Smuckers SWOT Smuckers Has a Case Study

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Smuckers has a number of strengths from which to gain competitive advantage. The company has a roster of leading brands that are household names (2009 Annual Report). It has saturation-level distribution around the nation. The company is consistently profitable and has a healthy balance sheet (MSN Moneycentral, 2010). It is liquid, has a low debt ratio and the company is growing faster than the industry average -- impressive since its business tend to be mature. One weakness of Smuckers is that its brands lack dynamism -- they are staples and do not excite consumers. The company's margins typically lack those in the industry over the past five years, indicating that Smuckers has lower pricing power than its competitors.

There are a number of opportunities in the market. Smuckers can place increased emphasis on the growing organic segment. Organic groceries have grown from $1 billion in 1990 to $23 billion in 2008 with expected future growth rates of 18% per year (Organic Trade Association, 2008). There is also further merger and acquisition opportunity -- the Folgers transaction in 2008 had been a huge success for Smuckers (AP, 2009). Some of the threats include competition, increasing grocery specialization occurring outside of Smuckers' area of expertise (organic, ethnic) and shifting consumer tastes. New entrants are common and some of them have emerged as legitimate players in some Smuckers' businesses.

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The company's brand strength has insulated it thus far, but over time there is concern that this brand strength is being eroded by new entrants and a failure of Smuckers to deliver premium product to match its premium pricing. This raises the specter of being forced into a low-cost model, which Smuckers may find that it is not adequately prepare for.

Conclusion

Smuckers is at present a strong company with a roster of successful brands. It markets its products as premium, but the company's long-term margins indicate that they have only limited premium pricing power. While the company has benefited from the economic downturn, this is because of consumers "trading down" to Smuckers. Thus, the company is no longer perceived as premium in the marketplace. With changes in the industry taking customers towards organic and ethnic food, Smuckers' products risk decreasing in relevance in the marketplace. The company can leverage its financial strength, distribution capabilities and its well-known brands to build the premium value back into Smuckers' roster. This could be accomplished by moving more significantly into organics or it could indicate that a more dynamic lineup of food is required. Otherwise, the best strategy will be to continue with M&a activity in order to build economies of scale and brace for a future as a low cost producer fighting in an.....

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