Kepak and the Future of the Irish Beef Industry - Case Study Example

Kepak and the Future of the Irish Beef Industry Lecturer: Executive summary Kapok Irish Meat Company is an existing professional and dynamic company dedicated to the processing of beef. It has made a mark to be the third largest processor in the country. Kepak Meat Company has been established as partnership based corporation located in Ireland. The company is working hard to become the best in customer satisfaction. By leveraging well thought out strategies that will be bolstered and executed by a professional management team, the company is set to have overwhelming returns. The government has ascertained the development of the beef industry as a major boost to agriculture; nevertheless, the beef industry is greatly undermined by overcapacity and lack of beef farming structures. However, the company has come up with strategies that have improved the performance of the company in the market with the advent of new technologies and merging with major suppliers. Contents page. Introduction………………………………………………….. 4 Business environment………………………………………… 4 Current strategy………………………………………………. 6 Appraisals of strategy……………………………………….. 8 Conclusion…………………………………………………… 10 Bibliography…………………………………………………... 11 Introduction. The CEO is contemplating on the best means of positioning the company to for success. The company’s mission is to augment the competitiveness of the company while increasing its sustainability and developing marketing strategies to boost the growth potential in the industry. This includes innovation techniques to develop the new brands in the company. In essence, the company has considered techniques to prevail in the market giving the best to its customers. Business environment. Over the past one year, the company has thrived through a conducive business environment. The threat of backward integration of the buyer is low owing to the fact that a large percentage of the populace consumes the products. In 2011, the prices of the products increased by almost 30%, a move that more than doubled the returns of the company. The investment for fresh chilled Irish beef in Europe’s high quality market has cultivated remarkable success. Had these opportunities not been harvested the industry might not have been in the same place right now. In relation to the five forces in porter’s model, the company has been well protected by the European customer relationship from the vagaries of the open market. For instance, even though there was an economic recession in 2009 where there was a significant fall in the value of the euro, the company’s product prices only recorded a 10% decrease due to the direct access it has to major retailers and improved food products distribution channels throughout Europe. The company’s brand identity eliminates the challenges that come with getting enough shelf space allocation, as is the case with other suppliers. The penetratation of the company owing to supply power is the consistent supply of beef all year round during winter and summer as well with no deficit, a feature that is a prerequisite in maintaining major buyers. This erases the possibility for supply fluctuation, a move that may put your competitors at a better place to alter the company’s production costs. Inflation of red meat prices is a major threat to the sales of the company while at the same time faced with the stabilization of poultry prices(Agra Europe (London) Limited,(2008). This portrays the threat of substitution in this market environment. In unstable economic times, retailers are not able to push the prices of beef, as people may not buy the products. The key question would be, how sensitive is the company’s products to substitution from other products such as poultry and pork at low price levels? If low prices prevail at such a rate that the production costs keep up with the profit margins, the company will be operating at a recessionary context. In addition, the relationship between the beef processors and the farming organizations providing the carcasses has not been smooth. This has greatly undermined the cooperation between the two sectors in attaining consistent high quality. In recent times, beef farmers have been exporting live calves abroad so that they can be raised there to maturity, as it is more profitable to do so. Consequently, the volume available locally to the beef processors reduces adding on overcapacity issues and threatening the company’s legibility and reputation in supplying guaranteed quantity of their products to restaurant chains and European retailers. In addition, the product quality is reduced to the reduced beef supply since dairy cattle actually add on to the input proportion (Kepak Meat Company, 1996) Current strategy Several innovations have been embarked in the company including the development of An umbrella Irish breed brand to capitalize on dynamic consumer needs and sales of its unique products such as the Mexican burger and oriental spicy pork rib. An addition to these is the technology that made possible for the consumers to get fully cooked microwaveable burgers at Kepak Convenience food stores. Kepak’s success could be largely attributed to the commitment to the innovative technology it has adapted. He is also prospecting “co-opetition” in the industry and seeking to expand the company’s thriving convenience foods enterprise to other countries. Co-opetition is a strategy that allows the competitors to compete in some areas and at the same time co-operate with others resulting in increased markets. The company went in partnership with the Musgrave group. This partnership has benefited both parties, it has become the company’s bedrock as it supplies, pork, beef and lamb from the processing site to 459 stores in Ireland (Kepak Meat Company, 1996). Partnerships have been made to counter downward spirals related to the supply problems. The company introduced this program, which will see the farmer’s costs covered by the company and bonuses awarded to farmers that meet the proposed quality standards. This will increase the company’s supply power. The company has stabilized the prices across its markets since it is not economical to push the prices further through the market in these harsh economic times. Opportunities for any likely price increase in the market environment have been undermined by the consumer’s ability to pay more. The threat the company faces in the future years is if protein switching becomes a widespread phenomenon in the markets especially in South America. The key question here is for how long a deficit may prevail in the European and the international markets. Another threat to the company is the political and economic impacts on the supply and the demand for beef and its beef products in the markets. It is however possible that the Europe and international market conditions will support the buoyant prices. These prices may not necessary reflect profitable margins and hence the responsibility lies on the producers to rebalance the rebalance these values and it is for this reason that the company decided to invest in research. To be upfront in competitive rivalry the company has taken advantage of its volumes to be at its peak in technological developments and to sustain its competitive edge in the global market. The company has an array of developed ranges of savory products produced to the retail and favorable economic conditions, the brand identity prevails over the buyer power making it strong enough to resist any downward push of prices by consumers power. The company is renowned for its unique chilled meat brands. Consistent quality standards are mandatory to ensure that the customers are always satisfied. The company’s factories operate at environmentally friendly conditions. The recent years has seen the company reduce energy consumption by 13%, reduce water consumption by 21%, reduce carbon emissions by 12.5% and reduce water output by 9%. Competitors have failed to compete with these standards (Agra Europe (London) Limited, 2008). The Kepak beef processors success in implementing some of its current strategies is due to the approval it got from the Irish food board, for instance in initiating co-opetition. The permission was essential in pointing out a reason to overpower historical antagonism and eliminating the understanding, that co-operation with a competitor is a legal anticompetitive practice. Appraisal of the strategy The company has done excellent in highlighting the strengths of the company of their brands over the competitors in the market. The adaptation of the new technology has served to add value to the company’s products and has therefore given it an edge in the international markets satisfying the retail and the consumer markets as well as being a medium of economic growth through jib creation. Paying close attention to the marketing trends and promotional activities of other competitors has challenged the company to always convince the consumer of its better qualities. Projected sales at the end of the year are expected to rocket to £ 50 million by the end of this business year. It now dominates 38% of the market share in the UK.The value added has exponentially increased to £3 billion (Irish Meat Association, 1997). The development of the new brands and the subsequent success will serve as a benchmark for future fruitful prospects. The value of the output has increased reflecting the effective value chain of the company. With innovation, the value accrued from the sales of the developed products offsets the original costs for the business inputs (Watkins, 2004). The cooperation between the human resource department, the technology department and the sale & marketing department has been key to produce tangible profit margins. Owing to market assessment using pest analysis, the company is set to have reviewed its strategies and changed the company’s direction for the better. This is reflected in the changes in product development, research developments, trading policies etc. this analysis is vital as it provides a base for the evaluation of strengths, weakness, opportunities and threats analysis of the company. The effective promotional methods such as catchy adverts and tasting campaigns to suit their target markets to suit the target market create value to the products. The company invests a substantial amount in advertising to maintain the value of the product or service to the customers. The company’s workforce performance is exemplary and it can be attributed to the fact the workers are effectively trained and rewarded on merit. Employees are a significant source of value and hence the good working conditions provide a clear advantage in the output levels. While the advantages of cooperation within the organization need no clarification, the partnership with the different companies bolsters the returns massively. The partnership with other companies increased viability in the supply chains as the status of the premium product was improved. With this strategy, parties, the farmer and the processors mutually accrue benefit in terms of price and they mutually cultivate long-term future goals in the co-opetition. Conclusion. The strategies has led to an increased market return as the company penetrate more potential markets and accrue the benefits of shared economies of scale. Rather than collaborating with other companies to ensure their survival, Kepak Company is doing so take-to-take advantages of the international opportunities it presents. Consequently, the Irish beef industry has had major improvements (Irish Meat Association, 1997). The investment decisions the company has made coupled with the financial support it has received from the state has boosted the performance of the company. The Kepak company main objective is to maintain this performance consistently satisfying customers while ensuring that there is maximum distribution of the company’s beef products. Bibliography. Irish Meat Association. (1997). Going Forward In Partnership: Proposals By The Irish Meat Association Aimed At Addressing The Problems And Challenges Currently Facing The Irish Beef Industry. Dublin, The Association. Kepak Meat Company. (1996). Overview [Of The Irish Meat Industry. Dublin, The Association. Watkins, R. (2004). Secondary Red Meat Processing In Europe. Market Harborough, England, Nuffield Farming Scholarships Trust. Agra Europe (London) Limited. (2008). The Ec Beef Market: Surplus Or Shortage? Tunbridge Wells, Kent, Agra Europe (London) Ltd. Read More