Question:
Tyson produced and distributed beef, chicken, and pork products in the United States. It acquired IBP, a major Competitor, but had been the subject of lawsuits by its Employees and the EPA. How should Management deal with its poor public relations and position the Company to gain and sustain Competitive advantage in an industry characterized by increasing consolidation and intense Competition?
Business strategy of Tyson food Inc is effective as they play an important role in the meat processing industry. Tyson is known as the second largest exporter of beef in US as well as their serving industries. The main competitor of the company is IBP. The company has taken acquisition strategy, integrating it with growth strategy. They have acquired their next competitor IBP Inc., which has affected their business revenue. As a beef packaging company, they have also added value to their value chain in the industry (Munro 2013). This strategy helped them immensely in making the business strong and vertically integrated as well as in forward integration. This is the main operational strategy that helps them in competing in the business. Going with their aggressive acquisition strategy, over the years they have also acquired Hudson Foods Inc., Garret poultry, Hillshire Brands and different Brazilian poultry business. Expanding in different key international places, they have also extended their branch in Tokyo, Shanghai, Moscow, London and Dubai (Sector Trend Analysis – Livestock and Meat Trends in the Gulf Cooperation Council Agriculture and Agri-Food Canada (AAFC), 2017). Their branch in Dubai is known as Gulf food and is sponsored by different Dubai originated organisations (Tyson Foods Inc. 2017). As a belonging to a food processing company and having the first mover advantage their products are also differentiated than the competitors. The corporate strategy includes growth in domestic value added chicken sales, food sales as well as enhancement in chicken production. Their corporate strategy also included innovation in processing mechanisms as well as increasing the innovation in packaging services. Increasing effectiveness in the customer relationship management and getting more consumer insights in their product and services should also be given emphasis in the new strategy. Cultivating the member’s and teams performance is also part of their corporate strategy.
Food industry analysis – Food industry is one of the most growing sector in the US as well as the international market. The domestic meat industry in UAE is not sufficient to meet the expectations of the industry. UAE is one of the fastest growing industries stimulated by their population growth, Urbanisation and rising incomes. In halal meat consumption, UAE is mostly noted in the international market. Though the population is less, it is also one of the most essential exporters of the halal meat from the Canadian livestock. As from the gulf corporation trends the beef consumption is high in the country Sector Trend Analysis – Livestock and Meat Trends in the Gulf Cooperation Council – Agriculture and Agri-Food Canada (AAFC), 2017.
Figure: Meat import trends in UAE
Source: Sector Trend Analysis – Livestock and Meat Trends in the Gulf Cooperation Council – Agriculture and Agri-Food Canada (AAFC), 2017
According to the report on the imports of the country US ranks fourth among the importers of the company. The main competitor of Tyson in exporting to UAE is Brazil and India. In poultry and frozen beef, United stated has acquired the third position in UAE.
SWOT analysis – Strengths – Tyson Food Inc. is one of the largest meat processing industries in US as well as in the international level. It also has strong position in the country and employs around 115,000 people. They also have 300 facilities in the company around US and abroad including Dubai. Their association with the largest brands of fast food sellers like McDonalds, KFC and Taco Bells has also provided them with a distinct competitive advantage (Tyson Foods Inc. 2017). The diverse group of supply partners are also strong advantage of the company (Johnson, 2017).
Weakness – The brand faces immense competition from the local competitors of meat producers and processors. They also have faced several lawsuits regarding water and air pollution. As the industry’s nature the wastage of the companies are harmful if not processed. Their air and water dumps were very harmful and they continued to dump the wastage harming the environment by the report of United States Environmental protection Agency (EPA) (Johnson, 2017). They also faced lawsuits in hiring immigrants without proper documents, which affected their face loss between the prospective workforce as well as the brand reputation. The company also has limited market share though being in the global market (Cavusgil et al., 2014).
Opportunities – the company is one of the most experienced in the industry but their branding activities are very less. The brand visibility is also less in the country. They can strengthen their relationship with their suppliers as well as with the purchaser like McDonald’s and Taco Bells. Associating with other global brands like Dominos and other bulk sellers of meat in the international market can provide a competitive advantage for the company. Their main aim to get involved in the common household kitchen also can be utilised as an opportunity (Cavusgil et al. 2014). There national food outlets and restaurant chains can also be used for increasing the profitability or brand awareness of the company.
Threats – the change in the customer preferences, vegans and their influence in other meat eaters are very harmful for the industry as well as Tyson. Economic fluctuations and fall in the prices of fast food can also affect the company’s bottom line (Johnson, 2017).
Corporate social responsibility -However, the company has been facing different lawsuits they have also invested in the different renewable energy projects. As after processing they are left with vast supply of fats and animals leftovers, they use it as a resource of Bio fuels. Their joint venture with ConocoPhillips to produce and use the biodiesels in truck fleets can also be used in the process, helping them save fossils fuels (Cavusgil et al. 2014). Tyson also contributed millions of dollars in the non-profit organisations and was listed among the Forbes magazine for their generous campaign all across America. They also contributed in the rescue mission campaign in Mexico. More than 8 million dollar was donated in the previous fiscal year through different hunger relief camp, health and nutrition camp, different sustainable agricultural projects, and community development projects of the company. This corporate social responsibility helps them in increasing sustainability, managing risk with compliance and strategic value creation (Pai et al. 2015). The philanthropic part like charities in this case is also part of the process. This thinks also helps them in maintaining a proper relationship with their suppliers as well as the customers. This also helps them in mitigating operational risk among the company.
The competitive advantages of the company are, their cost structure and investment decisions until now have proven to be efficient and added value for the company. The diversified suppliers chain and pricing mechanism has provided the company with certain advantages in increasing efficiency. Investing and acquiring companies in their forwardly integrated company made them effective in reaching to their customers. The retail chain and food service has upgraded their product mix strategy in the company. They are also into rapid innovation of their products and acquiring Hillshire brand for Category Captaincies. The company has also invested in the buy versus grow strategy in chicken processing. Their rapid quality improvement activities have helped them in value addition.
Growth through acquisition -The Company has used aggressive acquisition strategy over the years. They have strategically backwardly integrated with companies that have provided them with the proper supply chain advantage (Adamides, 2015). Their strategic integration with IBP Inc. was a better plan to reach the end customers as well as expanding while growing in the industry. Their ventures with the largest and established brands like McDonalds and KFC was part of their growth strategy. The company has also increased their service market in Hudson Foods, Garrett Poultry, Honey bear foods, Wright brand food Inc and several others. Having access to a huge asset, they have used that in biding and winning against their competitors like BEF-Brazil Foods, Pilgrim’s Corp and Cargill incorporated. Venturing with ConcoPhilips has also provided them with the proper strategic advantage of using the renewable Biodiesel for transportation.
Stakeholders Issues – The multinational corporation is one of the largest competitors in the industry. The internal stakeholders, for examples they maintain a proper relationship with their suppliers and employees. The company has faced several lawsuits for employing the immigrants without documents in the company (Rugman & Verbeke, 2017). Their steady corporate social responsibility activities have provided them with proper reputation among their customers as well as the suppliers. They were accused of being involved in employee abuse. The animal abuse was also major matter of killing in improper manner. These incidents affected the brand reputation of the company. Despite those incidents, they have a positive brand identity among their stakeholders. To eliminate the issues faced by the company, alleviating public relations in the media should be considered. First, a framework involving the planning should be strategized (Rugman & Verbeke, 2017). A proper way of handling is also through talking and maintaining the transparency. If there is some mistake that have occurred during any process, it should be acknowledged. Then a reform against the matter should be implemented. In this case, a standard procedure in employee rights and human rights should be implemented and made effective strictly for the office purpose (Adamides, 2015).
Political and legal trends -The international market of meat is growing though there have been a reduction in the red meat industry according the article published by Fortune’ Annual US meat consumption statistics. The poultry and chicken have shown steady growth in the country. The political trend in food industry is growing with no proxy for this kind of consumption (KPMG 2016 UAE Food & Beverage Report, 2016). There is no direct threat from the political aspect in this industry as the company is expanding towards the naturally processed chicken products. The market analysts have recognised that the big players in the industries are acquiring the small organic firms. The food should be labelled with the “healthy” and “safety” according to US food and drug Administration. According the Bioengineered Food Disclosure standard the genetically modified organisation used in the processing should be mentioned in the label and according to the law standard of USDA.
The social as well as cultural trends in this industry are tending towards using less or no meat in the recent years. Though there is no proper substitute of meat, any kind of meat is being rejected in small communities of vegetarian. People are getting more conscious about their health and their preferences are changing. The processed red meat sales are being declined in the international market according to the report published by WHO (World Health Organisation), though the US market independently showing no such trends and the sales are increasing comparing with the last year sales (KPMG 2016 UAE Food & Beverage Report, 2016).
The human resource strategy of the company is in need of evaluation as the company has faced an issue regarding the abuse of human rights in the office premise. The framework of the company’s human resource strategy is consisting of the societal factors including the code of conduct in the office premise (Silverman, 2016). Their standard procedures and organisational code of conduct is in need of reform to increase their brand reputation among the labour industry. The damage due to unsafe nature of work in the factory needs proper safety formulations by the human resource management, which would also help in increasing the proper environment for the company culture and environment (Pedersen, 2015). The high performance and proper adoption of leadership strategy is significant role in company culture and process of work.
Core Competency – The Company is long driven by their innovative strategies and were sustainable in implementing those strategies. Their different strategies also increased with their growth. The product differentiation, operational effectiveness, sustainable corporate social responsibility related strategies were some of the core competencies (Purce, 2014). They are also opening different branch in different key metropolitans in an international base. The recent venture in Dubai with gulf food poses a challenge as well as opportunities for the company. Their products are very different from their competitors. Their deliverables to their competitors are relevant. 21 % of their service is from the food service industry from retails and their restaurant chains (Silverman, 2016). The scalable supply chain management is also a part of their competitive advantage.
Evaluation and Control – The Company has gone by the Accelerate, Innovate and Cultivate international strategy while giving the value added product. They have also expanded in the international market (Purce, 2014). To evaluate their internal process and proposed strategies to alleviate their corporate culture, the process that can be suggested are reporting sessions after assessing the cultural environment, Collecting information on the change procedures should be given emphasis in this evaluation process (Tai & Chuang, 2014). The change management process can do the control of this new change. Communicating the new plan with the employees and then after implementation, the feedback should be taken by surveying the staff. This would also ensure the employees are in harmony with the company’s operational procedures (Appel-Meulenbroek 2014). As the company is operation from its headquarter in US, the central body should review the current procedures of code of conduct and address the need in all of its branches across the world.
References
Adamides, E. D. (2015). Linking operations strategy to the corporate strategy process: a practice perspective. Business Process Management Journal, 21(2), 267-287.
Appel-Meulenbroek, R. (2014). Modelling how to reach alignment with corporate strategy. Journal of Corporate Real Estate, 16(2).
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
Johnson, G. (2017). Exploring strategy: text and cases. Pearson.
KPMG 2016 UAE Food & Beverage Report. (2016). Retrieved from https://assets.kpmg.com/content/dam/kpmg/ae/pdf/kpmg2016_uae_foodandbeverage_report.pdf )(((((( (KPMG 2016 UAE Food & Beverage Report, 2016)
Munro, V. (2013). Stakeholder preferences for particular Corporate Social Responsibility (CSR) activities and Social Initiatives (SIs): CSR initiatives to assist corporate strategy in emerging and frontier markets. The Journal of Corporate Citizenship, (51), 72.7
Pai, D. C., Lai, C. S., Chiu, C. J., & Yang, C. F. (2015). Corporate social responsibility and brand advocacy in business-to-business market: The mediated moderating effect of attribution. Journal of Business Ethics, 126(4), 685-696.
Pedersen, E. R. G. (Ed.). (2015). Corporate social responsibility. Sage.
Puranam, P., & Vanneste, B. (2016). Corporate strategy: Tools for analysis and decision-making. Cambridge University Press.
Purce, J. (2014). The impact of corporate strategy on human resource management. New Perspectives on Human Resource Management (Routledge Revivals), 67.
Quer, D. (2015). International Corporate Strategy and Management. Unit 5: International Strategy in Different Contexts. Estrategia y Dirección Internacional de la Empresa.
Rugman, A. M., & Verbeke, A. (2017). Global corporate strategy and trade policy (Vol. 12). Routledge.
Sector Trend Analysis – Livestock and Meat Trends in the Gulf Cooperation Council – Agriculture and Agri-Food Canada (AAFC). (2017). Agr.gc.ca. Retrieved 27 November 2017, from https://www.agr.gc.ca/eng/industry-markets-and-trade/international-agri-food-market-intelligence/middle-east-and-africa/market-intelligence/sector-trend-analysis-livestock-and-meat-trends-in-the-gulf-cooperation-council/?id=1490119143313
Silverman, B. S. (2016). Resource redeployment and corporate strategy. Emerald Group Publishing.
Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.
Tyson Foods Inc. (Dubai Branch). (2017). Gulfood 2017. Retrieved 27 November 2017, from https://www.gulfood.com/exhibitors/tyson-foods-inc-dubai-branch
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