General Foods Corporation: Dessert Toppings Strategy Harvard Case Solution & Analysis

Introduction

             This case attempts to analyze one of the business situations for General Foods Corporation which is one of the largest food products manufacturers in the world. Standing at the end of the current year the total net sales of the company are $ 3.9 billion. And the net profits of the company stand at a level of $ 150 million. The US Grocery business of the company had accounted for about 85% of the profits for the company and around 70% of the sales. The main strategic business units of the company are the pet foods, main meals, breakfast foods, beverages, coffees and desserts. Each of the company’s business has its own strategy to balance the portfolio of the products.

            Each of the portfolio of the companies was balanced through a mix of high growth products which generated significant earnings for the business, those business that were low growth but generated significant earnings and lastly those types of business products that generated huge amounts of cash which were used by the management to reinvest for the growth of other areas of businesses. Furthermore, a set of classifications had been also established by the management of the company to which the products were assigned based upon their growth prospects, profitability, cash generation and future sales.

Problem Diagnosis

            The dessert toppings manager, Mr. Lawrence Tracy has to decide that whether the board of the company should reclassify Cool Whip from a category II business to a category I business. She also had to recommend that whether the Dream Whip should be reclassified from a category III business to a category II business. There were around three business categories in each of the business portfolio of the company which were category I, II and III products. These three corresponded to aggressively building volume, maintaining business position and optimizing the cash flows of the company respectively.

            Moreover, these three categories could also be classified as the stars, cash cows and problem child/question mark categories in terms of the Boston Consulting Group matrix. A careful analysis needs to be performed for each of the products in the toppings business and then make the final recommendations. A detailed analysis needs to be performed on the basis of the correlations between the sales units change, sales promotions and advertising expenditures, pricing strategies, business strategies and regression analysis.

Analysis

            Most of the businesses of the company fell in category II businesses as compared to category I and category III business. Furthermore, in terms of the size the products within the category II were much larger as compared to products in category I in terms of their positioning. However, the brand managers of the category I products have more freedom to freely use the resources of the organization and invest in profitable areas.

Reclassification Decision for Dream Whip Product

            The first product that we would consider in this analysis is the Dream Whip product. This product had generated considerable sales and gained huge market shares for the company since its inception and after the launch of the Dream Cake campaign. This had changed the positioning for this particular product category and made it a dessert enhancer which could be used or added to the cakes as an ingredient. It was till 1971, that the market share and the sales for this product had continued to increase however, after this campaign had attained its maximum usage potential, the sales of this product had continued to decline and the company was losing on its market share.General Foods Corporation Dessert Toppings Strategy Case Solution

            The usage of Dream Whip in Dream Cake had reached a level of 25% only, which was not sufficient enough to save it from other toppings and the Cool Whip. Initially in the year 1973, the Dream whip product was classified under a category II because of its competitive pricing, positing, advertising and promotions, however, in 1976, despite the fact that the ROFE and the EBT performance for this product were strong, the management of the company had marked that the total market for this product would decline further and as a result this was reclassified as a category III product. Furthermore, if we analyze the information for the reclassification for a particular product, then it could be seen that there are very less chances for reclassifying Dream Whip now from a category III product to a category II product. Some of the most critical reasons for not reclassifying Dream Whip to a category II product are as follows:......................................

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