Risk Management of Heinz Company
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Overview of the case
Background of the company
No firm outdid H.J. Heinz in enunciating the benefits of welfare work to consumers. Sketching in consumers' minds a link between the conditions under which products were assembled and their final market value, Henry Heinz made the Heinz label a household word. Unique in its success, the Heinz approach characterized consumer focused welfare publicity in two important ways. First, acute anxieties about commercial food preparation in the Progressive era encouraged food companies to advertise workplace reforms more widely than did other industries. Second, like the majority of welfare work advertising, Heinz publicity targeted middle-class women (Tone 1997).
The Heinz condiment company was founded in 1869, when twenty five-year-old Heinz began selling horseradish grown on a small plot of land in Sharpsburg, Pennsylvania. By 1900 the company had relocated to Pittsburgh, was employing a year-round, primarily female labor force of 2,500, and had cornered the burgeoning food preservation market through its manufacture of diverse comestibles such as baked beans, pickles, ketchup, chutney, preserves, and tomato soup (Tone 1997). From the beginning, Henry Heinz demonstrated his commitment to employee welfare. In 1903, when many employers still regarded welfare work as a risky innovation, Heinz had already established a wide range of betterment programs. The Heinz Company believed it provided the perfect setting and people to achieve this goal. Employees' attitudes and actions were indispensable to the company's desire to mass-produce condiments tastier than their homemade counterparts (Tone 1997). H.J. Heinz Company is one company that introduced innovations in its market and it created commonly used products such as Tomato Ketchup, Horseradish and Sour onions.
Heinz has established a strong system of corporate governance to ensure the Company is accountable to shareholders and the community, and that it operates in an ethical and socially responsible manner. At the center of their system is the 12-member Board of Directors elected by shareholders. Aside from the board of directors, the company has executives that make sure that the company performs well. The company's Chairman, President and Chief Executive officer is William R. John. The company made sure that it hired the best people in their field. The structure of the company is decentralized wherein decisions are not made by a single person. The board meets on a daily basis to discuss important issues and decisions that will create changes within the whole firm. The leader of the executive department of the company also meets with the board to discuss some strategies. In some instances the company’s departments communicates with each other before making any kind of decision that will affect a certain division. This structure of the company helps it to make the best decisions that in turn will be vital so that the company can provide the best service that people will avail. This also makes sure that any conflicts within the company can be minimized.
Mission of the business
The company wants to make sure that it creates products that are renowned and favorite for most people. The company makes sure that they have cutting edge researches about technologies that will help them continue their reputation as an innovative leader in the food industry. The company researches for technologies and techniques that will help them make sure that they always place the needs, health, safety and well-being of our consumers above all else. Moreover the company makes sure that it makes researches on the nutrition a certain target market needs.
This case study intends to make sure that the company will know its current standing and its future standing, this plans intend to determine how the company can acquire a good future standing. This marketing plan is a response to the risks that the company has to face in its environment. An objective is to prove that the company is able to provide a variety of wholesome foods, with an unwavering emphasis on health and wellness. The company wants to make sure that people will recognize them through the kind of products they have delivered. The company also wants to have a unique identity through the production of unique goods. Lastly an objective is to show how the company wants to create a good image wherein people will be encouraged to invest in the company.
Key Business Strategies
H.J. Heinz through its leaders is trying hard to learn from its past mistakes so that they can be market savvy. Heinz’s key business strategy is investing in better equipments that will make their food products. The company conducts researches and inquiries on the equipments that cost lesser but can produce the best food products. The equipments used by the company have been chosen for their reliability and performance. The company also makes use of corporate responsibility strategies to create a better image. The use of such strategies help the company gain more clients. Lastly the company makes sure that it has a well organized customer service that will give assistance to clients in need.
The internal stakeholders of the Heinz include the management of the company, employees and creditors. The Stakeholders’ impact on the governance of the firm is it affects the way the company is managed. It makes sure that the company performs well according to the stake holder’s standards. The management of the firm is a stakeholder because the company’s success or failure is conjoined with the management’s success or failure. The employees of the firm are stakeholders because the success or failure of the firm will impact their salary and its increase or decrease. The creditors are stakeholders because they contributed a certain amount that contributes to the financial resources of the company.
The government, clients and potential investors are those groups that are external stakeholders to the company. The government is a stakeholder for the firm because they are the ones that checks if the company follows regulations and laws. The government also observes for any negative effect for the company’s products. The clients are stakeholders because they are the ones that are affected by any changes initiated by the company. The clients are the end destination for the product, thus they need to know what stages a product goes through before it reaches them. The potential investors are stakeholders because they observe the financial status of the company and use this as a basis for any transactions that they will do with the company.
Relationship between the business and its environment
Heinz makes sure that it offers responsibility to all products it makes. The environment on the other hand checks if the business practices its stated policies on responsibility toward the society. The environment also assesses how the business carries out its risks. To understand the relationship between the business and the environment PEST analysis will be used.
Heinz made sure that they were aware of the political situation of the domestic market they have operated in and the industry has made sure that it has a reasonable position with regards to political issues. Heinz is continuously prepared for any problems concerning the political sector. Unless the political environment will change, Heinz prefers to stay away from such subject. The political environment has allowed the liberation of the market, liberation of the market paved the way for improvement of services.
Heinz is economically stable for the past years. Its economic stature is doing well that’s why they try to improve their products to give the best to their clients. It is not only the internal economic situation of the industry that should be taken note of but also the economy of its local markets. Heinz and the retail industry checks first the economic status of the market they are operating in before making decisions if they will have a branch in that area. The economy of the domestic market has given opportunities to Heinz and other retail businesses. The status of the economy has paved the way for Heinz and various retail businesses to prosper in the region and help in proving that the domestic market is one the premier region that houses the industry.
The social environment serves as the conscience for retail businesses. This environment ensures that the Heinz will not do things they know can ruin the company’s reputation with the society. The society ensures that the Heinz and other business in the retail industry will consider first its environment before making any decisions. Heinz and other business in the retail industry make sure that the products they offer will be accepted by the public. Heinz and other business in the retail industry do not authorize the delivery of some products they know will cause outbursts or complains from different groups in the society. Heinz and other business in the retail industry make sure that they have a very good relationship with different sector in the society although some sectors hold a grudge towards them. Heinz and other business in the retail industry also engage in social activities that tend to develop a better relationship between them, the clients and the society they are operating in.
Heinz offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Heinz made use of highly advanced cash register. It also made use of better security systems. Since technology rapidly changes Heinz and other business in the retail industry makes sure they are updated to what is happening and they can adjust to these changes. If other industries use new technologies to provide services, Heinz and other business in the retail industry has the technology capable of competing with such technologies.
Integration to Risk Management
Why a risk assessment would be carried out
Evaluation of the data obtained from the risk assessment involves a number of steps. This process includes the calculation of risk factors for the workforce as a whole, identification of high risk groups and individuals, understanding the links between exposure and consequences, and an assessment of the acceptability of the risks identified (Clarke & Cooper 2004). Risk can occur in any situation in the company. Risk can appear at any given situation in the business’ operation. A company can determine its potential risk area when there are many choices with regards to making decisions and all this choices can give benefit to the company. Organizations know that taking risk is a crucial activity for the company. A company needs to study the risk it will take before making any movements. Any wrong move in taking risk can lead to more problems for the company. Heinz needs to take risk because there are times wherein a company need make calculated risk to achieve their goal. Taking risk is vital for Heinz’s survival in its environment. It will help prepare the company for any probable problems. If risk will be taken carefully and when it results to beneficial circumstances, it will help Heinz have advantage over the rivals.
Organizations also believe that following the steps in risk management is important so that they can focus on the goal of overcoming the risk and so that they will maintain a culture of time importance wherein the lesser time should be used in undergoing necessary risks. Organizations need to adhere to the steps in risk management to survive the negative effects of the risk they have to make. Organizations create a risk assessment summary through gathering various information about risk and the different effects it can create to the company. The different information about the risk comes from situations or events that other companies encounter whenever they have to take certain types of risk. The organizations base their actions on the risk with what was done by other companies who experienced such problem, combining the risks together with the effects and threat levels they have against the company can help in summarizing, compacting and determining which risk can create the worst effect to the company. A company then formulates strategies for management of risk and it involves various activities. Organizations first know the risks they have to take; they determine which risk would give their company more problems and which risk may have a negative effect to their operations. The organizations then determine the strategies that they can use in risk management. These strategies should at least relate to risk management and it should be effective enough to counter the effects of taking risk.
Organizations then match the different strategies with the different risk identified. This ensures that for every risk taken, an appropriate strategy is readily available to counter its effects. The next thing organizations do is to organize the risk together with the strategies so that proper use of risk can be made. Organizing the risk together with the appropriate strategies lessens the effect of the risk. The assessment of risk encourages Heinz to determine which risk will be beneficial for the company. Assessing the risk means that the company knows its options but has doubts on the effect of its options. Assessment of the risk will give the Heinz and other companies a better option on what risk it should take without sacrificing the implementation of its key business strategies.
Expected value and benefit of formal risk management
In general terms, risk management is the process by which an individual tries to ensure that the risks to which she is exposed are those risks to which she thinks she is and is willing to be exposed in order to lead the life she wants. This is not necessarily synonymous with risk reduction. As indicated, some risk is simply tolerated, whereas others may be calculatedly reduced. In still other instances, some individuals may conclude that their risk profile is not risky enough (Culp 2001). A man who is extremely late to an important meeting and about to watch his bus pull away from the curb may not only willingly fail to look both ways at a cross walk, but he/she might perhaps quite rationally conclude that the risk of being late is so much higher than the risk of being hit by a car that bounding across the intersection when the light is green seems like the right judgment call. The process of risk management can differ based on both the risks being managed and the agent managing them. First and foremost, risk management is a problem faced by individuals. Although organizations are just collections of individuals, organizations face a set of risks all their own (Luhmann 1993).
Unlike individuals whose risk management objectives are clearly defined with respect to personal well being, organizations have a muddier risk management mandate. One factor that blurs the clarity of the problem is whose risks an organization is managing. If the interests of all the participants in an organization were perfectly aligned, the risk management objective of an organization would not matter so much (Lant & Shapira 2001). Businesses who doesn’t take risk may lose the competitive edge it has and it may not have to change to gain a better standing in the industry. When businesses fail the problem is not because they took the risk, the problem lies on the subsequent actions they have done after experiencing the effects of the risk.
Risk management has value and benefits. Risk management makes sure that the risk the company prefers to take will not create any other problems. Risk management helps Heinz take calculated risks that reduce the chance of any negative effect to the company. Risk management ensures that once the risk results to additional problems it can be immediately fixed. Risk management makes use of organized procedure that can help Heinz check and solve future problems. Risk management helps in making use of risks to conquer the competition in business markets. Risk management can give Heinz ideas on what risks would best fit the company so that they can achieve their goals and have competitive advantage. Moreover risk management minimizes the expenses of the company while maximizing the reduction of the negative effects of risks. Risk management helps Heinz to foresee the effects of the risk that will be taken, through this risk management will help reduce Heinz’ expenses on solving problems created by the risk. Lastly risk management creates value from the identification and reduction of risks that reduce productivity. Risk management will help Heinz be more productive because it can identify and reduce the barriers to productivity.
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