Challenge Identification
The primary issue to be addressed by the management team is how best to allocate company attention and capital to the possible growth opportunities in order to drive company growth and stimulate short-term financial results without sacrificing long-term growth potential.
Key Decision Criteria
Brannigan Foods is faced with the problem of energizing innovation and resultant company growth in a stagnating industry in which it is the market leader. Brannigan possesses a “cash-cow” in its current soup division, and must figure out a way to utilize this source of capital in order to drive growth in other sectors to ensure long-term profitability. The short-term financial goals are to increase profits by 3% over the next year, while long term goals are to stimulate growth in other areas of the Brannigan soup division’s lines of business.
When considering which strategic direction to pursue with respect to possible growth strategies, Brannigan should consider shifting consumer preferences. Consumers tend to be favouring products which are perceived as being lower in sodium and healthier overall. For example, the recent growth in the Annabelle’s Foods division demonstrates that consumers are becoming more focused on a combination of healthiness and convenience. Brannigan’s should be wary when considering allocating it’s limited growth capital to initiatives such as expanding the core lines of business due to the recent negative category growth of the ready to serve wet soup and condensed wet soup markets.
An additional factor that Brannigan should consider when choosing how best to move forward is the attractive growth and margin opportunities in the emerging soup markets such as deli soups and refrigerated soups. With the deli category in particular attracting a large volume of high-income, young consumers (who currently represent 40% of the deli soup market) the opportunity exists for Brannigan’s to engage with a fresh generation of consumers through the use of a distinct product line which is unlikely to cannibalize current major revenue sources such as condensed canned soups due to the difference in their distinct target markets.
Finally, Brannigan should evaluate how best to acquire and utilize the limited shelf space allocated by retailers. The amount of shelf space that Brannigan is able to capture will have a significant impact on growth in the future based on the degree of importance this factor is given within the boundaries of the case. While no direct financial guidance is given with regards to shelf-space, it is without a doubt critical to Brannigan’s bottom line, as it is the point-of-sale to the final consumer. Brannigans should take into consideration what the effect on shelf space will be with new product introductions or acquisitions.