Discussion Questions for Cracker Jack
1. Why has Borden Foods decided to sell Cracker Jack?
Borden Foods is attempting to unload of snack foods, most notably ready to eat food products; in order to focus efforts and resources in growing their pasta and grain based meal segments. Borden has recognized that the market for ready to eat caramel popcorn is growing in size, and while they are number two in market share with $192 million in retail sales, they do not feel they have the resources or time to compete in this market anymore. Current Borden production facilities have only 32% of space allocated to Cracker Jack products, and operate at 33% of capacity. Finally, Borden is struggling to deliver Cracker Jack to consumers at a competitive price, driving the brand down.
2. Why is Frito-Lay considering the purchase of Cracker Jack?
Frito-Lay has designed a “New Ventures Division” with a mission to “to drive significant Frito-Lay growth by seeking and creating new business platforms and products…” Frito-Lay, a division of PepsiCo, recorded an operating profit of $1.63 million on net sales, which represented 31% of PepsiCo sales. Frito-Lay is hoping to leverage their strong resources and captures new markets. Frito-Lay currently is the market leader in salty snack food products and of the brands represented nine hold positions in the top ten performers.
The New Ventures Division utilized ongoing internal research and development to identify three broad opportunity growth avenues for achieving meaningful future growth. Borden’s announcement to sell Cracker Jack comes at an opportune time for Frito-Lay and is a potential fit with all three-growth avenues.
3. What might a SWOT analysis for Cracker Jack look like based on an assessment of the Ready-to-Eat caramel popcorn category, Borden's experience with the brand, and Frito Lay's own research? What are the implications for Frito-Lay?
- Frito-Lay has strong...
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