Reinventing the organisation - Heinz Europe A Heinz case study Introduction The business writer, Charles Handy, illustrates the need for organisations to reinvent themselves by the sigmoid curve - effectively an ‘S’ shape on its side. An organisation which appears to be successful is on the upward growth path of the curve (point A). At this time, the organisation is making high sales and profits and is able to pay healthy dividends to shareholders. You may think, therefore, that there is no reason to change the organisation.
However, this organisation is close to its peak (point B). Beyond this point, the organisation may go into decline and be less successful. The time to change is at or before point A. The intelligent organisation will seek to reinvent itself and come up with new ideas in order to keep ahead of the competition. This is important as competitors will also be seeking to erode any competitive disadvantage that they may have. This case study focuses on the way in which Heinz, one of the world’s major global companies, has set out to reinvent itself at a time when it is already preeminent in a range of global food markets. The study examines aspects of Heinz’s ‘Project Millennia,’ an international restructuring plan announced in 1997, which chairman Dr Tony Reilly describes as ‘delivering the 21st century early’. In particular, the study considers the way in which Heinz has re-organised its European operations to create a pan-European structure based on eight global categories. The global Heinz Corporation Like many global producers today, the Heinz Corporation started off from a small scale and localised business. The first product produced by Henry John Heinz in 1869 was horseradish, followed by pickles, sauerkraut and vinegar. These were delivered by horse-drawn wagons to grocers in and around Pittsburgh, Pennsylvania. In 1875, a new product was introduced which still flourishes today – tomato ketchup. Over time, Heinz expanded in the USA and around the world, at first through internal growth (i.e. ploughing back profits into investment in new plants and equipment), but since the 1960s, by acquisition and brand building (i.e. taking over well known producers of products and
brands that complement Heinz’s existing ones). Today, Heinz has 50 affiliates operating in some 200 countries, offering more than 5,000 varieties. Heinz has also developed a strong world-wide focus on eight global product categories in which it possesses unique competitive advantages and opportunities:
foodservice infant feeding ketchup, sauces and condiments weight control seafood pet products frozen foods convenience meals.
Organisational structure In business, it makes sense to concentrate on what you do best – your best lines. All organisations therefore need to build organisational structures which make it easy to:
concentrate on best lines identify new opportunities arising in these areas channel resources and initiatives into best lines and particularly into new opportunities effectively manage best lines and opportunities encourage innovation and a ‘can do’ approach.
Heinz’s Project Millennia is all about enabling the organisation to adapt and change, so that it has the necessary flexibility to take the opportunities which will yield the highest possible returns. As part of this world-wide reorganisation and growth initiative, Heinz unveiled plans to focus on Europe-wide category management of its core businesses. Products and markets which offer the greatest potential for future growth and return on investments benefit from this category management approach, while product development, manufacturing, sales and marketing are directed to exploit opportunities in the most cost-effective manner. By using this new approach, Heinz is able to respond quickly to changing consumer patterns on a Europe-wide scale - if, for example, tomato flavoured pizza bases prove to be popular with an...
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