How McCain responds to changes in the external environment
Businesses have a number of objectives. Typical examples include: • winning the biggest share of the total market • increasing sales • satisfying customers • making profit for shareholders. A business’ ability to meet these objectives depends on two main groups of factors: i. the internal strengths of the organisation – for example being able to make the right products in an efficient way ii. being able to identify external influences in the business environment and on its consumers and adapt accordingly. The external environment today is changing fast. This case study shows how McCain needs to identify changes in the external environment. It must then rise to the challenges posed by change. The external environment consists of everything outside the business. The McCain product most people recognise is chips. McCain is the world’s largest producer of chips. McCain buys 12% of the British potato crop. McCain is also one of the world’s largest frozen foods companies. McCain is a privately owned company with a strong market focus. This means that it carries out research to find out what consumers want. It then uses this market information to create products that consumers want to buy. McCain’s business focuses on frozen potato products and frozen light meals. It provides consumers with a wide variety of cut and seasoned potato products through UK retailers, like supermarkets and restaurants. These include roast potatoes, potato wedges, hash browns, waffles and potato croquettes. McCain produces more specific potato shapes like Potato Smiles, Crispy Bites and Sumthings (shaped as numbers) which appeal to younger consumers. McCain also makes pizzas. Chips have come a long way since the potato was first brought to this country by Walter Raleigh in the 17th century. By the 1850s fish and chips were sold in the streets and alleys of London and in some of Britain’s industrial towns. If asked to name a typically English dish, most people will say ‘fish and chips’. Chips are produced in lots of different shapes and sizes, ranging from those deep-fried in fish and chip shops to today’s oven chips.
CURRICULUM TOPICS • Marketing and the business environment • Communication • Decision making and stakeholders • Control of business activity
GLOSSARY Objectives: the end purposes that an organisation sets out to achieve. Business environment: all of those factors that influence a business that are outside of the control of the business. Market focus: concentrating on the wants and requirements of customers.
One of the biggest environmental factors affecting McCain in 2005/6 was the growing concern about obesity, particularly in children. This case study shows how McCain has risen to the challenges of this debate and other external challenges. McCain’s view is that its chips can and do play a role in a healthy balanced diet and it is continually finding ways to ensure McCain products are as healthy as possible.
GLOSSARY SLEPT: a study of social, legal, economic, political and technological factors that affect a business. Social trends: patterns of change in social behaviour, for example in fashions and tastes. Demand: the desire to buy a product backed up by the money to purchase that product. In order to be able to understand its customers’ requirements and respond to other changes, it is important for a company to analyse its environment. A SLEPT analysis is a tool that helps to analyse the environment. To create a SLEPT analysis the company needs to examine the key environmental factors that affect its business. These are broken down into:
Having carried out the analysis it must then take action to respond to the important changes that have been identified.
Of course, some of the factors in the SLEPT analysis can be placed under more than one of these headings. The...