SWOT Analysis of Packaged Food Industries in the United States
The companies in this industry exhibit a healthy an appealing image, which is attractive to their customer base. This is because of the growth of the premium and organic label foods, which aid the retailers who can present an appealing and high quality product to the consumers.
In addition, the industry has a high consumer penetration among the majority of the American population. This is because of the increased popularity in packaged foods by customers who prefer cooking meals at home and taking packed lunch to work (Daft 185).
The Industry also experiences a low cost of production because of the use of cheap and recyclable raw materials for the packaging process (Hill 19).
This United States based industry also has well trained, highly experienced and professional personnel who ensure that the quality of the finished product is high and acceptable to the customer base.
Lastly, this industry is highly flexible because it serves a wide variety of food products. For instance, they serve dairy products, fish products, poultry products among others. Flexibility is strength since the companies in the industry enjoy a wide customer base by offering different types of commodities to different groups of consumers.
This industry in the United States experience low demand due to the increase in many commodity prices. This is because of the global economy, which has started to grow again after the recession in America.
In addition, this sector in the United States experience a lack of proper branding since only a few food-packaging companies have popular brand names (Daft 185).
Lastly, the United States based industry experiences a competitive work force environment driven by dominant larger employers who diminish the ability of the companies in the industry to recruit and retain its employees.
This industry enjoys a positive boost due to the favorable change in the demographic conditions of the American population with reference to preference. In response to the growing health awareness, the packaged food industries are shifting focus to the increasing aging population by developing products that offer health benefits (Daft 185).
In addition, the United States based sector enjoys the benefits of the well-developed communication and transportation systems, which supplement their production and supply activities. This is due to the physical location of the industry in a developed nation as compared to packaged food industries in developing countries.
Moreover, the industry enjoys the benefits of the multiple advertisement channels created by the internet and television, which increases their marketing capabilities. This is mainly because the packaged food industries are acknowledging the importance of technological trends such as the social media. Most packaged food industries now have a facebook and twitter accounts that aid in marketing (Hill 48).
Lastly, this industry has experienced an increased foreign market, which increases the demand, and market for their finished products. Through importation of their products to foreign markets, the packaged food industry increases their profits providing room for investment and growth.
This industry in the United States experiences an unstable macroeconomic environment, which is owed to the recession and the slow economic growth in the United States. This environment is characterized by poor relationships between the food packaging industry and the government. This captures the interactions at both national and international level.
This industrial sector is also facing a threat from technological innovation in alternative packaging such as HDPE and polyethylene. These alternative methods of packaging act as competition to the industry (Daft 8).
Moreover, this industry faces a threat from the increased competition from foreign-based packaged food industries that produce their products at relatively low costs because of the availability of raw products in their physical locations. These industries include the Indian packaged food industry and the Chinese packaged food industry (Hill 47).
Furthermore, this industry in the United States is facing a threat from strict legislations and regulations put in place by the government. For instance, the United States Food and Drug Administration and the United States Department of Agriculture have strict regulations that increase the companies’ production costs during processing, packaging and storage of the packaged food (Hill 46).
In addition, this industry faces a threat from the high overhead expenses they incur during their production process (Daft 7). These overhead expenses include all operational expenses like electricity, employees’ salaries, bonuses, advertisement expenses, transportation expenses among others.
Lastly, this industry suffers a threat from the high corporate taxation imposed on them by the government. This high tax rates plays a role in the collapse of a majority of the companies in the industry. This is because the companies in the industry have no room to invest their profits and grow. This trend has contributed to companies in the American packaged food industry outsourcing their production activities to other countries in an effort to reduce the production cost.
Daft, Richard L, and Dorothy Marcic. Understanding Management. Mason, Ohio: Thomson/South-Western, 2006. Print.
Daft, Richard L. Organization Theory and Design. Mason, Ohio: South-Western Cengage Learning, 2010. Print.
Hill, Charles W. L, and Gareth R. Jones. Strategic Management Theory: An Integrated Approach. Boston, MA: Houghton Mifflin, 2010. Print.