Introduction
The paper evaluates Perdue Farms’ family-owned food and agriculture company’s shift to antibiotic-free chicken processing. The findings of this probe will help the company management understand competitors in the poultry industry and find ways to navigate the market. Accordingly, the main aspects of the research will entail getting relevant information about the company’s roots, the enterprise background, the use of decision support tools to analyze its competitive position in the market, and offering recommendations to assist the managers in making improvements.
The first task involved searching for data on the company website regarding its vision and mission, target market, organization structure, and the main rivalries in the poultry reading and processing trade.
The second part of this paper entails a review of the operating environment and marketing dynamics using the SWOT and Porter’s Five Forces tools. SWOT analysis evaluates business entities based on strengths, weaknesses, opportunities, and hazards. It comprises gauging the performance of the enterprise relative to other players in the market and the advantage that keeps it afloat or impedes its existence. Porter’s model is applied in assessing competition in the industry, potential new entrants, power of consumers, superiority of suppliers, and risks of substitute products (Dobbs 33).
Finally, the recommendations and solutions suggest strategies to help the company outcompete rivals, sustain customer loyalty, expand its operations in the international market, diversify products, and broaden shoppers.
Background Analysis and Interpretation
Mission and Vision
A fourth generation of families owns American food and agribusiness company Perdue Farms. Its vision is to be the most trusted brand in foodstuff and agricultural products (Perdue Farms, “Company: Perdue Farms”). The enterprise has shown determination to become a household name in the sector by priding itself on being a leader in innovation. The company has kept on doing new things to get bigger and better since it commenced operations.
The introduction of the no-antibiotic program is in pursuit of their objective as a brand that consumers want: to provide the freshest-tasting, convenient, and reliable agronomic foodstuffs. Values core to the entity’s operations and future entail quality, integrity, teamwork, and stewardship. Its mission is to produce farm products and services that meet or exceed client expectations and have superior value. It also encourages collaboration and collection safety, including consideration for environmental protection and ensuring associates’ well-being and animal welfare.
Target Market
The farm’s intended market is price-insensitive clients, ranging from the young generation and millennials to children and low- and middle-class people who value superior natural foods. The consumer awareness of the hazards linked with the use of antibiotics, resulting in multidrug-resistant bacteria, by chicken suppliers led to an increase in foods devoid of booster medicine (Hoffman 6). In a Consumer Reports survey, 86% of respondents said local supermarkets should contain antibiotic-free chicken options, and over 60% agreed they would pay cents extra per pound for it (Hoffman 6). Therefore, Perdue responded to this shift in demand by offering antibiotic-free chicken brands.
Organizational Structure
The top leadership hierarchy of the entity comprises the Chairman, CEO of Perdue Farms, and President of Agribusiness. Other high-ranking officials in the company are the Principal Commercial Officer, Executive VP and Chief Financial staff, SVP of Corporate Communications, General Counsel, SVP of Specialty Meats and Emerging Brands, and Executive Vice President and Chief Human Resource person(see Figure 1) (Perdue Farms, “Leadership | Perdue Farms”). Jim Perdue, the founder’s grandson, is Perdue Farms ‘chairman and face.
Food Market Segment, Competition, and Niche
The enterprise marketplace division is a full line of poultry products and menu solutions for staple service operators. It includes independent restaurants, K-12 schools, military, college and university, and healthcare segments. The brand and products incorporate vegetarian-fed chicken and turkey with no antibiotics. The main rivals are the Pilgrim’s Pride, Tyson, and Sanderson Farms (Hoffman 4). Perdue Farm differentiates from others in the market by providing chickens fed on a completely vegan diet to ensure healthy and nutritionally balanced nourishment for purchasers. The move is aligned with consumer demands for antibiotic-free chicken products, a rising prospect with a massive market amidst increasing awareness of the adverse effects of medically boosted chicken. In the strategic group, Perdue Farms is the fourth-largest producer of raw chicken in the U.S., behind only Tyson Foods affiliates consisting of Holly Farms, Conagra Poultry, and Gold Kist.
Application of Decision Support Tools
SWOT Analysis
The main strength of Perdue Farms is transitioning to lactovegetarian chicken nutrition, eliminating antibiotics from its supply chain, and addressing consumer demand for antibiotic-free chicken products. With over 60% of buyers preferring nourishment services, the company offers affordable products, fast delivery, and strong message ads (Hoffman 6). Besides, the company has excellent customer service through 24/7 help on its websites and social networks, substantial brand equity, a strong distribution network, and significant investment in technology and innovation.
Second, the key weakness is attributed to the antibiotic-free strategy, which involves adjusting chicken living conditions, animal welfare practices, equipment installation, and increasing production costs and sales volume. The company’s vertical integration, except for beef, has significantly impacted sales and net income, with increased order taking in franchises and limited proper dine-in restaurants.
The third aspect is the opportunities, where Perdue’s market growth is driven by consumer behavior trends and willingness to pay extra for antibiotic-free poultry. The farm uses cognitive ads and financial reserves to expand globally (Newsmantraa). The company exports value-added brands and has opportunities to open franchisees and outlets (Doering). Finally, threats include emerging market players like Riceland Foods, Creekstone Farms, Dole, and fast cuisine chains that pose significant risks to the niche.
At the same time, major competitors like Tyson, Pilgrim’s Pride, and Sanderson Farms threaten to dominate (Hoffman 2). Besides, organic operations increase costs, and regulatory changes may introduce additional compliance requirements. The rating in Table 1 shows the relative weight of the SWOT component, where a 10 substantially impacts the business while one is less.
Table 1: Summary of the SWOT evaluation rating out of 10.
Porter’s Five Forces
Competition in the Industry
Porter’s five factors include competition, the potential of new entrants, the power of suppliers, the power of customers, and threats of substitute products; despite high profitability due to prime products, perdue faces fierce competition from larger producers like Tyson and Sanderson. The industry’s rapid growth and high differentiation make it a strategic concern. Consumers’ low switching costs make it easy to switch between offerings, and established market leaders make market share a primary fear.
Additionally, health policies and FDA regulations support this new trading model. Second, the profitable industry offers high chances of novel players, including restaurants, universities, and K-12 schools. However, Perdue’s high product differentiation and consumer preference for exclusive experience, value, and health may hinder first-hand players’ strength, as over 60% are willing to pay more for antibiotic-free poultry products (Hoffman 6). Third, supplier power in the industry has a low bargaining influence, but switching costs can be high for companies like Perdue.
Fourth, buyer power in antibiotic-free products is high due to market knowledge, standardized products, and differentiated products like Perdue deals, driven by brand positioning and unique qualities. Finally, cheaper products and services like KFC are always available in the poultry processing industry. Similarly, the mental switching costs of moving to substitute products, like cattle meat, are high (Hoffman 5). These substitutes provide the same or even better quality as Perdue Inc. provides. Table 2 shows the weight of each factor, where 10 means a high impact on the company while one is lower.
Table 1: Rating of the five aspects based on the investigation out of 10.
Porter’s Five Forces
Recommendations and Problem Solving
Solution Based on SWOT Survey
Perdue sells at higher prices, and purchase or sales volume depends on consumers’ willingness to absorb the cost of antibiotic-free poultry. The approach has significantly impacted the sales and net income compared to challengers. Perdue has already invested in agro-tech and innovations, which it can patent. Patenting innovations can ensure it remains economical and rises above other providers in the market. It can also help the company thwart the challenges of switching to antibiotic-free products, such as reducing losses due to health vulnerabilities linked with withdrawing antibiotics.
Another idea to help the farm minimize production costs is opening several outlets for the middle-income segment, especially in Asia and Europe. For example, the improving economic stability of consumers in the two continents can spread the buying power for its products, which also offers excellent market opportunities in other countries. Its excellent customer service, brand equity, and significant technology investment contribute to its success.
Widespread distribution will enable businesses to use economies of scale to reduce costs while providing cutting-edge services to attract more customers (Eckert et al. 681). Additionally, to offset rearing and other operating costs, the corporation could assist in financing upgrades for its suppliers, such as research and development and healthy growth enhancement procedures for chicks (Hoffman 7). The following is a list of the recommendations to solve the company’s logistics and operating issues coupled with shifting to antibiotic-free chicken products:
- Right-protect its agricultural tech and innovations to gain a competitive advantage.
- Opening outlets in the international market, such as Europe and Asia.
- Finance chicken production improvements for its suppliers.
Recommendations Based on Porter’s 5 Model
The entity can tackle competition, possibility of new entrants, supplier superiority, buyer power, and substitute products through the following:
- It can strengthen its brand loyalty by working on buyer relationship management. Accordingly, improving consumer relations will raise the psychological switching cost. It also entails signing long-term contractual liaisons with distributors to expand access to the intended niche.
- The enterprise can sometimes investigate collaboration with competitors for mutual benefits. For example, ways to comply with governing policies through collective bargaining to establish a conducive merchandising environment. The regulations should be binding for all players in the market to create an even playing ground.
- The firm should explore additional suppliers to avoid dependency on a few contractors and amplify price sensitivity. Establishing relationships with suppliers from different regions is important because it improves the supply chain efficiency.
- Increasing and diversifying the purchaser base will help the company manage its bargaining power. For instance, it can introduce novel products that pursue the emerging market sector and apply diversification strategies. Low-calorie meals can be considered to offer healthier alternatives that complement the main product to attract a broad clientele base.
Works Cited
Dobbs, Michael “Guidelines for Applying Porter’s Five Forces Framework: A Set of Industry Analysis Templates.”Competitiveness Review, vol. 24, no. 1. 2014, pp. 32–45. Web.
Doering, Christopher. “Perdue Farms’ Secrets to a Century in Business.” Food Dive. 2020. Web.
Eckert, Stefan, et al. “Economies of Scale: The Rationale Behind the Multinationality-Performance Enigma.” Management International Review, vol. 62, no. 5. 2022, pp. 681–710. Web.
Hoffman, Andrew. ” Perdue Farms Inc.: Antibiotic Use in Hatcheries.” Harvard Edu. 2015.
Newsmantraa. “Hams Market Size Research Report 2022 by Competitive Vendors in Top Regions and Countries, Development Trends, Threats, Opportunities and Forecast to 2028- JBS, WH Group Limited, Kraft Heinz, Tyson Foods, Perdue Farms Inc.” Digital Journal, 2022. Web.
Perdue Farms. “Company: Perdue Farms.” Perdue Farms. Web.
Perdue Farms. “Leadership: Perdue Farms.” Perdue Farms. Web.