Wall Street Journal Article Critique – Module 3
MBA 634
Katherine Hofto
The Wall Street Journal article, “Older Brands to Lead Revival at ConAgra Foods,”
describes the current strategic efforts ConAgra is making to overcome a quarterly loss of
$1.24 billion, or $2.85 a share. ConAgra is combatting a weak demand for processed
food, which is an issue that is also plaguing similar competitors, such as General Mills
Inc. and Campbell Soup Co. Because these companies share both market commonality
and resource similarity, rivalry is strong. The worsening market and waning demand for
such products only intensifies this rivalry.
The article also describes how ConAgra is struggling with its private-labeling business,
which produces food that grocery stores sell under their own brand name. ConAgra has
taken several strategic steps to improve its market position though new marketing
concepts to highlight products such as Reddi-wip that uses real cream, and reinvesting in
well-known brands that have been neglected in past years, such as Healthy Choice frozen
dinners and Marie Callender’s pot pies.
ConAgra has a variety of strengths, weaknesses, opportunities and threats that should be
examined to determine what strategic actions ConAgra should take to improve its market
position in this competitive environment.
Strengths
• ConAgra has a long history, as some of its brands date back to the 1860s. The
broad brand portfolio is a powerful strength, which can be used to gain customer
loyalty and pricing power.
• ConAgra has a strong supply chain with the ability to cut costs. The company has
seen significant cost savings, which has allowed ConAgra to offset declining
growth in revenue and flat sales.
• ConAgra has substantial resources that can allow for research, innovation and
expansion.
Weaknesses
• ConAgra’s acquisition of its private-labeling company for $5 billion in 2012 is
point of weakness. ConAgra continues to post losses for the business unit and
plans to divest and sell the business.
• Some of ConAgra’s brands are losing popularity due to a lack of renovation and
updated labeling.
• ConAgra has also encountered recent quality issues of E. coli tainted meat in 2002
and a salmonella outbreak linked to peanut butter production 2007.
Opportunities
• ConAgra can continue to improve marketing and labeling for brands that can
become staples for the next generation, such as its recent efforts with its Reddiwip brand.
•
•
Another significant opportunity for ConAgra is the capability to acquire new,
healthier brands to mitigate the losses suffered from a decline of interest in
processed food.
ConAgra can continue to cut production costs through innovation and efficiency
improvements in its supply chain.
Threats
• The changing tastes and preferences of customers can have a substantial impact
on revenue, as ConAgra is currently experiencing.
• Economic conditions can affect ConAgra if consumers substitute brand names
with lower priced or quality products.
• New or changing regulations could have an impact on the company since the
government closely monitors the food industry.
ConAgra has already begun several strategic actions to mitigate the effect of consumers’
tastes changing. This includes selling the private-labeling company that is losing money,
cutting production costs to offset less earnings, and reinventing old products to market to
new consumers. While these actions are all worthy endeavors, ConAgra should also focus
on acquiring new brands or offering new products that will appeal to consumers who
prefer less processed and more organic choices. General Mills Inc. was a first mover in
this by acquiring Annie’s, a natural and organic brand. Since the acquisition, General
Mills has seen sales growth and also a higher profit margin due to the higher prices that
these products carry. As a second mover, ConAgra should analyze the benefits and issues
General Mill encountered and then move quickly to ensure General Mills does not
dominate the market by building customer loyalty. Although this is the major move
ConAgra should make, ConAgra should also improve its quality control measures to
ensure no further issues are encountered. In the social media dominated environment
today, another problem will be an extreme public relations issue. By incorporating these
additional efforts, ConAgra could see more sales growth and higher profits.
Resources
Gasparro, Annie, and Chelsea Dulaney. " General Mills Reaps Benefits Of Cost Cutting."
Wall Street Journal (n.d.): n. pag. 23 Sept. 2015. Web.
Gasparro, Annie, and Lisa Beilfuss. "Older Brands to Lead Revival at ConAgra Foods."
Wall Street Journal (n.d.): n. pag. 23 Sept. 2015. Web.
Wall Street Journal Article Critique – Module 3
MBA 634
Katherine Hofto
The Wall Street Journal article, “Older Brands to Lead Revival at ConAgra Foods,”
describes the current strategic efforts ConAgra is making to overcome a quarterly loss of
$1.24 billion, or $2.85 a share. ConAgra is combatting a weak demand for processed
food, which is an issue that is also plaguing similar competitors, such as General Mills
Inc. and Campbell Soup Co. Because these companies share both market commonality
and resource similarity, rivalry is strong. The worsening market and waning demand for
such products only intensifies this rivalry.
The article also describes how ConAgra is struggling with its private-labeling business,
which produces food that grocery stores sell under their own brand name. ConAgra has
taken several strategic steps to improve its market position though new marketing
concepts to highlight products such as Reddi-wip that uses real cream, and reinvesting in
well-known brands that have been neglected in past years, such as Healthy Choice frozen
dinners and Marie Callender’s pot pies.
ConAgra has a variety of strengths, weaknesses, opportunities and threats that should be
examined to determine what strategic actions ConAgra should take to improve its market
position in this competitive environment.
Strengths
• ConAgra has a long history, as some of its brands date back to the 1860s. The
broad brand portfolio is a powerful strength, which can be used to gain customer
loyalty and pricing power.
• ConAgra has a strong supply chain with the ability to cut costs. The company has
seen significant cost savings, which has allowed ConAgra to offset declining
growth in revenue and flat sales.
• ConAgra has substantial resources that can allow for research, innovation and
expansion.
Weaknesses
• ConAgra’s acquisition of its private-labeling company for $5 billion in 2012 is
point of weakness. ConAgra continues to post losses for the business unit and
plans to divest and sell the business.
• Some of ConAgra’s brands are losing popularity due to a lack of renovation and
updated labeling.
• ConAgra has also encountered recent quality issues of E. coli tainted meat in 2002
and a salmonella outbreak linked to peanut butter production 2007.
Opportunities
• ConAgra can continue to improve marketing and labeling for brands that can
become staples for the next generation, such as its recent efforts with its Reddiwip brand.
•
•
Another significant opportunity for ConAgra is the capability to acquire new,
healthier brands to mitigate the losses suffered from a decline of interest in
processed food.
ConAgra can continue to cut production costs through innovation and efficiency
improvements in its supply chain.
Threats
• The changing tastes and preferences of customers can have a substantial impact
on revenue, as ConAgra is currently experiencing.
• Economic conditions can affect ConAgra if consumers substitute brand names
with lower priced or quality products.
• New or changing regulations could have an impact on the company since the
government closely monitors the food industry.
ConAgra has already begun several strategic actions to mitigate the effect of consumers’
tastes changing. This includes selling the private-labeling company that is losing money,
cutting production costs to offset less earnings, and reinventing old products to market to
new consumers. While these actions are all worthy endeavors, ConAgra should also focus
on acquiring new brands or offering new products that will appeal to consumers who
prefer less processed and more organic choices. General Mills Inc. was a first mover in
this by acquiring Annie’s, a natural and organic brand. Since the acquisition, General
Mills has seen sales growth and also a higher profit margin due to the higher prices that
these products carry. As a second mover, ConAgra should analyze the benefits and issues
General Mill encountered and then move quickly to ensure General Mills does not
dominate the market by building customer loyalty. Although this is the major move
ConAgra should make, ConAgra should also improve its quality control measures to
ensure no further issues are encountered. In the social media dominated environment
today, another problem will be an extreme public relations issue. By incorporating these
additional efforts, ConAgra could see more sales growth and higher profits.
Resources
Gasparro, Annie, and Chelsea Dulaney. " General Mills Reaps Benefits Of Cost Cutting."
Wall Street Journal (n.d.): n. pag. 23 Sept. 2015. Web.
Gasparro, Annie, and Lisa Beilfuss. "Older Brands to Lead Revival at ConAgra Foods."
Wall Street Journal (n.d.): n. pag. 23 Sept. 2015. Web.
Purchase answer to see full
attachment