oscar mayer
DESCRIPTION
oscar mayer case studyTRANSCRIPT
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 ?