Cpw Cereal Case Study
Question 1: How can General Mills (GM) and Nestle create international competitiveness by joining forces in CPW?
The CPW joint venture brings to both of the companies an advantage and increased international competitiveness by profiting from the core competences of each other.
GM is the second-largest cereal manufacturer in North America. It has technological and marketing expertise gained over more than 80 years of breakfast cereal market. GM is globally active with its products but they are very well known and strong in their home market. In 2006 only 16% of total sales came from outside of USA. This shows us that the heavy domestic dependence esp. in cereal market is very problematic for GM.
In this joint venture, GM brings the expertise and competence of upstream, including production and R&D.
The joint venture will profit a lot from the core competence of GM in upstream of the value chain.
On the other side, the other partner of joint venture Nestle is the world’s largest global food and beverage company in terms of sale. The company is located in Europe acting on global basis. It has a very large product portfolio and a very wide spread sales & marketing organization worldwide with 406 subsidiaries. CPW can profit a lot from the wide marketing & sales expertise and distribution network of Nestle.
In this case, the core competence of Nestle in downstream of the value chain contributes to the joint venture.
The worldwide positive brand image of Nestle and esp. in Europe, its sales & marketing competence gives CPW a very good advantage to market cereals under Nestle brand name outside of USA.
By this joint venture both companies profit as GM is able to use the excellent sales & distribution network of Nestle and can concentrate on upstream and its own home market sales. In this way they may optimise their costs by economies of scale and also diverse their sales globally reducing the domestic dependence. They have access to the other markets
The CPW joint venture brings to both of the companies an advantage and increased international competitiveness by profiting from the core competences of each other.
GM is the second-largest cereal manufacturer in North America. It has technological and marketing expertise gained over more than 80 years of breakfast cereal market. GM is globally active with its products but they are very well known and strong in their home market. In 2006 only 16% of total sales came from outside of USA. This shows us that the heavy domestic dependence esp. in cereal market is very problematic for GM.
In this joint venture, GM brings the expertise and competence of upstream, including production and R&D.
The joint venture will profit a lot from the core competence of GM in upstream of the value chain.
On the other side, the other partner of joint venture Nestle is the world’s largest global food and beverage company in terms of sale. The company is located in Europe acting on global basis. It has a very large product portfolio and a very wide spread sales & marketing organization worldwide with 406 subsidiaries. CPW can profit a lot from the wide marketing & sales expertise and distribution network of Nestle.
In this case, the core competence of Nestle in downstream of the value chain contributes to the joint venture.
The worldwide positive brand image of Nestle and esp. in Europe, its sales & marketing competence gives CPW a very good advantage to market cereals under Nestle brand name outside of USA.
By this joint venture both companies profit as GM is able to use the excellent sales & distribution network of Nestle and can concentrate on upstream and its own home market sales. In this way they may optimise their costs by economies of scale and also diverse their sales globally reducing the domestic dependence. They have access to the other markets