United Cereal: Case Study
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The case study entitled “United Cereal: Lora Brill’s Eurobrand Challenge” refers to issues and challenges faced by multinational corporations in the contemporary business environment. These issues and challenges are largely focused on two critical threats faced by any large scale organizations that operate in a global environment. The first of these is the cut throat nature of competition and the various sacrifices and adjustments that a company is required to make, in order to remain competitive in an industry with intense competition. The second major issue presented in this case study alludes to the various complexities involved in catering to a diverse multinational environment. An extensive analysis of this case offers both current and prospective strategic level managers of multinational corporations, key insights regarding the importance of evolving a business based on current market and economic situations.
The history of United Cereal (UC) is one which is largely a success story. Having established itself as a small business enterprise in the early 20th century in Kalamazoo, Michigan, the organization followed a pattern of continuous expansion, eventually becoming one of the largest breakfast food and beverage manufacturers in the world with a net worth of $9 billion in 2010. The organization also managed to expand its product and brand portfolio from one which solely contained cereals, to one which contained a wide assortment of breakfast food and beverage items. United’s Cereal’s dominance of the US market along with its major rival Kellogg’s, was mainly based on lowering costs through economies of scale and maximization of shelf space. Furthermore, UC also held its values and traditions at the core of its corporate philosophy. These traditions involved extensive R&D, delegation of a high level of authority to brand/division managers as well as careful and methodical consumer research processes which ensured that any new products that were introduced would be well received by consumers. The company integrated these values and traditions into its European operations and it is the European operations of UC which form the basis of this case study.
UC’s decision to expand into the European market arose from an intensely competitive US market, success in which (as mentioned earlier) was largely dependent on lowering costs and occupying the maximum amount of shelf space. The company’s European operations were extremely successful until the recession of 2008. Up until this period the company employed an extremely diverse and fragmented marketing strategy which left control of the company’s direction largely in the hands of country managers, who were given discretionary powers in terms of product launches, branding and spending decisions while conforming to the corporate culture of UC. This was largely due to diverse tastes and preferences across the European continent where sales figures and other indicators were extremely varied. This structure enjoyed many successes but was constantly rivaled by competitors such as Kellogg’s and Cereal Partners. This structure also displayed weaknesses such as incoherent market positioning strategies which resulted in the same product being positioned in a drastically different manner in individual countries. The recession of 2008, also necessitated a reduction in costs, which would create a negative impact on the amount of financial authority and level of independence offered to country managers.
This case study attempts to highlight he importance of a cohesive marketing strategy which not only creates a well defined position in the minds of consumers throughout geographical regions (and perhaps even globally) but also succeeds in reducing marketing and development costs, through various economies of scale, which are achieved through existing relationships with distributors and marketing agencies. While the segmented approach may result in dividends for a period of time, it may not necessarily be the most cost effective and efficient strategy in the long run