Thomas J Lipton

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UVA-C-2125 PERFORMANCE MEASUREMENT AT THOMAS J. LIPTON As associate director of Financial Analysis for Thomas J. Lipton, Inc., Don Logan was contemplating the poor reception given to the latest changes in product line profit statements and the measures by which product line financial performance was evaluated. After working with his staff through the summer implementing the new system, Logan realized that many of the product managers, whose performance would be measured by the new system, did not understand it. Some of the product managers questioned the principles involved. Others wondered how the new system would affect their particular products. History of Thomas J. Lipton, Inc. Thomas J. Lipton, Inc., was established in 1915 in New York City as a tea-importing firm by Sir Thomas Lipton, a flamboyant multimillionaire tea merchant. After his death in 1931, a holding company owned by the Anglo-Dutch corporation Unilever NV purchased the company from his estate. The company grew and became one of the largest diversified food companies in the United States. Lipton’s stable of products consisted both of products developed internally and products that had been obtained through acquisition. The 30 product lines were divided into three operating divisions: Beverage, Food, and General Management. Lipton brands were among the leaders in tea, soup, and salad-dressing markets. Lipton was the dominant supplier of tea to the retail trade in the United States, and tea continued to account for over 40 percent of the company’s revenues. In the industry, Lipton had positioned itself in the growing market for convenience and instant foods. Looking toward the future, Lipton’s marketing strategy was to strengthen the position of its tea business and other segments in which the company held a dominant position. For product lines that were profitable, but whose growth prospects were

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