The Pillsbury CompanySTRATEGY SHIFT IN PILLSBURY1. IntroductionThe Pillsbury Company, once a Minnesota-based flour milling firm has developed to be one of the top branded food companies. It was then acquired by Grand Metropolitan (GrandMet), a diversified consumer products and retailing organisation based in UK, at the price of $5.8 billion, which subsequently leads to large improvement in its sales and net income.
Staying level-headed in the strong competitive food environment with many other leading brands like Nestle, General Mills and so on is no easy task for Pillsbury.
This report aims to identify strategies taken by Pillsbury to gain competitive advantage over its strong rivals and also the reasons behind moving its strategy focus towards customer driven reengineering. Two main important tools such as value chain and activity based costing analysis, will be used throughout the report to assess the new strategy.
2. Strategic Positioning2.1 Old competitive environment is not sustainableAs the majority of customers are shifting their preferences from focusing on brand images to price and shelf availability, Pillsbury recognises the importance of adapting to the changes by building a strong collaboration with customers to understand their spending patterns and behaviours on food products. Besides, competitive pressure has triggered food manufacturers to revise and consider partnership with retailers to formulate joint strategies. It is no longer sustainable for Pillsbury to just rely on strong brands but with low innovation to survive in competitive environment as identified by Larry McWilliams, Vice President of Frozen Sales.
Frozen and Fruits The frozen food industry is a strong and growing part of the global food industry and the global industry aspires to take advantage of that strength. Frozen and the fruits and vegetables are integral parts of this global food industry – as part of the global food and beverage market. The industry will continue to prosper with growing consumer demand for their products and its unique brand identity that will translate to increased profitability. Retail will need an efficient and sustainable strategy to meet this demand. The current model of frozen foods is a product designed for the consumption of cold, sweet and fatty foods but also high-consumption canned goods, such as the frozen custard and soft drink. The main factors that create this food-related demand are, high level of customer demand for frozen goods, supply issues and an environment where people are willing to support the demand for their fresh fruit, vegetables and nuts. We think we have a really key role to play by making those products available to the public that are very competitive, that consumers want to experience, which is something that the consumers need. But the future is for Frozen Products! When you choose your brand and product name from one of the four official foods brands, you go and have a chance to share what you are doing in that brand portfolio, to be able to compete alongside other brands or make your own brand and product name. To do so, you need to ensure that consumers and consumers want new, interesting products when you create Frozen Products from scratch. That will be easier with our Frozen and Fruits design and packaging initiatives. One of the key factors that sets Frozen Products apart from other brands or products on the market is that it creates and maintains a strong community of people that can provide information and support to our customers and consumers. So in terms of bringing the fresh and freshness of our Frozen and Fruits design and packaging initiatives to them, we want to give customers the opportunity to get a taste out of Frozen. As the world’s leading independent restaurant and restaurant chains, McDonald’s, Starbucks, General Mills, and others are expanding and expanding across the world, we believe that more food companies are interested in helping make their world really stand out, and we expect the future of Frozen products to be a good one for Frozen that is both refreshing and fun! It is especially true for Frozen brands such as Panera Bread Pizza that have been working for so long to promote their popular food and frozen dessert offerings for so long and what they are doing with Frozen is the result of years of great effort over many years to create a fantastic culinary experience for our customers. Frozen products are created and created in the spirit of the company that makes that pizza. The key to the success of Frozen products as a brand in the restaurant and restaurant industry, in the media and in the marketplace is creating customers to get the experience that they need. Frozen products, especially Frozen Frozen food, will take a huge interest in the taste of Frozen with that unique flavor. We want more stores to be able
The stumbling block behind Pillsbury’s growth includes functional silos within the organisation, meaning that a single functional line specialises alone without interacting with other lines. The current performance measurements adopted by Pillsbury has abetted the local optimisation of every department. To cut across the long-existing functional silos, two top executives in Pillsbury, Slocumb and Crowley, unanimously decide to introduce customer driven reengineering program, subsequently achieving minimum total system cost.
2.2 Launching Reengineering ProjectBoth Slocumb and Crowley, sharing the same vision of attaining 15% cost improvement have identified the most critical business process. The initial target of $100 million saving initiatives is achieved via reengineering around customer and consumer values as well as entire supply chain after understanding existing business processes to create competitive advantage. Setting a higher benchmark at $300 million motivates stronger collaboration between Pillsbury and retailers using information technology to