Campbell Soup Co.

1. International Strategies

For the past 25 years, Campbell’s Soup has been managed by three different CEO’s, McGovern, Johnson and Morrison, all who brought their own ideas, vision and strategy for making sure Campbell grew in terms of both size and profitability. Campbell’s international business unit, one the largest of the six business units established by McGovern, was a main focus for all three managers. The following are the different strategic approaches taken by each CEO for the international division:

Gordon McGovern:

McGovern’s overall strategic focus was to introduce as many new products as possible. To do this, he encourages his employees to be knowledgeable and creative, and emphasized that it was okay to fail. To encourage his developing products team, he provided them with a very high budget for R&D and marketing. Instead of focusing on cost reduction, he was more concerned with having a greater sales & marketing budget. Part of his strategy was also acquiring small, fast-growing food companies. Using this, McGovern’s international strategy was to expand and strengthen Campbell’s performance in foreign markets . McGovern can be classified has having a international mindset. This is evident because the overseas acquisitions made by McGovern were companies that specialized in domestic food production such as the German specialty food importer, the Italian food producer, and Arnott’s the Australian cookie company.

David Johnson:

David Johnson was an asset to Campbell’s because he was more experienced internationally. Unlike McGovern, Johnson shifted the company’s focus from acquiring small, fast growing food companies to growing sales and increasing market share in it’s more acknowledged brands. Johnson hoped his strategy would increase the confidence of the heirs of Campbell. Johnson restructured the six business units created by McGovern, to three divisions: domestic, bakery and confectionary and international grocery. Like McGovern, he also wanted to increase sales in the international division. However, instead of acquiring domestic companies, his strategy was to better market it’s products overseas while preparing foods that would cater to each countries tastes and preferences. This shows us that Johnson used the transnational mindset for developing internationally.

Dale Morrison

Like David Johnson, Morrison also followed the transnational mindset and believed that in order to grow and be profitable, Campbell needed to focus on premium brands that had the highest growth potential and were differentiated compared to competitor brands. Doing this effectively required Morrison to invest more money in advertising. He also wanted to penetrate foreign markets and believed to accomplish this he would have to acquire company’s overseas. Morrison also realigned the three divisions to Soups and Sauces, Biscuit and Confectionary and Away from Home. The spinoff of several poor performing businesses contributed to his international strategy.

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Vlasic Foods International was Campbell’s fourth largest division, bringing in sales of approximately $1.4 billion.. Although Morrison believed that Vlasic Foods had tremendous opportunities for growth, he did not want to lose sight of his strategy of focusing on Campbell’s more profitable brands. To do this he would have to allow Vlasic to become a stand-alone company. After the spinoff, Vlasic Foods comprised of eight food businesses and operated in five countries. Despite Morrison’s expectations, Vlasic sales fell short and the stock experienced a continuing decline from 1998 to 2000. In hindsight, some may view the spin-off of Vlasic as a bad strategic move. However, Vlasic Foods was a misfit for Campbell Soup. The potential for long-term growth in this industry was low and these managers thought that the opportunity costs of keeping this business were high. Also, spinning-off this low-growth businesses will allow Campbell to focus more on the high profitable businesses.

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