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Strategic Management of Quaker Oats Company

Introduction The Quaker Oats Company, officially formed in 1901, is currently undergoing massive reorganization, which will dramatically change its position in the industry. Over the last four years, Quaker Oats' returns have been consistently rocky. Quaker unloaded Snapple, its ice-cream toppings and condiments business, and its frozen bagel business 1997. The company has turned to an emphasis on its high performing products such as Gatorade and bagged cereals. Gatorade accounts for more than one-third of the company's total sales and claims over 80% of the US sports-drink market. Quaker is also a leading producer of granola bars, rice cakes, pancake mixes and syrups, and value-added …show more content…

Relative to its larger competitors Quaker performs very well. This year Quaker has a ROE of 251.3% second only to General Mills with 253.4%, but much better compared to 98.5% for Bestfoods, 35.7% for Heinz 32.5%, and for Coca-Cola. The next ratio Quaker exhibits is a 11.3% ROA, weighed against 18.5% for Coca-Cola, 12.9% for General Mills, 10.0% for Bestfoods, and 5.9% for Heinz. Quaker offers a very impressive 185% BEP while Coca-Cola shows only nearly half at 89% and General Mills, Heinz and Bestfoods have 143, 141 and 111% respectively. The final ratio is profit margin in which Quaker is very competitive with a profit margin of 9.9% exceeding General Mills 8.6, Bestfoods at 7.6%, and Heinz at 7.0%, falling short only to Coca-Cola at 15.8%. The industry average (total food producers industry) for each of these results also verifies Quaker's competitive position. ROA is 6.2%, ROE is 24.9%, Profit Margin is 5.5%, and BEP is 143%. Most of these numbers verify that Quaker is actually more successful than the rest of the industry. Competing Markets Quaker has strong brands in Europe and Latin America, and Gatorade is also growing in popularity abroad. In Latin America, they have realigned their infrastructure, and consolidated and eliminated redundant positions. Morrison, the new CEO assigned in 1997, began to heavily push to strengthen markets where opportunities for growth were high. In particular, Quaker Oats made a real effort to tap into the expanding Gatorade market by

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