JM Smucker Company, Coursework Example

JM Smucker Company has followed the niche focus strategy because the company realized that it has its advantages in resources based valuation (RBV).  Market rates equity, adapt new governed policy changes, consumers’ preferences trend, and foreign franchise restaurateurs are the SWOT analysis for the focus strategy. In this analysis, niche focus strategy is best described because of their resources and capabilities are capitalized above average of competitors’ resources and capabilities in similar markets. The reflection is clearly stated in the securities exchange commission 10-8K filing that implicates the strategy.

According to JM Smucker, U.S. Retail Coffee Market sales total is approximately up to $29.2 Million, increased by 9 percent in the third quarter of 2010. Their current quarter margin sales were impacted by lower green coffee raw materials costs offsetting the expenses on marketing and promotion recognition and acquisition and merger-related inventory valuation adjustments. The niche is the lower green coffee raw materials that boosted the sales–gives favorable market rate equity.  Segment Performance on exhibit 1 shown below:

Segment Performance

In addition,  offshore business in Canada, Special Markets sales total approximately $2.6 Million gained by foodservice and export businesses on baking and spread categories products marketed through restaurateurs franchise program. The impact of volume growth was more than offset by mix and increases in promotional spending.  Net sales, excluding acquisitions and foreign exchange, decreased 1 percent in the third quarter of 2010 compared to 2009.

Collaborately, JM Smucker implied consumers’ preference trends in the U.S. & Canada. U.S. retail consumer market segment net sales for the quarter increased 1 percent compared to the prior year.  Total volume in the U.S. retail consumer market increased 4 percent, compared to the third quarter last year, with gains in Hungry Jack® pancake mixes and syrups, Jif® peanut butter, and Smucker’s® fruit spreads.  Volume gains were mostly offset by increases in promotional spending, sales mix, and price declines on selected items.

The U.S. retail consumer market segment profit increased 6 percent for the third quarter of 2010, compared to the same period in 2009, mainly due to lower raw material and freight costs offset by incremental marketing.  Segment profit margin for the quarter improved from 23.2 percent in the third quarter of 2009 to 24.3 percent in 2010. Reflecting the sales on each popular product are the consumers’ preference trends,  in which, are the pancake mixes, peanut butter, syrups, and fruit spread jams.

Another analysis on governed policy changes has impacted JM Smucker Company on the outcome of current and future tax examinations, changes in tax laws, and other tax matters, and their related impact on the Company’s tax positions. However, their tax positions stood at $7.7. Million of interest expenses in 2010, deduced in outstanding borrowings of scheduled debt repayment of $75 Million and $550 Million in 2009.

Cost Leadership strategy of strategic choices was not taken by Smuckers’s generic strategy. The disconnection is faulted by the expenditure on merger & acquisitions (M & A) restructure plans. Their gross profits on SEC 10-8K filing were 38 percent, excluding the merger & acquisition costs of 0.4 percent. Unaudited Non-GAAP Measures exhibit 2 shown below:

The J. M. Smucker Company

Unaudited Non-GAAP Measures

In 2009, JM Smucker spent over $42 Million dollars on M & A joint venture with several companies and impacted the operating net losses. Merger and integration costs of $0.03 and $0.16 per diluted share are included in the third quarter and first nine months of 2010, respectively, while restructuring and merger and integration costs of $0.19 and $0.39 per diluted share are included in the third quarter and first nine months of 2009, respectively.  Excluding these items, the Company’s non-GAAP income per diluted share was $1.17 and $0.87 for the third quarter of 2010 and 2009, respectively, an increase of 34 percent, and $3.30 and $2.68 for the first nine months of 2010 and 2009, respectively, an increase of 23 percent. In oppose to the cash flows balance sheets — It may show the difference if the company use the GAAP measures. Thus, those per diluted shares may differ in the latter.

JM Smucker has the most effective strategy internally because they had increased the fixed costs to the administration department by 1 percent this year of 2010 for the U.S. markets and no gain for Canada Special Markets. Smuckers has created SCA effectively by using differentiate strategy, and cost leadership strategy, and focus strategy altogether and toppled competitors’ low resources capacity on outsourcing ingredients, i.e. lower green coffee raw materials.   However, this company has external weakness and opportunities in some areas that have a potential growth in sales. For instance, Smuckers have franchised with one country, Canada, which imped by growth in expansion to multinational businesses throughout the world like Latin America, Asia, China, and Europe.  JM Smucker have a plenty of opportunities to be a first mover to market their products worldwide and watch their product life cycle in each continent for better research and development on product mix and marketing mix and product developments.

JM smuckers’ strategy, mission and vision statement should not be revise at this time. When they expand their terrorities to aboard lands, the mission and vision statement should revise.