Question

CASE 17 CAMPBELL: HOW TO KEEP THE SOUP SIMMERING*

At the first-quarter earnings call for the 2015 fiscal year, Denise Morrison, Campbell’s president and chief execu- tive officer, said: We were encouraged by our organic sales growth across most of our portfolio, particularly in U.S. Simple Meals and Global Baking and Snacking. Our U.S. soup performance was driven by a stronger seasonal sell-in and the timing of our quarter end relative to the Thanksgiving holiday. Although our year is off to a solid start, we are facing some challenges. Our gross margin performance did not meet our expectations due largely to higher than anticipated commodity costs and supply chain costs. We have plans to offset gross margin pressure in the remainder of the year. We also are facing headwinds from currency. Despite these challenges, we continue to make progress strengthening our core business and expanding into faster-growing spaces.1 Denise Morrison, who formerly headed the company’s North American soup division, had taken over as CEO nearly four years ago. The change at the top for the company received a lukewarm response from investors, who were watching to see what drastic changes Morrison might have in store. Analysts suggested that Campbell may have missed an opportunity by picking insider Denise Morrison to lead t he world’s largest soup2 maker instead of br inging in outside talent to revive sales. By 2015, with Morrison at the helm, the Campbell Soup Company had launched more than 50 new products, includ- ing 32 new soups. This number was way up from prior years. Morrison also shocked experts with the $1.55 billion buy- out of California juice-and-carrot seller Bolthouse Farms, the largest acquisition in Campbell’s history.3 Despite the revitalization of its product line, however, the company still failed to accomplish an impressive comeback. Company Background Probably known best for its red-and-white soup cans, the Campbell Soup Company was founded in 1869 by Abram Anderson and Joseph Campbell as a canning and pre- serving business. Over 140 years later, Campbell offered a whole lot more than just soup in a can. In 2014 the company, headquartered in Camden, New Jersey, com- petitively operated in five segments: U.S. Simple Meals, Global Baking and Snacking, International Simple Meals and Beverages, U.S. Beverages, and Bolthouse and Food- service. In 2015 Campbell’s products were sold in over 100 countries around the world, and the company had opera- tions in the United States, Canada, Mexico, Australia, Belgium, China, France, Germany, Indonesia, Malaysia, and Sweden

The company was pursuing strategies designed to expand the availability of its products in existing markets and to capitalize on opportunities in emerging channels markets around the globe. As a first step, Campbell Soup Company, synonymous with the all-American kitchen for 125 years, acquired in 1994 Pace Foods Ltd., the world’s largest producer of Mexican sauces. Frank Weise, CFO at that time, said that a major motivation for the purchase was to diversify Campbell and to extend the Pace brand to other products. In addition, he said, the company saw a strong potential for Pace products internationally. Camp- bell also saw an overlap with its raw material purchas- ing operations, since peppers, onions, and tomatoes were already used in the company’s soups, V8, barbecue sauce, and pasta sauces.5 To help reduce some of the price volatil- ity for ingredients, the company used various commodity risk management tools for a number of its ingredients and commodities, such as natural gas, heating oil, wheat, soy- bean oil, cocoa, aluminum, and corn.6

Campbell Soup, a leading food producer in the United States, had a presence in approximately 9 out of 10 U.S. households. However, in recent years, the company faced a slowdown in its soup sales, as consumers were seeking more convenient meal options, such as ready meals and dining out. To compete more effectively, especially against General Mills’ Progresso brand, Campbell had undertaken various efforts to improve the quality and convenience of its products.

China and Russia

For the longest time, consumption of soup in Russia and China had far exceeded that in the United States, but in both countries nearly all of the soup was homemade. Within the past few years, however, with the launch of products tailored to local tastes, trends, and eating hab- its, Campbell presumed that it had the chance to lead the soup commercialization in Russia and China. “We have an unrivaled understanding of consumers’ soup consumption behavior and innovative technology capabilities within the Simple Meals category. The products we developed are designed to serve as a base for the soups and other meals Russian and Chinese consumers prepare at home.”7 For about three years, in both Russia and China, Campbell sent its marketing teams to study the local markets. The main focus was on how Russians and Chinese ate soup and how and Campbell could offer something new. As a result, Camp- bell came up with a production line specifically created for the local Russian market. Called “Domashnaya Klassika,” the line was a stock base for soups that contains pieces of mushrooms, beef, or chicken. Based on this broth, the main traditional Russian soup recipes could be prepared.

But after just four short years, Campbell pulled out of the Russian market that it had thought would be a simmer- ing new location for its products. Campbell’s chief oper- ating officer and newly elected CEO Denise Morrison said results in Russia fell below what the company had expected. “We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame,” Morrison said. When the company entered Russia, Campbell knew that it would be challenging to persuade a country of homemade-soup eat- ers to adopt ready-made soups. When Campbell initially researched the overseas markets, it learned that Russians eat soup more than five times a week, on average, com- pared with once a week among Americans.8 This indicated that both the quality and sentiment of the soup meant a great deal to Russian consumers—something that Camp- bell may have underestimated. As for China, a few years after Campbell infiltrated the market, CEO Denise Morrison was quoted by Global Entrepreneur as saying, “The Chinese market consumes roughly 300 billion servings of soup a year, compared with only 14 billion servings in the U.S.”9 When enter- ing the Chinese market, Campbell had determined that if the company could capture at least 3 percent of the at-home consumption, the size of the business would equal that of its U.S. market share. “The numbers blow your hair back,” said Larry S. McWilliams, president of Campbell’s international group.10 While the company did successfully enter the market, it remained to be seen whether Campbell had the right offerings in place to capture such a market share or whether China’s home- made-soup culture would be as disinclined to change as Russia’s was.

U.S. Soup Revitalization

In September 2010, Campbell launched its first-ever umbrella advertising campaign to support all of its U.S. soup brands with the slogan “It’s Amazing What Soup Can Do,” highlighting the convenience and health ben- efits of canned soup. The new campaign supported Campbell’s condensed soups, Campbell’s Chunky soups, Campbell’s Healthy Request soups, and Campbell’s Select Harvest soups, as well as soups sold in microwave- able bowls and cups under these brands.11 Despite other departments flourishing, the soup division continued to struggle.

Campbell Soup Company had begun moving atten- tion away from reducing salt in its products and focusing more on “taste adventure” as its U.S. soup business was turning cold. Campbell Soup was one of the first large U.S. packaged-food makers to focus heavily on decreas- ing sodium across its product line. The salt-reduction push was one of the company’s biggest initiatives of the past decade. “The company had pursued reducing sodium lev- els and other nutritional health initiatives partly to prepare for expected nutritional labeling changes in the U.S. But amid the attention on salt-cutting, management focused less on other consumer needs, such as better tastes and exciting varieties,” said former CEO Douglas Conant. “I think we’ve addressed the sodium issue in a very satisfac- tory way. The challenge for us now is to create some taste adventure.”12 Yet with Campbell reinventing its product offerings and revitalizing its soup line, Conant decided that his work was done and it was time to retire. He stepped down as CEO in July 2011 at the age of 60. Denise Morrison, for- merly president of the North America Soup division, took the reins as chief executive. At the time of her promotion, many were hesitant to accept her as the best candidate for the position. After all, the soup division, which had been her responsibility, had been losing steam and encounter- ing declining sales under her tenure. Yet the company rein- forced its confidence in her to do the job, and Morrison assured everyone that changes were on their way and a shift in focus was in the works. Morrison said that Camp- bell would bring both the “taste and adventure” back to its soups, with a new and expanded product line offering unique new flavors and “adding the taste back” by doing away with sodium reduction.

Firm Structure and Management

Campbell Soup was controlled by the descendants of John T. Dorrance, the chemist who had invented con- densed soup more than a century ago. In struggling times, the Dorrance family faced agonizing decisions: Should they sell the Campbell Soup Company, which had been in the family’s hands for three generations? Should they hire new management to revive flagging sales of its chicken noodle and tomato soups and Pepperidge Farm cookies? Or should Campbell perhaps become an acquirer itself? The company went public in 1954, when William Murphy was the president and CEO. Dor- rance family members continued to hold a large portion of the shares. After CEO David Johnson left Campbell in 1998, the company started to weaken and lose cus- tomers,13 until Douglas Conant became CEO and trans- formed Campbell into one of the food industry’s best performers. Conant became CEO and director of Campbell Soup Company in January 2001. He joined the Campbell’s team with an extensive background in the processed- and packaged-food industry. He had spent 10 years with Gen- eral Mills, filled top management positions in marketing and strategy at Kraft Foods, and served as president of Nabisco Foods. Conant worked toward the goal of imple- menting the Campbell’s mission of “building the world’s most extraordinary food company by nourishing people’s lives everywhere, every day.”14 He was confident that the company had the people, the products, the capabilities, and the plans in place to actualize that mission.

Under Conant’s direction, Campbell made many reforms through investments in improving product qual- ity, packaging, and marketing. He worked to create a com- pany characterized by innovation. During his tenure, the company improved its financial profile, upgraded its sup- ply chain system, developed a more positive relationship with its customers, and enhanced employee engagement. Conant focused on winning in both the marketplace and the workplace. His efforts produced an increase in net sales from $7.1 billion in fiscal 2005 to $7.67 billion in fiscal 2010.15

For Conant, the main targets for investment, fol- lowing the divestiture of many brands, included simple meals, baked snacks, and vegetable-based beverages. In 2010, the baking and snacking segments sales increased 7 percent, primarily due to currency. Pepperidge Farm sales were comparable to those a year earlier, as the additional sales from the acquisition of Ecce Panis, Inc., and volume gains were offset by increased promotional spending. Some of the reasons for this growth were the brand’s positioning, advertising investments, and improvements and additions in the distribution system. Conant also secured an agreement with Coca-Cola North America and Coca-Cola Enterprises Inc. for distribution of Campbell’s refrigerated single-serve beverages in the United States and Canada through the Coca-Cola bottler network.16

In fiscal 2010, the company continued its focus on delivering superior long-term total shareowner returns by executing the following seven key strategies:17

?   Grow its icon brands within simple meals, baked snacks, and healthy beverages.

?   Deliver higher levels of consumer satisfaction through superior innovation focused on wellness while providing good value, quality, and convenience.

?   Make its products more broadly available and relevant in existing and new markets, consumer segments, and eating occasions.

?   Strengthen its business through outside partnerships and acquisitions.

?   Increase margins by improving price realization and companywide total cost management.

?   Improve overall organizational excellence, diversity, and engagement.

?   Advance a powerful commitment to sustainability and corporate social responsibility.

Another major focus for Conant and Campbell Soup was care for their customers’ wellness needs, overall prod- uct quality, and product convenience. Some of the main considerations regarding wellness in the U.S. market were obesity and high blood pressure. For example, building on the success of the V8 V-Fusion juice offerings, the com- pany planned to introduce a number of new V8 V-Fusion Plus Tea products. In the baked snacks category, the com- pany planned to continue upgrading the health credentials of its cracker (or savory biscuit) offerings. Responding to consumers’ value-oriented focus, Campbell’s condensed soups were relaunched with a new contemporary packag- ing design and an upgrade to the company’s gravity-fed shelving system.18

In 2011, after 10 years leading the company, Conant retired. His successor, Denise Morrison, had worked for Conant for quite some time, not just at Campbell but at Nabisco as well as earlier in their careers. In August 2011, on her first day as CEO, she was set on employing a new vision for the company: “Stabilize the soup and simple meals businesses, expand internationally, grow faster in healthy beverages and baked snacks—and add back the salt.”19 With the younger generation now making up an increasingly large percentage of the population, Morrison knew that the company had to change in order to increase the appeal of its products. At that time, the U.S. population included 80 million people between the ages of 18 and 34, approximately 25 percent of the population. Early on in her role as chief executive, Morrison dispatched Campbell’s employees to hipster hubs—including Austin, Texas; Port- land, Oregon; London; and Paris—to find out what these potential customers wanted. 20st To build employee engagement, Campbell provided manager training across the organization. This training was just one part of the curriculum at Campbell University, the company’s internal employee learning and development program. Exemplary managers built strong engagement among their teams through consistent action planning. The company emphasized employees’ innovation capabilities, leadership behavior, workplace flexibility, and wellness.

Challenges Ahead

In her new role, Morrison said she planned to “accelerate the rate of innovation” at the company. Morrison planned to grow the company’s brands through a combination of more healthy food and beverage offerings, global expan- sion, and the use of technology to woo younger consumers. While innovation isn’t a term typically associated with the food-processing industry, Morrison said that innovation was a key to the company’s future success. As an example, she cited Campbell’s development of an iPhone applica- tion that provided consumers with Campbell’s Kitchen recipes. The company’s marketing team devised the plan as a way to appeal to technologically savvy, millennial- generation consumers, Morrison said.21 Yet more than a few years into her governance, analysts still had a lukewarm response about Morrison taking over. They still expressed their doubt about whether Morrison was the right choice, rather than some new blood as a CEO replacement.

Industry Overview

The U.S. packaged-food industry had recorded faster current-value growth in recent years mainly due to a rise in commodity prices. In retail volume, however, many cat- egories saw slower growth rates because Americans began to eat out more often again. This dynamic changed for a couple of years when cooking at home became a more popular alternative in response to the recession and the sharp rise in commodity prices in 2008.22

After years of expansions and acquisitions, U.S. packaged- food companies were beginning to downsize. In August 2011, Kraft Foods announced that it would split into two companies: a globally focused biscuits and confectionery enterprise and a domestically focused cheese, chilled processed-meats, and ready-meals firm. After purchasing Post cereals from Kraft in 2008, Ralcorp Holdings spun off its Post cereals business (Post Holdings Inc.) in February 2012.23

Though supermarkets were the main retail channel for buying packaged food, other competitors were gain- ing traction by offering lower prices or more convenience. The recession forced shoppers to consider alternative retail channels as they looked for ways to save money. A big beneficiary of this consumer trend was the discount- ers, which carried fewer items and national brands than super marketsbutofferedlowerpricesinreturn.Forexam- ple, dollar store chains Dollar General and Family Dollar expanded their food selections to increase their appeal. Drugstore chains CVS and Walgreens expanded their food selections as well, especially in urban areas, to leverage their locations as a factor of convenience. Mass merchan- diser Target continued to expand its PFresh initiative, fea- turing fresh produce, frozen food, dairy products, and dry groceries.24

The increasing availability of refrigeration and other kinds of storage space in homes influenced the demand for packaged goods in emerging markets. However, for con- sumers who lacked the ability to preserve and keep larger quantities, U.S. companies began selling smaller packages, with portions that could be consumed more quickly

Competition

Campbell operated in the highly competitive food industry and experienced worldwide competition for all of its prin- cipal products. The principal areas of competition were brand recognition, quality, price, advertising, promotion, convenience, and service.

Nestle?

Nestle? was the world’s number-one food company in terms of sales, the world leader in coffee (Nescafe?), one of the world’s largest bottled-water (Perrier) makers, and a top player in the pet food business (Ralston Purina). Its best-known global brands included Buitoni, Friskies, Maggi, Nescafe? Nestea, and Nestle?. The company owned Gerber Products, Jenny Craig, about 75 percent of Alcon Inc. (ophthalmic drugs, contact-lens solutions, and equipment for ocular sur- gery), and almost 28 percent of L’Ore?al.26 In July 2007 it purchased Novartis Medical Nutrition, and in August 2007 it purchased the Gerber business from Sandoz Ltd., with the goal of becoming a nutritional powerhouse. Furthermore, by adding Gerber baby foods to its baby formula business, Nestle? became a major player in the U.S. baby food sector.

General Mills

General Mills was the U.S. number-two cereal maker, behind Kellogg, fighting for the top spot on a consistent basis. Its brands included Cheerios, Chex, Total, Kix, and Wheaties. General Mills was also a brand leader in flour (Gold Medal), baking mixes (Betty Crocker, Bisquick), dinner mixes (Hamburger Helper), fruit snacks (Fruit Roll- Ups), grain snacks (Chex Mix, Pop Secret), and yogurt (Colombo, Go-Gurt, and Yoplait). In 2001 it acquired Pillsbury from Diageo and doubled the company’s size, making General Mills one of the world’s largest food com- panies. Although most of its sales came from the United States, General Mills was trying to grow the reach and position of its brands around the world.

Kraft Foods

The newly independent Kraft Foods Group was spun off by Mondele?z International (formerly Kraft Foods Inc.), divid- ing the North American grocery from the global snacks business in 2012. Kraft Foods Group was the fourth-largest consumer packaged-food and beverage company in North America. Its most popular brands included Kraft cheeses, beverages (Maxwell House coffee, Kool-Aid drinks), convenient meals (Oscar Mayer meats and Kraft mac’n cheese), grocery fare (Cool Whip, Shake N’ Bake), and nuts (Planters). While Mondele?z was focused on growth overseas, Kraft Foods Group was looking to resuscitate its business in North America.2

Heinz Company

H. J. Heinz had thousands of products. Heinz products enjoyed first or second place by market share in more than 50 countries. One of the world’s largest food pro- ducers, Heinz produced ketchup, condiments, sauces, frozen foods, beans, pasta meals, infant food, and other processed-food products. Its flagship product was ketchup, and the company dominated the U.S. ketchup market. Its leading brands included Heinz ketchup, Lea & Perrins sauces, Ore-Ida frozen potatoes, Boston Mar- ket, T.G.I. Friday’s, and Weight Watchers foods. In 2013 Heinz agreed to be acquired by Berkshire Hathaway and 3G Capital.29

Financials

In the 2014 fiscal year, Campbell’s sales from continu- ing operations increased 3 percent to $8.3 billion, driven by acquisitions and an additional workweek in the year. Organic sales declined 1 percent, while adjusted earn- ings per share (EPS) from continuing operations increased 2 percent to $2.53.

In the U.S. Simple Meals segment, sales were up 3 percent versus sales a year earlier. This compared to a 5 percent increase in fiscal 2013. The growth came from higher sales of Prego pasta sauces and Campbell’s dinner sauces. How- ever, sales declined in U.S. Soups as growth in Swanson broth was more than offset by declines in ready-to-serve and condensed soups.

The Global Baking and Snacking segment grew 7 percent (versus 4 percent in fiscal 2013) driven by mar- ginal growth at Pepperidge Farm and continued gains in Goldfish crackers, fresh bakery items, and the Indonesian market.

The U.S. Beverages business saw a continued decline in sales, and the company initiated turnaround plans to jump- start the business.

delivering economic, environmental, and social perfor- mance. Launched in 1999, the DJSI tracked the financial performance of leading sustainability-driven companies worldwide. In selecting the top performers in each busi- ness sector, DJSI reviewed companies on several general and industry-specific topics related to economic, envi- ronmental, and social dimensions. These included corpo- rate governance, environmental policy, climate strategy, human capital development, and labor practices. Campbell included sustainability and corporate social responsibility as one of its seven core business strategies.30 Campbell’s Napoleon, Ohio, plant implemented a new renewable energy initiative, anchored by 24,000 new solar panels. The 60-acre, 9.8-megawatt solar power system was expected to supply 15 percent of the plant’s electricity while reducing CO2 emissions by 250,000 metric tons over 20 years.31

Additionally, Campbell employees volunteered an aver- age of 20,000 hours annually at more than 200 nonprofit organizations. Supported by local farmers and Campbell, the Food Bank of South Jersey was earning revenue for hunger relief from sales of Just Peachy salsa. The salsa was created from excess peaches from New Jersey and was manufactured and labeled by employee volunteers at Campbell’s plant in Camden.32

What’s Next?

A new food-rating system unveiled in 2009, the Affordable Nutrition Index (ANI), analyzed both nutrition and the cost value of food, making it easier for consumers to find budget-friendly, nutritious foods. Dark-colored vegetables, certain fruits, and vegetable soups were among the most affordable, nutritious foods. “In today’s economy, more people are making food choices based solely on cost, so it’s important to guide them on ways to get nutritious options without hurting their wallets,” said Adam Drewnowski, PhD, a professor at the University of Washington. “It is important to identify a wide range of affordable, nutritious choices that can help people build a balanced diet that fits their lifestyle and budget.”33

As for Campbell, its advertising campaign failed to assist the company in gaining the expected traction in the ready-to-serve soup business. Campbell planned to correct this by introducing new products into what many considered a rather ordinary product line. But if the economy continued to improve, would Campbell’s name still resonate with American consumers or would con- sumers venture back to restaurants? Would Campbell’s soup simmer to perfection, or would the company be in hot water?

QUESTION:

1)VALUE CHAIN ANALYSIS

IE:INBOUND LOGISTICS,OPERATIONS,OUTBOUND LOGISTICS,MARKETING/SALES,SERVICE,PROCUREMENT,TECHNOLOGICAL DEVELOPMENT,HR,GENERAL ADMIN) THEN CONCLUSION OF VALUE CHAIN.

3)HOW DOES EXTERNAL ENVIORNMENT AFFECTS CAMPBELL STRATEGY

4)CAN INTERNAL ENVIORNMENT SUSTAIN COMPETITVE ADVANTAGE?(USE VALUE CHAIN+RESOURCE BASED VIEW

5)ISSUES CAMPBELLS FACED (INTERNAL/EXTERNAL)

6)SOURCES OF CAMPBELLS COMP ADVANTAGE?(BUSINESS LEVEL STRATEGY)(DIFFERENTIATED OR DIVERSIFIED)

7)RESOURCE BASED VIEW

8)LEADERSHIP OPINION FOR CURRENT CEO?

Answer 1

VALUE CHAIN ANALYSIS

IE:INBOUND LOGISTICS,OPERATIONS,OUTBOUND LOGISTICS,MARKETING/SALES,SERVICE,PROCUREMENT,TECHNOLOGICAL DEVELOPMENT,HR,GENERAL ADMIN) THEN CONCLUSION OF VALUE CHAIN

Michael Porter (1985) coined the term ?value chain? as the set of linked activities performed by an organization that impact its competitiveness. As seen in Figure 2, the value chain consists of five primary and four support activities. Primary activities are directly concerned with the creation or delivery of a product or service. These include inbound logistics (e.g. receiving and storing raw materials), operations (e.g. converting raw materials through manufacturing into finished goods or service creation process), outbound logistics (e.g. delivering of goods or services to customer), marketing and sales (e.g. identifying opportunities and processing customer orders) and service (e.g. providing after-sales support to customers).

Design/methodology/approach

– The data set for testing the hypothesized relationships in this study was drawn from 232 Australian manufacturing firms.

Findings

– The findings show that there is no significant direct relationship between supply logistics integration and competitive operational performance; rather, the relationship is fully mediated by inbound supply performance and internal lean production processes. Further, lean production processes have a positive effect on inbound supply performance.

Research limitations/implications

– The study shows the importance of managing both internal (production processes) and external processes (logistics and supply chain) of firms’ operations in an integrated manner in which supply logistics integration act through key internal processes to impact competitive performance which the end customers actually experience.

Originality/value

– This is the first study which uncovers what happens “in between” the incoming materials and the end outputs delivered by firms into the market. This “in between black box” is important in improving our understanding of how inbound supply activities are translated into outbound competitive performance outcomes.

3) HOW DOES EXTERNAL ENVIORNMENT AFFECTS CAMPBELL STRATEGY

It has long been argued that organizations must interact with their environments in order to survive. But is the nature of this interaction invariant across environmental contexts? This paper considers the importance of communication between organizations and key environmental elements to the development of organizational strategic norms. Based on a grounded theory framework of analysis, it is theorized that organizational strategic norms are negotiated with the environment in an interactive fashion, and that task environmental elements concerned with assessing organizations tend to employ evaluation processes that are broadly reflective of an organization's context. Views offinancial analysts and individual investors, elicited in both a quantitative and a qualitative form, are suggestive of the merits of this theorizing. Several implications for researchers and strategists are discussed.

CAN INTERNAL ENVIORNMENT SUSTAIN COMPETITVE ADVANTAGE?(USE VALUE CHAIN+RESOURCE BASED VIEW

Firm profitability is a function of industry attractiveness (structure) and the firm’s relative position within that industry. A strong relative position implies that the firm has a competitive advantage that can be sustained against attacks by competitors and changes in the industry. The search for industry attractiveness and an analysis of competitors can guide a firm in its choice of competitive strategy. Competitive strategy is based on the premise that the firm has a number of ways in which competitive advantage can be achieved. ‘Both industry attractiveness and competitive position can be shaped by a firm … a firm can clearly improve or erode its position within an industry through its choice of strategy. Competitive strategy, then, not only responds to the environment but also attempts to shape that environment in a firm’s favor.’

Competitive advantage is based on how value is created or arrived at in carrying out a competitive strategy. Value is determined by the unique combination of attributes—in a product or service—which are important to a customer. For example in terms of automobiles, the value of a Ferrari or a Fiat is determined only by customer perception. Whether Ferrari or Fiat, the value must exceed the firm’s cost of creating it. Value is added as specific activities or functions are performed to provide a product (or service). Competitive strategy and competitive advantage can result from any number of different configurations of activities within the firm. For a firm in the automobile industry with expertise in design, this activity may be combined with an array of activities. For example, those responsible for styling may work closely with such disparate activities as materials procurement or advertising

Competitive strategy must be tied to how a firm can sustain a competitive position and achieve long-term profitability. In developing a competitive strategy, a firm generally has two choices. Its competitive position can be based on: cost leadership or specialization. A firm’s choice of strategy generally falls into one of three generic strategies: cost-leadership, differentiation, or focus.

5)ISSUES CAMPBELLS FACED (INTERNAL/EXTERNAL)

Internal validity is the degree to which observed changes in a dependent variable can be attributed to changes in an independent variable. Thus, internal validity is a matter of degree (e.g., high, medium, low) rather than one of presence or absence. The researcher’s confidence in his or her findings is proportionate to the strength of internal validity of the research design (Finger & Rand, 2003). True experiments are designs that have strong internal validity; that is, participants are randomized to experimental conditions, and other means are used to ensure that changes in the dependent variable can be attributed to the experimental manipulation of the independent variable. Quasi-experimental designs have weaker internal validity, as we will illustrate later. There are several types of threat to internal validity (Cook & Campbell, 1979; Finger & Rand, 2003; Rosenthal, 2002), including • history, • maturation, • testing, • instrumentation, • statistical regression, • attrition, • selection, • interactions with selection, • diffusion or imitation of treatments, • compensatory equalization of treatments, and • experimenter expectancy.

EXTERNAL VALIDITY

External validity has to do with the generalizability of the research findings; to what extent can the findings of an experiment or quasiexperiment be generalized to and across various populations, settings, and epochs? In the following sections, we examine, in further detail, the major types of threats to external validity, the relationship between internal and external validity, and the situations in which we should (or shouldn’t) be concerned with threats to external validity. Threats to external validity are evaluated by tests of the extent to which one can generalize across various kinds of people, settings, and times and are, in essence, tests of statistical interactions (Cook & Campbell, 1979). The major threats include three types of interactions with the experimental condition that the participants are in. These are interactions with selection, setting, and history. Interaction of Selection and Experimental Condition Description. This concerns the question of whether the findings from the selected group of research participants can be generalized to other categories of people, such as people with other geographic or demographic features. Examples. A study comparing patients with severe major depression with healthy controls might seek to match the participants on demographic features. Many severely depressed patients are unable to work and are therefore unemployed, receiving welfare or disability assistance. To match the patients with the controls on demographic factors, the researcher might decide to include only unemployed control participants. While this strengthens the internal validity of the study, it raises the question of whether the results can be generalized to people from other levels of occupational functioning. If the results of the research study vary across occupational levels, then there is an interaction between selection (in this case, occupational status) and experimental condition. This interaction threatens the external validity of the study. The only way to determine whether this threat exists is to determine whether the results vary with occupational status.

SOURCES OF CAMPBELLS COMP ADVANTAGE?(BUSINESS LEVEL STRATEGY)(DIFFERENTIATED OR DIVERSIFIED

The rivalry among companies in the food processing industry is high and intense. These food processing companies are competing on price, quality, taste, health factors, product innovation, and product benefits (The Food Processing Industry 2006). Campbell's major rivals are General Millis Progresso, Heinz and Kraft Foods.

As a multinational food processing company, Campbell's faces an extremely competitive market in internationally, nationally and locally due to the similarities between each soup producer and wider selection of products provided by other food processing company. (Ellison, Sarah 2003)

On the other hand, various types of generic soup brands in the existing market which offer products in lower price have raised the competitive pressure. However, the Campbell's high quality of soup products and the ability to keep low production costs weaken the rivalry of the generic soup brands. For instance, Campbell's price their soup products only 20 to 25% higher than generic brands while maintaining a level high quality. Campbell's would have to continue developing superior healthy food to distinguish itself from Progresso and smaller soup maker companies.

RESOURCE BASED VIEW

The Resource Based View (RBV) takes an ‘inside-out’ view or firm-specific perspective on why organizations succeed or fail in the market place. According to RBV, firm’s abilities also allow some firms to add value in customer value chain, develop new products or expand in new marketplace. The RBV draws upon the resources and capabilities that reside within the organization in order to develop sustainable competitive advantages. However, not all the resources of firm will be strategic and hence, sources of competitive advantage. Competitive advantage occurs only when there is a situation of resource heterogeneity and resource immobility.

LEADERSHIP OPINION FOR CURRENT CEO?

there is no shortage of schools for businesspeople of every specialty: accountants, engineers, financiers, technologists, information specialists, marketers, and, of course, general managers, who have their choice of hundreds, if not thousands, of M.B.A. programs. But where is the school for the person in charge of getting the best results from all these members of the organization? There is no school for CEOs—except the school of experience. Chief executives must learn on the job how to lead a company, and they must learn while every stakeholder is watching.