Strategy and bargaining power - food for thought

Another blog hat tip - this time to Stephen Andrew at Vardean for spotting this excellent strategy case study from the Economist in Feb 2011. It briefly analyses the strategic position of Northern Foods, a UK-based food manufacturer that has built its business around supplying own-label processed food products (e.g. ready meals) for the supermarkets. As Stephen points out, the article works well for a business lesson in many ways, including capacity management,reasons for M&A, supplier relationships, profit margins. It is also a great example to use when explaining Porter’s Five Forces Model, using the references to the different bargaining power wielded by the major supermarket groups and by multinational food brands like Nestle and Kraft.