What is the right proposition in this Green Giant and the Move to Mexico Case? Green Giant

What is the right proposition in this Green Giant and the Move to Mexico Case?

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О о Green Giant and the Move to Mexico The Green Giant Company is a food products firm that specialized in canned and frozen vegetables. Started as the Minnesota Valley Canning Company in 1903, it was one of the earliest to adopt a memorable advertising character, the Jolly Green Giant who, together with his friend Little Sprout, appeared first in magazines and then on radio and eventually television. The company's name was changed in 1950 to reflect the popularity of the advertising symbol and slogan. Green Giant was also one of the first to adopt the new technology of freezing rather than canning vegetables, which helped greatly to preserve their taste and texture. Growth was steady during the 1950s and 60s, and the company expanded from southern Minnesota to central California where there was a much longer growing season. A large facility for freezing fresh vegetables was built at Salinas, California, about 120 miles south of San Francisco, in 1964. The Green Giant Company was acquired, in a friendly takeover, by the Pillsbury Company of Minneapolis, Minnesota, in 1978. Pillsbury produced flour, baking products, and packaged cake/cookie/brownie mixes. The food industry segments of the combined firms did not overlap, so the acquisition gave Pillsbury a much broader product line with customer appeal and a much larger output with economies of scale and scope. In 1987, Pillsbury itself was acquired, in an unfriendly takeover, by the Grand Metropolitan Company of Great Britain. Grand Metropolitan produced alcoholic beverage and owned strings of pubs and betting parlors in England, Scotland, and Wales. It was said that the senior executives of that company were concerned about the decline in the consumption of alcoholic beverages as watching television at home replaced the traditional British practice of going out in the evening for a pint of beer and a game of darts at the neighborhood pub. They were determined to enter the consumer products market, and picked Pillsbury because they felt that those products, frozen fresh vegetables and packaged baking mixes, would fit other social changes, such as the growing employment of women outside the home, that were then taking place in Britain. Pillsbury and Green Giant, together, were acquired by Grand Metropolitan when the Pillsbury stockholders agreed to accept a payment of $5.6 billion. Soon after the acquisition was complete, executives at Green Giant were told that they must increase the profits at that division "substantially" to help pay off debt arising from the acquisition. The executives at Green Giant were reminded that Grand Metropolitan's style of management had always been characterized as "a light but firm hand upon the throat." Failure to increase profits quickly and substantially, it was implied, could have severe career implications. The problem with increasing profits either quickly or substantially in the canned and frozen vegetable industry is that these products have become close to commodities, with little brand recognition or consumer loyalty. Green Giant had the best known trademark in the industry and held the largest market share, but is still controlled only 14 percent of total industry sales. The remaining 86 percent was held by Birdseye, Del Monte, Dole, Heinz, and "house brands" produced for the various supermarket chains. Further, the per capita consumption of frozen vegetables in the United States was steady, not growing, and canned vegetable consumption was falling as fresh produce was brought from distant nonseasonal growing regions О о Green Giant and the Move to Mexico The Green Giant Company is a food products firm that specialized in canned and frozen vegetables. Started as the Minnesota Valley Canning Company in 1903, it was one of the earliest to adopt a memorable advertising character, the Jolly Green Giant who, together with his friend Little Sprout, appeared first in magazines and then on radio and eventually television. The company's name was changed in 1950 to reflect the popularity of the advertising symbol and slogan. Green Giant was also one of the first to adopt the new technology of freezing rather than canning vegetables, which helped greatly to preserve their taste and texture. Growth was steady during the 1950s and 60s, and the company expanded from southern Minnesota to central California where there was a much longer growing season. A large facility for freezing fresh vegetables was built at Salinas, California, about 120 miles south of San Francisco, in 1964. The Green Giant Company was acquired, in a friendly takeover, by the Pillsbury Company of Minneapolis, Minnesota, in 1978. Pillsbury produced flour, baking products, and packaged cake/cookie/brownie mixes. The food industry segments of the combined firms did not overlap, so the acquisition gave Pillsbury a much broader product line with customer appeal and a much larger output with economies of scale and scope. In 1987, Pillsbury itself was acquired, in an unfriendly takeover, by the Grand Metropolitan Company of Great Britain. Grand Metropolitan produced alcoholic beverage and owned strings of pubs and betting parlors in England, Scotland, and Wales. It was said that the senior executives of that company were concerned about the decline in the consumption of alcoholic beverages as watching television at home replaced the traditional British practice of going out in the evening for a pint of beer and a game of darts at the neighborhood pub. They were determined to enter the consumer products market, and picked Pillsbury because they felt that those products, frozen fresh vegetables and packaged baking mixes, would fit other social changes, such as the growing employment of women outside the home, that were then taking place in Britain. Pillsbury and Green Giant, together, were acquired by Grand Metropolitan when the Pillsbury stockholders agreed to accept a payment of $5.6 billion. Soon after the acquisition was complete, executives at Green Giant were told that they must increase the profits at that division "substantially" to help pay off debt arising from the acquisition. The executives at Green Giant were reminded that Grand Metropolitan's style of management had always been characterized as "a light but firm hand upon the throat." Failure to increase profits quickly and substantially, it was implied, could have severe career implications. The problem with increasing profits either quickly or substantially in the canned and frozen vegetable industry is that these products have become close to commodities, with little brand recognition or consumer loyalty. Green Giant had the best known trademark in the industry and held the largest market share, but is still controlled only 14 percent of total industry sales. The remaining 86 percent was held by Birdseye, Del Monte, Dole, Heinz, and "house brands" produced for the various supermarket chains. Further, the per capita consumption of frozen vegetables in the United States was steady, not growing, and canned vegetable consumption was falling as fresh produce was brought from distant nonseasonal growing regions

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As the president of Green Giant in 1988 I would be faced with a decision that carries significant weight not only for the companys financial future but also for the wellbeing of the employees and the ... View the full answer