Case Study Description of Friona Industries: Delivering Better Beef
CEO James Herring of Friona Industries, a leading U.S. cattle feedlot operator, has a history of leadership in the highly fragmented and often contentious U.S. beef industry. Friona has established relationships up and down the beef production chain to provide high-quality, consistently tender beef that consumer's value. In 2005, Friona is partnering with Cargill, the leading U.S. meatpacker, to produce private-label beef products for grocery retailers such as Harris Teeter and Safeway. Will the introduction of high-quality, reasonably priced beef lead to higher sales for the retailer and ultimately stronger margins for Friona?
Authors :: Ray A. Goldberg, Mary Shelman, Carin-Isabel Knoop
Swot Analysis of "Friona Industries: Delivering Better Beef" written by Ray A. Goldberg, Mary Shelman, Carin-Isabel Knoop includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Friona Beef facing as an external strategic factors. Some of the topics covered in Friona Industries: Delivering Better Beef case study are - Strategic Management Strategies, Customers, Joint ventures, Mergers & acquisitions and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Friona Industries: Delivering Better Beef casestudy better are - – cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions,
there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Friona Industries: Delivering Better Beef
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Friona Industries: Delivering Better Beef case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Friona Beef, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Friona Beef operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Friona Industries: Delivering Better Beef can be done for the following purposes –
1. Strategic planning using facts provided in Friona Industries: Delivering Better Beef case study
2. Improving business portfolio management of Friona Beef
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Friona Beef
Strengths Friona Industries: Delivering Better Beef | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Friona Beef in Friona Industries: Delivering Better Beef Harvard Business Review case study are -
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Friona Beef digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Friona Beef has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Sales & Marketing field
– Friona Beef is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Friona Beef in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Friona Beef has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Friona Industries: Delivering Better Beef Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Learning organization
- Friona Beef is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Friona Beef is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Friona Industries: Delivering Better Beef Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Friona Beef has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Friona Beef has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Sales & Marketing industry
– Friona Industries: Delivering Better Beef firm has clearly differentiated products in the market place. This has enabled Friona Beef to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Friona Beef to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Friona Beef in the sector have low bargaining power. Friona Industries: Delivering Better Beef has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Friona Beef to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Friona Beef is one of the leading recruiters in the industry. Managers in the Friona Industries: Delivering Better Beef are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Friona Beef is present in almost all the verticals within the industry. This has provided firm in Friona Industries: Delivering Better Beef case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Organizational Resilience of Friona Beef
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Friona Beef does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Friona Beef has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Friona Beef has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Friona Industries: Delivering Better Beef - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Friona Industries: Delivering Better Beef | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Friona Industries: Delivering Better Beef are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Friona Industries: Delivering Better Beef, in the dynamic environment Friona Beef has struggled to respond to the nimble upstart competition. Friona Beef has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Friona Beef supply chain. Even after few cautionary changes mentioned in the HBR case study - Friona Industries: Delivering Better Beef, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Friona Beef vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Friona Beef, firm in the HBR case study Friona Industries: Delivering Better Beef needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Friona Beef has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, Friona Beef has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Friona Industries: Delivering Better Beef HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Friona Beef has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Friona Industries: Delivering Better Beef, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Friona Beef products
– To increase the profitability and margins on the products, Friona Beef needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Friona Industries: Delivering Better Beef HBR case study mentions - Friona Beef takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Friona Beef has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Friona Industries: Delivering Better Beef, is just above the industry average. Friona Beef needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Friona Industries: Delivering Better Beef | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Friona Industries: Delivering Better Beef are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Friona Beef in the consumer business. Now Friona Beef can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Friona Beef can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Friona Beef can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Friona Beef to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Friona Beef has opened avenues for new revenue streams for the organization in the industry. This can help Friona Beef to build a more holistic ecosystem as suggested in the Friona Industries: Delivering Better Beef case study. Friona Beef can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Friona Beef has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Friona Industries: Delivering Better Beef - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Friona Beef to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Friona Beef to increase its market reach. Friona Beef will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Developing new processes and practices
– Friona Beef can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Friona Beef can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Friona Beef can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Friona Beef can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Friona Industries: Delivering Better Beef, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Friona Beef in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Friona Beef can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Friona Industries: Delivering Better Beef External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Friona Industries: Delivering Better Beef are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Friona Beef with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Friona Beef.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Friona Beef needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Environmental challenges
– Friona Beef needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Friona Beef can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Friona Beef business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Friona Beef needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Friona Beef can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Friona Beef in the Sales & Marketing sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Friona Beef high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Friona Beef has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Friona Beef needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Friona Beef demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Friona Industries: Delivering Better Beef Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Friona Industries: Delivering Better Beef needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Friona Industries: Delivering Better Beef is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Friona Industries: Delivering Better Beef is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Friona Industries: Delivering Better Beef is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Friona Beef needs to make to build a sustainable competitive advantage.