Cpw and Kelloggs

6179 Words Mar 13th, 2013 25 Pages


Cereal Partners Worldwide (CPW): The No. 2 world player is challenging the No. 1 – Kellogg International Marketing – Assignment 1 Candidate: Emad AbouElgheit ISM - International School of Management Doctor of Philosophy (Ph.D.)

Presented to: Professor Peter Horn 21 November 2011 Word Count: 4,326



Abstract The paper analyzes the case study developed in 2007 of Cereal Partners Worldwide (CPW): The No. 2 world player is challenging the No. 1 – Kellogg. Nearly 17 years after its foundation in the year 1990, Cereal Partner Worldwide or CPW is looking at its current position as the world number two breakfast cereal
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Both companies are considered to be at the global stage of the internationalization process where coordination and integration of activities happens between international subsidiaries in various global markets. However, Cereal Partners Worldwide (CPW) joint venture deal had a 50 – 50 equity between General Mills and Nestlé, a relatively higher advantage rested with Nestlé having the stronger brands and global presence.12 Studies show that when domestic firm (in this case Nestlé) holds a higher bargaining advantage, no effect of on the joint venture contract would occur, which is confirmed by the equal equity. Another common characteristic of similar ventures is that the multinational (in this case General Mills) will seek to arrange fixed payments such as licensing,13 another argument that is supported by the fact that the agreement was also extended to the production of private label cereals in the UK.14 The joint venture clearly


benefitted General Mills to rely on strong global presence in markets outside the US and develop stronger brands. On the other hand, Nestlé benefitted from General Mills strong expertise in breakfast cereals consumer food category to enforce strategic product lines among its portfolio and

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