Heinz case

Résumé du document

Heinz is one of the most profitable companies operating in the food processing industry. This essay will try to describe the industry and environment of this company. Then, we will see how the competitive advantage has been developed within this industry. By reading the Vision of the firm, we can conclude that Heinz operate in the "food processing industry". Thus, Heinz wants to become the leader in the food industry, by providing the "best value". In this industry, the firms are satisfying the needs of a great part of the population, who want to have safe and good food. The value of the products, they are delivering is function of the way they transform raw ingredients into food for consumption by human. Moreover, the products of this industry are often quickly perishable, thus they have to use process and technics that permit to prolong the lifetime of their products.

Extraits

[...] Therefore, the strategy of Heinz has been since the beginning to provide more and more products, related with the food processing industry, to offer a large quantity of products to the customer. Until the years 2000, the firm achieves a lot of acquisitions or launch of new brand. Launch of ready-to-serve 'quality' soups and baby foods in 1931, or acquisitions of several food companies since 1963 (Charlie the Tuna, Starkist, Weight Watchers International In 2002, the firm changed his view, by selling a large part of its activities. “Heinz sells U.S. StarKist seafood, North American pet foods and pet snacks, U.S. private label soup, College Inn broth, and U.S. [...]

[...] Thus, it is not in a declining stage. Today, the processed food's customers are not “early adopters” and the key players are already in the marketplace (generally big firms). Thus, we can conclude that the industry is not in a growth stage. Then, the level of sales is quite constant in the industry. Thus, we can set-up that the Processing industry is in the mature stage; characterized by low prices, important level of sales, and products used by the large majority of consumers. [...]

[...] Consumers can for example have their habits in a big retailer's chain, for the purchasing of national and international brand, but occasionally, purchase local brand for special occasions. The last Porter's force is the bargaining power of suppliers, and is weak also. Generally, the suppliers of raw ingredients are small producers and do not have big financial abilities. The food industry is a big client because it is a consolidated market. Thus, it purchase in large quantity, and have power in the bargain with suppliers. [...]

[...] In what type of industry environment(s) does Heinz operate? First, we have to know precisely, in which industry Heinz is working. By reading the Vision of the firm, we can conclude that Heinz operate in the “food processing industry”. Thus, Heinz wants to become the leader in the food industry, by providing the “best value”. In this industry, the firms are satisfying the needs of a great part of the population, who want to have safe and good food. The value of the products, they are delivering is function of the way they transform raw ingredients into food for consumption by human. [...]

[...] Firms must spend a huge amount in communication and marketing, to become an unavoidable supplier, asked by the final customers. This can lead to create a barrier to new entrants because the communication cost to establish a well-known brand is high, and if they are not able to equilibrate the relationship with the retailer, the firm cannot achieve to create a competitive advantage. The brand loyalty is also created by a large effort of communication and marketing, to fit the final customer's tastes. [...]