Executive Summary General Mills first began as a flour Mill in the 1860’s and since the beginning they have been a successful, innovative company. Throughout the years they have grown to becoming the third largest food company in North America. General mills is committed to diversity, innovation and the relationships they have built. They believe their stakeholders are as important to the company as their customers, keeping them in mind for every business decision made. They have 6 key stakeholders; consumers, customers, partners, teams, shareholders and communities. General Mills believes the success of their stakeholders is a success for the company, every decision they make must add value to for their stakeholders. In 2001 General Mills completed a merger with their long-time competitor, Pillsbury. Both sides of the merger felt this was the best decision for each company involved, General Mills felt it would add value to shareholders, while Pillsbury was just happy the business would stay local. The merger was complete with a $10.5 billion price tag and would total $13 billion in annual sales. The only problem was Pillsbury’s weak performance, causing layoffs for General Mills. The best solution to remedy this problem is for General Mills to get its thinking caps on and come up with a new innovative product line for Pillsbury. It will take time and a lot of effort, but in the end the benefits will improve the new company and get Pillsbury performing at the same level as General Mills. With a feasibility analysis complete, I have determined General Mills has what it takes to implement this solution and be successful. The issue of ethics and the law are also addressed briefly, since there is a lot legalities involved with creating a new product. Making sure General mills isn’t infringing on patents or copyrighted products, while being ethical in their decision-making. The final step was going through the product development process and discussing 7 steps to successful product development implementation. The seven steps to successful product development are idea generation, screening, concept development and testing, business analysis, product marketing mix and development, market testing and commercialization. Each will be discussed in more detail to convey a clear picture of the steps General Mills must take to plan and implement my recommended solution and solve this issue of Pillsbury’s weak performance.

Position General Mills began with two flour mills in the 1860’s. By the 1960’s they started marketing to children with Play-Doh, Easy Bake Oven and even board games like Monopoly. In between that time, they entered into the cereal business. Starting with “Wheaties” in 1924 and then “Kix” introduced in 1937. Gaining the highest market share, they were the first company consumers thought of when buying cereal. Today the company has grown to something much larger, working on making people all over the world healthier, richer and even making lives easier. “General Mills is the world’s sixth-largest food company. We market in more than 100 countries and hold the No. 1 or No. 2 position in virtually every category in which we compete,” as stated on the General Mills website. General Mills has a huge focus on holding themselves to the highest standards when it comes to corporate social responsibility. This coincides with the values important to General Mills, which are championship brands, people, innovation, and performance. General Mills wants to build leading brands, have a diverse and committed workforce, implement innovative ideas and have outstanding performance for the key stakeholders involved. General Mills has six key stakeholders; consumers, customers, partners, teams, shareholders and communities. General Mills wants all their key stakeholders to feel like they’re part of something and to be trusted by those involved. In the following paragraphs I will discuss the reason why these key stakeholders are important and why they should be a crucial part of General Mills decision making. Consumers are an important stakeholder to keep in mind when making decisions because they are ultimately who will keep your business growing and expanding into bigger and better endeavors. They believe in General Mills to make durable, high quality products and to make sure everyone gets value out of buying General Mills over another brand. Although, customers and consumers are somewhat in the same group they were separate because General Mills looks at consumers as anyone out there buying, even if they are not be buying their products. Customers are those specific consumers that buy General Mills over the competition, so they want the same thing any consumer does. Partners are a key stakeholder because General Mills believes it is important to treat everyone with respect and to act with integrity. Maintaining good relationships with suppliers and vendors is a key focus for General Mills; they want to make sure their success is a success for General Mills. Being able to keep all stakeholder’s in mind when making critical business decisions is very important, considering they too can be affected by General Mills mistakes. Fitting in with Partners are teams because they are also a crucial aspect of General Mills, their workforce contains diverse, committed and innovative groups of employees. They want their employees to learn and grow in their communities, while helping the business strive.
The obvious stakeholders in any business are the shareholders; they relate to a large amount of companies out there today. General Mills shareholders look to them to be superior in everything they do, constantly growing and gaining more market share. These shareholders have a huge stake in what decisions are made because they have the financial risk of being invested in the company, so if General Mills were to fail the shareholders lose money. Finally, the community is a key stakeholder because General Mills believes in making a positive difference in the lives of the surrounding community. The community will tend to be your best customers because people believe in shopping locally to help out their own community. General Mills gives back to the community by providing funding for community programs that will help improve the lives of the youth. They had a United Way campaign that totaled 6.8 million, the largest corporate contribution. General Mills focuses on programs that will help enrich the communities around their headquarters and manufacturing operations. General Mills believes in acting ethically in every decision they’re faced with. They hold themselves to the highest standards, and they expect the same from their partners. The make sure every day activities comply with the local or national law of the communities they operate in. They choose not to make promises they can’t keep because they don’t want to jeopardize that trust they have with their customers, partners, employees and consumers.
General Mills believes in keeping the workforce diverse, since they focus on innovation and new ideas, it’s key to have diverse employees. This is how they stay ahead of the market and are always able to provide customers with the latest and greatest in the food industry. They not only focus on workforce diversity, but they also strive for supplier diversity with almost a half a billion dollars going to minority and women owned businesses. General Mills believes by being diverse they have a competitive global advantage over other companies because they can understand and communicate with a range of diverse consumers.
In order to strive in the business world today, it’s important for General Mills to keep their key stakeholders in mind when making critical business decisions. For General Mills to stay ahead of their competition it is beneficial that they are diverse and understand how important it is to keep their competitive advantage and perform to the best of their ability. General Mills will be able to strive in these tough times and stay profitable, while still understanding what is important to run a successful business operation.

Sense In today’s economy, it’s hard to think that there are companies out there who are not facing problems with keeping their business alive and staying profitable. Considering the rising cost of ingredients and the recent acquisition of Pillsbury, it was somewhat surprising to find out General Mills is able to keep sales high. Despite their strong sales, General Mills profit fell 4% due to the increased cost of ingredients, like corn and oil, which are key ingredients for any company in the food industry. The higher cost of ingredients is causing General Mills to raise prices in grocery stores to make up the difference. Fortunately for General Mills, consumers are spending more of their food dollars in grocery stores rather than going out to restaurants. Another problem facing General Mills is the recent trouble they got into with the FDA because of the health claims made about Cheerios. General Mills capitalizes on the cholesterol lowering effects of the cereal, but the FDA feels if the cereal can deliver on those claims it should be considered a drug and not a cereal. In a letter from the FDA to Ken Powell, chairman and CEO of General Mills, they wrote: “Based on claims made on your product's label, we have determined that your Cheerios Toasted Whole Grain Oat Cereal is promoted for conditions that cause it to be a drug because the product is intended for use in the prevention, mitigation, and treatment of disease.” I found this very interesting because I never would have put cereal in the same category as prescription medication used to treat disease. General Mills responded by bringing to light the fact that the health claims made about Cheerios have been FDA approved for 12 years and supported by clinical studies. Although this is a serious issue, I did not feel it was the biggest problem facing General Mills. The recent acquisition of Pillsbury, in 2001, has brought about a $5.1 million debt that General Mills has inherited after completion of the merger. Along with the debt, comes the price to purchase Pillsbury at a hefty first payment of $642 million and an end total of $10.5 billion. The merger took longer than expected for both sides causing a number of jobs to become available, roughly 800 in Minnesota, according to General Mills spokesperson Tom Forsythe. Even with these jobs opening up, General Mills still foresees companywide layoffs of around 1,000 employees. With these factors in place, the large amount of debt will not negatively affect General Mills. General Mills believes this merger will save them $400 million by simplifying the business and of course, expansion into a new market. As of August 28, 2006, General Mills debt totaled $7 billion, while operating performance had improved with 7% in sales growth and 4% in volume growth (Bloomberg.com). Even with this growth, General Mills still needs to focus on improving its newly acquired Pillsbury division considering the weak performance. They have already had to shut down two separate plants, in Pennsylvania and Minnesota, due to weakening profits. With the new acquisition, comes a new set of key stakeholders. Keeping in mind all of General Mills stakeholders; consumers, customers, partners, teams, shareholders and community, then adding in the key stakeholders associated with Pillsbury, their customers, employees, suppliers and shareholders. General Mills now has a set of stakeholders to consider when making business decisions for the Pillsbury division.
Uncover
The top priority for General Mills should be revamping Pillsbury to increase its overall performance, and profitability. With the high cost of acquiring Pillsbury, they have created a large amount of debt that needs to be reduced in order to stay profitable. Although, by combing the sales of both companies they become more of a top competitor with annual sales reaching $13 billion and will become the third largest food company in North America and the fifth in the world. While the merger may not seem like an issue, since General Mills will now be able to capitalize on another product line that will add to their strong sales already, but this acquisition won’t come without hard work and new innovative ideas.
To combat the weak performance by Pillsbury, General Mills could use their highly creative workforce to launch a new product line for Pillsbury. They could also sell off or discontinue divisions of Pillsbury that are not bringing in high enough profits to stay in business. To avoid antitrust issues General Mills had already decided to sell parts of Pillsbury and its own Betty Crocker cake mixes, so they didn’t end up with over half the nation’s cake mix market (usatoday.com). The following sections will discuss the possible solutions for revamping Pillsbury and creating a profitable business. Edward Jones analyst Matthew Arnold said “As long as General Mills keeps coming up with new products, consumers won't mind paying the higher prices because they'll be getting something they perceive to be different or better.” This will make it possible for General Mills to stay profitable with the rising cost of commodities. Creating a new product with Pillsbury is a great opportunity for General Mills to test the waters in this new market endeavor. Not only will they be able to create more profits, but they will be able to see how well their innovative ideas fit in with the needs of Pillsbury customer’s. The next possible solution is to discontinue or sell off unprofitable product lines from Pillsbury. General Mills has already started doing some of this to avoid antitrust issues and to get rid of products that do not fit in with the new vision and goals of this new company. They plan to sell the “Green Giant” canned vegetable business because it does not coincide with the business they’re trying to become. They not only want to get larger, they also want to become more lean and efficient. To accomplish this they need to get rid of the “clutter,” to gain the high standards they strive to achieve. A final solution could be to offer more Pillsbury bake-off contests, this will give consumers creative ways to use their brand and increase sales by requiring contestants to use General Mills or Pillsbury products. By introducing General Mills into the contest, it provides contestants with a wider variety of products to use and gets consumers to associate the two businesses as one, instead of competitors. This will cause General Mills customers to trust the quality and value of Pillsbury products, since they already believe in the General Mills brand. These contests can also help the communities that General Mills operates in, considering that is one of their key stakeholders. This would be beneficial to the communities because each contest has a cash prize for the winner and those winners will most likely spend that money locally, helping the economy of those communities.
Solve
After considering the possible solutions that General Mills could implement to help with the inherited problems when the merger with Pillsbury became official in 2001. General Mills felt the merger would “deliver greater value to shareholders by delivering faster growth," Steve Sanger, CEO of General Mills, while Pillsbury thought it was great the company would stay local. While for both companies, the merger will create a lean, efficient and highly competitive new company, there is still a lot of work that needs to be done. That is why I am recommending General Mills use its talents and create a new innovative product line to increase profits for the Pillsbury division. The reason for not choosing the other two alternatives were, the first possible solution has already been implemented by General Mills and the second, may end up costing more than it’s worth. By slimming down the two companies, General Mills would be able to reduce costs and create a more efficient company. That is why General Mills is selling the “Green Giant” canned vegetables division of Pillsbury, General Mills’ Betty Crocker cake mixes and Pillsbury’s cake mix lines. This will boost profits and reduce the amount of “clutter.” As for the next solution, bake-off contests take time to plan, and are not a cost effective solution. Although, it could possibly increase the amount of products sold, I think there would be more costs than benefits to this solution and would be more work than it’s worth. In the end, creating a new product line is the best solution for General Mills and it coincides with the goals and values of General Mills. One of General Mills’ top four values is championship innovation, which means they believe in “developing and implementing innovative ideas to build [their] brands and drive [their] business,” (Generalmills.com). General Mills focuses on being diverse and innovative, in order to stay ahead of their competition, so it makes sense to recommend a solution that fits in with their values and business goals. Developing a new product takes time and money, but the end result will bring together the two companies in the minds of consumers and add value to General Mills’ stakeholders.

Build When making recommendations it is important to ensure the decisions you make are ethical, legal and feasible. If you don’t make ethical decisions, consumers will not trust your brand and in turn not buy your products. When General Mills and Pillsbury first opened their doors they held themselves to the highest standards in regards to personal integrity and ethical conduct. They hold everyone they work with to those same standards, so recommending a solution that is not ethical or legal would not be a feasible solution for General Mills. A new product line to create profits for the Pillsbury division fits the criteria for a good recommendation; it is ethical, legal and feasible. To determine the feasibility of a recommendation, it’s important to conduct a feasibility analysis by focusing on four dimensions; Economic, organizational, technological, and legal. Economic, do you have the funds to handle the solution? With combined sales of $13 billion dollars and $400 million in savings by combining companies, General Mills will be able to handle the cost of developing a new product line. With the cost of acquiring Pillsbury, General Mills may have to watch their spending for awhile to not slip into the red. To help with the cost of product development General Mills can use the money from selling divisions of Pillsbury to guarantee the success of their new company endeavor. The next dimension, organizational, deals with having enough people and the right knowledge to execute the solution. General Mills believes the key business strategy is diversity and using their employees’ differences to fuel their growth. Having creative people to create a new product line is not an issue for General Mills, but with recent layoffs the problem may be having enough creative people. Fortunately, the recent acquisition of Pillsbury has brought a new team of employees and bright minds to work for General Mills. I believe General Mills has the tools to create a new product and be successful. Thirdly, you need to have the correct, up-to-date technology to create and implement the solution. With the technological advances of today, I don’t foresee General Mills having any issues with not having the correct technology. They are ahead of the game and have the know-how to create the latest, most innovative products in the food industry. Finally, the solution has to be legal and cannot combat any existing contracts or agreements. When creating a new product line, General Mills has to be very conscious of the legalities associated with making a product. They have to be aware of any patents or copyrights other companies may have and not infringe on those rights. General Mills has to make sure the product they develop is different than anything on the market or they run the risk of being sued, if there are patents involved. As long as General Mills pays attention to the legal aspects of developing their product line, there is one less thing standing in the way of their success. After conducting a feasibility analysis, I believe the recommendation of creating a new product for the Pillsbury side of General Mills will help them grow and expand as a new company. Now that we have determined the solution of creating a new product line is both feasible and ethical, the next step is determining the steps needed to implement the solution.
Achieve
Product development is not an easy task that happens overnight, it takes a lot of planning, brainstorming and trial and error to find what works. It is important for companies to take advantage of the 90/10 rule of business, which means companies should always be spending 90 percent of the time planning and the remaining 10 percent implementing. Businesses that use this rule will be able to plan for a seamless implementation and avoid problems that could arise. In order for General Mills to succeed in this new business endeavor, they need to spend time planning for the future and what it has to offer this new dynamic duo. To start they will have to take the necessary steps to create this new product line to launch their new company. Product development involves 7 key steps, according to knowthis.com. Those 7 steps are idea generation, screening, concept development and testing, business analysis, product marketing mix and development, market testing and commercialization. The first step, idea generation, involves brainstorming and gathering ideas for new products. This can be accomplished in meetings, or focus groups with consumers to find out what they want or even better what they need. Another option is using surveys to gain a larger pool of data, or even contests to give consumers the chance to be part of developing a product that could end up in stores worldwide. This step is constant and can be ongoing to ensure every possible option is exhausted. Second, General Mills would need to screen the ideas generated in the previous step. By bringing those ideas in front of company personnel to weed out anything that is not feasible or innovative enough. This process will help narrow down the ideas to the most attractive options and then General Mills will be able to start estimating timelines, costs and t amount of resources needed. The next step involves taking those ideas and putting them to the test by putting them in front of consumers, with focus groups or board presentations. Getting feedback from people outside the project team is beneficial because they have the opportunity to speak their mind without having to worry about the risk of saying the truth. It also gives marketers a chance to find out who will buy this product, how often they might purchase it and find out how much they would be willing to pay. This step is crucial in making sure General Mills product will succeed and be a viable product. The fourth step involves analyzing the business, which involves a large amount of research. In this part of the process General Mills will determine if this product fits with their company’s mission and goals. This is where General Mills will begin to find out what is needed to move from an idea into a real product and start to plan for a budget. This step is very important because it will determine whether or not you have the resources needed for the end product. Step five fits in with this part of the process as well because it’s where you actually begin product development and decide on the marketing mix needed to sell the product. The final steps of the process involve market testing and commercialization, this is the point where General Mills will find out if their new product will be purchased by consumers. Market testing involves releasing the finished product to a small segment of the market to determine its success rate. Finally, General Mills would finish with commercialization. This means the product is ready to be released to a wider market, it has passed all the tests and is now considered a true product that will be successful and hopefully, profitable. In conclusion, the best solution for General Mills to fix the weak performance of Pillsbury is to create a new product line that will launch General Mills into a new market and gain a larger market share. This will increase profits and boost General Mills to becoming the third largest food company in North America, as stated previously. If they stick with the 90/10 rule, spending 90 percent planning and 10 percent implementing, they will be able to have a seamless release and avoid any complications that could ruin their new company.

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