Week 1 Responses   #1

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Week 1 Responses

 

#1. Hi everyone,

General Mills is a food processing company based in the United States whose name brands include Betty Crocker, Haagen-Dazs and Cheerios (General Mills, n.d.).  For this industry, two elements from Porters Five Forces model (QuickMBA, n.d.), General Mills should consider is Rivalry, and Threat of Substitutes.  

According to Digital Media Solutions (2020), one of General Mills’ biggest competition is Kellogg, where GM and Kellogg account for $7.3 billon in cereal sales across the United States.  With that, the two companies have gone back in forth in their quest to remain superior and rein in more customers.  Most recently, the GM and Kellogg each launched a new cereal to put pressure on the rival firm.  According to QuickMBA (n.d.), this competitive move by each company can result in price fluctuations, channel distribution changes, and can lead to sour relationships with suppliers.  

The second force GM should be aware of is the threat of substitutes.  As mentioned earlier, GM has a variety of brands, and with each brand comes the potential for an off-brand to make their name.  Discounted items or generic products have always been and probably will continue to have a place on grocery store shelves, GM should be concerned about the potential uptick in generic brand sales due to the current economic state related to the pandemic and unemployment rate.

Moving on to PEST considerations, economic and social standings will play a significant role in GM’s profits.  According to Garcia (2020), GM actually saw a boost in sales due to the pandemic because there was more at-home dining.  This increase in sales should be monitored closer and not something the company should lean on for long-term growth and stability.  As the economy strengthens and COVID restrictions relax, more consumers may opt for restaurant dining versus staying in.  The social factor should be examined as a lot of lifestyles have shifted and with that, consumer taste and preference.  GM should be wary of new hypes from competition as the workforce slowly comes back.  Additionally, economic growth is impacted due to inflation, interest rates and consumer confidence.  According to Value Based Management (n.d.), these concerns are impacting the macro-economic level and should be reevaluated based on region/country.  

Overall, GM has proven its strength and endurance during the pandemic in which the company saw an increase in profits.  Even so, it took one of its biggest competitors (Kellogg) head-on and in my opinion proved to have a competitive advantage.  Because of this, I would score the company a 7 on a 1-10 scale.  GM saw a 10% increase during late 2020 and has not yet showed signs of dropping (Gasparro, 2020).

 

References

Garcia, T.  (2020).  General Mills says economic troubles will drive at-home dining even after the pandemic is over.  Retrieved from  https://www.marketwatch.com/story/general-mills-says-economic-troubles-will-drive-at-home-dining-even-after-the-pandemic-is-over-11608222518

Gasparro, A.  (2020).  General Mills aims to protect coronavirus sales boost.  Retrieved from  https://www.wsj.com/articles/general-mills-reports-stronger-sales-but-growth-moderates-11600863778

General Mills.  (n.d.).  Company overview.  Retrieved from  https://www.generalmills.com/en/Company/Overview

QuickMBA.  (n.d.).  Porter’s Five Forces.  Retrieved from  http://www.quickmba.com/strategy/porter.shtml

Value Based Management.  (n.d.).  PEST Analysis.  Retrieved from  https://www.valuebasedmanagement.net/methods_PEST_analysis.html

 

 

#2. Hello

The packaged consumer foods industry is extremely competitive, General Mills is one of the leading producers of packaged consumer goods with well-known cereal brands like Cheerios, Chex, Cocoa Puffs, Kix, Lucky Charms, Total and Wheaties. Looking at this industry I will say that the availability of substitutes is one of the reasons for competition because there are a lot of substitutes to General Mills products, taking just the cereals we realize that there are quite a number of substitutes that consumers can turn to. The availability of substitutes leads into the second observation that I made for this industry and that is the bargaining power of customers, this is because due to the availability of substitutes the organizations dealing in the products in this industry will have to be mindful of their priced since consumers can just move to a substitute which is within their price range.

            Considering the remote environment for General Mills the initial point that comes to mind in relation to PEST analysis is economic factors and looking at examples like interest and exchange rates, inflation rates and economic growth. These are factors that generally are out of the control of organizations but does have effect on their performance and outcomes. With the pandemic that the world is dealing with, this has affected every sector including the economy and this has affected General Mills as well, this can be seen in General Mills’ share price which is fluctuating and also looking at the organization’s fourth quarter report there has been a 10% decline in its net sales. The next factor I will consider is social factors, because this also plays a vital role in the external environments’ effects on organizations. Issues like population growth rate, age distribution, people’s attitude towards careers and health consciousness are some of the issues that come into play under this point. This I see General Mills handling it well with for example the nutritional information that they make available to their consumers, their nutrition philosophy, etc.

In conclusion I will say that looking at General Mills’ returns on investments and the standing the organization has in the industry (currently ranking 7th in the food processing industry), I will say that the environment is favorable for this organization and with things gradually picking up with the pandemic situation, I see it getting even better for them, to give General Mills a ranking on a scale of 1-10 I will give them a 7.