Compensation and benefits ppt presentation

Case Study: Gerber Baby Food

Global Business Strategies

August 7, 2006

Case Study: Gerber Baby Food

Store bought baby food is considered a necessity for many individuals around the world. Prepackaged baby food is a convenience that few would give up and a product that helps individuals properly feed their infants. Most people, when buying or feeding a jar of baby food to their infant, do not think of the company and all the intricate details being a baby food maker entails. Gerber baby foods is the top seller of baby food products in the world, and just like any other global corporation, Gerber baby foods has the endless responsibility of running a successful corporation; it is not just about purГ©ed fruits and vegetables. The following is a case study of Gerber baby foods and the company's other non-food products (Gerber website, History, 2006).

Background and History

The world of store bought baby food began in Michigan, 1927 at the home of Daniel and Dorothy Gerber. Little did they know that by trying to find an easier method for hand-straining solid food for their seven-month old daughter Sally and Dorothy's suggestion of doing the chore at the local cannery, the Fremont Canning Company where the family produced a line of fruits and vegetables, they would create a baby food empire. Mr. Gerber took the advice of his wife and found that her idea of canning their daughter's baby food at the factory was an ingenious idea. Mr. Gerber continued experimenting and his daughter became company's first baby food analyst. Workers in the plant thought the idea was great and began requesting samples for their babies, and by late 1928 Gerber baby food was ready for the market (Gerber Website, History, 2006).

Gerber's experience in marketing was interesting as the company came around the time when national distribution was nearly unheard of, and most products were only available in a few stores in every area of the country. Gerber had to do something to gain national attention so that the company could survive. Gerber devised an ingenious marketing campaign for the company. Gerber offered a coupon including a picture of the Gerber baby in many publications, which encouraged previously skeptical grocers to place orders by the dozens. Six months later, Gerber baby foods were on grocery stores' shelve across the nation (Gerber Website, History, 2006).

Since Gerber's debut in 1928, The company has continued to grow into the leading baby food global corporation that has nearly 190 food products; is labeled in 16 languages; is distributed to 80 different countries; and has maintained one of the world's largest privet research facilities dedicated to infant nutrition. In 1994, Gerber merged with Sandoz, Ltd. The company then became part of the Novartis group of companies formed in 1996 by the merger of Ciba-Geigy and Sandoz. Gerber is headquartered in Fremont, Michigan(Gerber Website, History, 2006).

Products

Gerber began with only offering five products. The first flavors, introduced in late 1928, were strained peas, prunes, carrots, spinach, and beef vegetable soup. Gerber eventually went on to develop three age appropriate categories each containing a multitude of meats, vegetable, and fruits. Each category offer foods, consistency, and textures appropriate for different for the ages separated by the categories. Over the years Gerber has added other food products such as cereals, juices, finger foods, an organic line of food products, cultural flavor lines, and a line of food products for toddlers. In addition to the food products Gerber has also incorporated other non-food products such as bottle and breastfeeding products, other feeding products like utensils, cups, and dishware, Pacifiers and teething products, healthcare products, bath time and skincare products, clothing, and child insurance (Gerber Website, History, 2006).

Internal Company Strategic and Operational Challenges to Going Global

Like any other global corporation Gerber has challenges in the global market. Mr. Butterick, director of ruman Resources for the Latin America, discussed some challenges that affect Gerber's global operations and the changing environment in global business. He emphasized that due to the changing tariffs, regulations, and fast-paces technological advancements, including e-Commerce and EDI (Electronic Data Interface), global trade and operations of multinational companies will not be the same in the future (Michigan State University, 2000, para. 1). In order to handle global challenges Gerber must access new markets and develop the right combination of a product portfolio looking at eating habits, governmental regulations, pricing, sales potential, and climate (Michigan State University, 2000, para. 1). Gerber foods typically uses a country and market segment concentration strategy (FAO, 2006, heading ownership).

Gerber has a global responsibility to the company's customers to produce the highest quality products, and the company must overcome this challenge even when being a global company makes it a more difficult task. As stated by Mr. Butterick, "Babies are the most important human beings for mothers all over the world, and all mothers want to provide the best that they can afford" (Michigan State University, 2000, pare. 3). To ensure that this challenge is met, Gerber must monitor the quality of its products in every step of the supply chain from the selection of the fruits and vegetables to the storage of finished products on retailer's shelves, while continually looking towards emerging markets and keeping sales and margins high (Michigan State University, 2000, para. 4).

One way Gerber is monitoring quality is through a computer software program developed by the software company SAS. Using the SAS software Gerber's quality engineers developed a system that extracts daily complaint records from the corporate warehouse and links that data with manufacturing and process-related information. The software is able to categorize information by the products complaints are made about by the criticality of the complaint. The Consumer Response System (CRS) informs executives of product quality levels and alerts plant supervisors of possible concerns in the manufacturing process. Executives use to have to wait for weekly reports then try to evaluate and try to relate that data back to distinct departments or manufacturing processes. Now executives can to query and analyze quality data on their own. They can get their data and create their own reports, and the information is all up-to-date within a 24-hour period. Executives can react to complaints faster than they could before (SAS Website, 2006). Gerber understands that quality is related distribution as well. Gerber has a global distribution network that assures grocery distributors will receive the quantities of products in the designated time frame. (Gerber Ingredients website, 2006).

Decision to Operate Globally

At the time Gerber began making baby food the concept was new and revolutionary as people generally made homemade baby food. Gerber did not go global for quite sometime as the idea was not conceivable until later. In the 1960's Gerber started to sell the baby food in Europe. After marketing in Europe, Gerber began looking for other markets. Some markets have not taken so well to store bought baby food as some mothers in other countries like Brazil believe homemade baby food is more nutritious. There have also been dumping issues with Canada so Gerber stopped selling to Canada. Gerber is trying to make a market in Guatemala, but due to government regulations they have had some trouble fully entering the market. While some markets have not done so well, Gerber has thrived in other countries and sells to 80 countries, and Gerber continues to fond new markets to enter.

Successes and Failures in global operations

Overall Gerber has achieved success. As previously stated Gerber is sold in 80 different countries and controls 70% of the baby food market. On a small scale Gerber has had some troubles and small failures. Some failures were resolved and others are still on going.

Political Problems

Gerber has run in to issues with Canada. The baby food company was accused of dumping in Canada and was found guilty. In 1998 Gerber could no long sell baby food in Canada (CBSA, updated, 2004). The company was able to sell other non-food products, but the baby food market was, basically, handed over to Heinz. In 2003; however, the band was lifted, but Gerber has made no move to return as of yet (Mills. 2003).