The Cambell Soup Company Essay Research Paper — страница 2

  • Просмотров 338
  • Скачиваний 5
  • Размер файла 18
    Кб

slender looking dress, telling viewers soup is good food, and it only as 90 calories per can. It’s funny how a commercial can have such an impact. Every time I pull out a can of soup, I think of that woman, and think “great, I’m only eating 90 calories!” McGovern expected no less than zero defects. He had nationwide conferences for managers that included ways to improve quality. One of those strategies was to conform the company’s equipment to produce products the consumer wanted. Before, it would produce what it could with present equipment and risk reducing customer satisfaction. New product innovation is a great asset to the company, however Campbell spent too much time and energy on new products and excessive advertising. From 1982 to 1989 Campbell’s marketing

budget grew from $275 million to $552 million dollars. It’s advertising expenditures went from $67 million in 1980 to $197 million in 1989. With the entire new product innovation came high risk. When Campbell’s started its new product campaign, it spent $30 to $40 million for creation of new product lines. Usually it would use $10 million to develop and test new products, and it also used $10 to $15 million in advertising to launch the new item. He insisted on new items, regardless of cost. He preached he would rather his divisions create new products and fail, than no creations at all. Typically in the food industry only 20% of new products lasted for more than a year. But Campbell surpassed this average. During the 80’s one out of eight products were successful. McGovern

had no limit to the amount of money he spent to encourage new products and acquiring businesses and updating the company. McGovern spent $150 to $300 million annually for production, packaging, and labeling. This decision was based on market considerations and consumer trends. As a result of overspending and turning manager’s attention to product innovation, the company began to lose sight of cost control, profit margin goals, and old stand-by products. They became overconfident with their strategies and acquisitions. Often if the odds were against them, they would still pursue. They focused too much on marketing and lost sight of processing, packaging, and distribution. In the later part of the ’80’s, the profits started to reflect the neglect to the better part of the

company. The Dorrance heirs began to openly criticize McGovern’s approach to running the company. McGovern chose to resign from the criticism and the family disagreement over whether or not to merge with Quaker Oats. Campbell than started their search for a new CEO and found David Johnson, he was formerly CEO of Gerber, and proved his ability to turn around a company and produce higher profits. David Johnson started with Campbell in January 1990. Since he was the CEO of one of Campbell’s competitors, he was able to get an unbiased perspective of the troubles in the company. He knew Campbell had a good, strong foundation, with excellent research and development with well known brands. The company had just lost its focus. He felt if he could reorganize and refocus the company

within six months than it would be performing once again. Not only were earnings growth a first priority, but gaining the confidence of the Dorrance heirs was too. He felt confident, they were not trying to medal in the business, they were only dissatisfied with the profits. Johnson’s restructuring plan refocused the business on its best known brands, such as its soup, Prego, Pepperidge Farms, Vlasic, and Swanson. Johnson did not believe that Campbell’s growth should come from acquisitions of small food companies and from new products that primarily served to satisfy short lived trends. Johnson divested businesses that McGovern had purchased that were not complimentary to Campbell’s portfolio. A total of 26 businesses were divested and those 26 businesses only had an

average net profit margin of 1%. Johnson also eliminated unprofitable and slow selling products from the Campbell product family. Johnson had six initiatives to his strategy to help the company’s performance: ? Divesting businesses that were non-strategic and reorganizing it’s own division. ? Eliminating weak items from the company’s product family. ? Using the 20-20-20- motto for performance targets and insisting new products compliment Campbell’s strengths. ? Focusing on the global marketing of the company’s competencies and capabilities. ? Expanding and creating low-cost business system at corporate level. ? Utilization of assets to maximize the return to stockholders. To utilize assets, Johnson sold eight plants and shut down twelve more worldwide. The remaining