01 Feb business case study Mini-Case1 Hain Celestial Group: A Firm Focused on Organic? Differentiation You will have five mini-case studies during the course, in groups. I will form the g
business case study
Mini-Case1 Hain Celestial Group: A Firm Focused on Organic? Differentiation
You will have five mini-case studies during the course, in groups. I will form the groups. Each mini-case is 2-3 page long, and you should perform a case analysis using the Appreciative Inquiry 4-D cycle framework (AI-4D). This is a change management and problem-solving tool that will be extremely useful for you on your professional life. It is easy and simple to use and will equip you with strategic thinking when facing change situations (remember, strategy carries change at its core!)
The 4-D Cycle Framework is:
Discovery: What gives life, what is? This is the existing situation/scenario in the organization.
Dream: What might be? This is the future vision, the ideal/desired scenario for your organization.
Design: How can it be? This is the outline of your strategy to move from the Discovery scenario to the Dream scenario.
Destiny (or Delivery): What will be? This is how you will implement the strategy you have outlined in Design.
I just want to do dream
Requirements: 1 case
BGEN 499 Strategy, Mini-Case 1 _____________________________________________________________________________________________ 1 Hain Celestial Group: A Firm Focused on Organic? Differentiation Hitt, M.A., Ireland, R.D., Hoskisson, R.E. (2020) Hain Celestial Group: A Firm Focused on Organic? Differentiation. In: Strategic Management: Competitiveness & Globalization: Concepts and Cases, 13th Ed. (pp.135-136). Boston, MA: Cengage Learning. Business-level strategy details actions a firm takes to compete successfully in a particular industry or industry segment by using its resources, capabilities, and core competencies to create a competitive advantage. Hain Celestial Group uses a differentiation strategy to compete against its rivals. The differentiation strategy is one through which the firm seeks to differentiate itself from competitors in ways that create value for which target customers are willing to pay. By developing and using capabilities and competencies to produce and distribute unique types of natural and organic foods, Hain differentiates itself from competitors. Hain’s strategy takes advantage of a newly evolving preference among some consumers in terms of the types of food products they buy. This consumer preference change, which in essence is a preference for food that is healthier and, in some cases, more responsive to environmental challenges, affects a number of firms including those growing food products, grocery stores that sell those products, and restaurants in which people consume the products. Irwin Simon is Hain Celestial’s founder and CEO. At the time of founding, Simon said that he knew that the choice to eat more wholesome foods and live a healthier lifestyle wasn’t a fad or a trend. It’s a transformation people want to make for the long term.? The company grew through a series of acquisitions of small organic and natural foods’ producers. These acquisitions, as Simon puts it, are not GE or Heinz or Campbell’s….Growth is coming from companies like Ells and BluePrint – entrepreneurial start-ups.? The largest acquisition to date was Celestial Seasonings, a supplier of teas and juices. The firm’s successful acquisition strategy has focused on buying brands started by someone else? and then figuring out how to grow them from there.? Through these acquisitions and the products associated with them and because of effective marketing programs, Hain is the largest supplier to natural food retailer Whole Foods Markets (now owned by Amazon). BluePrint, the company mentioned above, focuses on natural juices marketed to consumers to ‘cleanse’ their bodies. Brands such as Terra vegetable chips, Dream non-dairy milk, and Celestial Seasonings tea are household names for the health-oriented shopper. Sales of Hain’s portfolio of products result in Hain Celestial being the world’s largest natural foods company. The demand for natural food in general and for Hain’s products in particular finds Hain selling its branded products to traditional grocery store chains; these sales account for about 60 percent of the firm’s U.S. sales. In 2014, sales outside the United States accounted for the remaining 40 percent of Hain’s revenue. Meanwhile, large branded food firms without as intense of a focus on natural food products are experiencing revenue and earnings’ challenges. Kraft Foods, Campbell Soup Company, and J.M.
BGEN 499 Strategy, Mini-Case 1 _____________________________________________________________________________________________ 2 Smucker Company are examples of these firms. For these and similar firms, earnings have stalled in part because their brands do not focus on the natural and organic items that appeal to some of today customers, at least not to the degree that is the case for Hain Celestial. Partially because of this, Hain’s earnings and stock price have climbed much higher on a relative basis. To deal with the slump in revenue and earnings, large branded firm companies are implementing different strategies. Smucker’s, for example, acquired Big Heart Pet Foods (maker of Milk-Bone dog treats and Meow Mix cat food) as a means of entering the pet food market quickly. Others, such as Nestlé (maker of Crunch and Butterfinger candy bars and other chocolates), are removing artificial ingredients such as colors and dyes from candy and chocolate. Hershey Company and Mars, Inc., which collectively account for approximately 65 percent of the global market share in packaged candy, are reducing the amount of high fructose corn syrup in their food items. Mondelēz is seeking to reduce saturated fats and sodium in its snacks by 10 percent. However, these changes do not allow these firms to overcome the problem of rapidly changing consumer tastes toward organic and natural foods. Grocery stores, such as Kroger, Albertsons, and Walmart, are also seeking to enter the natural or organic segment. Given its commitment to using the cost leadership strategy, Walmart’s decision to introduce low-priced organic foods is not surprising. Walmart is joining Wild Oats Marketplace (an independent producer in the natural food segment) to place about 100 organic products into its store? and the Wild Oats line will be priced 25 percent lower than competing national organic brands.? Competition from a firm with success using the cost leadership strategy (such as Walmart) will challenge Hain Celestial to emphasize the value of differentiated products to customers wanting to purchase natural or organic. The trend toward organic foods is occurring in restaurants as well. Chipotle Mexican Grill, Inc., for example, commits to providing customers with Food with Integrity.? For Chipotle, this means serving foods made with local, sustainably produced organic products and using meats from naturally raised-not factory farm-animals. To address what had become somewhat unimpressive sales growth beginning in 2016, Hain Celestial contemplated the possibility of selling its organic meat businesses in mid-2018. Instead of meats, executives evaluated the possibility of expanding the firm?s efforts to provide protein options to customers through some of its other products such as an array of organic nuts. Case discussion: Hain?s business-level strategy is based on current environmental trends. Using the Appreciative Inquiry 4-D framework, develop the firm?s strategic analysis on: 1. The current strategic scenario (Discovery). Provide a brief description and explanation of the firm?s existing business-level strategy.
BGEN 499 Strategy, Mini-Case 1 _____________________________________________________________________________________________ 3 2. The desired strategic scenario (Dream). Envision and describe an ideal strategic scenario where the firm would prosper and grow in its market segments. This scenario is a vision, a goal the firm wants to pursue. 3. Strategy (Design). Develop and describe a strategy to move from the current strategic scenario (Discovery) to the desired strategic scenario (Dream). The strategy is how the firm will accomplish its vision. 4. Strategy implementation (Destiny). Describe how the firm will implement the strategy described in Design.
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