Posted: May 25th, 2022
Smuckers bases its strategy on the development of category-leading everyday foods brands the company’s brands in general complement one another. The most recent strategic move, the acquisition of Folgers, doubled the size of the company in 2008. Smuckers has seen strong growth as the result of its strategy. However, the company has a poorly articulated sense of mission and vision. Smuckers has no clear vision, which provides little guidance for stakeholders, including those in management. The mission is relatively vague and while it is congruent with the company’s strategy, it provides little sense of clarity for employees, in particular those who have been recently laid off following record revenues and profits.
The JM Smucker company was founded in 1897 in Orrville, Ohio. The company has developed gradually over time to become a retail food company in the United States. The company produces a wide range of well-known brands including Eagle Brand, Jif, Knott’s Berry Farm, Pillsbury, Smucker’s, R.W. Knudsen, Folgers and take home Dunkin Donuts products (Smuckers.com, 2010).
The company does not explicitly publish a mission or vision statement. However, it does discuss its strategic objectives in the 2009 Annual Report. The report states that “we offer consumers diverse brands and products that are part of everyday meals…the J.M. Smucker Company has a meaningful impact on society with a portfolio of brands that brings families together to share memorable meals and moments.”
This mission accurately reflects the company’s strategy. The product line is comprised largely of category leaders, and all are common household foods. Smuckers is not a premium producer nor are they a discounter, but a mass marketer, with moderate quality levels and moderate pricing to match. The brands have sufficient strength to allow the company higher prices than discounters, but are kept at a level that supports mainstream success.
The brands are, in general, mature. The company has had slow, steady growth over the past several years, the one notable spike in top line growth being the result of the acquisition of Folgers, which essentially doubled the size of the company. Following the acquisition the top line improved $1.2 billion (48.8%) and the bottom line improved $$95.57 million (56%) (MSN Moneycentral, 2010). Without the Folgers acquisition, revenue would have been down 6%. Folgers strengthened the brand portfolio, increasing the overall attractiveness of the Smuckers portfolio. The company also benefited from the economic downturn, which had consumers eating more at home and focused on the company’s basic brands (Associated Press, 2009). The acquisition of Folgers, therefore, represented a move to strengthen the company’s commitment to its mission.
There are several key stakeholders at Smuckers. The company’s shareholders represent a major stakeholder group, as to their customers. Otherwise, the staff and management are another key stakeholder group. The Smuckers strategy has been a boon to the shareholders. The company’s policy of developing category-leading brands has lead to the creation of stable revenues, which has allowed Smuckers to pay a health dividend each year. The dividend paid in 2009 was $1.31 per share, up from $1.22 per share the year previous. The shareholders also benefited from the Folger’s purchase. That product complemented many of Smuckers’ other product lines. The purchase was for $2.95 billion in 2008 (Bhattarai, 2008). Shareholders’ equity increased by $5.063 billion from 2008 to 2009, indicating that the shareholders derived good value from the transaction.
The customers have benefited from the company’s mission as well. Setting aside the Folgers purchase momentarily, it is worth considering that some of the company’s success in recent years relates directly to their ability to market products that are leading everyday brands. The economic downturn made these brands more attractive to consumers, and this has resulted in some strength for the company. With specific respect to Folgers, this brand benefited greatly from the economic downturn. It offered a value proposition to consumers who cut back on high-end coffee purchases at the likes of Starbucks in favor of cheaper coffee at home. Consumers of Folgers benefited from the strength and increased visibility afforded the brand by Smuckers.
Employees have not necessarily benefited from the company’s mission and objectives in recent years. Smuckers is the process of restructuring Folgers. This benefits workers in New Orleans, where a $70 million expansion is underway and it Orrville (Plain Dealer, 2010). However, workers in four other plants are losing their jobs in the restructuring (Associated Press, 2010). The strategy therefore benefits some of these stakeholders but only at the expense of others as the company is forced to rationalize some plants in order to contain costs and maintain its price competitiveness.
The company can improve its mission by lending it clarity. The company’s strategy may be relatively clear, but it is not equated to any well-articulated sense of mission or any vision. The company’s mission can be inferred, but employees in particular would benefit from clarification of the firm’s core values and its core purpose (QuickMBA, 2007). This is especially crucial during times of restructuring, as the company has entered into at present. Employees may sense uncertainty and unease about their own jobs in the wake of such job costs. In particular, cutting jobs when the company is enjoying strong profits and growth is especially likely to shake the corporate culture. Better understanding of the company’s value and purpose would help the remaining employees understand the changes and their role in the firm.
In addition, a vision statement should be developed. Smuckers has no vision statement, and its annual report does not contain any long-range future statements. In part, this derives from the many years the company spend as a mature firm, milking cash cow products and experiencing incremental growth. The acquisition of Folgers marked the beginning of an expansion phase for the company, but there has been no indication that company management has a clear vision for what lies beyond the immediate time frame. Clearly, the company has good vision — the Folgers acquisition paid off immediately and handsomely. It should articulate this vision. Doing so would give the employees a greater sense of their overarching objectives. In addition, such a vision would be beneficial to shareholders. For them, they need to understand the growth potential of the stock to help them understand the future value of the company.
Smuckers needs to formulate a more articulate mission and vision for the company. Management has a plan as indicated by its recent successes, but this plan is relatively obscure. This provides little guidance for shareholders with respect to the company’s prospects. In addition, it provides little guidance for the workers who are losing their jobs at the time when the company is at its most profitable.
Smuckers website, various pages. (2010). Retrieved April 19, 2010 from http://www.smuckers.com
Smuckers 2009 Annual Report. Retrieved April 19, 2010 from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzQyODkzfENoaWxkSUQ9MzI5MzkwfFR5cGU9MQ==&t=1
MSN Moneycentral: JM Smucker Company. (2010). Retrieved April 19, 2010 from http://moneycentral.msn.com/detail/stock_quote?Symbol=sjm&getquote=Get+Quote
Associated Press. (2009). Smucker’s profit surges after acquiring Folgers. MSNBC. Retrieved April 19, 2010 from http://www.msnbc.msn.com/id/34060210/
Bhattarai, A. (2008). Smuckers to pay $3 billion for Folgers Coffee. New York Times. Retrieved April 19, 2010 from http://www.nytimes.com/2008/06/05/business/05folgers.html
Associated Press. (2010). J.M. Smucker to close plants, cut 700 jobs. Associated Press. Retrieved April 19, 2010 from http://www.google.com/hostednews/ap/article/ALeqM5htGgb8xaeNDphDY3DmJH__yIYDjAD9EL463G0
Plain Dealer. (2010). Smuckers unit Folgers Coffee plans $70 million expansion. Cleveland Plain Dealer. Retrieved April 19, 2010 from http://www.cleveland.com/business/index.ssf/2010/03/smuckers_unit_folgers_coffee_p.html
QuickMBA. (2007). The business vision and company mission statement. QuickMBA.com. Retrieved April 19, 2010 from http://www.quickmba.com/strategy/vision/
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