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  • Case 17

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    Regent H'ng
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    J.M. Smucker Company's corporate strategy is to grow existing brands, introduce new products, and make strategic acquisitions focused on the North American market. Across brands, Smucker aims to be number one in product lines where it competes. Smucker expanded beyond jams and jellies through successful acquisitions of well-established brands, making itself less of an acquisition target and increasing profits. Smucker's brands are leading positions in their segments, and its business lineup exhibits strategic fit through value chain match-ups that provide cost savings opportunities. Smucker's segments are all profitable cash cows generating excess cash flows, enabling further acquisitions and investments to improve financial and market performance.

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    J.M. Smucker Company's corporate strategy is to grow existing brands, introduce new products, and make strategic acquisitions focused on the North American market. Across brands, Smucker aims to be number one in product lines where it competes. Smucker expanded beyond jams and jellies through successful acquisitions of well-established brands, making itself less of an acquisition target and increasing profits. Smucker's brands are leading positions in their segments, and its business lineup exhibits strategic fit through value chain match-ups that provide cost savings opportunities. Smucker's segments are all profitable cash cows generating excess cash flows, enabling further acquisitions and investments to improve financial and market performance.

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    5K views2 pages

    Case 17

    Uploaded by

    Regent H'ng
    J.M. Smucker Company's corporate strategy is to grow existing brands, introduce new products, and make strategic acquisitions focused on the North American market. Across brands, Smucker aims to be number one in product lines where it competes. Smucker expanded beyond jams and jellies through successful acquisitions of well-established brands, making itself less of an acquisition target and increasing profits. Smucker's brands are leading positions in their segments, and its business lineup exhibits strategic fit through value chain match-ups that provide cost savings opportunities. Smucker's segments are all profitable cash cows generating excess cash flows, enabling further acquisitions and investments to improve financial and market performance.

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    Case Questions 1. What is J. M. Smucker Companys corporate strategy?

    What common strategy elements are shared across its brands? Did it make sense for Smucker to expand its business lineup beyond jams, jellies, and preserves? Why or why not? J.M. Smuckers corporate strategy is to grow its existing brands, introduce new products, and make strategic acquisitions. These three goals are focused on the North American market. Across its brands Smuckers aims to be the number one product in all of the product lines in which they compete. Smuckers expanded beyond jams, and jellies to protect it from becoming an acquisition of a larger firm. By expanding Smuckers has made itself less likely to be acquired by increasing its cash flow and size. Smuckers has been very successful so far in expanding purchasing number one brands and increasing both revenues and profits by large margins along with an increase in stock price. Smuckers decision to expand the business has been a successful one. 2. What is your evaluation of Smuckers business lineup and its acquisitions since 2002? How strongly positioned are the companys brands in each segment of the industry? Smuckers list of acquisitions and brands reads off like an all star team, Pillsbury, Smuckers, Jif, Folgers, Dunkin Donuts, Hungry Jack, Crisco Smuckers has been careful to purchase only well established and successful brands and focused on leading brand names. Smuckers has decided it is better to acquire already established brands than to build a new brand from scratch. Smuckers brands are positioned as the leading brands in many of the processed foods segments in which they compete. Folgers is the leading coffee, Crisco is the leading cooking oil, Smuckers leads in fruit spreads, Knudsen leads in health and natural beverages, and Jif leads in peanut butter. 3. Does J. M. Smuckers lineup of businesses and brands exhibit good strategic fit? What value-chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see? Smuckers has been focused on center of the store products and wishes to be number one in each of the categories in which it competes. With that strategy as a seller of processed foods Smuckers has done well to expand and grow its product lines and increase its presence in supermarkets in North America. Peanut butter goes hand in hand with jams, cooking oil goes with baking mixes, Folgers coffee is a good way to expand from the breakfast table to the workplace and syrups and topping go well with pancake and waffle mixes. Value chain match ups which should give Smuckers cost savings include Peanut butter and oils, Fruit spreads and fruit toppings, syrups and juices, Baking mixes and frostings with flour and baking ingredients. Smuckers as a food processor can also benefit by giving its food processing experience to newly acquired business units and vice versa. Processing techniques, packaging and shipping savings, consolidation of operations to fewer locations, combined shipments and storage of products all of these offer savings along with economies of scale which gives Smuckers bargaining power with suppliers and supermarkets.

    4. Perform a financial analysis of J.M. Smuckers. Does Smuckers lineup of businesses and brands exhibit good financial resource fit? Does it appear that J. M. Smucker Companys businesses are cash hogs or cash cows? What do the companys cash flow characteristics disclose about its ability to make new acquisitions or major investments in the current business lineup? Yes, Smuckers lineup of businesses offers a good financial fit. Smuckers segmented profit statement from their 10-K 2010 included in case 17 states that all of Smuckers segments are generating a profit; in fact all segments are experiencing growing profits. It appears that all of Smuckers segments are cash cows generating cash flows over and above its internal requirements. Smuckers has divested operations and brands that have not fit its corporate strategy or did not generate a large enough profit such as Mrs. Smiths pies, Brazilian and Australian jams and jellies, and industrial ingredients businesses. Smuckers business segments make a good financial fit because they generate enough excess cash to invest in securing and investing in promising acquisitions and create opportunity for investment in current operations. Smuckers has been increasing its profit and cash flows through successful acquisitions of popular businesses and with the advantages gained through combining technology, operations, marketing, and distribution Smuckers has been able to invest in the underperforming operations or merge them with another business unit to make them more profitable. 5. . What strategic actions do you recommend the Smucker family undertake to further improve the companys financial and market performance? Use the money generated through the cash cows of the business to invest in new acquisitions and new and retooled factories. Close underperforming or outdated facilities and whenever possible combine production lines to make better use of economies of scale and to save on facilities operations costs. Continue to search out and purchase high quality brands that are for sale that can add immediate value to the companys bottom line. Invest in R&D of new products that can be offered that are healthy or natural to take advantage of health conscious consumers. Continue to merge product lines and operations to find cost savings across different product offerings and brands. Reduce redundant operations and corporate waste. Expand operations where conditions are favorable and take advantage of low borrowing costs. Protect the credit rating of the firm to make for more profitable future lending.

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