Campbell Soup Company
Campbell Soup Company
1. Describe Campbell Soup's corporate strategy under Gordon McGovern's tenure. What key changes did David Johnson make? What about Dale Morrison?
Joseph Campbell founded Campbell Soup Company in 1869. They are considered a leader in their industry. They employ over 24,500 people and have revenues around 6 billion. Currently they have over 2000 products on the market. Over the years they have diversified into a number of businesses, however soup has been its core business. Since 1980, Campbell Soup Company has undergone three different strategies under three different CEOs who brought their own agenda in order to build value for the company and its shareholders.
Gordon McGovern took over as CEO in 1980. Immediately upon assuming his new position he began initiating changes in the century-old company. Under McGovern, Campbell's strategic focus was on developing and introducing new products, and expansion of the business portfolio through acquisitions. He wanted his employees to be creative and have a willingness to experiment. He encouraged entrepreneurial risk, by decentralizing Campbell's management and rewarding employees who showed these traits. He also had a strong focus on the consumer. He expected his employees be knowledgeable in the areas that were important to the consumer.
McGovern organized the business into six different divisions. They were Campbell U.S., Pepperidge Farm, Vlasic Foods, Mrs. Paul's Kitchens, Other United States, and International. He set 4 specific key performance targets that he wanted to reach - a 15 percent annual increase in earnings, a 5 percent increase in volume, a 5 percent increase in sales revenue, and a 18 percent return on equity. Unfortunately for McGovern his strategy had flaws, and he did not met
his performance targets. McGovern was experiencing a lot of pressure to resign and eventually did in 1989.
Campbell's new CEO was David Johnson. He took office in January of 1990 and took a different approach then Gordon McGovern. "His first priority was crafting a new strategy for Campbell that would grow earnings and win the confidence of the Dorrance heirs" (436). He wanted to boost the company's performance quickly to discourage a takeover. He set new key performance targets - 20 percent earnings growth, 20 percent return on investments, and 20 percent return on assets. "Johnson disagreed with McGovern's view that Campbell's growth should come primarily from the acquisitions of small,...