Critically examine the main issue that undermines the relationship between Heinz and McDonald’s

BUS4004 2020-21 Semester

Two Final Assessment: An Individual Take-Home Exam

Case Study Instructions Answer ALL questions. Start each question on a new page. Keep the answer to each question within 1,500 words in double line spacing. Put a reference list on the last page. State your name, student ID, class session, and group number on the cover page. Upload answers to a folder of Final Assessment in Veri Guide before 15 May, 6:00pm.

1 Read the case below on the world’s largest restaurant company. Answer ALL questions. McDonald’s Squeezing out Heinz Ketchup. McDonald’s confirmed that it has started the process of moving to other vendors, following the appointment of former Burger King Worldwide CEO Bernardo Hees to run Pittsburgh-based H.J. Heinz Company. Mr. Hees also serves as vice chairman of the board of Miami-based Burger King. “As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time,” according to a statement from Oak Brook, Illinois-based McDonald’s. The decision appears to put an end to a years-long push by Heinz officials to regain ground with the restaurant giant that operates more than 34,000 locations around the globe, although most American customers buying Big Macs aren’t getting Heinz ketchup with their fries anyway. McDonald’s had soured on Heinz once before, back in the early 1970s. The Pittsburgh company had 90 percent of the business supplying ketchup and pickles to the fast-growing chain, according to author John F. Love’s 1986 book, “McDonald’s: Behind the Arches.” After Heinz couldn’t meet McDonald’s need for ketchup as a result of a tomato shortage, the restaurant chain took most of its business elsewhere. This time around, the split is more about the people than the product.Heinz was acquired this year by a partnership of 3G Capital and Warren Buffett’s Berkshire Hathaway. Mr. Hees is a partner in 3G Capital, which acquired Burger King a few years ago. For Heinz, the impact of McDonald’s decision will likely be seen more in international markets. “It’s a global transition to other suppliers. Heinz was only used in two markets in the U.S.,” said Lisa McComb, Director of McDonald’s U.S. media relations. In this country, Heinz ketchup has been served in McDonald’s restaurants only in the Pittsburgh and Minneapolis markets. But Heinz had been gaining ground in some other markets. In the U.S., other fast-food operators such as Wendy’s and Chick-fil-A use Heinz’s Dip & Squeeze portion-controlled ketchup servings.A Heinz spokesman did not respond directly to McDonald’s statements, but reiterated comments made last month on the issue. “As a matter of policy, Heinz does not comment on

2 relationships with customers,” said Michael Mullen, senior vice president of corporate and government affairs. “All our food-service customers globally remain valuable to the company and are an important part of what has made the H.J. Heinz Co. what it is today. We continue to operate respecting every customer while upholding the high level of confidentiality and business ethics that the H.J. Heinz Company has built with our business partners over the years.”

1.Is ketchup a commodity? (15 marks)

Critically discuss the marketing options available for Heinz to differentiate its ketchup with other suppliers in business markets. (35 marks)

2.Critically examine the main issue that undermines the relationship between Heinz and McDonald’s. (30 marks)

How can the supplier retain the relationship with the buyer? (20 marks)- END OF PAPER –to-Business Marketing

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Answer Excerpt

BUS4004 2020-21 Semester Two Final Assessment: An Individual Take-Home Exam Case Study Instructions Answer ALL questions. Start each question on a new page. Keep the answer to each question within 1,500 words in double line spacing. Put a reference list on the last page. State your name, student ID, class session, and group number on […]



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