Brasil Food Case - Corporate Strategy
Essay by Alejandro Arenal • November 24, 2016 • Case Study • 2,584 Words (11 Pages) • 1,807 Views
Eugenio Cellie, 401842
Luca Cesari, 401843
Steffie Le Benezic, 401706
Mariel Toledo 142092
Alejandro Mijares 401367
Abdelrahman Bernaoui 402175
Brasil Food Case
1a. Five force analysis of the Fresh meat industry and the processed product industry.
Fresh Meat segment | Processed Product segment | ||
Supplier | Medium-low | -Fluctuating price of the cereals for rearing -Strong requirement to meet ethical product -Technology in meat genetics -US visa would increase bargaining power rely on Canada, Mexico etc. | -Global expansion to emerging economies -Production control |
Buyer | Medium | -Higher prices of the meat today (inflation) -Negotiation of the prices rely on the volume engaged | -Food safety issue -Strong segmentation in retail market between premium, mid-range and commodity products from retail and specialist butchers. |
Competitive rivalry | Medium – Low | - Land belong to the big industrial who dictate breeding and manufacturing method procuring product needed. The wage is imposed by them. | - Politics of acquisition of small brand - US rivalry in terms of volume production |
Threat of substitution | Medium -high | -Importance of the GMO (genetic modify organism) -Heathy products | -Growing Organic Food Market and customer preferences for quality and convenience food |
Threat of | High | -High capital investment to do -Increase of the income in Brazil -Certification and labels needed (ex: COC – controlled origin certification) establish the access to local and international market. | -High capital investment to do -Increase of the income in Brazil |
Key factors of success of Fresh meat industry and the processed product industry.
Fresh Meat industry - VRIO Analysis | |||||
Valuable | Rare | Imitable | Org. Expl. | Implications | |
Low production cost | YES | YES | NO | YES | Economy of sale => Sustainable Competitive Advantage |
Vertical integration | YES | YES | YES | YES | Traceability = Sustainable Competitive Advantage |
Diversification of meat production | YES | YES | YES | YES | Sustainable Competitive Advantage |
High installed capacity | YES | YES | YES | YES | Sustainable Competitive Advantage |
Product processed industry - VRIO Analysis | |||||
Valuable | Rare | Imitable | Org. Expl. | Implications | |
Low production cost | YES | YES | NO | NO | Economy of sale => Sustainable Competitive Advantage |
Global commodities chain | YES | YES | YES | YES | Sustainable Competitive Advantage |
Efficient network (alliances between own brand + strategic location) | YES | YES | YES | YES | Sustainable Competitive Advantage |
Value added food and safe product | YES | YES | YES | YES | Sustainable Competitive Advantage |
Both segments are really linked because of the integrated supply chain of the fresh meat and processed product industry. The big industrials dictate the method of production, provide producers and manufacturers and impose the salary rates (Production costs are estimated to be 60% lower than in Australia and 50% than in the US.). Moreover, the diversification of meet (Poultry, pork and beef) permit a good allocation of the resources and the installed capacity in Brazil. All this practices of cost optimization create a unique governance in the domestic market, but thanks to exportation it stimulates and permits transferal of best practices and that allows a full compliance of the food standards. For foreigner producer of meet it would be preferable to make business with this big Brazilian firms who are already inserted in the strategic Brazilian network and have the proper installed capacity. For example, the French company DOUX tried to implement itself in brazil but this drove him into the ground.
1c. Analyze Brazil food key sources and competitive advantage in the Brazilian market. What is the remain strategy of Brazil foods in Brazil? Is it based on cost or differentiation?
The Company has an agreement with Perdigão, The fusion of the business of Perdigão and Sadia will lead to the formation of BRF—Brasil Foods S.A. (the new name for the combined company). The General strategy of the company consists of using competitive advantages as a low-cost producer of food in large scale to increase the return on invested capital and continues to grow in a sustainable way in the coming years. They intend to continue strengthen their global distribution network and client base, providing a portfolio of diversified, innovative products directed at the market and supported by strong international and local brands. The main elements in their strategy are the following:
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