Products and International Exposure
The company has various trademarks all over the globe. In North America alone, the company maintains trademarks like Heinz, Classico, Jack Daniels, Catelli, Bella Rossa, Nancy’s, Lea & Perrins, etc. In Europe, HJ Heinz operates brands like Orlando, Nipiol, Derevenskoe, Amoy, etc. In Asia-Pacific and the rest of the world, the company operates products like Tom Piper, ABC, Nurture, Farleys, Wellingtons, Nycil, Glucon D, etc (Dienstarg, 1994). III. Corporate Strategy and Strategic Challenges
Products of the company are sold under a highly competitive industry environment. The company has various large and small competitors. Therefore, customer values and product quality management are defined as very important areas of business endeavors. III. 1. Corporate Strategy The latest strategy of the company is entitled Heinz Superior Value and Growth Plan. The plan is a follow-up of the last growth strategies of the company. The plan focuses on achieving three objectives, which are:
• To improve profit margins by reducing costs The company undertakes several initiatives to trim production costs in all of its factories and management centers. For instance, the company installs higher capacity information systems that are design to promote savings in several departments of the company, like waste reduction, inventory management and purchasing. The company is enhancing trade-spend efficiencies by driving out inefficient spending and also enhanced investment returns (‘HJ Heinz Annual Report’, 2004).
Other cost cutting strategies include applying for a more integrated global supply chain project that aims to further facilitate global procurements, continuous improvement of the business processes and plant optimizations. In respect of these cost cutting efforts, Heinz is targeting to have approximately $ 355 million savings over the next couple of years. • To expand portfolio by enhancing innovation This is a rather old strategy of HJ Heinz. Growth through innovation has always been a core strategy of the company.
HJ Heinz has a state of the art innovation center and which is established to improve corporate ability to diversify and differentiate processed food products to serve the tastes of HJ Heinz’s consumer everywhere. For each period, this innovation center works hard to support corporate growth and expansion to new markets. For instance, in 2007 alone, Heinz planned to examine 100 new product initiatives for further product diversity. Beside tastes, the company also aims to be prudent in health terms.
This means most of Heinz products is associated with health and organic materials (‘HJ Heinz Annual Report’, 2004). • To deliver enhanced shareholders return by developing corporate liquidity and cash Management also believed that this strategy is not new for the company. This is proven by the chart displayed on Heinz annual report which revealed the stable increase of dividend paid to shareholders and the rather significant increase in share repurchase during the fiscal year of 2006.
The rate of dividend growth indicated that Heinz placed its image toward investors as an important factor of business performance and growth. The annual report also stated that the company maintains several other efforts to protect investors from special interest groups. III. 2. Strategic Challenges In respect of the business model of the company and its strategies as mentioned above, in this sub-chapter I will elaborate the risks and strategic challenges faced by the company. The discussion is including material issues only and those needed considerable attention of investors.