Heinz Europe

Reinventing the Organisation - Heinz Europe The business writer, Charles Handy, illustrates the need for organisations to Background - the Heinz has also developed a strong By using this new approach, Heinz is Consolidation as the win market share from rivals either reinvent themselves by the sigmoid curve - effectively an ÔSÕ shape on its side. An world-wide focus on eight global able to respond quickly to changing through internal growth of the business organisation which appears to be successful is on the upward growth path of the global Heinz product categories in which it consumer patterns on a Europe-wide lowest cost producer or by acquiring complementary curve (point A). At this time, the organisation is making high sales and profits and Corporation possesses unique competitive scale - if, for example, tomato in Europe producers (i.e. former rivals). Once a is able to pay healthy dividends to shareholders. You may think, therefore, that advantages and opportunities: flavoured pizza bases prove to be company acquires competitive Like many global producers today, the there is no reason to change the organisation. ● foodservice popular with an individual countryÕs One of the basic facts of business advantage as the lowest cost producer, Heinz Corporation started off from a customers, then Heinz has the it is likely to be able to sustain and ● infant feeding life which relates to large scale small scale and localised business. operational systems and marketing build on this advantage. ● ketchup, sauces and condiments strategies to quickly meet this area of production is that if you can gain the The first product produced by Henry One of Project MillenniaÕs aims for growth at a pan-European level. greatest share of a market, you will be John Heinz in 1869 was horseradish, ● weight control Heinz has been consolidation in order able to produce at lower unit cost than followed by pickles, sauerkraut and ● seafood The 40 operating units within Europe to become the lowest cost food rival producers of similar products. It is vinegar. These were delivered by ● pet products have recently been formed into five producer in Europe. Heinz was already horse-drawn wagons to grocers in and new business organisations. These are: not hard to see why. a lowest cost producer in the UK and ● frozen foods around Pittsburgh, Pennsylvania. In the lowest cost producer in Europe 1875, a new product was introduced ● convenience meals. in many of its favoured product which still flourishes today - tomato categories. However, as Charles ketchup. HandyÕs sigmoid curve indicates, Reorganisation companies must go forward, develop Over time, Heinz expanded in the USA In business, it makes sense to HeinzHeinz EuropeEurope and constantly improve. and around the world, at first through concentrate on what you do best - your At Heinz, there is no clear end point to internal growth (i.e. ploughing back best lines. All organisations therefore European Grocery Main products: soups, beans and bean meals, pasta and any business operation - it is a process However, this organisation is close to its peak (point B). Beyond this point, the profits into investment in new plants need to build organisational structures pasta meals, ketchup, condiments, dressings, puddings, spreads and fillers. of continuous improvement. Once a organisation may go into decline and be less successful. and equipment), but since the 1960s, by which make it easy to: European Foodservice lead has been built up, it is necessary to acquisition and brand building (i.e. The time to change is at or before point A. The intelligent organisation will seek to ● concentrate on best lines Main products: bulk packs of soups, beans, ketchup, salad cream, dressings, consider ways of building on that lead. taking over well known producers of reinvent itself and come up with new ideas in order to keep ahead of the ● identify new opportunities arising tomato products and tuna; individual sachets/pots of ketchup, salad cream, This may involve developing new products and brands that complement competition. This is important as competitors will also be seeking to erode any in these areas dressings, sugar, salt, beverages, jams and other preserves. markets, such as HeinzÕs successful HeinzÕs existing ones). Today, Heinz drive into Eastern Europe, or competitive disadvantage that they may have. ● channel resources and initiatives European Retail Frozen & Chilled Foods has 50 affiliates operating in some 200 developing innovative new products into best lines and particularly Main products: pizzas and related products, frozen This case study focuses on the way in which Heinz, one of the worldÕs major countries, offering more than 5,000 ready meals, desserts, ice cream and bagel bites. such as HeinzÕs recent baked bean into new opportunities global companies, has set out to reinvent itself at a time when it is already pre- varieties. European Seafood pizza line. This has been an outstanding ● eminent in a range of global food markets. The study examines aspects of effectively manage best lines and Main products: canned tuna, salmon, mackerel, success - the pizza achieved an 8% HeinzÕs ÔProject Millennia,Õ an international restructuring plan announced in opportunities sardines and other seafood products. share of the UK frozen pizza market 1997, which chairman Dr Tony OÕReilly describes as Òdelivering the 21st ● encourage innovation and a Ôcan European Infant Feeding even before the advertising support century earlyÓ. In particular, the study considers the way in which Heinz has doÕ approach. Main products: canned and jarred babyfoods, infant formula began. re-organised its European operations to create a pan-European structure milks, dry cereal babyfoods, rusks, baby juices, infant based on eight global categories. HeinzÕs Project Millennia is all about feeding accessories and adult nutritional products. enabling the organisation to adapt and change, so that it has the necessary flexibility to take the opportunities which will yield the highest possible The decision to divide the business into The company which sells most is best returns. these categories was a further staging placed to: As part of this world-wide post in the move to give greater pan- ● take advantage of the latest reorganisation and growth initiative, European focus to operating and advances in technology Heinz unveiled plans to focus on marketing strategies. Sales however ● spread marketing and advertising Europe-wide category management continue to have a ÔcountryÕ focus. of its core businesses. Products and costs over a wider output markets which offer the greatest One of the main reasons for changing ● buy components and ingredients potential for future growth and return the organisational structure has been in bulk on investments benefit from this that Heinz can now look at its ● distribute products at lower unit category management approach, while categories on a pan-European basis, costs etc. product development, manufacturing, sales and marketing are directed to making sure that resources are directed These advantages are usually described where the greatest prospects of growth exploit opportunities in the most cost- as economies of scale. In competitive European Infant Feeding effective manner. and return lie. markets, therefore, it makes sense to a single advertising agency has been The petfood operation in Eastern appointed across continental Europe for Europe and Russia is an embryo the Heinz Tomato Ketchup business. business at the moment. There are more TASKS & ACTIVITIES pet owners in Russia than in the USA - By driving for synergies across Europe In order to consolidate its position, Redraw the sigmoid curve to show a clear indicator of the potential of this and reinvesting savings to deliver top 1Heinz has acquired a number of 6how the growth pattern would be operation. Heinz now has to persuade line growth, Heinz is increasing new businesses. What are the main altered by an intelligent organisation pet owners to purchase conveniently shareholder value. arguments for this consolidation that constantly reinvented itself. prepared Heinz animal food. process? What are the chief benefits likely to be? Identifying new Heinz has been marketing baked beans Why did Heinz have to develop in Russia for 18 months, an operation 7innovative solutions in order to opportunities which was built on the back of the How has Heinz managed to open up the baked bean market in become the lowest cost producer in Russia? The newly reinvented Heinz will only babyfood business. The Russians enjoy 2 the categories in which it has chosen to be successful if it is able to identify and eating beans, but are not used to eating specialise? What do you understand by the develop new opportunities. them in tomato sauce. Heinz realised European Foodservice this was a major opportunity to build on 8following business terms used in Suggest three reasons why Heinz the case study? We have already identified two recent the existing popularity of baked beans European Retail Frozen & Chilled Foods examples of HeinzÕs inventiveness throughout other European markets. 3has decided to focus on categories ● healthy dividends to shareholders Pan-European focus rather than on national markets. What using new plant and investment in However, a certain amount of subtlety earlyÓ. It is only by operating in such a Heinz is still involved in the process of in management are the main benefits that will result ● international restructuring plan technology new to Heinz - tomato was required in introducing such a dynamic way that a modern restructuring. Ensuring that the from this change? flavoured pizza crusts and baked bean ● changing consumer patterns In line with the move to focus popular brand to a new market in which organisation is able to create management clearly understand what is on product categories, HeinzÕs pizzas. Another excellent example of consumers had little awareness of shareholder value. Heinz wants to required of them, following the ● internal economies of scale management has also changed its HeinzÕs ability to seize new Heinz Baked Beans.

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