J.M. Smuckers External Environmental Analysis
MGT 599: Strategic Management
TUI University Winter 2010
External Environmental Analysis
Case Assignment Module 2
Professor:
Executive Summary
This external analysis is critical in the development of a well rounded, cohesive strategic plan and will enable the JM Smuckers Company to gain a more comprehensive understanding of the current external operating environment and situational awareness of both future threats and opportunities. This analysis establishes a basic industrial framework, and then utilizes Porter’s 5-Forces model and PEST analysis in attempting to develop a common understanding of the industry and economic environmental threats and opportunities.
Porter’s Five Force model indicates that the greatest threats and opportunities facing the J.M. Smuckers company are likely in the form of substitution in the specialty segments due to the emergence and growth of CSAs and farmers markets providing locally grown organic foods, and the threat to profit margins are due to the high degree of rivalry among food manufacturers across all product segments. The analysis also indicates that Smuckers can leverage its product depth and brand name to gain market share as consumers are driven towards value, and use its strong balance sheet to potentially seek additional products to further expand its broad product portfolio . The PEST analysis indicates that current political factors such as the national debt, state immigration laws, healthcare reform, social-cultural conditions driven primarily by the increasing demand to develop and utilize safer and greener energy, and emerging technology innovations will have the biggest impact on the global business environment.
What should also be taken from this macro analysis is that rarely should an issue be considered solely a threat or opportunity. Instead every threat should be seen as an opportunity to distance the company from its competitors and every opportunity a chance to fall behind. The ability
TUI University Winter 2010
External Environmental Analysis
Case Assignment Module 2
Professor:
Executive Summary
This external analysis is critical in the development of a well rounded, cohesive strategic plan and will enable the JM Smuckers Company to gain a more comprehensive understanding of the current external operating environment and situational awareness of both future threats and opportunities. This analysis establishes a basic industrial framework, and then utilizes Porter’s 5-Forces model and PEST analysis in attempting to develop a common understanding of the industry and economic environmental threats and opportunities.
Porter’s Five Force model indicates that the greatest threats and opportunities facing the J.M. Smuckers company are likely in the form of substitution in the specialty segments due to the emergence and growth of CSAs and farmers markets providing locally grown organic foods, and the threat to profit margins are due to the high degree of rivalry among food manufacturers across all product segments. The analysis also indicates that Smuckers can leverage its product depth and brand name to gain market share as consumers are driven towards value, and use its strong balance sheet to potentially seek additional products to further expand its broad product portfolio . The PEST analysis indicates that current political factors such as the national debt, state immigration laws, healthcare reform, social-cultural conditions driven primarily by the increasing demand to develop and utilize safer and greener energy, and emerging technology innovations will have the biggest impact on the global business environment.
What should also be taken from this macro analysis is that rarely should an issue be considered solely a threat or opportunity. Instead every threat should be seen as an opportunity to distance the company from its competitors and every opportunity a chance to fall behind. The ability
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