Brief Introduction to cereal market

There are mainly 2 types of food which are provided by the breakfast cereal market. They are
ready to eat cereals and hot cereals. Cold category has only 90 percentage globally as it is
consumed only by people who are living in African contities.In Eastern Europe, the Middle
and Far EastAfrica and Latin America can be named as emerging markets. total global industry
value grew by 4.2 percent to reach over $25 billion.6 Between 1998 and 2003.When comes to
creal market in us it is highly dominated by hot creals than cold creals. From the year 1968
General mills have begun to internationalise its operations by acquiring Smiths Food Group,
Ltd. of England and Belgium.In 1990 Operations of Nestle company began to internationalize
their products.

CPW- Cereal Partners Worldwide was established in 1990.It is a 50:50 joint venture between
Nestl and General mills .CPW has 50 brands worldwide. Except for United states and Canada
CPW operates cereals more than 130 countries world wide.In 1990 joint venture was
established extending the cereal production in United kingdom as well.

General Mills

a manufacturer of consumer food products, operates more than 30 global markets and exports
to over 100 countries. It has66 production facilities.34 in united states,15 in asia region,6 in
Canada,five in Europe,5 in lkatin America and mexico,one in south Africa.The companys
headquarters is in Minneapolis, Minnesota.

Nestle-

Founded in 1866, itis the worlds largest food andbeverage company in terms of salesNestl
headquarters is in Vevey, Switzerland and the company has
500 factories in 83 Nestls businesses can be divided into six divisions

Such as product groups, which include beverages; milkproducts, nutrition and ice cream;
prepared dishes and cooking aids; chocolate, confectionery and biscuits;

pet care and pharmaceutical products.

How can General Mills and Nestl create international competitiveness by joining forces in
CPW

Both General mills and Nestle are highly powerful companies where building up strong
brands, global competencies and excellent quality. Cpw has been established as a joint venture
by holding 50 to 50 ownership of both companies Nestle and General mills. Also cpw has
extended to the production of private label cereals in the UK.That would be a greaest advantage
The joint venture clearly benefitted General Mills to rely on strong global presence in markets
outside the US and develop stronger brands. On the other hand, Nestl.Also general mills has
a strong specialization on food catagories and it will benefited to Nestle.It is true that the Cpw
can be considered as a one of most successful global companies in the world but yet an
internationalized marketing strategy is nedded to operate both companies successfully and to
beat the competition occurred .

Following specific strategies can be used according to the given case and they can be
integrated to make the joint venture successful.
General Mills

_ cereal marketing expertise

_ technical excellence in ts and production

processes (upstream competences)

_ broad portfolio of successful brand.

Nestl

_ worlds largest food company

_ strong worldwide organization

_ deep marketing and distribution knowledge (downstream

competences).

2. Question02- Evaluate the international competitiveness of CPWcompared to the Kellogg

Company.

We can evaluate cpws international competitiveness with the Analyise of macro level factors
for General Mills and Nestl, also by applying Porters five forces model or the swot analysis
to can be taken.We can analyise value chain inorder to analyise the competitor kegllogs
position in global cerial market and to identify & analyise the competitive strategies.

1.Supply factors
 Major supply factors which affects to cerial industries are agricultural and
technological aspects, skilled and educated labor and .United states and switzerland are main
two rich countries in supply side .This clearly empowers CPW through General Mills with a
strong supply, stability and health and education, Switzerland holds an advantage over the US
according to the Global Competitivness technology, high skilled labor.

2.Demand factors

When comes to Demand factors in United states Market leads the total demand for
cpw products. with growing trends for new product innovation, organic and healthy products.
Only 16 percent of General Mills sales come from outside the US.21 While in Switzerland,
Nestls local sales are one percent of total global higher economy in manufacturing and
distribution due to higher technological and industry norms .

Other factors

leading agricultural country is US. Also the efficiency and effectiveness in government
and non goivernemnt organizations can be affect to the competitiveness in cpws markets.

Michel Porters five forces model-

There are mainly 5 aspects in Michel porters model.They are bargaining power of
suppliers,bargaining power of customers,entry into new markets,Threat of substitutes.

When comes to substitutes high risk of cheaper substitutes is there.

Supermarkets are powerful palyers as not only bargaining power depends on rawmaterials but
also on distribution Normally there is a higher bargaining power of suppliers as well as
customers.
. and Entry to marketis quite difficult because of key global players. new entrants will face
challenges passing a certain growth stage.global market is possible through new product
development and diversification strategies.

Rivarley among competitors is high because there are many key global players like kellogs to
compete with the brand of cpw.

Swot analysis answer under question no 2

Strengths-Factors that internally occured within company which strengthen the operations of
the company

Weekenesses-Factors which slowdown the functions of the company and occurred internally

Oppertunities-External factors which give beefits to the company

Threats-Harmful factors which adversely affect the goal achievement of the company

When compared to the kelloge company,cpw has following swot factors.

Strengths weekenesses

High cost
High labour cost
Strong customer relationships
Rapidly changes in technology
Strong internal communications system
A strong geographical location
 successful marketing strategies
Business reputation of being innovative

Technical excellence

Successful branding
Opportunities: Threats:
Products are quality lot of competitors in the market with
Seasonal high demand of the product similar products
High market share High cost
Strong market world wide Economic & political changes

.By analyzing the current competiveness using BCG matrix

Bcg matrix or Boston matrix can be used to express the relationship with market share,market
size n market growth for the products of cpw

1..cows- is where a company has high market share in a slow growing industry

ex-cpw market in mexico

2.Dogs-low market share in matured markets.

Ex- cpw market in Autralia,uk,germany,france

3.Question mark-high market growth but low share

ex cpw market in japan

4.Stars-high market share in which has a fast growth rate

ex cpw market in middle east & Africa,china,eastern Europe

Competitive triangle-value chain analysis

Mainly in here the been healthy and concentrating on healthy products is more important. Also
by providing high quality products with less expensiveness is more vital.

Research & development-AS cpw is a joint venture, general mills has invested rs 191 million
for research & development activites when kellog invest rs 171 million which is lesser
comparing to general mills.

Production-General Mills as well as Nestle have expand their production widly also reduce
their costs inorder to make the production process more quality.Nestles successful operation
known as excellenece 2007.Also comparing to kellogue cpw adopts more diffrenetiation
when comes to advertise their products.

Marketing & Services-Kellogue has a stand along branding method while cpw has cpw has
extended nestle branding and it add value to companys marketing strategies.Also more
attractive bpacaskging is with kellogs company.When comes to digital marketing its cpw rank
first comparing to kellog.

Cpw adoptes a price penetration method while kelloge offers mainly discounts for customers
under price prmium method.

Direct distribution is with cpw.kellogue is more powerful than cpw cz it has a wde varaity of
distribution methods for different communities.Kellogue has many varities of ceareal
products.on the otherhand cpw aims at providing business sevices.

Other internal factors-Mostly in Africa, Middle East and Asia countries has a low market share
s for cpw comparing to kellogue.cpw should find new market venture to market their
products.cpw should adopt a more production fouc process comparing to kelloge.although cpw
maintainna week turnover,it maintains a high income of 17% of net sales growth.

Finally cpw should adopt logal capabilities,norms,cultural aspects to include their activites &
should highly concentrate to expend their market internationally than kellogues performance.

Question number 3- Blue ocean strategy and its application

Blue Ocean basically means searching innovative market spaces.

It is in the view that market boundaries and industry structure is not given. Blue ocean strategy
can be achieved by differentiating the product and by achieving low costs. no current exist
markets and living the company to itself expansion. In Blue ocean strategy mainly it focus
around capturing new demands other than competing existing product .Blue ocean theory is
applicable to cpw company too.

Under the Blue ocean strategy 4 factors are considered. They are,

Which of the factors that the industry takes for granted should be cut off?

Which factors reduced well below the industrys standard?

Which factors raised well above the industrys standard?

Which factors should be created that the industry has never offered?

The way blue ocean strategy applies to cpw

To achieve the targets of blue ocean strategies,cpw should adopt international competitiveness
& international competencies.This will help to achive the market leadership & global market
share in world markets. Creating an international competitiveness and developing core
competencies for CPW will depend on two key strategies; first, to capitalize on the firms
existing core competencies which are its pricing strategy and its successful
1.International competitiveness-

this basically means how a country an arrive their market to international market without any
barriers. Here cpw company can use Product price, Technological and management
capabilities, joint ventures & export pricing as to achieve international competencies.

Cpw should reduce transport and manufacturing costs mainly to achieve competiveness
internationally. nd developing core compete should launch a global knowledge transfer
program.

Product price-Mainly the product price is consist of abour,material,transportation and quality

costs.Cpw should always maintain low costs in theses above mentioned factors.

Technological & management competencies-Mainly Cpw should focus on innovating new

products and they should include technological advancements in their ceral products.They
should produce & identify new marketable products & new ventures which they never found
before.

Joint ventures-By jpint venturing there is a usage of pooling of resources & spreading risks
among different products.Currently cpw is a joint venture of General Mills & Nestle.

Export pricing-Financing cpw is a major requirement as funds should obtain to use for day to
day operations & to invest in major new investments.Mainly cpw can place private banks
situated in globally and governments to fianc their products.cpw can obtain bank loans,
government loans & they also can invest in government securities and bonds.

2.International competencies-

in here cpw should focus on unique capabilities & competencies such diversification in
products, innovation, and after sales services.
Diversification-

Innovation-

After sales services-

Ways in which both international competencies & international competitiveness can achieve

1. Sales and marketing campaigns promotional activites-

According to the case given most of cows advertising are done using electronic medias
like television. So cow has the ability to expand their communication media using internet,
newspapers, radio etc. Cpw can organize marketing programs worldwide ,further organizing
workshops to market their products. They can use more e marketing methods as it is a
multinational company.

2.developing product diversification method

By offering high quality with low cost and identifying new styles ,choices, cultures of
consumers are focused in here. segmenting ,targeting and positioning mainly dividing the
market according to the demand of the consumers like market for young, adults ,infants
etc.Also cpw can diversify in producing the creals,oats, and other nutritional products
according to the suitability of customer choices.

3.identifying nich markets

In here identifying smallest markets will be give more market share and market
leadership.focusing on asian markets, Russia china emerging. middle east new market
venture.Halal products should target for the Jewish and more healthier cold product can be
introduced in african countries.

4.Branding

By building up a high quality Brand for cpw company as a unique name or icon in consumers
mind should be an essential factor in here.Not only cpws brand should develop locally but it
should be focused to develop internationally as well.Also by establishing a brand agreements
between countries cpw will have an opportunity to grab the market leadership.

Question number 04-Where and how can CPW create further international sales growth?
Mainly cpw can internationalise the sales by using three ways.They are by identifying new
trends in production,identifying in Distribution methods & by identifying trends in
advertising.

1.Trends in Production

By identifying the speeding of society like young, old ages cow can focus on further sales
growth.Cpw can produce different catagories of foods seperatly for infants,children below 10
years,children above 10 years,for teenagers & adults.

Also aiming at the entry of more women into the workforce and their changing life styles can
identify as a trend under production process.As today living women are delaying their marriage
& marry in late ages and have small number of children may have an effect to the cpw ceral
production.

Today living intelligent on producing more products oriented towards vitamens,low fats
products.This can be a newest product item for cpw productions.

Infact cpw can focus on new packaging methods like the cover,the pack,the brand icon
etc.cpw can produce most attractive product pacakage other than its competitors.
.

2.Trends in Production

Due to high percentage of sales in ceral market,cpw can expand their sales on ceral products
by identifying new ventures in globally.

They can expand their distribution channels through supermarkets & hypermarkets globally
By using e commerce methods, websites they can conveniantly communicate their products
& market their products worldwide to cereal consumers.

3.Trends in adevrtising

In here there are lot of marketing activites are going worldwide.cpw can engage their products
to market under this.Celebratery endrosemnts too can be taken in here.

Main competitors are kelloggs,Weetabix,Pepsico for cpw.Under the innovative production

methods,distribution methods& advertising methods cpw can expand the international sales
& by clearly identifying the competitors and their impact cpw can internationalize its overall
sales & beat the competition globally.