oscar mayer

The Oscar Mayer Company 

•An American  meat and cold cut production company .

•Owned  by Kraft's  Food Group .

•Known  for  its  Hot  Dogs, Bologna,  Bacon,  Ham  and     Lunchables products.

Philosophy: “ There’s always a better way”

1883:Oscar F. Mayer & Gottfried Mayer 

founded the company in Chicago.

1971:Oscar Mayer Company 

went public & was listed on Newyork stock exchange.

1989:Merger with Kraft 

Food, Inc.

1936:WienerMobile makes 

its debut.

1979:Louis Rich Inc. was 

acquired.

TIMELINE: OSCAR MAYER COMPANY

Characters in the case

Marcus McGraw:•22 years career with Oscar Mayer Foods•President  for  the last 4 years.

Eric Stanger:•Vice  President  of Oscar Mayer brand.

Jim Longstreet:•New  member  of Direct  Management Team.•Brought  into  new product hit rate.

Jane Morely:Director of Finance & Planning.

Mike McTiernan:•Founder  of McTiernan Consultation Firm. 

Rob Goodman:•Category  Manager at Louis Rich.

STRATEGY OF MARCUS MCGRAW

Hire McTiernan, Consultation firm for market research and planning advises.

Invite ideas from trusted managers.

Go through the memos.

Develop own To-Do list.

Case scenario

McTiernan Corp., sent a research report to Marcus McGraw.

McGraw is waiting responses from four of his most trusted managers, from different departments.

major challenges

Increasing popularity of healthy products with less fat and salt content.

Increasing demand on products that are more convenient to cook and easy to consume.

Overall red meat consumption has decreased while white meat demand has dramatically increased within last five years.

Memo 1

Rob Goodman (Category Manager) Louis Rich- White Meat Product Line

Suggestions:

1. “Switch to Rich Campaign”

Boosting up brand awareness by heavy advertising. Emphasis on advantages of white meat over red.

2. Introducing the string of new products.

Memo 2

Jane Morely (Director of Finance & Planning)

Suggestions:

1. Healthy and convenient products.2. Acquisition of small companies.

Chicken Rite, Inc. – Low cal. Chicken salad. Turkey Time Ltd. – Readymade frozen Sandwiches. Crabbies, Inc. – Simulated Shell fish products.

Memo 3Jim Longstreet (Newest member of Direct Management team)

Suggestions:1. Zappetites

Meeting consumer trends of : The change in trend from sit-down meals to on-the –go

handheld portable meals. With the explosive growth of microwave ovens, the associated

need of the products that fit “frozen food” category.

2. Lunchables

In substitution to the same homemade meals 5 days a week. Will include sliced lunch meats, cheese & crackers, condiments,

and a chocolate treat.

Memo 4Eric Stanger (VP of OM Brand)

Suggestions:

Six Urgent Actions

Price cut by 10 cent per package on lead top 3 OM products. Increase the advertising budget by $25m. Re-institute the Wienermobile promotional campaign. Formulate a low fat & salt line. Focus on rationalizing & capacity utilization in OM brand. Enliven Oscar Mayer Brand.

Questions & Answers related to the case:

    In the beginning of the case McGraw thinks he has “ Never  encountered  such  a  complex  business challenge” as the one he currently faces. By the end of the case, after he has read the  ideas  listed  in the four memos, McGraw can’t believe he ever  thought the  investment  issue  was  “  Going  to  be  hard  one”. What  changed  the  president’s  perspective?  What strategic  decision  making  process  does  McGraw pursue?

Q.1

McGraw changed his perspective of the business challenge because:

He knew that he had a competent and passionate team who had made solid recommendations relevant to their areas of expertise.

He need not choose a single option from the pool but can use them to strategize a mixed agenda by proper budgeting and risk management to allocate the company resources.

McGraw’s strategic decision-making process is:

Problem identification via the McTiernan report. Situation analysis with managers’ input taking into consideration the cost, 

convenience, customer, and competitive analyses. Analysis of the proposed solutions. Selection of a mix of solutions. Preparation of a rough P&L based on selected solutions.

A.1

    If McGraw chooses a strategic direction that favours only  one  department,  What  negative  effects  could this  have  on  other  departments?  How  can  McGraw mitigate the damage?

Q.2

 McGraw considered all  four of  the managers  to be highly competent and believed their suggested solutions were for the best of the company.

  If  McGraw  would  have  chosen  the  recommendations  of just a one department, he would be risking it all on a single bet.

  It  would  have  sent  wrong  signals  about  the  company’s belief in the diversity of their products and created distrust among the two organizations of the same parent company.

 He mitigated the damage by not choosing a single option but  using  inputs  from  all  the  four  managers  to  come  up with a strategic solution.

A.2

What  effects  is  the  change  in  the  strength  and weaknesses of competition having on the Oscar Mayer division?  How  does  this  impact  the  investment decision?

Q.3

Accordingly with the new changing competition trendsStrengths:

 More sophisticated manufacturing and marketing skills. Stronger financial positions. Focus on building value-added brands. Market share.

Weaknesses:

 Reduced brand strength. Failure to recognize changing consumer preferences in the past.

These  have  encouraged  the  OM  division  to  start  devising  strategies  to  develop healthier  red  meat  products,  invest  in  white  meat,  create  new  convenience products, and innovate in order to differentiate themselves. Impact in Investment decisionOM is increasing investment in Research & Development, Advertising & Promotions and new human resources and acquiring new firms.

A.3

Absent any resource constraints, which of the four departmental directions which of the four department directions do you think is most viable? Which is the second best strategy? Which is the least viable?

Given the information in the case, what strategic course do you think the Division should pursue?

Q.4 & Q.5

Recommended strategic course of action

 Follow the advice of Stagner and rebuild the brand through price reductions and a larger advertising budget.

 Retake lost market share.

 Regain lost customers.

 Convert competitors customers.

 Help sales force and organization grow the OM brand  with what is already in existence.

Once  the  OM  brand  has  been  re-established,  follow Longstreet’s ideas and introduce new product lines.

It is important to continue to grow the OM brand with healthy,  affordable  and  relevant  products  for  a  fast paced society.

Once the brand has been established and new product lines have hit, 

Follow Jane Morely’s advice and look into acquiring small companies.

Which of Jim Longstreet’s new product ideas is less likely to succeed? Why?

A.6  Jim  Longstreet  suggested  on  launching  two  new product lines Zappetites and Lunches.

Lunchables  is  least  likely  to  succeed  because  of  the following:

 It is covering a very narrow target customer base.

 The price of Lunchables is more as compared to Zappetites.

 Time required to prepare is more than Zappetites.

Q.6

Questions ?