Newman’s Own: A SWOT Analysis

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Outline

This paper is a case study of the company ‘Newman’s Own’. Here the SWOT analysis of the company is done. The paper has four parts. The first part is the overview of the case, second part is the SWOT analysis, third part is some questions and answers related to the case and the last part is recommendation.

Newman’s Own: A SWOT analysis

Overview

SWOT analysis is a commonly used tool for analyzing the current position as well as future possibilities of an organization. Here, the company Newman’s Own is analyzed focusing on its strength, weakness, opportunities and threats. Paul Newman is the founder of Newman’s Own. Newman’s Own is a company engaged in the production of food items. It offers salad dressing, pasta sauces, salsas, popcorn, and lemonade and steak sauce. The company is taking utmost care to produce nutritious food products. Two factors make the company a reputed one. First is that, there are no artificial preservatives in the food products of the company. The second one is that the company is concerned about the welfare of the society. It spends lot of money on charitable activities. Now the company expanded its operations from United States to different foreign countries like Australia, England…etc. Another important milestone in the history of the company was the alliance with McDonald. The General Mills is the main competitor of Newman’s Own. A proper SWOT analysis can help to improve the performance of the company by way of recommendation based on the SWOT analysis.

SWOT Analysis

Strengths

Starting from the Christmas gift of homemade salad dressing to the position of Newman’s Own Inc, it is seen that, Paul Newman and his diversification business activities have a reputation and brand image among the customers. The salad dressing item is the most profitable item among the product line of the company, which later enabled to have Alliance with McDonald. The company gives more emphasis to charity programs which itself has become one of the marketing techniques for capturing customers. Strength of 18 employees and their morale had a role in its position, even though the number is less as compared to other players in the industry. Entering into pet food similar to General Mills shows its keenness to change to meet competition. Continuous quality improvement, online sales, partnership with Green Mountain Coffee Roasters etc show the company’s innovativeness and techniques to cope up with the changing environment.

Weakness

Only two weaknesses could be pinpointed in the case of Newman’s Own Inc. It is said that the company contributes all its profit after tax for charity purposes without holding back certain amount to meet contingencies. Sometimes the strength may possibly become the weakness i.e. in case of spreading out, increase in demand of the products and other diversification activities require large number of employees. Currently the company’s international business is limited to a few countries only. Also, customers have an opinion that Newman is exploiting his celebrity status.

Opportunities

Newman’s Own has a great opportunity to hold up in the market and compete not only now, but also in the coming years. There are no trade union activities which may adversely affect the company. The company can expand in other areas like Pizza market capturing to the taste of Pizza. Entering into Newman’s Own Cookbook and selling through online to meet the competition from General Mills shows that the company copes up with the changing environment and competition. The company has a strong financial position as sales increased by 74.3% as compared to the previous year with sales of above $190 million. This could be utilized by Newman’s Own to have alliance with other top players in the same industry in US.

Threats

Currently it is seen that the company donates all profits after tax without keeping a certain percentage for contingency purpose to withstand the adverse conditions. There are strict regulations in the US food and organic industry. Even though there are strict regulations, it is seen that there are many players in the market. In the pet food industry, all players should comply with the laws of Food Safety and Inspection Service (FSIS) of USDA. In case of Pretzels, one of the organic foods by Newman’s, an Oregon Tilth Certification has to be obtained before selling the product. (Good food, n.d.). After all, competition in the market is a threat to the company, even though it is mainly a non-profit organization.

Questions and Answers

Question 1: What business is the company in?

Answer: The Company is engaged in the food business including salad dressing, sauce, popcorn, salsas…etc.

Question 2: What value does the business provide to the customer?

Answer: The Company provides its customers a value added service by way of providing nutritious food. The food items provided by the company do not contain any artificial preservatives, which show that the company is more concerned about the health of the customers.

Question 3: What is the most important issue facing the business?

Answer: The most important issue that the business is facing is competition from General Mills as this company has become more powerful after purchasing Pillsbury.

Question 4: What is the apparent problem?

Answer: Even though charity is good, there should be some concern about the company’s future while spending more money for charitable activities. The company is spending a very good portion of its profit for charitable activities. This may result in shortage of funds for the business operations of the company.

Question 5: On first reading, what do you think the company should do?

Answer: On my first reading of the case, what I feel is that the company should enter into production of more food items.

Question 6: What are the possible problems with your recommendations?

Answer: In the recommendation it is given that the company should reduce its spending on charitable activities. This will raise a question as to whether it is proper to advise a company to control its spending on charitable activities. If one thinks from the society’s point of view, it is unethical to tell a company that it must put restriction on the amount spent on charitable activities.

Question 7: What are the characteristics of the industry in which the company is?

Answer: “The food and beverages industry is among the most competitive and globally-linked of all business sectors.” (Plunkett’s food, beverage & tobacco industry, 2008). The competition in the food industry is very high and another important characteristic is that the food items are highly perishable.

Question 8: How does the company compare with other similar companies?

Answer: The main factor which makes the ‘Newman’s Own’ different from other similar companies is that, the company is involved in so many charitable activities. It spends lot of money on charitable activities.

Recommendations

Following recommendations can be considered for the future improvement of the company. Through SWOT analysis, the main drawbacks found are regarding the charity mission of the company, lesser number of employees and the expansion policies. It is recommended that the company should expand its business in non-represented countries. For this purpose, the company should retain a certain amount of profit which can be utilized for expansion activities. It is also advisable to increase the number of employees in case demand increases.

References

Good food: Pretzels. (n.d.). Newman’s Own Organics: The Second Generation. Web.
Plunkett’s food, beverage & tobacco industry: Overview of Plunkett’s Food, Beverage & Tobacco Industry coverage. (2008). Plunkett Research, Ltd.

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