General Mills Case Study

The RTE cereal industry had historically been one of the most concentrated of all U.S. industries,

5) Capital Requirements: in order to enter the industry, there were huge capital expenses to be sustained by firms, such as a minimum of $ 100 million for capital investments, and at least 125 employees to run a plant that could produce both packaging and cereals themselves. In this framework, advertising expenses may be added too, since they’re a great part of the expenditures a RTE Cereal firm has to face, and they also represent a great Barrier To Entry, being an amount close to 1/5 of the sales generated by the company.

The ready-to-eat (RTE) sector has increased sales and therefore have given the Breakfast cereals market an advantage to have a higher market share of 4.2% in 2013. The emphasis is more to the value and the convenience of cereals rather than the quality. However people are starting to be more heath conscious and are going to the higher nutritional brands which tend to be the well-known ones such as Kellogg 's, Weetabix and Nestle.

(Roy, Matthew) The small companies hold a very small part of the market; approximately 13.6%. (Roy, Matthew)The four larger companies hold the other 86.4% of the market. (Roy, Matthew) These four big cereal manufacturers are Kellogg, General Mills, Post, and Quaker Oats. “Great Barriers to entry and the inelastic nature of cereal allow this oligopoly to exist and numerous government attempts to end it have failed.” (Roy, Matthew) Due to the oligopolistic nature of the industry companies are able to turn large profits as well. (Roy, Matthew)

The company was recently presented an opportunity by its largest retail customer to significantly increase its share in their private label manufacturing. The prospect of growth was risky, since it

Private labels also had a better relationship with the grocers because of the better margins they offered to them. This was a bargaining tool Private Labels used to their advantage. Now their product was being placed in more strategically placed locations throughout the grocery store, which increased their sales and decreased the Big Three’s sales. In addition to allowing competitors into the industry, the Big Three hurt themselves by spending millions of dollars on coupons and advertising. There was little to no results that proved these methods were effective in gaining market share. For example, the RTE cereal industry spent $800 million in advertisements and trade promotions, but did not see much reward other than non-loyal consumers switching their products based on current trade promotions. Another factor of the industry crisis was due to the fact that the Big Three stopped their united front of raising prices together. The Big Three no longer made strategic moves together and in return made it easier for others to enter the industry. At the start of the RTE Cereal Industry the Big Three offered value to their customers, however over time their capabilities were possessed by many competitors, not making their organizations rare. This hurt their competitive advantage among the

General Mills (GSI) is the sixth largest food company in the world. The company currently operates in more than 100 foreign countries and employs over 35,000 people. . GSI manufactures and markets branded consumer foods worldwide and supplies branded and unbranded food products to the foodservice and commercial baking industries. The company manufactures cereals, yogurt, ready-to-serve soup, dry dinners, frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza, flour, fruit and snacks; and organic products, including soup, granola bars, and cereals; and ice cream and frozen desserts, and high fiber snacks. Its best

General Mills Chairman and CEO, Ken Powell, has truly become successful in leading a clear focus for General Mills to find solutions in ever-changing consumer food preferences; Mainly, by the food company particularly manufacturing natural and organic food products. For the most part, Chairman and CEO Powell configures General Mills path to manufacturing natural and organic food products typically focuses on innovating and investing to market foods helps to provide new growth for General Mills (Christenson, 2015, n.p.).

In June of 2016 General Mills announced that they were going to approximately cut around 1,400 jobs worldwide because few products were in low demand with customers. Customers are demanding for more “real food”. They don’t want processed food instead they want more natural ingredients included in the products. General mills will close its facility in New Jersey which produces progress soup costing 370 jobs. Another General Mills facility in Ohio which produces dry mixes will lose another 180 workers. General Mills will also close facilities in overseas markets. In Brazil, they will shut down a facility which produces meals and snakes costing 420 jobs. Also in China, they will shut down a facility which is involved in producing of

2)A Junior marketing executive at MegaGrain Cereals suggests increasing the package size and price of its best-selling brand without increasing the amount of cereal inside the box. Her superior warns that this might be a bad idea because MegaGrains long-term survival, like most companies, depends on

Firstly, according to the sociocultural environment, we were able to find out TCBY’s consumers are getting more and more health conscious. This is because the frozen yogurt that TCBY produces has a sound health and fitness emphasis which is a social issue that affects the way goods flow through marketing channel. Secondly, due to the competitive environment, TCBY’s franchisees are facing competition from new stores in nearby areas so that it causes the decline in sales of their stores. It is evident in the case that TCBY had 34 percent of the market for frozen yogurt, while its closest competitor had only a 9.7 percent share. However, more companies are getting into the market. McDonald’s Corporation replaced its soft serve ice cream with frozen yogurt. Dairy queen also entered the market. Baskin robins added frozen yogurt to its line of ice cream product. Haagen-dazs added a new frozen yogurt to its product line in supermarkets. Convenience stores and grocery store chains, such as the Kroger Company, have frozen yogurt machines in their facilities. This kind of competition is referred as a Horizontal Competition ‘that occurs between Channel members operating at the same level and generally within the same market’ (Brickley 1996, p. 173). Lastly, based on the economic environment, there is a downturn in the economy. As a result of both heightened competition and reduced consumer spending, TCBY’s profits fell 32 percent from 1989 to 1990 and were

Porter’s Five Forces model looks into an industry and allows for deeper analysis of business strategy that is involved with each company. It strives to identify the justifying factors that are related to five forces that determine the competitive environment and overall attractiveness of an industry. In the case of KKD’s their competitive position is put against fast food industry. Potential entrants of this industry depend on what stage of the industry life cycle it is in at the time, however most of the time the threat of potential entrants is low. This is because the majority of the firms currently in the industry have developed economies of scale that provides them with a cost advantage over new entrants. KKD has cost advantages due to its supply chain and since they manufacture their own doughnut-making equipment and produce doughnut mixes their economies of scale is entirely internal thus making the doughnut making process very efficient. Their access to distribution sells directly to the customer by means of their stores with counters and drive-through windows. They also sell out of the stores in grocery and convenience stores. Their brand is known for their doughnut signs as well as doughnut-making theaters where customers can come watch the doughnut making process through glass windows.

Kraft nourishments Group, inc. Produces including businesses sustenance furthermore refreshment products, including helpful meals, refreshment drinks what's more coffee, cheddar also other grocery items. The organization works its business through six segments: Beverages, Cheese, refrigerated Meals, Meals & Desserts, Enhancers & nuts also Canada. The drinks section incorporates Maxwell House, Gevalia, and Yuban coffees; Tassimo hot drinks system; capri sun and Kool-Aid bundled juice drinks; Crystal Light, Kool-Aid, also country time powdered beverages; Also MiO fluid. Those cheddar fragment incorporates kraft and saltine barrel natural cheeses; philadelphia cream cheese; kraft furthermore

According to a consumption survey carried out by Kellogg’s in 2008, 97% of households purchased breakfast cereal in the ROI, placing Ireland as the largest consumer (per head) of breakfast cereal in the world. This translates into a €200 million per year market for the cereal industry. Though traditionally cereals have been consumed at breakfast time, of recent, the industry (Kellogg’s in particular) have marketed cereals as a snack food for consumption anytime during the day. (http://www.guardian.co.uk/business/2006/dec/28/food.usnews) Cereal manufacturing is a high margin-to-cost business, gross profit margins on processed cereals are 40-45%. According to analysts

Cadbury also segregates its products based on the demographics. The packaging of Cadbury is also good and it creates a long time impact in mind of customer. The consumer base of Cadbury is also expanding day by day as with its