The subject of this statement, H. J. Heinz &Co. has an enormous presence in the global markets. Heinz is one of the world's leading manufacturers of grocery store products. Based in Pittsburgh, Pennsylvania, the business was founded by Henry J. Heinz in 1876. It quickly creates its reputation on its flagship product - ketchup - and its advertising slogan - "57 varieties".
Heinz markets its food lines in a few 200 countries and cases dominance of market show in 150 of its top quality products. Its key activities are the production of condiments; freezing foods; tuna; soups; beans and pasta; toddler foods, and pet food. The company generates sales quantities exceeding $US 10 billion and uses 32, 500 people worldwide.
THE DEPENDENCE ON STRUCTURAL CHANGE AT HEINZ
The background for this survey is not new, as to have made Heinz a worldwide player experiencing unique problems.
During the later 1990's, HEINZ commenced to experience sluggish growth. This was mentioned by declining market show and dropping sales. Worse still, the worthiness of Heinz stocks dipped. Not surprisingly, shareholders sought a technique to turn the business's funds around. On 30 Apr 1998, William R. Johnson replaced the exuberant Anthony O'Reilly as Company Chairman. Johnson immediately go about devising such a strategy.
As part of the course of action, a forensic analysis of the structure mentioned that its malaise was the effect of a combo of exogenous (exterior) and endogenous (inside) factors.
EXOGENOUS FACTORS INCLUDED:
Increasing international competition from global giants such as Kellogg's Jenny Craig, Campbell's Soups, Nabisco and Del Monte; and,
The appreciating US Dollar exchange rate
ENDOGENOUS FACTORS INCLUDED:
Setting higher prices; and
Decreased advertising
THE MILLENNIUM PROJECT
Under the previous command of Dr O'Reilly, Heinz sought to improve its success by nurturing its contract prices and reducing its costs on advertising. This approach can be likened to the strategy of skimming, whereby companies leverage a electric power brand name getting into a new market and place a higher price for it. The ploy is calculated to skim off affluent consumers. But this plan will not always work. And that is what stakeholders in Heinz soon realised. In the event, the new CEO, William Johnson rebutted this approach. His arrange for change, the so-called Millennium Project, consisted of the next elements:
Reducing the international workforce by 2, 500 employees (later, by 3, 000-4, 000)
Consolidating the number of plants, closing 25 of 101 worldwide
Reducing the amount of non-core activities, including the Weight Watcher's class business
Channelling savings into marketing, advertising and research
Changing the ethos of the business, in an attempt to purge it of the surfeit of 'yes' men
Link salaries and incentives of management of performance
THE Execution OF CHANGE AT HEINZ
The Millennium Project (later modified as Project Excel) incorporated lots of severe proposals. Many of these involved place closures in Europe, where staff might have been forgiven for about the company's authority as unsympathetic with the plight of Western workers. Subsequently, Heinz has gained a reputation as a corporation making unilateral decisions. Additionally it is a company which has an desire for foods for pay disputes, as the recent stand-off between management and shop-floor operatives at Wigan demonstrates. Notwithstanding, the execution of its corporate change programs has encountered relatively little level of resistance, perhaps because of this of the written text book manner in which change has been promulgated. In the case, Heinz has carefully built a platform for continuous change.
THE SUCCESS OF THIS MILLENNIUM (AND EXCEL) PROJECTS
Market experts have adjudged the outcome of the millennium and Excel jobs as successful, when measured against the following indices;
Streamlined management structure
Rising share value
Continuing dominance of market share
Soaring sales volumes
More lately, Heinz has confronted other issues. Growing fuel prices and the impact of the global recession have buffeted this business, along with virtually every other enterprise operating internationally.
The risk of competition from international rivals is constantly on the stalk the business. Such companies wield significant advertising power, carry out their own market research and are likely to exploit spaces in new markets. They also invest closely in food technology; in some instances, directing their initiatives at the ethnicity of any rising market and tailoring their products to match. To that magnitude, other global players constitute a danger.
FURTHER CORPORATE REFORM AT HEINZ
In the first part of 2010, Heinz trotted out a pilot program (Heinz Global Performance System), whose goal is to promulgate further proper reform over the source, logistics and creation pipeline. At the time, the business ramped up its sales focuses on, a target not readily achievable in the context of the stagnant global market. HGPS is at present restricted to a trial phase at 25 development facilities throughout THE UNITED STATES and Europe. In the centre of the HGPS program is a template of standardised improvement across all facets of the business.
THE TERMS AND CONDITIONS OF THIS HGPS PROGRAM
HGPS was created to streamline the business's whole value-added process, from research and development to marketing. It really is envisaged that this may be accomplished through:
Further commitment to analyze and development
Increased focus on forward supply planning
Diversifying the company network
Improving information technology put on the supply cycle
On the development side, the company intends to:
Maintain quality assurance
Improve output
Create further labour-saving efficiencies through state-of-the-art production technology; and
Further standardize product design and packaging
Maintain its commitment to key activities
Maintain its dedication to marketing
THE HEINZ Objective STATEMENT
The long-term aims place by the H. J. Heinz and Co are recurrent. Broadly speaking, they include:
Consolidation of market talk about in proven spheres of interest
Expansion of the business's occurrence in the emergent market segments of North Africa and Asia; and,
Development of new electric power brands, especially those targeted at the emergent markets
THE HEINZ SWOT MATRIX
Strengths:
Marketing Expertise
Well established ability brands
Products Differentiation
Supply pattern cost savings
State-of-the-art creation technology
Substantial research commitment
Ability to improve tack quickly
Strongly Incentivised Management Structure
Weaknesses:
Industrial Relations Issues
Rapid change threatens desire and morale levels among staff
The need to keep up an overarching global management structure
Opportunities:
Consolidation of market share in established markets
Expansion of market talk about in emergent regions of North Africa and Asia
Development of new vitality brands, especially those directed at the emergent markets
Acquisition of set up local brands in emergent markets
Threats:
Currency volatility
Escalating global energy cost
Increasing competition from major global players
Rise of general brands
CHALLENGES CONFRONTING HEINZ AS INDICATED BY SWOT ANALYSIS
Having resolved the critical interior factors eroding Heinz's competitive performance, the business recognizes that it's confronted by a cluster of exterior threats to its viability. To a huge extent, these exterior risks are omnipresent. SWOT examination shows that they include:
Currency volatility
Escalating energy costs
Increasing competition from both domestic and global players
In the event, Heinz must react to these challenges by:
Concentrating production, procurement and syndication within the main element economic zones, in order to reduce the impact of exchange rate volatility
Investing in different energy options
Continuing to pursue cost-savings programs
Tailoring the aims of research and development to the emergent market
2. 1 Program OF PEST Research FOR THE STRATEGIC GOALS OF HEINZ
Given that Heinz is focusing on the emergent market segments of North Africa and Asia, where it has recently experienced exponential development, the business should take the next geo-political concerns into account:
In recent weeks, the North African region is becoming something of your political cauldron. Political instability extends from Tunisia to Libya and beyond. In Egypt, the results of a popular uprising which led to the overthrow of the Mubarak routine has yet to be chosen. Nevertheless, Egypt holds out the greatest promises as a consumer market. It has an increasingly well educated, English speaking work force. Though Sharia rules is the font that Egyptian law is mainly drawn, hardly any issues, aside from lifestyle ones are influenced by the strictures of Islam in Egypt. Environmental and career legislation are less demanding throughout the Middle East.
While political stableness is no problem in China, political restrictions on the use of communications technology may hamper the development and supply cycle every once in awhile. A plethora of highly trained, British speaking employees in China augurs well for an growth of creation facilities there. Throughout the wider South-East Asian region, per capita income is rising, especially in such tiger economies as Thailand and Vietnam. Inside the former, politics instability looms as a concern. Alternatively, the Philippines stay a firm anchor in your community. This populous island country is experiencing something of an economic resurgence in the fields of information and communications technology. Consumer development is expected to rise drastically.
Competition from other global players does not present a serious or immediate danger to Heinz's dreams in the emergent market segments.
2. 1 THE MAJOR EXTERNAL Risk: THE Climb OF THE General BRANDS
The risk posed by the proliferation of generic brands is computed to weaken Heinz's overall trading position. It is no less of any threat to its rivals, too. The universal brands are alternative products, which find their way onto the shelves of the top multiples and tolerate the imprimatur of the companies. Within the United Kingdom, that threat is palpable, as leviathans such as Tesco and Sainsbury's, through astute product position, are able to promote their own mark brands to the detriment of their suppliers. These companies operate from behind the defensive walls of oligopoly. Their existence distorts the market as their purchasing ability bourgeons. Worse still, oligopolists have a tendency to both anticipate and imitate one another's behavior.
There can be little uncertainty that most consumers will avail of general brands, at some time or other. Nevertheless, certain universal brands experience difficulty producing product loyalty, particularly when those products vie for preferences and preferences. For many that, common products are designed to behave like all other alternative products. They display cross elasticity of demand. In other words, as Tesco sharpens the shelf price of its own brand ketchup, it is realistic to believe that the demand for Heinz (Top secret Component) Ketchup will fall season within. If Sainsbury's mimics this behavior (which is usually to be expected), then sales of Heinz tomato ketchup will glide in its stores, too.
THE Information RECOMMENDATIONS
(i) THE BACKGROUND TO THE Survey:
H. J. Heinz & Co is one the world's leading manufacturers of grocery store products. The business operates on a worldwide scale and harbours global ambitions. Its long haul objectives include:
Consolidation of market share in established markets
An expanded presence in the emergent markets
For everything that, Heinz is also a company confronted by global issues.
Increasing international competition from other grocery giants such as Kellogg's, Jenny Craig and Campbell's Soups, has outlined the necessity for profound structural change. This goal asserted itself from the overdue 1990's, as Heinz began to lose market share and its sales turnover tumbled. In the case, emboldened by a fresh leadership, the business set about applying corporate change. At present, Heinz is constantly on the build on the successful results of the Millennium, Excel and HGPS programs for corporate reform. That reform has made certain the viability of the business. Restructuring has included radical decision-making, bearing down heavily on surplus capacity, labour costs and overheads. Heinz remains focused on the tenets programs.
This program concurs with this approach.
(ii) THE OUTLOOK FOR H. J. HEINZ & CO
The present report relies upon the traditional marketing tools of SWOT and Infestations analysis to determine the company's perspective.
These analyses expose that Heinz mainly trades on its reputation and the momentum of its huge electric power brands. Notwithstanding, Heinz is still stalked by its international rivals; they wield significant advertising clout and are apt to exploit gaps in new marketplaces. But Heinz is greater than a match for its rivals, as it includes benefitted from its leaner corporate and business composition. A company's capability to respond to change is an indication of its propensity to meet challenges, especially those that arise from global competition. Consequently, it would appear that Heinz is well positioned to meet these challenges, as it is an organization whose leadership is geared to change.
However, using Porter's Five Forces model, an even more sinister threat to the company's viability is disclosed. It, too, is a danger which originates externally. It is the hazard posed by the rise of the common brands - those substitute products cleverly sold by powerful sets of oligopolists practically just about everywhere. To battle this menace, Heinz must continue to invest closely in advertising which communicates the concept that its products are quickly differentiated from those of its challengers.
Given that Heinz intends to expand its existence in the emergent market segments of North Africa and Asia, it might be advisable for the company to suspend further investment in these regions, until political stability is restored.
In the interim, Heinz must capitalize on its capability to remain competitive at a relatively low cost. It also advantages from huge economies of range. The savings made from the reform programs, should be channelled into further investment in food technology. A lot of this research should be targeted toward the progressively more advanced consumerism of the emergent market segments.
On balance, Heinz is poised to attain its global goals.
2. 3 FOOTNOTES
Albert, Robert, The Good Specialist: H. J. Heinz and his 57 Types, Boston Houghton, Lindsey, Miffin Co, 1973, passim ISBN: 0-395-17125-1
Heinz: www. heinz. com/heinz-global
Ibid
www. prnewire. co. uk/cgi/media/release
www. justfood. com. information/heinzworkers-vote-for-strike
Ibid
www. foodmanufacturer. co. uk/heinz-rolls-out-global-continuous-improvement-system
The Times, various ends
Lipsey, Richard and Chrystal, Alec, loc cit, p. 74-5
