Heinz: A Successful Food Processing Company
Question:
Discuss about the The Business Case Report.
Business Innovation is a critical organisational process for betterment and improvement that enables introduction of workflows, services or products, new ideas and so on (Hill, 2008). Business innovation allows achievement of goals throughout the entire organisation for achievement of business aims. Innovation is initiated with new idea generation or from a problem that needs to be resolved. Ideas for solving a problem or for purpose of new idea development begins from brainstorming post which business feasibility, desirability and viability for each idea is established. Innovation is a process which renders competitiveness to an organisation by extending their core competency (Chesbrough, 2010). Globalisation has made it compulsory for organisations to innovate and come up with new procedures of doing things. Innovation has been considered a procedure that can help save money as well as time, allowing businesses to adapt to marketplace.
The H.J. Heinz Company is an American Company that processes food with its headquarters in Pittsburg, Pennsylvania. It was founded by Henry John Heinz in the year 1869, Bernardo Hees is the current CEO in the organisation (Heinz, Retrieved on 17th September 2017). The Company employs around 32,500 people and sells products globally. The best aspect of competitiveness of Heinz food products is that it has adapted and caters to local tastes around the world. While the Company manufactures over thousands of food products, it manufacturing units are located across six continents. These manufacturing units cater to over 200 countries worldwide with over 150 brand names. The Company earned a revenue of US$ 15.64 billion and its operating income is around US$ 2.02 billion. Company details can further be obtained in its website www.kraftheinzcompany.com
Heinz has been operating globally with their products in dynamic world environment. Success and competitiveness of the Company is rendered by its ability to cope to changes in the environment which distinguishes it from other companies around the world that processes food products (Sosna, 2010). Heinz produces a variety of products from sauces, to spices, condiments, salad dressings, dips, tomato products, syrups and toppings, tomato juices, soups, entrees and various other products. Its world-class brand portfolio consisting of various products is made to enhance culinary creativity along with variety. In every country and at every point the Company has been exploiting on its strong asset base by achieving excellence in brand building. It has been able to establish core competency around its brand by strengthening its brand identity by creating a strong association with cultural integrity. Variety is the mission statement of the Company which inspires its product with large number of taste band. It currently comprises of the fifth largest brand name in the world. At every country its success is owned by its adjustment to taste buds that it does capably. The Company has integrated a continuous effort for innovation within its culture with continuous research skills (Schaltegger, 2012). Its continuous commitment to provide customers with exiting product quality has provided innovative framework within its scope. Innovating with business processes, cultures, products tastes has been a continuous endeavor within the company.
Benefits of Innovation
There remains several benefits associated with innovation of a Company which is known to drive its growth. Innovation has been seen associated with creation and maintenance of a brand identity. In order to remain competitive at marketplace and extend core competency, it becomes essential to innovate in a continuous process (Amit, 2012). Innovation is also known to attract customer interests and gain more customer focus. However, three primary benefits of innovation is efficiency, productivity, providing a profit center, increasing business agility, enhancing customer satisfaction, complying with legislations and tax benefits, supporting diversity and so on. While benefits of innovations remain unaccountable, they might incur costs and substantial business risks, which needs to be overcome. In order to evaluate potential benefits for innovation, business leaders and managers has to consider the potential inflows generated from a project innovation (Hecht, 2012). Net Present Value (NPV), which encompasses financial calculations of present value for all future cash flows that will be generated from a project, is considered. Post assessing a positive NPV acceptance or rejection for a project is made.
In order to drive any sort of innovative process there needs to be strategic course of action. A strategic plan is a course of action that guides step by step procedure for arriving at goal or defined objective for the innovation (Gambardella, 2010). Like any other business innovation a strategic plan is initiated by identification of opportunities for innovation. Customer gaps in tastes or price is analysed then post brainstorming ideas are generated for filling up the gap. In order to evaluate any gaps existing an analysis of external and internal environment is conducted. While external analysis is done using PESTLE factors as political, economic, social, technological, legal and environmental analysis. Internal analysis is done using SWOT analysis of strength, weakness, opportunity and threat analysis.
In order for evaluating customer demands, an analysis of demographic, psychographic and geographic factors is done (Comes, 2008). Understanding of customer demands and choices will help designing of the product in a better manner with more opportunity. Then opportunity to fill in such gaps are generated which leads to the second step towards innovation. Solution to meet gaps and identify an affordable product is designed, amongst various solutions a particular one is chosen, which is then refined. Once a procedure or products has been decided upon by Heinz then prior to its mass production, there is internal financial analysis that is made (Serrat, 2017). Internal financial assessment utilizing various practices as Net Present Value (NPV) method, Accounting Rate of Return (ARR) method, Payback period needs to be accommodated. A best possible course of action will be selected depending upon needs by the Company. Once an idea is refined and decided upon then it goes towards its implementation. A finalized solution is implemented by validating its production and distribution on large scale is the final procedure for strategic implementation.
Strategic Plan for Innovation
Business Innovation requires analysing of opportunities and goals prior to its implementation. Prior to final application of any project, there has to be a proper evaluation technique that allows approval for a particular project (Essmann, 2009). Prior to entering any market Heinz Company does an extensive analysis of market prevailing situations and customer demand analysis. Analysing customer taste buds and there product preference is the key factor that drives innovation in the Company. Once a thorough analysis of customers has been undertaken, it does product analysis of various products that are existing in the market, then innovation process starts. With culture at Heinz having a culture of change to develop organisational process, it is readily able to accept ideas. Organisational environment within the Company is more improved that is conducive to any type of change. Every time it employs new customer research techniques, market communication techniques that enable easy and quicker assessment of the market. All departments throughout the organisation makes contribution towards change processes. Its innovative program has further added to being the catalyst of the culture of change within Heinz. Heinz Fresh ideas folder emphasizes that each individual contributes some ideas for the organisation. Its internal sources are grouped and prioritized with 50 broad ‘zones of interests’, which continuously refers to its customers. Subsequently there is an ongoing process that develops further into a full marketing program for implementation of ideas.
When Heinz came up with its idea of Barbie Pasta shapes then there was a lot of project evaluation technique. Firstly, feasibility study involved drawing from financial analysis then subsequent efforts to match up to customer expectations was made. Heinz did not limit its Barbie Pasta packaging alone but also made designer packaging with brightly colored holograms that would attract customers. The overall costs benefits arising from the product was immense as it helped create a greater market share for the Company. Human resource department at the Company makes immense contribution to the innovative process, by identification of innovation skills amongst individual and then selecting them for the Company.
Recommendation and Conclusion
Analysis of all potential reasons for business innovation draws significant parameters for which businesses needs to innovate. As for Heinz, it is a successful food processing company due to its capability to research and bring new products to the market and surprise its customers. It has been capable of continuously evolving in procedures and techniques to innovate and bring changes into their Company such that they can steadily handle the process of innovation. In each and every country it evaluates financial costs for innovation prior to launching or going ahead with any product that it considers feasible. Therefore feasibility study using techniques as Net Present Value (NPV) method, Internal Rate of Return (IRR) method, Payback period method, Accounting Rate of Return (ACC) and so on are considered. These financial models allows diagnosis of significant risks for each and every endeavor be it processes or products prior to initiating its development. Thus, business innovation can provide several benefits and advantages to a business if undertaken in an appropriate manner. In accordance to Australian Bureau of Statistics, businesses that innovate are considered to be more productive or generate more jobs as considered to non-innovative businesses.
Reference Lists
Amit, R. &. 2012. Creating value through business model innovation. MIT Sloan Management Review, 41.
Chesbrough, H. 2010. Business model innovation: opportunities and barriers. Long range planning, 354-363.
Comes, S. &. 2008. Business model innovation. From strategy to execution, 65-86.
Essmann, H. &. 2009. An innovation capability maturity model–development and initial application. World Academy of Science, Engineering and Technology, 435-446.
Gambardella, A. &. 2010. Business-model innovation: General purpose technologies and their implications for industry structure. Long range planning, 262-271.
Hecht, A. D. 2012. Creating the future we want. Sustainability: Science, Practice, & Policy.
Heinz, K. (Retrieved on 17th September 2017). Company Profile. https://ir.kraftheinzcompany.com/overview.cfm.
Hill, C. 2008. International business: Competing in the global market place. Strategic Direction.
Schaltegger, S. L.-F. 2012. Business cases for sustainability: the role of business model innovation for corporate sustainability. International Journal of Innovation and Sustainable Development, 95-119.
Serrat, O. 2017. Business model innovation. In Knowledge Solutions. Springer Singapore, 499-507.
Sosna, M. T.-R. 2010. Business model innovation through trial-and-error learning: The Naturhouse case. Long range planning, 383-407.
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