Oscar Mayer

Topics: Meat, Oscar Mayer, Pork Pages: 9 (1765 words) Published: November 14, 2010


The demand started to shift towards consumption of white meat & more healthy food products, it happened not only because of their sudden desire of becoming health conscious but also because of the rising prices of the meat being offered.

The consumers need is food/breakfast, lunch & dinner.

Their want was meat, be it red or white but healthy & full of nutrition.

Their want was backed by their ability to purchase the meat in the market thereby increasing the demand.

The corporation thus faced the problem of investment in a manner which would get the corporation back on track & help it recapture its market share & sales.

McGraw was alarmed after he read the note written by McTiernan stating the challenges foreseeable for Oscar Mayer in the coming years. This was a business challenge unlike anything they had experienced before. This was because there was a decrease in sales of red meat (Oscar Mayer division) and a growth in the white meat market (Louis Rich category). However, responses from four of McGraw most trusted managers providing different but plausible solutions to the problem gave him the confidence that the challenge will eventually be overcome and his projected sales and profit figures will be achieved.

1. The Strategic Decision Making Process pursued by McGraw is as follows:

• Problem identification through the report given by McTiernan

• Situation analysis with inputs from four of his managers considering the cost, convenience, customer & competitive analysis.

• Analysis of each of the solutions keeping in mind the pros and cons of each and the prevailing market trends

• Choosing a mix of solutions

• Preparing an estimate of the future earnings from both the brands by applying the solution

2. If McGraw chooses a strategic decision that favors only one department there would be negative impact on the other departments. These are as follows:

Case 1: If he chooses the 1st solution where the strategy is to pump more money in the Louis Rich category

Effects on other departments:

• There would be further reduction in the sales of the OM division of red meat which is the main forte of the company

• An increase in the Advertising and Promotion expenditure may lead to an initial reduction in profits

• It will lead to only short term growth

• Reduction in sales or the number of customers as the customer loyalty lies in red meat segment

Mitigating damage:

• Careful and better planned allocation of current advertising and promotion budget

• Conducting survey on customer preferences (whether they prefer white meat over red) in order to avoid unnecessary expenditure in promoting the LR brand

CASE 2: Choosing the second solution which is acquiring smaller companies that offer healthier and more convenient options:

Effects on other departments:

• Image of Parent company may be tarnished if the acquired company does not do well

• Loan taken to buy the company will lead the added burden of regular interest payments and repayment of loan

Mitigating damages:

• Acquire the least risky company (e.g. Turkey Time Ltd), a company that has the same line of business as Louis Rich brand. This leads to investing lesser funds for the development of the product

• Information about the company in terms of its product range, target customers, profitability etc should be obtained in order to make an informed investment decision

CASE 3: If he chooses the strategy to invent a 4th category (Lunchables and Zappetites) within the processed meats

Effects on other departments:

• Reduction in the importance of their priority division-Red Meat Production

• Increase in expenditure on developing, advertising and promoting the product

• Increase in manpower requirements (2-3 more technical people required). This in turn leads to an...
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