Gaining And Sustaining Competitive Advantage: General Mills Case Study

Company Perspectives

Discuss about the Gaining sustaining competitive advantage.

Strategy is considered to be one of the most crucial aspects of any business enterprise. A strategy serves as a guideline to the company and helps the company in expanding the business operations. The chosen company for the given assignment is General Mills and the chosen segments are Snacks and Convenience Food (Hill, Jones and Schilling 2014). The report has given a background of the company and presented a time line of its history of international expansion. The second part of the report discusses the different strategic approaches adopted for the chosen segment. 

The General Mills is a multinational manufacturer based in America and is also the marketer of various branded consumer products. The headquarters of the company is based in Minnesota. The brand is an absolute favorite in the eyes of the consumers because it offers superior quality products as well as services (Barney 2014). The employees find General Mills a good company to work for as it rewards innovation and appraises the performance of the employees. The company has been growing consistently since the last few decades. The company history and the timeline of international expansion have been given in the next section:

The company is one of the biggest leading cereal companies in the globe with several brands under its name like Cocoa Puffs, Cheerios and Trix. The company has also been able to expand its operations in the food line sector including desserts and cake mixes. The products of General Mills are available in more than 90 countries and have long term collaborations with Nestle S.A. and PepsiCo. Apart from its domain in snacks in Europe, the company also functions outside the grocery sector in various domains like educational, healthcare, convenient stores and vending machine operations. 

The portfolio of General Mills became better and the company increased its snack portfolio. And spread its operations to England and Belgium with the purchase of Smith Food Group Limited. The company followed this by opening a French Biscuieria in Latin America and Japan (Ginter, Duncan and Swayne 2018).

However, it was in 1989, that the company decided to expand its operations overseas. General Mills partnered with Nestle which was a Switzerland based company. After its amalgamation with PepsiCo, the company entered into Europe’s snacks market.

Post 2000 the company has shown interest in expanding its operations to Asian counties (Martinsuo 2013). With this aim, it has opened various ventures under the company name in Singapore, Malaysia, China and other countries in Africa as well.

Time Line

Figure 1; Net sales of the company (Source: Generalmills.com. 2018). 

The snack division of General Mills consists of a wide variety of brands that include brands like Chef Mix, Natural Valley, Cascadian Farm and Bugles corn snack. The brand has also added Annie`s which is the newest addition to the snack products line and includes a wide variety of options. The company gets its majority of income from the snacks division. However, recently there was a drop in the sales due to the new demand placed by the millennial who demanded a healthy diet.

The snack segment of General Mills snack has had an enormous growth opportunity in the United States (Bettis et al. 2014).  The given segment has been growing at a tremendous rate and which has covered more than 40% of the US market share. To capture the health conscious segment, General mills has also invested in the better for you product range which has bars and organic product.

Although the strategy followed by General Mills for international expansion of the snacks division included giving out free samples at the malls in Europe, Asia and Australia the products did not achieve international success at the expected rate because the concept of frozen meal was not preferred by the Asian population who have a desire for hot meals specially breakfast. Nevertheless, there exists a huge amount of potential in the snacks segment of the company because of the improving scenario of urbanization, increase in revenue and low base impacts in the Asian market.

According to Stead and Stead (2013), the strategic approach was simple. It wanted to become one of the biggest food-ing and consumer goods brand in the globe and for this it followed a policy of buying other business. General Mills believed in making small acquisitions and take over which would automatically give the company an advantage over the rival companies (Morschett, Schramm-Klein and Zentes 2015). Hence, under its umbrella, General mills are associated with a large number of products which are based in different countries.  In order to attain success it has planned to enter the local market of the various countries for ease of competition and access to a larger crowd. This approach to international expansion had been taken because it helps in easy functioning. Instead of formulating new recipes and products, take over and acquisitions helped General Mill to have an easy way out.

Snacks Division of General Mills

Figure 2: The revenue generated by the company through international and national operations (Source: Generalmills.com. 2018). 

Convenient Food concept is a normal formula these days whereby the food is already pre-cooked and packed in a box in order to make it easier for the consumers to just eat them directly or by adding minimal resources in order to cook (Lasserre 2017). In today`s fast paced environment, it is extremely difficult for family members to cook food and spend long hours in the kitchen. Capturing these ideas, many companies started the idea of convenience food (Wheelen et al. 2017). General Mills had also started taking advantage of the given segment and today it has a wide base of products under its umbrella. These products are as follows:

• Chef Mix
• Fiber One
• Nature Valley
• Annies
• Betty Crocker
• Helper
• Old El Paso
• Yoki

Over the years the company has increased and expanded the Convenience food segment and has spread its activities into various countries like Europe, Asia, Australia and others. It followed a similar policy like that of the snacks segment of acquisition and take over.

The following strategic approaches were undertaken by General Mills in order to expand internationally:

• Setting Goals- It knew that it could not follow a haphazard manner and hence for this purpose it had set well defined goals for the organization`s expansion plan. It had set certain milestones and set out proper target companies (Rothaermel 2015). As the eating habits of Europe are quite similar to that of the Americans and at the time of world wars, travelers used to travel frequently to and fro, the company decided to make Europe its primary target. Later on it set out goals for countries like Asia and Australia as well.
• Extending strategy to Supply chain- Apart from following techniques like acquisition, mergers and take over, the company widened its supply chain base as well and started importing and exporting from various sources (Slack 2015). The merger with companies like Pepsi proved to be a plus point in its case. It also tied relations with Unilever which went a long way in strengthening the company`s base.
• Taking the advantage of e-commerce- It also took advantage of the new advent of e-commerce and indirectly widened its market to various countries it had not tied relations with. E-commerce accounts for 1.5 % of the company`s sales.

Hence, over the years, it has taken various companies and tied up with other brands like Morton Foods, Pepsi and other large enterprises to get an access to international customer base and expand its operations worldwide.

Figure 3: A summary of the performance, segment wise (Source: Generalmills.com. 2018). 

Conclusion

Therefore, the story of General Mills has been quite an impressive one and it has grown its business to a great extent in the last 150 years. Starting as a normal mill company, it expanded its product base widely in order to increase its revenue. The corporate portfolio management of the company was widely headed by the company heads and the different CEO`s who were involved. Without their guidance and help, the expansion would not have been possible. The given report has highlighted the history of the company through a timeline and selected two segments; snacks and convenience food and elaborately discussed their international strategic approach. 

References

Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.

Bettis, R., Gambardella, A., Helfat, C. and Mitchell, W., 2014. Quantitative empirical analysis in strategic management. Strategic Management Journal, 35(7), pp.949-953.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.

Generalmills.com. ,2018. General Mills: A U.S.-based food company. We serve the world by making food people love, providing quality brands in more than 100 countries on six continents.. [online] Available at: https://www.generalmills.com/ [Accessed 9 Mar. 2018].

Ginter, P.M., Duncan, J. and Swayne, L.E., 2018. The Strategic Management of Healthcare Organizations. John Wiley & Sons.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Lasserre, P., 2017. Global strategic management. Palgrave.

Martinsuo, M., 2013. Project portfolio management in practice and in context. International Journal of Project Management, 31(6), pp.794-803.

Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp. 978-3658078836). Springer.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.

Stead, J.G. and Stead, W.E., 2013. Sustainable strategic management. ME Sharpe.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.