978-1259278211 Case 17 Solution Manual Part 1

subject Type Homework Help
subject Pages 7
subject Words 2924
subject Authors Alan Eisner, Gerry McNamara, Gregory Dess

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Teaching Note: Case 17 – Campbell: How to Keep the Soup Simmering
Case Objectives
1. To help students understand how a firm makes decisions about what business the
corporation should compete in and how growth should be accomplished.
See the table below to determine where to use this case:
NOTE: Although the case is primarily indicated for Chapters 5 and 6, instructors can build up to
Chapter Use Key Concepts Additional Reading
and/or Exercises
1: Strategy Concept Strategic management
2: External
Industry competition five forces; general
NOTE financial info
3: Internal Analysis Value-chain analysis; resource-based view
5: Business-Level
Strategy
Competitive strategy; generic strategies
6: Corporate-Level
Diversification; synergy; core
NOTE web articles, and
7: International
International strategies: multi-domestic vs.
NOTE web articles
Case Synopsis
Change was stirring at Campbell Soup. Denise Morrison, who formerly headed the company’s
North American soup business, had taken over as CEO in 2011. The change at the top for the
The soup business had been stagnant or slow growing for many years. Consumer preference had
moved away from soup to frozen pizzas and microwave meals. Campbell had struggled in the
face of this decline. First it had diversified its products, and then it had consolidated tangible
International expansion of the soup products into Russia had not worked, and the effects of
efforts to make inroads into the Chinese market were still uncertain. In the U.S. market,
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competition and general environmental factors had pushed the company to create a healthier
product line, but the reduced sodium levels had also negatively affected product taste. The ready-
to-serve soup business had not gained any traction against competition, especially from
Progresso. Should Campbell keep to its tried-and-true condensed soup formula, or was more
innovation necessary to revitalize the company?
Teaching Plan
The primary subject matter of this case concerns the importance of doing an external and an
internal analysis before selecting a business unit strategy. Therefore, this is a case that is well
suited for a full investigation of strategic analysis and formulation. An analysis of Porters five
forces can be used to analyze the environment in the packaged food industry. By building a
sound foundation in external and internal environmental analysis, and identifying possible
business, corporate-level and international strategies, students can evaluate Campbell’s progress
in implementing them. As such, this case is best positioned mid-way through the course, after
students have had an introduction to the concepts of strategy analysis and formulation.
Icebreaker
This case can start with an icebreaker. Starting from the perspective of a customer may make it
easier for students to transition to a strategic analysis.
Did you have soup this week, month, year? Was it homemade or canned?
Have you ever tried Campbell’s products? Over the last few years have you seen any changes in
the taste or look? What do you think about these changes?
Since Campbell is present in about 85 percent of U.S. households, a great many of the students
should be familiar with the product. Also, you can discuss the soup culture in U.S. Who still eats
soup, and why?
Before engaging in discussion, you might want to test students’ basic knowledge regarding the
Which statement is most true?
a. More soup is consumed in China than in the U.S.
b. Campbell Soup products are in approximately 9 out of 10 U.S. households.
c. Campbell brands include Pace Salsa,V8 juice, and Pepperidge Farm cookies.
d. Russians eat soup more than 5 times a week, on average, compared with once a week
among Americans.
e. All statements are true.
ANSWER: e. ALL these statements are true!
Campbell has higher net income than its rival Kraft Foods.
a. Yes
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b. No
ANSWER: b. Of the major competitors listed in the case: General Mills, Heinz, and
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign,
and also which additional readings or exercises to include to augment each discussion. Refer
back to the Case Objectives Table to identify any additional readings and/or exercises so they can
be assigned in advance.
1. What are key forces in the general and industry environment that affect Campbell’s
choice of strategy?
2. What internal resources does Campbell have that may give it a competitive advantage?
3. What do you think Campbell should do to counter the competition and remain in the top
of the soup business?
Discussion Questions and Responses
Prior to answering the specific case questions, the instructor might want to position the
discussion by reviewing what strategic management really is:
Referencing Chapter 1: Strategic Management
Strategy is all about the ideas, decisions, and actions that enable a firm to succeed. See Chapter
1, Exhibit 01: Strategic management consists of the analyses, decisions, and actions an
organization undertakes in order to create and sustain competitive advantages:
strategy directs the organization toward overall goals and objectives;
includes multiple stakeholders in decision making;
Leaders face a large number of complex challenges. Leaders must be proactive, anticipate
change and continually refine changes to their strategies. This requires a certain level of
“ambidextrous behavior,” where leaders are alert to opportunities beyond the confines of their
During strategic analysis, the leader does “advance work” to anticipate unforeseen
environmental developments, identify unanticipated resource constraints, assess changes in his or
her preferences for how to manage. During strategy formulation, the organization addresses the
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In strategy implementation, depending on the type of organization structure, the leader might
include key individuals in a discussion around selecting which strategies might be best to
implement at which level within the organization. The leader must ensure proper strategic
The basic question strategic management tries to answer is: How can we create competitive
advantages in the marketplace that are not only unique and valuable but also difficult for
competitors to copy or substitute?
Retired CEO Conant’s mission for Campbell was “together we will build the world’s most
extraordinary food company by nourishing people’s lives everywhere, every day.” On her first
day as CEO in August 2011 new CEO Morrison was set on employing a new vision for the
1. What are key forces in the general and industry environment that affect Campbell’s
choice of strategy?
Referencing Chapter 2: Analyzing the External Environment of the Firm
Organizational leaders must become aware of factors in the overall environment that might affect
their ability to create a competitive advantage. So how do managers become environmentally
aware? By doing scanning, monitoring, and gathering competitive intelligence, and using these
Environmental scanning involves surveillance of a firm’s external environment to predict
environmental changes and detect changes already under way. It is a BIG PICTURE viewpoint
Environmental monitoring is a firm’s analysis of the external environment that tracks the
evolution of environmental trends, sequences of events, or streams of activities. Leaders need to
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What factors or trends might be most important to Campbell Soup? To assess how the external
environment might affect the firm’s strategy, it’s necessary to take a look at the factors in the
general external environment. Campbell Soup must consider the political/legal, economic and
Political-Legal: all food producers need to follow relevant laws in each country where they do
Economic: an economic downturn can make customers more reluctant to eat out, so cheap,
Demographic: in the U.S. customers were younger, so staying in touch with the tastes and needs
Sociocultural: tastes had changed, at least in the U.S., with customers looking for more
convenient meal options, such as ready meals. Both quality and convenience are key. Soup is no
Technological: as consumers became more “wired”, finding opportunities to reach these
consumers, for instance with iPhone recipe apps, became more important. Technology is also a
Based on the general environmental forces, the industry faced challenges. Things were changing,
It’s also necessary to assess the segments of the external competitive environment that include
competitors, customers, and suppliers, substitutes and new entrants. Porters five forces model
allows strategists to anticipate where the industry might be most vulnerable. See Exhibit 2.7.
Campbell Soup, like other packaged food companies, was confronting two key threats:
One was from the high levels of rivalry, especially given the perpetual threat from
The second was the growing power of buyers such as discount chains.
Clearly, there were a few large and equally balanced firms that were pitched in a battle for a
greater share of the global market. Changing customer tastes and the threat of substitutes were
resulting in an increase in this rivalry. In addition, although supermarkets had been the main
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Suppliers – Low Threat: The suppliers in the packaged food industry have low bargaining
power. The distribution channels are easily accessible and the various companies have the ease of
interchange between the suppliers if they consider doing so necessary. As far as Campbell the
ingredients required for the manufacture of the company’s food products are purchased from
Suppliers’
Suggested: Products are
Suggested: The threat of entry
is medium. There are low entry
barriers, such as low capital
requirements, easy learning
Suggested: There is a high
threat from substitute
products. Consumers have a
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Buyers – High Threat: In most of the company’s markets, sales activities are conducted by the
company’s own sales force and through broker and distributor arrangements. The company’s
The ultimate buyers of Campbell products do not have any significant bargaining power. They
do have the choice to switch to another retailer, but their actual power to affect prices is very
Campbell may be adversely impacted by the increased significance of some of its customers. The
disruption of supply to any of the company’s large customers, such as Wal-Mart Stores, Inc., for
an extended period of time could adversely affect the company’s business or financial results. In
addition, the retail grocery trade continues to consolidate, and mass-market retailers continue to
Industry Rivalry – High Threat. The food and beverage industry is characterized by intense
rivalry. The company experiences worldwide competition in all of its principal products. This
competition arises from numerous competitors of varying sizes, including producers of generic
and private label products, as well as from manufacturers of other branded food products, which
Barriers to Entry – Medium Threat: The threat of entry is medium. There are low entry
Substitutes – High Threat: There is a high threat from substitute products. Consumers have a
variety of choices, such as dining out to a restaurant or a fast-food place. At the same time the

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