United Cereal

United Cereal faced the highly competitive in European market, their profitability depended on efficiently operating and managing materials costs. Owning to the different cultural habits and tastes across European market, each country subsidiaries responded to the local market by customizing their own product which stimulated the sales volume but lead to a higher SA&G expense than in the U.S. operations. In order to fix operating problems, Brill made the Eurobrand proposal to improve the margins and she built up Eurobrand team who could help to develop strategies for European brand.

If I were Lora Brill, I would launch Healthy Berry Crunch as a standalone product in France. Since that the concept of Eurobrand was still at the early stage, launching new product could lead to negative impacts for organization. In addition, separating new product from launching Eurobrand, UC could be benefited from long-term perspectives.

To begin with, the customers in France showed interest in healthy breakfast foods for United Cereal, as a new entrant in the new segment could be benefited from this niche market. Then, the competition is relatively low because there’s only Kellogg’s Special K with Strawberries had been launched in 2006. Furthermore, based on test results of raspberry-based product showed that in France there’s 64% of UC’s target customers were willing to repurchased the product, the index was above UC’s 60% minimum target. Finally, the other reason is that France is UC’s second-largest European market, launching new product would give United Cereal a strong market penetration.

However, the test is only be taken in France, though consumer tastes are converging, it is still hard to say that the consumer across Europe would widely accept the new product like French did and convince other country subsidiaries to executive the project. Besides, the cost is much higher than budget for other subsidiaries. According to the case, it would cost at least $20 million in France, but the Spanish subsidiary was still in recovery from the recession, they were struggling in budget and would not take any risk to launch the new product which didn’t follow UC way to do full-scale test market. So Healthy Berry Crunch should launch standalone in France rather than be the first step to a Eurobrand product.

It seems that it would be hard to corporate with other country subsidiaries initially; however, Eurobrand need to be launched eventually. For the UC’s long-term development in European market, coordinate country subsidiaries might help to enhance UC’s competitiveness in Europe. To implement the Eurobrand, United Cereal should deal with some problems that rooted in European organization at first. One problem is that country managers were mandate to maximize the subsidiary’s local profit. Country managers were giving the leadership of cross-functional team, they might exploit their