General Foods Corporation – Dessert Toppings Strategy Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Decision Definition

One of the most critical decisions had to be made by the dessert toppings manager, Mr. Lawrence Tracy and the decision needs to be made regarding two of the strategic business units of General Foods, which are the Cool Whip business and the Dream Whip business. The decision relates to the fact that whether the management of the company and the brand managers of the respective brands should reclassify the Cool Whip product from a category II to a category I business and reclassify the Dream Whip from a category II to a category III business. A detailed analysis needs to be performed before a final decision needs to be made, which would include the evaluation the financial performance of each, risks and rewards, the expected market size, the potential for profits, sales and market share and their relationship with advertising and promotions. A careful analysis needs to be performed as the recommendations would have implications also for the overall corporate strategy of General Foods.

GF strategy and Team Meeting

The strategy of General Foods was dependent upon the individual strategic planning for each of the strategic business units. The management of the company and the heads of each of the strategic business unit had always managed to balance the portfolio of different products within each business and portfolio of different businesses altogether with the help of the technical research strategy and the corporate strategy of the company. A single portfolio of businesses comprised of several types of businesses mixes, which comprised of the high growth businesses that provided the impetus for increased earnings for the company. However, these businesses consumed a lot of cash in their initial stages. The second businesses were those that generated the current level of their earnings always and were stable businesses and lastly, the third type of the businesses were those that generated excess cash that could be utilized by the management in other areas of the company and also used for reinvestment purposes. The company had most of its businesses belonging to the second category and few small ones to the third category.

This case focuses on the frozen toppings businesses of the company, which are the Cool Whip and the Dream Whip business. Initially, both of these businesses in the initial consultation were categorized as category II business and both of these businesses were profitable in their initial years. However, the main factor due to which these two were classified as category II business was that the processed topping market was experiencing limited growth. Nonetheless, after 1973 when then team meeting was conducted and both the businesses were classified as category II businesses, the situation for both the products seemed to change over the next 3-4 years.

In 1976, the brand managers of Dream Whip considered for a reclassification of this businesses from category II to category III. On the other hand, the significant growth in the year 1975 in the toppings businesses in the past two years which the management of the company thought was due to the product strategy and the advertising of Cool Whip had increased significantly. The performance of the brand had improved in the year 1976.Furthermore, the estimates of the market share for 1977 were also high, which instigated the management for the reclassification of the Cool Whip from a category II to a category I business.General Foods Corporation Dessert Toppings Strategy Case Solution

Market Size & Stability

In 1976, the toppings market totaled around 30 million units, which is approximately equal to $ 150 million of the total retail sales of all the companies. However, since the Cool Whip and the Dream Whip business belong to the frozen segment of the topping market therefore, based on the composition of the market in terms of real cream and processed toppings the total market size has been multiplied by processed toppings share, and then it has been again multiplied by 65%, which is the frozen segment share within the toppings market share. Based on the future market growth scenarios for the low side, best estimate and the high side, the market potential and stability has been calculated in excel spreadsheet based upon the growth rates for each scenario. The market size in each of the years from 1977 to 1982 would be as follows:

MARKET SIZE ESTIMATE FOR 1977-1982
	Low Side	Best Estimate	High Side
Frozen’s share of total processed toppings	71%	73%	73%
Processed toppings market	36.00	37.01	37.01
Frozen toppings volume growth (annual)	5%	7%	9%
Processed Frozen toppings market:
1977	37.80	39.60	40.34
1978	39.69	42.37	43.97
1979	41.67	45.34	47.93
1980	43.75	48.51	52.24
1981	45.94	51.91	56.95
1982	48.24	55.54	62.07