abhishreshthaa
Abhijeet S
Pest Analysis On Heinz Company : H. J. Heinz Company (NYSE: HNZ), commonly known as Heinz and famous for its "57 Varieties" slogan and its ketchup, is an American food company with world headquarters in Pittsburgh, Pennsylvania.
Perhaps best known for its ketchup, the H.J. Heinz Company manufactures thousands of food products in plants on six continents and markets these products in more than 200 countries and territories. Heinz ranked first in ketchup in the United States with a market share in excess of 50 percent. Moreover, its Ore-Ida label held more than 50 percent of the frozen-potato sector. Overall, the company claims to have 150 number one or number two brands worldwide. Breaking the company's sales down by sector: ketchup, condiments, and sauces account for about 24 percent of overall sales; frozen foods (including Ore-Ida, Budget Gourmet, and Weight Watchers), 15 percent; pet products (9-Lives, Gravy Train, and Ken-L-Ration), 14 percent; soups, beans, and pasta meals, 12 percent; tuna, 12 percent; infant foods, 11 percent; and other, 12 percent. Geographically, about 55 percent of revenues are generated in North America, 26 percent in Europe, 11 percent in the Asia-Pacific region, and eight percent elsewhere.
Political Factors- the policies and actions of the governments wherein HJ Heinz Company is operating and located, whether it is in the national or local politics affects the business of the company. The political and legal conditions that has a great impact on the business of Heinz Company in Europe, if the government of a particular country, is more open in establishing new manufacturing plants and is more open in importing the products that were manufactured in low source countries, then Heinz Company will expand its business in Europe. On the other hand, if the policies of the government and the European Union do not protect the business of Heinz then there is a probability that the company will no longer expand in Europe and shift to other nations that have better policies. Another factor in the political environment is the regulation of the business. If the government regulates the business wherein HJ Heinz is in. however, European countries and the European Union are open to this type of business therefore Heinz does not have problems with regards to regulation. And if the government of the country is not friendly to businesses, then there is a probability that Heinz Company will not establish their business in that country. Political stability in the country also plays an important role in the external environment of the company if the country is not politically stable chances are Heinz Company will not establish their business or transfer to another country that is politically stable.
Economic Factors- it is concerned with the overall view of the economy. The macro economy of a nation and in the case of Heinz Company the European Union has a huge influence on the business of the company. It includes the gross domestic product, the inflation and unemployment rates, and the foreign trades and surplus of the country, as well as, the European Union. If the overall economy of the nation and the region is not stable and desirable, Heinz Company will not expand their business because there is a probability that the company will lose a great amount of money.
In the case of Heinz Company, the stagnant consumer expenditure in western Europe, coupled with the increasing consolidation and buying power and price competition from discount supermarkets and higher costs of inputs have reduced the food sales for Heinz in that particular region in Europe (, 2005). Aside from these factors, the increased prices of fuel in the international market play a big role in the business of Heinz since the company also distributes their own products to convenience stores, supermarkets and hotels. Increased prices in fuel would also increase the prices of the products and since there is a huge competition for supermarkets that sell cheap food products there is a possibility that consumers will not buy the products of Heinz Company.
The European countries particularly nations that are members of the European Union generally have stable economies, therefore venturing new businesses and markets in Europe will not be difficult for Heinz Company.
Social Factors- from the four factors, it is the most difficult since beliefs and attitudes of people cannot be easily quantified (, . & , . 2002). Demographics also play an important role in the social factors, as well as, the changing trends in the tastes and behaviour of the consumers in the analysis of the external environment of the consumers.
Heinz Company have experienced dwindling sales in the European Market because most consumers have started to buy natural, organic and chilled fresh foods than frozen foods in which Heinz Company offers (, 2005). The changing trend of consumers which is to buy healthier and safer foods has greatly affected the business of Heinz in Europe. In order to cope up with that problem, reported that the company will focus only in three market categories and these are the meals and snacks, ketchup, condiments and sauces, and infant foods.
Aside from the changing tastes of European consumers, the rise of the older population in Europe also poses a problem, because companies such as Heinz have factories in Europe wherein it has numerous employees, therefore having a bigger population of older people than younger ones Heinz Company will have a hard time obtaining more employees, the retirement of employees is rapidly getting higher while the replacement does not increase.
Technological Factors- The complexities of achieving business success through increased efficiency, effectiveness and competitiveness, combined with innovative applications of modern technology, has heightened the awareness of both Technology and business managers towards more strategically oriented approaches for planning and management of any industry (, 1993). The rapid changes in technology nowadays have wider range of effects in business. The technological factors have far-reaching impacts on the research and development, e-commerce and internet (, 2006 and , 2006). The research and development has effects on the business of Heinz Company because utilising technologies in research and development new products and services are developed. Moreover, the internet and e-commerce have huge contributions to the technological factors because through them the consumers could give feedback and reactions regarding the products of the company which could also be a big help in research and development.
Perhaps best known for its ketchup, the H.J. Heinz Company manufactures thousands of food products in plants on six continents and markets these products in more than 200 countries and territories. Heinz ranked first in ketchup in the United States with a market share in excess of 50 percent. Moreover, its Ore-Ida label held more than 50 percent of the frozen-potato sector. Overall, the company claims to have 150 number one or number two brands worldwide. Breaking the company's sales down by sector: ketchup, condiments, and sauces account for about 24 percent of overall sales; frozen foods (including Ore-Ida, Budget Gourmet, and Weight Watchers), 15 percent; pet products (9-Lives, Gravy Train, and Ken-L-Ration), 14 percent; soups, beans, and pasta meals, 12 percent; tuna, 12 percent; infant foods, 11 percent; and other, 12 percent. Geographically, about 55 percent of revenues are generated in North America, 26 percent in Europe, 11 percent in the Asia-Pacific region, and eight percent elsewhere.
Political Factors- the policies and actions of the governments wherein HJ Heinz Company is operating and located, whether it is in the national or local politics affects the business of the company. The political and legal conditions that has a great impact on the business of Heinz Company in Europe, if the government of a particular country, is more open in establishing new manufacturing plants and is more open in importing the products that were manufactured in low source countries, then Heinz Company will expand its business in Europe. On the other hand, if the policies of the government and the European Union do not protect the business of Heinz then there is a probability that the company will no longer expand in Europe and shift to other nations that have better policies. Another factor in the political environment is the regulation of the business. If the government regulates the business wherein HJ Heinz is in. however, European countries and the European Union are open to this type of business therefore Heinz does not have problems with regards to regulation. And if the government of the country is not friendly to businesses, then there is a probability that Heinz Company will not establish their business in that country. Political stability in the country also plays an important role in the external environment of the company if the country is not politically stable chances are Heinz Company will not establish their business or transfer to another country that is politically stable.
Economic Factors- it is concerned with the overall view of the economy. The macro economy of a nation and in the case of Heinz Company the European Union has a huge influence on the business of the company. It includes the gross domestic product, the inflation and unemployment rates, and the foreign trades and surplus of the country, as well as, the European Union. If the overall economy of the nation and the region is not stable and desirable, Heinz Company will not expand their business because there is a probability that the company will lose a great amount of money.
In the case of Heinz Company, the stagnant consumer expenditure in western Europe, coupled with the increasing consolidation and buying power and price competition from discount supermarkets and higher costs of inputs have reduced the food sales for Heinz in that particular region in Europe (, 2005). Aside from these factors, the increased prices of fuel in the international market play a big role in the business of Heinz since the company also distributes their own products to convenience stores, supermarkets and hotels. Increased prices in fuel would also increase the prices of the products and since there is a huge competition for supermarkets that sell cheap food products there is a possibility that consumers will not buy the products of Heinz Company.
The European countries particularly nations that are members of the European Union generally have stable economies, therefore venturing new businesses and markets in Europe will not be difficult for Heinz Company.
Social Factors- from the four factors, it is the most difficult since beliefs and attitudes of people cannot be easily quantified (, . & , . 2002). Demographics also play an important role in the social factors, as well as, the changing trends in the tastes and behaviour of the consumers in the analysis of the external environment of the consumers.
Heinz Company have experienced dwindling sales in the European Market because most consumers have started to buy natural, organic and chilled fresh foods than frozen foods in which Heinz Company offers (, 2005). The changing trend of consumers which is to buy healthier and safer foods has greatly affected the business of Heinz in Europe. In order to cope up with that problem, reported that the company will focus only in three market categories and these are the meals and snacks, ketchup, condiments and sauces, and infant foods.
Aside from the changing tastes of European consumers, the rise of the older population in Europe also poses a problem, because companies such as Heinz have factories in Europe wherein it has numerous employees, therefore having a bigger population of older people than younger ones Heinz Company will have a hard time obtaining more employees, the retirement of employees is rapidly getting higher while the replacement does not increase.
Technological Factors- The complexities of achieving business success through increased efficiency, effectiveness and competitiveness, combined with innovative applications of modern technology, has heightened the awareness of both Technology and business managers towards more strategically oriented approaches for planning and management of any industry (, 1993). The rapid changes in technology nowadays have wider range of effects in business. The technological factors have far-reaching impacts on the research and development, e-commerce and internet (, 2006 and , 2006). The research and development has effects on the business of Heinz Company because utilising technologies in research and development new products and services are developed. Moreover, the internet and e-commerce have huge contributions to the technological factors because through them the consumers could give feedback and reactions regarding the products of the company which could also be a big help in research and development.
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