The paper analyzes Campbell Soup Company, explained its mission statement, competition, SWOT Matrix, and evaluated the main issues affecting the company. It also gives a recommendation and how it should be implemented. The company produces a high range of packaged fresh foods, high-quality soups, snacks, simple meals, and beverages. Their mission statement explains that the company aims a building the most extraordinary food company in the world by nourishing the lives of people every day and everywhere. Campbell encounters global competition in all of their main products. The main problems facing the company are the poor sales performance, increasing skepticism of large-scale food producers, and the four seismic shifts . The financial ratios indicate that the company has a healthy financial performance. The company should implement low-cost production so that they can mitigate the effects of the increasing costs of the raw materials. The best technique for implementing the recommendation is through a strategic cost analysis. Campbell should diagnose their different costs from the farm to the final price purchased by the ultimate consumer.
Introduction
Campbell Soup Company describes a multinational food company that has its headquarters in Camden, N.J. the company has annual sales of about $8 billion. The company produces a high range of packaged fresh foods, high-quality soups, snacks, simple meals, and beverages. The company is inspired and driven by their purpose to offer real foods that enhance life’s moments. For many decades, consumers have trusted the company to offer flavorful and authentic readily available beverages and foods and connect them to warm memories and experiences. Their brand is worth $2.1 billion ( Place, 2011) . Their portfolio expands beyond the production of soup to the processing of foods such as Pace Mexican sauce, Pepperidge Farm Cookies, tortilla chips, Goldfish crackers, and Royal Dunk Biscuits among many other products. The current CEO and President are Denise Morrison who aims at reshaping the company to enhance shareholder value and to drive sustainable growth. The paper will seek to analyze Campbell Soup Company, explain its mission statement, competition, SWOT Matrix, and evaluate the main issues affecting the company. It will also give a recommendation and how it should be implemented.
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Campbell was founded in 1869 in Camden. It was initially known as Joseph Campbell Preserve Company, and they processed minced meats, canned tomatoes, condiments, canned vegetables, soups, and jellies. The major milestone of the company took place in 1897 when the general manager, Author Dorrance, hired his nephew, John Dorrance. John Dorrance was a chemist who highly desired to work for Campbell that he accepted a weekly salary of $7.50 and paid for his laboratory equipment from his own income ( Shea & Mathis, 2012) . John is the one who invented condensed soup, an invention that revolutionized the soup industry. The company won the award for quality in 1876 at the Centennial exhibition. They also won the 1900 Cold Medallion for excellence in the Paris Exposition.
Company Mission Statement
Their mission statement explains that the company aims a building the most extraordinary food company in the world by nourishing the lives of people every day and everywhere. Campbell’s company slogan is nourishing the lives of people every day and everywhere. It implements its mission by offering a wide variety of affordable, convenient, and delicious food choices that will assist every individual to have a healthful and balanced diet. A mission statement acts as a guide to the company as they attempt to meet the needs of their clients. It reflects the core business aims, purpose, values, and identity. Their mission guided Campbell to the Fortune 500 Company of 2008 ( Place, 2011) . The list gives a list of the main 500 companies in the US based on profits and gross revenues. Their core values are teamwork, character, and competence. Teamwork dictates that the employees should work together to achieve extraordinary things in the marketplace and workplace. Character aims at instilling trust of all their stakeholders by leading with courage, taking responsibility, and acting with integrity. Their competence is dependent on building a diverse and learning culture.
Competitors
Campbell encounters global competition in all of their main products. The competition emanates from many different competitors who have different influence across multiple beverage and food categories. The competition comes from other beverage and food manufacturers, and the producers of private and generic label products. They vie for consumer dollars and merchandising support. The main areas of competition are service, brand recognition, convenience, taste, promotion, quality, advertising, and price ( Shea & Mathis, 2012) . Some of their main competitors are:
General Mills, Inc.
Mondelez International, Inc.
Conagra Brands Inc.
J M Smucker Co.
H.J. Heinz Company
Mead Johnson Nutrition Co.
Tyson Foods Inc.
Pinnacle Foods Inc. among many other companies.
SWOT Matrix
| Strengths | Weaknesses |
|
Strong brand equity Refocusing on their core operations Leading position in their main categories Robust financial performance Diversified geographic operations Reduced debt burden |
About 70% of their total revenues are dependent on the US. About 15% of their total revenues are heavily concentrated on Walmart. Extreme competition Rising costs |
| Opportunities | Threats |
|
The US economic slowdown Expansion of emerging markets Continued product innovation Increased demand for their organic products |
Customer acceptance Private label growth Increasing commodities Low adoption rates Strict food and beverage regulation |
The company has a very strong brand equity that has ensured they have a steady sales figure since their inception. Their brand image has assisted the company to have a significant market share of the retail sales in the US, especially in the Wet Soup category. They have a strong financial performance because of their strong brand equity and significant market share. Their diversified geographic operations are in more than 120 countries around the world ( Eastlack & Rao, 2009) . Furthermore, due to the size of their company, they experience economies of scale. The main weakness is their dependence on Walmart and the US retail market. If there is a drop in the sales, Campbell can be adversely affected. The increase in the price of the materials has increased the retail prices of their commodities. The fierce competition in the industry has reduced their market dominance.
Nevertheless, Campbell has diverse opportunities to improve their performance. The economic slowdown has shifted some consumers from restaurants to the diverse retail stores. Their innovativeness has allowed the company to continue producing unique products. The increased demand for organic products has improved their sales performance and enhanced their international presence in the emerging markets ( Place, 2011) . The strict regulations threaten their market entry and introduction of new products. The low adoption rates of their new products has reduced their profit margins and slowed down their growth. The growth of private labels has reduced their market dominance and acceptance by some potential customers.
Issues Affecting Company
The main problem facing the company is the poor sales performance. The company analyzed their quarterly results, and the company reported a sales decline in their shelf-stable beverages, Organic sales, and Campbell Fresh ( Eastlack & Rao, 2009) . They also encountered various non-cash impairment charges. The total impairment charges were $212 million. Their quarterly income reduced by about $101 million which was equal to about 33c per share of their common stock. The main drop in sales was attributed to the drop in quality of their carrot and their capacity impairment in the manufacture of some fresh beverages.
The other issue facing the company is the increasing skepticism of large-scale food producers. The skepticism is attributed to the change in consumer tastes in the food industry. The company has found itself struggling with the dynamic consumer behavior especially their increased interest in fresh foods ( Place, 2011) . Furthermore, customers have been quite cautious about the impact of the food on their physical health and the origin of the food. There has been an increasing distrust on the company’s products. If the distrust continues, their sales margins, revenues, and profit may plummet tremendously.
The third issue is the four seismic shifts that have threatened the existence of Campbell. The four seismic shifts include the global economic realignment, demographic changes in the American Family, the ever-changing digital landscape, and the increased wellness and health awareness. The middle class in the developed countries has been shrinking while the middle class in the developing countries has been bulging ( Eastlack & Rao, 2009) . The shifts have affected how different clients engage and view the food and beverages produced by certain companies. Campbell’s iconic brand can be both a curse and a blessing. The company needs to continue giving quality products, or their successes will begin to dwindle.
Ratio Analysis
As per the period ending 31 st July 2016, the current ratio was 75%, the cash ratio was 12%, while the quick ratio was 38%. The gross margin was 35%, after tax ROE was 37%, the operating margin was 12%, and the pretax ROE was 56%. The Pretax margin was 11%, and the profit margin was 7%. The net income was $563 million, and the earnings per share were $1.81. The dividend stood at $1.24, and the payout ratio was 56.4%. The operating cash flow was $1463 million while the free cash flows $1122. Their return on assets was 7.07% while their average asset turnover was 1. The financial ratios indicate that the company has a healthy financial performance.
Recommendation
The company should implement low-cost production so that they can mitigate the effects of the increasing costs of the raw materials. A low-cost producer describes a company or a firm that offers services and goods at lower costs. Such companies maximize the economies of scale so that they can implement a low price strategy. It is evident that consumers are quite sensitive to price changes and they are highly likely to purchase goods that have the lowest prices ( Place, 2011) . There is no company that can avoid the effects of increasing materials’ costs. Most companies are forced to adjust to the impact of inflation on their current operation costs. Campbell should be able to utilize low-cost production as part of their competitive strategies. Utilizing low-cost production will improve their market share, sales performance, and their ability to penetrate emerging markets in the long run.
Implementation Strategy
The best technique for implementing the recommendation is through a strategic cost analysis. Inflation affects all companies. Campbell should diagnose their different costs from the farm to the final price purchased by the ultimate consumer. It involves the construction of a value chain that indicates the value that is added to the product at all steps in the production and marketing process. The value chain will assist Campbell to identify the shifting cost components. The company should then analyze their long run shifts of the competitors’ prices in comparison to their own ( Eastlack & Rao, 2009) . Campbell should then evaluate the future impact of inflation on the overall cost including competitors’ prices. The analysis will allow the company to come up with an effective strategy that will allow Campbell to become a low-cost producer. It will also ensure that Campbell to focus on their core segments and the differentiation of their products from their competitors.
Campbell should identify the shift in the key cost components. Sustained inflation affects all the current operating costs such as distribution costs, purchased materials, marketing costs, direct labor costs, transportation, maintenance, fringe benefits, energy, and salaries. If inflation remains unchecked, it can affect the entire cost structure of an industry. Some factors such as increasing fertilizer costs or raw material prices can have a serious impact on the cost structure of the company. Using the value chain involves analyzing the costs from the acquisition of raw materials to the sale of their finished product. It should not be restricted to Campbell alone; the company should understand the value chain of their competitors to find the best techniques for reducing costs ( Eastlack & Rao, 2009) . It will also assist Campbell to evaluate the impact of inflation on the whole market spectrum. The value chain analysis may be quite complex but its assists in evaluating the cost competitiveness and the various strategic alternatives.
The next step involves assessing the competitive shifts and how the rising cost pressures may affect their market share potential and growth objectives. All the company’s competitors may face similar problems, but their reaction to the issues facing them determines their success in the industry. The company should then evaluate the future cost increases on their capital and operation expenses. Campbell will be able to foresee the future price increases and make the appropriate decisions ( Place, 2011) . The next step involves strategic realignment where the company chooses the best practices from the strategic cost analysis. Campbell should select the best practices that will result in lower cost of production while maintaining their high quality. The company should come up with policies that will minimize the effect of cost pressures. Ultimately, the appropriate practices may create competitive advantages and cost competitiveness for Campbell.
Summary
The paper analyzes Campbell Soup Company, explained its mission statement, competition, SWOT Matrix, and evaluated the main issues affecting the company. It also gives a recommendation and how it should be implemented. Campbell Soup Company describes a multinational food company that has its headquarters in Camden, N.J. the company has annual sales of about $8 billion. The company produces a high range of packaged fresh foods, high-quality soups, snacks, simple meals, and beverages ( Place, 2011) . Their mission statement explains that the company aims a building the most extraordinary food company in the world by nourishing the lives of people every day and everywhere. Campbell’s company slogan is nourishing the lives of people every day and everywhere. Campbell encounters global competition in all of their main products. The competition emanates from many different competitors who have different influence across multiple beverage and food categories.
The main problems facing the company are the poor sales performance, increasing skepticism of large-scale food producers, and the four seismic shifts . The financial ratios indicate that the company has a healthy financial performance. The company should implement low-cost production so that they can mitigate the effects of the increasing costs of the raw materials. It is evident that consumers are quite sensitive to price changes and they are highly likely to purchase goods that have the lowest prices ( Eastlack & Rao, 2009) . The best technique for implementing the recommendation is through a strategic cost analysis. Campbell should diagnose their different costs from the farm to the final price purchased by the ultimate consumer. It involves the construction of a value chain that indicates the value that is added to the product at all steps in the production and marketing process.
References
Eastlack Jr, J. O., & Rao, A. G. (2009). Advertising experiments at the Campbell soup company. Marketing Science , 8 (1), 57-71.
Place, O. C. (2011). Campbell Soup Company.
Shea, M. E., & Mathis, M. (2012). Campbell Soup Company . Arcadia Publishing.
