General Mills Business strategy

The Five Forces model provides a means of assessing the overall profitability of an industry. General Mills operates in the processed food industry, focusing on sales to grocery outlets. The bargaining power of buyers is often quite strong, because there are only a handful of major players in any one area. The industry is becoming increasingly concentrated. In fact, Wal-Mart now controls 21.5% of the US grocery market, giving it tremendous bargaining power over a supplier like General Mills (Daniels, 2017). Balancing this is the fact that as a major buyer of agricultural products, General Mills can exert pressure down the supply chain – but often times the suppliers have limited control over their costs so this tactic is risky and just ends up squeezing out farmers. Careful supply chain management is required to maintain the sustainability of the business (Church, 2015).

The economic environment is generally favorable at present, with unemployment at low levels and economic growth at high, steady levels. The social environment, however, is perhaps less favorable to the types of processed foods that General Mills makes, which are less popular today than they were thirty or forty years ago. Overall, this means that the company has moderately favorable conditions – enough to be profitable but not enough for robust growth.

General Mills has some strength in management, where it has experienced people who know the business, and have worked in this space for a long time. They have good relationships with their channel partners as well, and this helps them to keep their products on shelves, to launch new products, and remain in the eyes of the consumer.

The overall environment is moderately favorable. General Mills is good at what it does, but it is still subject to forces such as consolidation in the grocery industry that increase the bargaining power of companies that sell its food, and it is also susceptible to changes in consumer preferences, which in many areas make General Mills products less attractive than they used to be – there is intense competition now, much more than their used to be in these businesses.

I agree that General Mills' size gives them advantages, for example in shelf space, and in supply chain as well. However, I would counter with the fact that barriers to entry have become lower in this industry. New channels like Whole Foods have given opportunities for start-ups to emerge and build brands selling premium varieties of processed foods – though there is some thought that it will be a challenge going forward as those types of channels get bigger themselves (Tuttle, 2017).

I think it would be interesting to take a look at the influence that emerging markets have on General Mills. The company sells all over the world, but the US is its largest market. Yet, its ability to grow going forward clearly means that it needs to succeed elsewhere. The supply chains and retail channels are completely different in those types of countries, so one would want to assess the capabilities of their management team to work in those countries – or what approaches they could utilize to work around any deficiencies that the company possesses, such as building its presence in the country via acquisition (Rappeport, 2012). Either way, it's worth thinking about the internationalization strategy, and how things like the PEST analysis and Five Forces can look completely different in different countries.