Businessmodel of General Mills

Customer Segments

General Mills has a segmented market business model, with customer groups that have different needs. The company targets its offerings at consumers and businesses such as foodservice firms.

Value Proposition

General Mills offers three primary value propositions: innovation, risk reduction, and brand/status.

The company embraces innovation in its product development process. It maintains a formal approach called “Innovation Intersection” that connects its employees with academics, inventors, suppliers, entrepreneurs, and consumers as a means of generating cutting-edge ideas. It also operates the General Mills Worldwide Innovation Network (G-WIN) open innovation program, which partners with start-up accelerators and renowned innovators to identify advanced food technologies.

The company reduces risk by maintaining high quality and safety standards. It adheres to the following objectives for product improvement in order make its foods healthier for consumers:

• Reduce fat, trans fat, saturated fat, calories, sodium or sugar by 10% or more
• Increase beneficial nutrients such as vitamins, minerals, and fiber by 10% or more
• Formulate products to include at least a half-serving of fruit, vegetables, whole grain, or low/non-fat dairy
• Formulate/reformulate products to meet specific internal requirements, including limiting calories, and meet nutrition or health claim criteria as defined by the U.S. FDA General Mills maintains “Health Metric”, an initiative established to measure its progress against these goals. Since 2005, more than 1,000 of its U.S. retail products have met the criteria. Health Metric was developed by the General Mills Bell Institute of Health and Nutrition, which works with leading university scientists worldwide to advance health and nutrition research.

The company has established a powerful brand due to its success. Its products are marketed in over 100 countries on six continents and it is a part of two joint ventures that market foods sold in over 130 countries. It oversees many well-known brands, including Gold Medal flour, Cheerios cereal, Betty Crocker baking products, Yoplait yogurt, Green Giant vegetables, Nature Valley, and Pillsbury refrigerated dough. Many of these hold #1 or #2 standing in their respective markets. Lastly, it has won many honors, including the following:

• Ranking on the Best Corporate Citizens list (No. 39) by Corporate Responsibility (2015)
• Recognition as one of America’s Most Reputable Companies (No. 7) by Forbes magazine (2014)
• Ranking as one of the 100 Best Companies to Work For by *Fortune *magazine (2014)
• Ranking on the DiversityInc Top 50 Companies for Diversity List (2014)
• Ranking on the Global 100 Most Sustainable Corporations list by Corporate Knights (2016) ### Channels

General Mills’ main channels for consumers are retailers such as grocery stores, mass merchandisers, membership stores, natural food chains, drug/dollar/discount chains, and eCommerce grocery providers.

Its main channel for businesses such as foodservice distributors and operators, restaurants, and convenience stores is its direct sales team. The company promotes its offering through its website, social media pages, advertising, and participation in conferences.

Customer Relationships

General Mills’ customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

General Mills’ business model entails designing, developing, and manufacturing its products for customers.

Key Partners

General Mills’ key partners are the suppliers who provide it with raw materials for use in the manufacture of its products. Most suppliers are located in the U.S. and are given access to resources through the Supplier Connect Portal on the company’s website. The main raw materials it uses are grains, dairy products, vegetables, fruits, meats, vegetable oils, and other agricultural products.

General Mills also relies on various types of retailers to distribute its products to consumers.

General Mills also maintains trading partners with whom it engages in the transfer of data in support of integrated business-to-business processes. This results in faster process cycle times.

Lastly, General Mills operates 301 Inc., a program through which it supports emerging food brands that offer a promising product and a good fit through investments and expertise.

Key Resources

General Mills’ main resource is its intellectual property. It maintains valuable trademarks for its wide variety of prominent brands. The company also depends heavily on physical resources in the form of its 59 manufacturing facilities that produce food products.

Their global presence is as follows: 30 in the United States, four in Greater China, two in the Asia/Middle East/Africa region, four in Canada, 10 in Europe/Australia, and nine in Latin America/Mexico.

Cost Structure

General Mills has a cost-driven structure, aiming to minimize expenses through low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing, administration, and research/development, all fixed costs.

Revenue Streams

General Mills has one revenue stream: revenues it generates through sales of its products to consumers through retail channels and to businesses through its direct sales team. For businesses, sales typically occur through the signing of long-term contracts.