Background
Pepperidge Farm is a United States bakery located in Norwalk Connecticut. It was established in 1937 by an American, Margaret Rudkin, who named it Pepperidge after a tree that is located on their property at Fairfield Connecticut ("Pepperidge Farm® – Heritage and History"). The bakery specializes in Milano, Nantucket cookies, varieties of bread and goldfish crackers. The business was born out of her attempts to bake a preservative-free bread for her third born son who was asthmatic and thus allergic to commercially made bread that was laden with preservatives. She ended up making bread so good that her son’s doctor endorsed it for his patients with the same condition. Following this motivation, Margaret approached Fredrick Marschall, who owned and operated the Marschall grocery to convince him to sell the bread for her. Upon tasting it, Fredrick bought every bread that Margaret had made and even ordered for more. Her husband, Henry, who was a Wall Street broker helped her sell the loaves in stores in New York. In no time, the business expanded causing her to expand from her kitchen to commercial production in 1947. The business continued to grow as she managed it to include other items such as chocolate cookies and frozen pastries. In 1961, Margaret sold the enterprise to Campbell Soup Group where she will then serve as a board member and the first female to ever occupy the seat.
External Analysis
Opportunities
Pepperidge Farm enjoys a myriad opportunities especially due to the fact that their products subscribe to the modern lifestyle where people want foods on the go due to their busy life. This makes it easy for Pepperidge to expand to a variety of markets especially those characterized by a fast life.
Pepperidge was founded at a time when there were minimal developments in technology. Most recently, however, technology has been integrated into major global fast food chains such as the McDonalds, which the Pepperidge could easily imitate or even adopt a better version of the technology. Below are few other opportunities that Pepperidge could exploit:
Demographic Trends
Changes in population in terms of size tastes as well as health concerns have been a central consideration in the business policies of Pepperidge. The business has responded to the increasing population by licensing more distributors for its products. In the USA alone, for example, the company boasts well over 4700 distributors for its products. The business has also responded to the health concerns of the growing population. Most originally, the Pepperidge bread was developed as an alternative to a boy, Mark, who was allergic to bread that had preservatives. For this, the company keeps a keen eye on the changes in taste of people in its market regions. Recently, there have emerged concerns over genetically modified foods causing a majority of the population to prefer naturally baked cakes and bread. This has over time promoted the business prospects for Pepperidge due to their lack of inclusion of preservatives in their foods.
Specific International Events
As a global business model, Pepperidge pays close attention to international events that may affect its business either adversely or positively. For example, the debate on the contents of packed food is one with critical relevance for Pepperidge. Should governments in the market segment that Pepperidge serves discourage additives such as preservatives in foods, this may signal a positive effect on Pepperidge for its range of products that do not use preservatives. Conversely, should the government be for preservatives, the company is likely to face competition from other players in the industry who rely on preservatives for their products to remain viable in the market.
Technological Change
Pepperidge has demonstrated a keen focus on adopting recent technologies to match the pace of the business world. This was particularly evident in their latest roll out of the Seal Tab technology for their baked cracker chips. The seal is a step in their innovation with regards to packaging which allows a consumer to open easily and seal the contents of his package. Besides, the seal also keeps of air and moisture from the chips ensuring that they are of premium quality from the time of purchase to when they are ultimately consumed. The convenience possessed by this latest technology is a response to the demands of the clients who initially had trouble with the packaging of the products by Pepperidge which especially made it difficult to eat while traveling. But the new technology now fulfills this and goes on to add extra benefits such as the fact that the paper allows rolling and closing, causing it to get smaller and smaller as the contents of the package get emptied.
Culture Trends
There is a growing acceptance of fast foods across cultures except for minimal cultural differences in preference for certain foods. The business model adopted by Pepperidge is such that the cultural differences of various regions of the world play to its advantage rather than dampen the business prospects of the company. To take care of this, the company avoids the idea of personally managing and overseeing the operations of its distribution points and instead focuses on the licensing of distributors who are well familiar with the market needs of their locality.
Threats
On the downside, however, Pepperidge faces stiff competition from several global food chains such as the McDonalds and the Subway that specializes in fast foods. Similarly, there is a growing worry among people in terms of the health aftermath of fast foods as well as possibilities of inclusion of genetically modified foods in the ingredients used by the food chains.
Legal, Political Conditions
The legal and political considerations are among the greatest barriers to entry into some regions. For example, in a region that suffers civil unrest, Pepperidge is unlikely to launch. As well, the company may be discouraged to launch in an environment where the costs of legal compliance are too high. This may explain why there are minimal outlets for Pepperidge in countries served with persistent political instability.
Economic Climate
The economic considerations of a certain business environment are major determinants of the success of a business and are at times out of the control of the business. Harsh economic climate hurts the prospects of any business. The Pepperidge Company, however, has employed a model of business that takes care of the economic outlook for the particular region of operation. This has been achieved through paying the distributors only a certain portion of the total revenues they make. Because of this, the business sonly incurs costs that are proportionate to the total revenues collected. Also, the company has priced its products proportionately to the economic climate of the areas of operation. For example, the prices charged per pack in the distribution points located at the heart of New York are different from those charged in the outlets in other less affluent neighbourhoods. However, to protect the image of the company as a reputable food chain, the company has avoided venturing into very economically depressed neighbourhoods.
Tax rates
The company has faced seriously hard times in times of unfair taxation on middle-class Americans who form the majority of its market (Pressman, Steven 181). High tax rates lead to depressed incomes for Americans making it hard to afford luxurious fast foods such as Pepperidge.
Internal Analysis
Strengths
Pepperidge operates one of the leanest styles of business management by allowing distributors to be independent. Much like franchising, Pepperidge never directly controls the management of its distributorship. This, apart from saving them costs, also helps Pepperidge leverage on special entrepreneurial expertise possessed by the entrepreneurs who subscribe to distribute their products. This has a multiplier benefit in the sense that for an independent entrepreneur he can understand better the needs of the local market and advise the top management of Pepperidge accordingly. Equally, by having the distributorship in the independent hands of distributors, the company can focus on the critical aspects of the business such as quality assurance as the distributors take care of the needs of the customers. Yet another strength for Pepperidge is their global presence with a presence in over 60 countries worldwide and over 85 independent distributors. This not only allows the company to enjoy economies of scale but also helps to improve its reputation as a reputable food chain that has earned the confidence of various regions of the world. Besides, the fact that the bread is free of preservatives is an addition especially in the world of today when people are overly wary of the nutritional content of the foods they consume. The company also has had a fairly high growth rate from its days as a kitchen business to its commercialization and expansion into the world market. Through a consistent growth rate, there is expansion and growth in revenue which enables the company to hire qualified staff and pay well to retain them (Bernroider, Edward 562).
Weaknesses
As a weakness, the business has a barely differentiated menu which limits its expansion in some regions that have a great preference for certain tastes based on their culture. Also, the company has its products highly priced which leaves out the ordinary citizens. For an established brand like Pepperidge, it should be possible to have foods that take care of every market segment.
Works cited
"Pepperidge Farm® – Heritage And History". Pepperidgefarm.com. N.p., 2016. Web. 10 June 2016.
Pressman, Steven. "The decline of the middle class: an international perspective." Journal of Economic Issues 41.1 (2007): 181-200.
Bernroider, Edward. "Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises:: an Austrian Study." European management journal 20.5 (2002): 562-573.
