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...es those costs onto consumers, thus making Perdue Farms’ products more expensive. Excess capacity in the industry has created downward price pressures, making it more difficult to get higher prices for premium products. Opportunities • Prepared and frozen products – The prepared and frozen market segments are expected to grow, while the fresh poultry market has peaked. • Food-service segment – The food service segment is 50% of total poultry sales, while Perdue Farms sells only 20% to this segment. Historically, the food service segment has not been brand conscious, but has been cost-conscious. However, consumers are becoming increasingly-busy as well as conscious about the quality of their food. • International expansion – In 2000, the Perdue Farms international sales market segment accounted for more growth than any other segment – 64%, and was expected to continue to grow. Many consumers in foreign countries prefer red meat over white meat favored by American consumers. In addition, consumers in certain countries such as China consume parts of the bird that are not permitted by the FDA to be sold in the U.S. Purdue Farms can take advantage of these circumstances and establish further operations abroad. • U.S. expansion – Currently, Perdue Farms has a limited presence in the U.S., which leaves much of the U.S. left to be explored. Many poultry processors are concentrated in certain areas of the country. Therefore, exploring other markets could mean a significant gain in market share. Moving production to other areas of the country could also mean significant cost savings due to the differences in the cost of labor, resource costs, and the cost of complying with federal and state environmental laws. Threats • International expansion – Purdue faces a threat from the lack of knowledge about the economy and regulations in foreign countries, from insufficient facilities and transportation available in foreign countries, as well as from foreign government corruption. Additionally, import duties and taxes hinder profitability when dealing with foreign markets. • Current marketing strategy - The current marketing theme may be inconsistent with a need to expand into value-added products, where growth is anticipated. Previously, Perdue Farms marketed products as “fresh young chickens”. This could mean that the meat is unprepared and is not ready to be served. • Decline in the poultry market – Analysts observed that the overall poultry market has slowed, posing a threat to every company in the industry. • Environmental regulations – Environmental issues pose a threat to the poultry industry as a whole. Advocates of the cause claim that growing, slaughtering and processing poultry is dangerous to workers, inhumane to the poultry, and bad for the environment. One of the major concerns is the excess of nitrogen and phosphorus in manure which can create a phosphorus runoff, threatening nearby bodies of water. While Perdue Farms instituted various overseeing and prevention measures, stricter regulations could pose a threat to the entire poultry industry. STRATEGY Perdue Farms employs a differentiation strategy with an emphasis on providing products of the highest quality, and on granting superior levels of customer service. Perdue Farms wishes to become indispensable to consumers by taking cost out of the product and delivering the product when and where customers want it, exactly the way customers want it. Perdue Farms has been extremely successful in providing quality products to consumers. Over time, the company has not lost its focus and has continued to employ higher standards than any company in the industry. Continuous R&D efforts, and technological strives have all aided in the process. Additionally, Perdue Farms has realized that the key to quality production are happy, healthy, long-term employees. In support of the strategy, Perdue Farms has become more decentralized, and allows employees to participate in day-to-day decisions. Furthermore, Perdue Farms instituted educational, training, and health programs to better employees’ economical, social and physical well-being and to reduce turnover. While Perdue Farms has had much success in production, distribution, and sales of quality poultry products, the company has yet to do all it needs to in order to become indispensable to consumers. Industry trends show that demand for whole birds has declined, while the demand for further-processed and value-added products has increased. While these segments are forecasted to have highest growth, Perdue Farms has yet to establish a solid entry into these markets. Furthermore, Perdue Farms only sells its products in certain areas of the U.S., ignoring potential customers and their needs in other areas of the country, such as the Upper Midwest. STRUCTURE AND CONTROL SYSTEMS Prior to 1990s, Perdue Farms’ organizational structure was very centralized. Decisions were made only by the CEO and by senior executives. As Perdue Farms expanded both geographically and in product-lines, it was necessary to create separate business units which operated independently. When Jim Perdue became CEO, he gave more decision-making power to the employees. Decentralization is important when a company is operating within multiple business areas. It allows each area to operate efficiently, having the power to make decisions without the need for approval for every step taken. Further decentralization may be necessary as expansion continues. ALTERNATIVES In order to respond to the challenges of the 21st century, Perdue Farms can make several strategic moves. The company can pursue domestic expansion, international expansion, or product-line expansion, and it can strengthen the food-service market segment. International expansion can be achieved by exporting, or partnering with or acquiring companies overseas. While a partnership or an acquisition can aid in lack of knowledge of the foreign country, the threat of corruption and of reduced profits due to trade barriers still exists. Entering a foreign market requires extensive research and resources. Potential benefits may not be enough to veer this threat. Product-line expansion could include healthful products and other value-added products that may be of interest to consumers. However, in order to undertake this expansion, Perdue Farms will need to overcome the image of a company that sells unprepared whole chickens. To do this, a new marketing campaign will need to be developed to steer the consumer away from this image. While this step is one that Perdue Farms should consider in the future, it requires an entirely new direction, which may take a long time to establish. Furthermore, Perdue Farms has several lines of value-added products already in supermarkets, and the company should promote those products and should monitor their sales. RECOMMENDATION To respond to market changes and ...