations are not overbearing using financial stability and strong reputation.
Overcome highly competitive conditions by diversifying product line, using current innovation. Sell US manufacturing plants to reduce risk of economic turbulence
Overcome increases in cost of inputs by limiting diversity and focusing on one segment (ketchup)
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