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Heinz 2002

Henry Beam: Western Michigan UniversityForest David: Mississippi State University

A. Case Abstract

Heinz (4124!""###$!%##& '''heinzcom) is a comprehensive *+siness po,icy orstrategic management case designed -or +se at *oth the +ndergrad+ate and grad+ate ,eve,sWith case setting year 2##2. Heinz is a -+n case to -oc+s on in c,ass since so many o- itsprod+cts are ho+seho,d names Head/+artered in 0itts*+rgh. 0ennsy,vania. Heinzs-inancia, statements. mareting po,icies. strategies. vision statement and direction areprovided in the case Heinz marets over !.%## -ood prod+cts in more than 2## co+ntriesand has man+-act+ring -aci,ities in 21 co+ntries 3n addition to etch+p. its origina, and*estno'n prod+ct. Heinzs prod+ct ,ine inc,+des stea sa+ces. pet -oods. in-ant -oods.

snacs. pasta. t+na. so+p and condiments St+dents typica,,y are ased to prepare a threeyear strategic p,an -or Heinz to so,ve pro*,ems presented in the case For eamp,e.Heinzs sa,es and earnings have *een -,at -or the past -ive years. 'hi,e ,ongterm de*t is 56*i,,ion compared to shareho,ders e/+ity o- 7+st 516 *i,,ion

Ma7or competitors o- Heinz inc,+de 8amp*e,, So+p (9# o- *rand name USso+p maret). ;enera, Mi,,s. +aer ?ats (ac/+ired *y0epsi8o in 2##1)

Heinz is the ,argest prepared -ood s+pp,ier to the US -ood service maret. 'hichconsists o- resta+rants. diners. ca-eterias. and other a'ay-romhome eating p,aces US-ami,ies spend a*o+t ha,- o- every -ood do,,ar on mea,s o+tside the home Heinz has a1% maret share in in-ant -oods in the US Heinz se,,s @Aives cat -ood (the ind+stry,eader) as 'e,, as i**,es Cn Bits. ;ravy train. 8yc,e. and enA ration dog -oods HeinzsStarist is the 'or,ds ,eading *rand o- canned t+na Heinz in the ,argest se,,er o- canned*eans in the United ingdom. and the ,argest maer o- private ,a*e, so+p in the UnitedStates =*o+t 9# o- Heinzs sa,es come -rom 4# 'e,,no'n *rands

Wi,,iam ohnson. 'ho *ecame 8E? in 2##1. is 7+st the -i-th 8E? in the companys16# year history

B. Vision Statement(proposed)

Go *e the *est -ood prod+cts company in the 'or,d

C. Mission Statement(proposed)(corresponding to components ,isted *e,o')

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H Heinzs -irst responsi*i,ity is etended to ,oya, c+stomers (1) in more than 2##co+ntries and territories (") ?+r phi,osophy is to prod+ce a /+a,ity prod+ct at a -air price(") Ghe company is a 'or,d'ide provider o- processed -ood prod+cts and n+tritiona,services (2) Ghe companys strongest g,o*a, *rand is Heinz etch+p (%). 'hich is 7oinedin the US *y maret,eading *rands s+ch as ?re3da. Starist. and Boston MaretHomeSty,e Mea,s We are dedicated to the tota, s+ccess o- Heinz as a 'or,d'idecompetitor in the =mericas. E+rope and =-rica. the 0aci-ic

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2

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maret

8ompetitors have a higher rated Board o- Directors ##! 2 #1#

#otal -.00 2./

). Internal Audit

Stren+t$s

1 Di--erentiated prod+cts2 Use 'e,,no' spoespersons and advertising icons6 ;ood rep+tation -or /+a,ity prod+cts -or 1## years4 8+,t+ra, prod+cts! High,y a+tomated man+-act+ring" Energetic yo+ng management team% Many prod+cts are segment ,eaders

*ea3nesses

1 Aimited +se o- in-ormation systems2 High de*t6 Dependent on commodity prices4 Io mission statement! Aimited s+ccess se,,ing prod+cts o+tside the United States and United ingdom

Financial ,atio Anal(sis (+,y 2##2)3nd+stry: Food 0rocessing

Sector: 8ons+mer$Ion8yc,ica,

Com"an( Industr( Sector S4& 500Valuation ,atios0$E

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6ro7t$ ,ates 8Sa,es (M) vs >tr 1 Lr =go 44# %"! "22 #91Sa,es (GGM) vs GGM 1 Lr =go 4%6 1@49 @"2 1""Sa,es ! Lr ;ro'th tr 1 Lr =go I$= 2"#6 1@41 1#!#E0S (GGM) vs GGM 1 Lr =go "%99 1@"" 1#"@ #!1E0S ! Lr ;ro'th

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I)E Matri

1e( Internal )actors *ei+$t ,atin+ *ei+$ted Score

Stren+t$s

Di--erentiated prod+cts #1# 4 #4#

Use 'e,,no' spoespersons and advertising icons ##! 4 #2#

;ood rep+tation -or /+a,ity prod+cts -or 1## years #1! 6 #4!

8+,t+ra, prod+cts ##2 6 ##"

High,y a+tomated man+-act+ring ##! 6 #1!

Energetic yo+ng management team ##! 6 #1!

Many prod+cts are segment ,eaders #1# 4 #4#

*ea3nesses

Aimited +se o- in-ormation systems ##9 1 ##9

High de*t #1# 2 #2#

Dependent on commodity prices #1# 2 #2#

Io mission statement ##! 2 #1#

Aimited s+ccess se,,ing prod+cts o+tside the United States andUnited ingdom

#1! 1 #1!

#otal -.00 2.5

9@

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6. #!*S Anal(sis

Stren+t$s *ea3nesses

1 Di--erentiated prod+cts

2 Use 'e,,no' spoespersons and advertising icons6 ;ood rep+tation -or /+a,ity prod+cts -or 1## years4 8+,t+ra, prod+cts! High,y a+tomated man+-act+ring" Energetic yo+ng management team% Many prod+cts are segment ,eaders

1 Aimited +se o- in-ormation

systems2 High de*t6 Dependent on commodity prices4 Io mission statement! Aimited s+ccess se,,ing prod+cts o+tside the United States and United ingdom

!""ortunities S;! Strate+ies *;! Strate+ies

1 ?ne E+ropean c+rrency. the E+ro2

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H. S&ACE Matri

Y axis

Financia, strength ! 1 'orst to " *est L ais: ! (6) 2Environmenta, sta*i,ity 6 1 *est to K" 'orst

X axis

3nd+stry strength 6 1 'orst to " *est N ais: 6 (2) 18ompetitive advantage 2 1 *est to " 'orst

8onservative FS =ggressive

8= 3S

De-ensive ES 8ompetitive

@1

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I. 6rand Strate+( Matri

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9. #$e Internal;Eternal ?IE@ Matri

#$e I)E #otal *ei+$ted Score

Strong =verage Wea

6# to 4# 2# to 2@@ 1# to 1@@

High 3 33 3336# to 6@@

Medi+m 3O O O3#$e E)E #otal*ei+$ted Score

2# to 2@@Heinz

Ao' O33 O333 3N1# to 1@@

Hold and Maintain

@6

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1. E&S;EBI# Anal(sis(in 5mi,,ions at 1261#1)

5=mo+nt Ieeded: 5!##Stoc 0rice 54#EB3G

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*i,,ion Heinz is p+tting the divisions into a s+*sidiary that 'i,,. in t+rn. *e merged 'ithDe, Monte Go pay -or the ac/+isition. De, Monte 'i,, give 4! o- its shares -or each 1##shares that Heinz shareho,ders o'n. and Heinz 'i,, get to name si o- the res+,tingcompanyQs nine *oard mem*ers Ghese *+sinesses. 'hich together generate approimate,y519 *i,,ion in ann+a, sa,es (or 2# o- Heinzs ann+a, reven+es). are: Iorth =merican pet-ood and pet snacs& US t+na& US private ,a*e, so+p and 8o,,ege 3nn(