978-1259278211 Case 17 Solution Manual Part 2

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NOTE – ADDITIONAL WEB LINKS TO FINANCIAL INFORMATION:

One interesting way to evaluate the competitiveness in the industry is to look at comparative

financial performance from the perspective of an investor. Since Campbell is a publicly-traded

firm, take a look at http://finance.yahoo.com/q/co?s=CPB to see how it compares with its peers.

2. What internal resources does Campbell have that may give it a competitive

advantage?

Referencing Chapter 3: Analyzing the Internal Environment of the Firm

When one firm outperforms others by a wide margin over a long period of time, it’s important to

figure out how this could be. The answer may lie in how that firm arranges its activities and

Remember, value-chain analysis is a strategic analysis of an organization that uses value-creating

activities. Value is the amount that buyers are willing to pay for what a firm provides them and is

measured by total revenue, a reflection of the price a firm’s product commands, and the quantity

To answer the question of what strategy Campbell should choose, that strategy should be

adequately supported by its value chain and other internal resources. Campbell must assess the

relationships between the elements in its value chain. Every activity should add value. Take a

look at Exhibit 3.1 to see the value chain activities. Here is what an assessment of this might look

like for Campbell:

Value chain activity How does Campbell create value for the customer?

What challenges does it have in its value chain?

Primary:

Inbound logistics (distribution

facilities, material control

The company’s principal executive offices and main

research facilities are company-owned and located in

Operations (efficient work-flow

design, quality control systems)

Company’s manufacturing and processing plants are

well maintained and are generally adequate to support

Outbound logistics

(consolidation of goods, efficient

Campbell uses an electronic network to facilitate its

continuous-replenishment program with its most

Marketing and Sales (motivated

sales people, innovative

advertising & promotion,

Sales activities are conducted by the company’s own

sales force and through broker and distributor

arrangements. The company has strong market positions

Service (ability to solicit

All of the company’s segments sold products to

Secondary (or support):

Procurement (procurement of

raw materials, “win-win”

relationships with suppliers)

The ingredients required for the manufacture of the

company’s food products were purchased from various

suppliers. While all such ingredients were available

Technology development

(innovative culture & qualified

Campbell sustains an appropriate technology

infrastructure to provide and maintain connections

Human resource management

(effective recruitment, incentive

Re human resource management, as per CEO Conant’s

statement, the company “possessed the people” to

General Administration

(effective planning systems to

establish goals & strategies,

Under Mr. Conant’s direction, Campbell made many

reforms through investments in improving product

quality, packaging, marketing, and creating a company

Primary Activities

Campbell had historical strength is all its primary activities, especially its inbound, operational

Secondary Activities

Campbell had added value in its procurement processes, and appeared well aware of the need for

supportive technological processes in order to continue to sustain that advantage. Retired CEO

To answer the question of how to support a competitive strategy, it’s important to consider the

concept of the resource-based view of the firm, and the three key types of resources: tangible

Tangible Resources:

Financial – Douglas R. Conant’s focus on winning in both the marketplace and workplace had

Physical – Campbell’s physical facilities were certainly adequate.

Technological – Campbell maintained an adequate technological system that allowed it to

Organizational – Able to produce new varieties of products in the past using organizational

Intangible Resources:

An important issue to focus on here is the importance of intangible resources like innovation and

reputation. Especially in mature brands, sustaining reputation is essential. Look at any intangible

Human: CEO Conant’s focus on innovation appeared to continually revitalize the workforce.

Innovation and creativity: Campbell was constantly adding new products that better reflected

Reputation: Excellent – Campbell started its business in 1869 and now sells its products in

over 100 countries. Campbell’s name and brand logo represented reliability in product

quality.

Organizational Capabilities: The ability to produce new varieties of products for their

customer’s health and wellness and its expansion into emerging markets meant Campbell had

Determining whether the internal resources are valuable, rare, difficult to imitate, or difficult to

substitute (VRIN) can help a firm sustain a competitive advantage. See Exhibit 3.6. Applying the

VRIN concept shows that Campbell had valuable resources, which nearly every competent firm

3. What do you think Campbell should do to counter the competition and remain in the

top of the soup business?

Referencing Chapter 5: Business-Level Strategy

A competitive strategy is linked to the value chain, and supported by intangible assets. Campbell

had historically good coordination across the value chain. Resources and assets should provide a

In order to achieve a sustainable competitive advantage, Campbell had to assess its ability to

contend with other processed food companies. The question of how to compete in a given

business to attain competitive advantage requires an assessment of the types of competitive

strategies, including the three generic strategies that are used to overcome the five forces and

achieve a competitive advantage:

●Overall cost leadership

oLow-cost-position relative to a firm’s peers

●Differentiation

oCreate products and/or services that are unique and valued

●Focus strategy

oNarrow product lines, buyer segments, or targeted geographic markets

Generic strategies are plotted on two dimensions: competitive advantage and strategic target. The

Campbell had products that targeted different types of consumers and their health concerns, such

as blood pressure or weight loss. With new products on the market and on their way, contract

CEO Douglas Conant had remade the company’s condensed soups, introduced soup in

microwavable containers, revamped marketing and redesigned shelving systems in supermarket

soup aisles. This made Campbell one of the industry’s best performers and its preset production

Was it necessary to put more emphasis on differentiation? Would a combination strategy make

sense for Campbell?

Referencing Chapter 6: Corporate-Level Strategy

Corporate strategy focuses discussion on the questions of what businesses a corporation should

compete in, and how the businesses should be managed so they can create “synergy” – creating

Diversification is the process of firms expanding their operations by entering new businesses.

Some possibilities include:

●Mergers and acquisitions

●Strategic alliances

Whatever the choice, it should create value for all stakeholders – employees, suppliers,

Companies can achieve synergy through diversification in two ways:

Through related businesses (horizontal relationships)

●Sharing tangible resources

Or through unrelated businesses (hierarchical relationships)

●Value creation derives from corporate office

●Leveraging support activities

Core competencies reflect the collective learning in organizations – how to coordinate diverse

production skills, integrate multiple streams of technologies, and market diverse products and

Campbell operated with a related business model. Given its core competencies in the

Campbell had grown primarily through acquisition and internal development, and it appeared to

NOT in the case: Campbell operated 5 divisions worldwide:

U.S. Simple Meals, which included all the various soups, both condensed and ready-to-serve,

plus sauces (Prego) and baby food (Plum Organics);

Global Baking and Snacking, which included Goldfish snack crackers, Pepperidge Farm cookies,

and Arnott’s biscuits outside the U.S. as the biggest sellers;

International Simple Meals and Beverages, which included soups and sauces;

U.S. Beverages, which mainly consisted of the V8 product line; and

Bolthouse and Foodservice, businesses, which involve service to restaurants.

NOTE – ADDITIONAL WEB LINKS:

One of Campbell’s strengths is its brand. In 2013 Campbell announced that its soups, primarily

the Chicken Broth & Noodle, would be available in Keurig K-cups as “fresh-brewed” mini-meal

options. CEO Morrison said “This innovative partnership is a win for consumers and for both

companies, and represents another important step as Campbell expands into higher-growth

spaces.” Will this increase the brand’s presence and drive more sales in other product categories?

See http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-

newsArticle&id=1852005 for the whole story.

Also in June of 2013, Campbell had acquired Plum Organics, “a leading provider of premium,

organic foods and snacks that serve the nutritional needs of babies, toddlers and children. ‘Plum’

is the No. 2 brand of organic baby food in the United States and is currently the No. 4 baby food

brand overall. Plum Organics generated $93 million in gross sales for the year ended Dec. 31,

2012.” See http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-

newsArticle&ID=1829771&highlight=

Do these recent acquisitions and alliances bode well for the company? Are the synergies apparent

here?

In June 2013 Forbes agreed that Campbell appeared to be reinventing itself with innovations and

acquisitions, and putting a lot of emphasis on branding and consumer outreach, especially to

Hispanics and “Millenials”. For a report on how Campbell was reaching out, see the article at

http://www.forbes.com/sites/avidan/2013/06/03/soups-on-at-campbells-as-it-reinvents-itself-

with-innovations-and-acquisitions/

For more about Morrison’s overall strategy, see

http://www.forbes.com/sites/jennagoudreau/2013/02/21/the-campbell-soup-turnaround-is-

heating-up-will-it-sizzle-or-fizzle-out/, which includes a timeline and video report on the new

initiatives.

But not everyone was buying this new brand strategy, especially the idea of “soup in a bag”.

Stephen Colbert poked fun at the soup pouch idea in November 2011 in this video:

http://www.huffingtonpost.com/2012/11/16/stephen-colbert-soup_n_2143500.html

Would this new “soup” strategy increase overall market share and revenue?

Referencing Chapter 7: International Strategy

International expansion is a viable diversification strategy; however, before pursuing this, a firm

needs to determine why an industry in a given country is more (or less) successful than the same

industry in another country. When choosing a country to expand into, firms must assess the

There are two opposing forces that firms face when entering international markets: cost

A global strategy was effective if it standardized all of a firm’s products for all of its worldwide

markets. Doing this would reduce a firm’s overall costs by spreading investments over a larger

global market. However, a global strategy should be based on three assumptions:

●Customer needs and interests were homogeneous worldwide

Campbell had been pursuing a global strategy with its simple meals and beverages and global

baking and snacking businesses. The assumption was that customers liked soup, vegetable

drinks, and both savory and sweet snacks worldwide. This may have been true in the European

Would CEO Morrison be able to succeed to grow brand recognition, grow market share and

profits worldwide?

NOTE – ADDITIONAL WEB LINKS:

Take a look at Campbell’s various brands at

http://www.campbellsoupcompany.com/our_brands.asp

Note the European brands as well as the branding move into Asia Pacific. Does the Asian brand

profile appear to be adequately positioned for growth into this region?

Regarding the European business, in August of 2013 Campbell announced that it was in final and

exclusive negotiations for the potential sale of its “simple meals” and beverages business

in Europe to CVC Capital Partners (CVC), a leading global private equity firm. According to the

Lemmens and Royco in Belgium.The proposal also includes the sale of four plants in

Puurs, Belgium; Le Pontet, France; Lubeck, Germany; and Karpalund, Sweden. The proposed

Campbell’s products in the United Kingdom or the Middle East or Africa. It also does not

include Kelsen Group, which will continue its operations in Denmark and the export of its

http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-

However, also in August 2013, Campbell announced that it had “completed the acquisition of

Kelsen Group A/S, a producer of quality baked snacks, including the Kjeldsens and Royal

Dansk brands, sold in 85 countries around the world. Based in Nørre Snede, Denmark, Kelsen is

http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-

newsArticle&ID=1846153&highlight=

Do these recent moves appear reasonable?

In 2015 there appeared to be nothing new: Campbell was reshaping itself, trying to “improve its

growth trajectory by strengthening its core business and expanding into faster-growing spaces.

Does this sound terribly “innovative” to you?