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J.M. Smucker Company: Internal and SWOT Analysis

1. Introduction

J.M. Smucker Company is a leading branded food products company in North America with a strong presence in the U.S. retail oils and baking markets, as well as coffee market divisions. The company has been in operation for over 115 years and has a strong track record of success. Despite this, the company faces some significant challenges that need to be addressed in order to continue its growth trajectory. In this paper, we will conduct a SWOT analysis of J.M. Smucker Company to identify its strengths, weaknesses, opportunities, and threats. We will then provide recommendations on how the company can address its challenges and capitalize on its opportunities.

2. J.M. Smucker Company: Internal and SWOT Analysis

2.1 Strengths

Some of J.M. Smucker Company’s key strengths include:

-A long-standing and successful track record: The company has been in operation for over 115 years and has a strong track record of success. This gives it a competitive advantage over newer companies who do not have the same level of experience or name recognition.
-A strong presence in the U.S.: J.M Smucker Company has a strong presence in the United States, which is the largest market for food products in the world. This gives the company a large potential customer base to sell its products to.
-Branded food products: The company sells branded food products, which are typically seen as being of higher quality than unbranded products. This gives the company an advantage in terms of customer perceptions and allows it to charge higher prices for its products.
-A diverse product portfolio: J.M Smucker Company has a diverse product portfolio, which includes coffee, oils, baking mixes, and more. This diversification reduces the risk associated with investing in the company as it is not reliant on any one particular product for its success.

2. 2 Weaknesses

Despite these strengths, J.M Smucker Company also suffers from some weaknesses, which include:

-An aging workforce: The company’s workforce is aging and this is likely to lead to an increased need for investment in training and development programmes to ensure that new employees are able to replace those that retire or leave the company over time.
-“Me too” products: Many of the company’s products are “me too” products, which means that they are very similar to those offered by competitors and do not offer anything unique to customers (Kotler & Keller, 2009). This makes it difficult for the company to differentiate its products from those of its competitors and could lead to reduced sales as customers switch to other brands that offer more innovative products
-High levels of debt: J M Smucker Company has high levels of debt, which totaled $5 billion at the end of fiscal year 2018. This leaves the company vulnerable to financial shocks and could limit its ability to invest in new product development or undertake other expansion plans.
-Dependence on North America: The company is heavily dependent on North America for its sales and profits, with around 85% of total revenue coming from this region. This dependence leaves the company exposed to economic downturns or other political/economic events that could adversely affect demand for its products in North America.

2. 3 Opportunities

Despite these weaknesses, there are also some significant opportunities available to J.M Smucker Company, which include:

-The U.S. retail oils and baking markets are growing: The U.S. retail market for oils and baking products is expected to grow at a compound annual growth rate (CAGR) of 2.6% between 2018 and 2025 ( Transparency Market Research, 2018). This provides J.M Smucker Company with an opportunity to increase its sales and market share in this growing market.
-The coffee market is expected to grow: The global coffee market is expected to grow at a CAGR of 3.5% between 2018 and 2025 ( Mordor Intelligence, 2018). This offers J.M Smucker Company an opportunity to increase its sales in its coffee division and gain market share from its competitors.
-Investment in plant replacement: The company has announced plans to invest $350 million over the next three years to replace ageing manufacturing plants and equipment. This investment could lead to increased efficiency and productivity, as well as lower costs, which would boost the company’s profitability.

2. 4 Threats

In addition to these opportunities, there are also some threats that J M Smucker Company faces, which include:

-Competition from private label brands: Private label brands are becoming increasingly popular with consumers and they now account for around 20% of sales in the U.S. retail food sector (Nielsen, 2017). This poses a threat to J M Smucker Company as customers may switch to these cheaper alternatives in order to save money.
-A slowdown in the U.S. economy: There are signs that the U.S. economy is slowing down and this could lead to reduced demand for J M Smucker Company’s products as customers tighten their spending in an effort to save money.
-Workforce loss: The company has announced plans to reduce its workforce by around 10% over the next two years through a combination of voluntary separations and involuntary layoffs (Smucker, 2018). This will lead to increased costs in terms of training and development for new employees, as well as possible reputational damage if the company is seen to be cutting jobs during a time of economic growth.

3. Conclusion

J M Smucker Company is a leading branded food products company in North America. The company has a long-standing and successful track record, as well as a strong presence in the U.S. market. However, the company faces some significant challenges, including an aging workforce, high levels of debt, and competition from private label brands. In order to address these challenges, the company should focus on investing in plant replacement and product development, as well as workforce training and development.

FAQ

The J.M. Smucker Company's internal and SWOT analysis can be found in their most recent annual report. Some key highlights from the company's performance in recent years include a strong focus on cost cutting initiatives, which has helped to improve margins and profitability. The company has also been growing its top line sales at a healthy clip, thanks to strong demand for its products across North America. One of the key challenges facing the company today is managing costs associated with raw materials, as well as transportation costs. Additionally, the company faces stiff competition from other food manufacturers who are looking to enter the market for natural and organic foods.

The JMS stockholders have enjoyed impressive returns in recent years, thanks to the company's strong financial performance. The shares have outperformed the broader market indices over the past five years, returning nearly 20% per year on average. This outperformance is likely to continue in the future as the company capitalizes on growth opportunities in both developed and emerging markets around the world.

Some potential growth opportunities for JMS stockholders include expanding the company's reach into new markets, such as Asia and Latin America. Additionally, the company could look to acquire smaller competitors in order to gain market share and further solidify its position as a leading food manufacturer.

J.M Smucker's competitive advantage lies in its strong brand recognition, which allows it to charge premium prices for its products. Additionally, the company has a diversified product portfolio that includes both food and beverage items, giving it some protection against fluctuations in consumer demand.

JMS stock is currently trading at a relatively high price-to-earnings ratio, which may indicate that the market is expecting strong future growth from the company. However, JMS faces stiff competition from other large food manufacturers, such as Kraft Heinz and General Mills.