Cambell soup Company

Campbell Soup

Jim Elsner must decide the best course of action for Campbell's Soup with regards to its microwave soup initiatives. He must also evaluate the company's system for product development. At present, the system is insufficient to meet the company's needs. The Plastigon project has been stalled by repeated technical issues and the company's product development system as a whole appears inadequate to address its future needs.

The operating and competitive environment for Campbell's Soup is changing. The packaged food business has not been subject to significant technological or social change in decades. The market has been mature, but existing competitors are making technological changes in order to improve their market share. Campbell's, one of the market leaders, has expanded the company through the development and purchase of other lines. The development of microwaveable soups is a strong strategic response to a new market opportunity. It leverages the strength of the iconic Campbell's brand, but the effectiveness of the strategy has been hampered by several weaknesses.

The Containers and Capital Investments division has two main departments responsible for this project, the packaging group and the engineering systems group. The structure of the engineering systems group is not conducive to rapid pace of technological development. The most important roles for the group are to develop new products and to make efficiency improvements. Engineers typically divide their time between multiple projects. They are also centrally located in New Jersey. One of the issues with regards to the launch of Plastigon is turnover stemming from extensive travel to the North Carolina plant where the Plastigon project is located. In short, the personnel and structures in the engineering systems group are conducive to their traditional role of modest improvements to existing processes; they are not conducive to the development of entirely new processes and technologies.

The second weakness is with regards to communication. With employees scattered over multiple sites, it is difficult to coordinate the flow of information. For example, the red-and-white division is simultaneously developing its own microwaveable container based on DRG technology. There are also difficulties regarding the communication of organizational objectives. The Plastigon project is viewed by some as the personal whim of the CEO rather than a market-driven initiative. The management at the Maxton plant is not contributing their part to the Plastigon project out of fear for a deterioration of operating results. The importance of the project has been poorly communicating within the company, and the personnel responsible are not communicating well with each other.

The third weakness is with regards to finances. At present, neither Plastigon nor DRG technology are viewed as profitable options. Additionally, the sales estimates for these initiatives, net of cannibalization, are unknown at best. Therefore, the move into microwaveable lines is subject to significant risk. The company-wide aversion to this level of risk can be seen in the actions of the Maxton plant managers and the engineers assigned to the project.

There are a number of options available to Campbell's. The first step they need to undertake is to determine the future of their move into microwaveable soups. It is recommended that the Plastigon program be scrapped in favor of the DRG program. At present, Campbell's does not appear to be capable, in terms of personnel, culture and systems, to develop new technological processes. The DRG program represents modifications of existing technology, which is more congruous with Campbell's existing capabilities. Additionally, DRG products have the potential to be profitable. Per unit operating costs are 22% of Plastigon products and the wholesale price is only 70%. While DRG products cannot be produced profitably at present, they are close enough that tweaks to the price or production efficiency can get them there. Plastigon products, whose production costs are estimated to be 175% of the wholesale price, are nowhere near profitability.