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Case: Perdue Farms, Inc.
Case: Perdue Farms, Inc.

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Perdue Farms, Inc., has been a privately held family owned company since 1920. Over the years Perdue has become vertically integrated in order to be more competitive and maintain financial stability. Perdue’s objective is to be the leader in broiler and related poultry products in the industry. They strive to maintain quality and constantly improve efficiency and service, both today and in the future.
Perdue Farms Inc. has a mission to provide the highest quality poultry and poultry related products to retail and food service customers. They want to be the recognized industry leader in quality and service, providing more than expected from their customers, associates, and owners. They will accomplish this by maintaining a tradition of pride in their products, growth through innovation, integrity in the management of their business, and commitment to Team Management and the Quality improvement process.

Perdue’s overall mission is strong but a strategy for long term growth and market development needs to be reviewed and evaluated.

Perdue Farms Inc. has numerous external opportunities and threats. The external opportunities that effect Perdue are as follows;
To broadly diversify and have greater market share, domestically and internationally
To increase marketing of healthy image products that envelops a strong niche market.
To ship via plane, to maintain fresh not frozen broilers and increase market share and penetration.
Develop new markets in the Upper Mid-west to increase market share.
Increase sales of food service chicken and turkey from 20% of overall sales to 30% due to a strong 12% growth rate.
To expand the international grain and oilseed market
With an increase push on health in 1994, chicken sales are up over red meat sales.
Average annual consumption of chicken is up to 80lbs/person/year, an all time high.
The external threats are as follows:

Most of the competition sells frozen products for less money.
Perdue’s cost to raise chickens is above the national average.
Growth rate in chicken sales is only 5% due to lack of frozen line.
Over capacity of chickens has reduced wholesale prices, which reduces profit margins.
Competition is strong in broiler industry with 53 competitors.
Untapped markets in the Upper Mid- west need to be explored.
The Perdue Farms, Co. has internal strengths and weaknesses that need to be addressed and evaluated; The strengths are as follows;
Perdue is vertically integrated which means that they produce the chickens, they breed, hatch the eggs, they select the growers, build Perdue chicken houses, formulate and manufacture their feed, oversee care and feeding, operate their own processing plants, distribute via truck and marketing. They now also sell what used to be waste, such as the chicken feet that is sold to the Orient as a delicacy.
Privately held firm
Technologically advanced, ex.,20% more breast meat than the competition
Birds are fed organically and not feed additives.
Sell both raw and pre-cooked chickens and turkeys.
Good compensation package to the workers.
Non-union company.
MIS efficient and essential to operating the business.
Good variety from fresh oven stuffer roasters, cooked prepared foods, cutlets, tenders, Fit n easy and much more.
Good TQM with mission and vision
Excellent R&D; for better meat to bone ratios.
Keep overhead low, quality up
Great diverse product line that has changed with consumer changes.
Horizontal diversification when they bought Showell Farms, which made them the third largest producer in the broiler industry.
Great social responsibility, code of ethics
Environmentally concerned about waste and prevention
Strong effective marketing
The weaknesses in the Perdue Farm, Inc. case are as follows;

They only sell fresh not frozen chickens
Deliveries are only made by truck so the radius to overnight chickens is limited.
Lack of long-term planning for future changes
4) I would suggest a strategy that Perdue would focus on maintaining their quality and efficiency along with plans for extensive market development. I would like to see them expand into the Upper mid-west before other markets gain strong holds and market share. If Perdue plans on maintaining their place in the market they need to expand and continue to diversify their products to attract niche markets and stay ahead of the competition.

According to Porter’s generic strategies, he points out that in order to gain the competitive advantage companies need to draw from three bases: cost leadership, differentiation, and focus.

In my study of Perdue, I feel that they are a differentiation and focus orientated company. First, I see Perdue as a leader in quality and efficiency but not a cost leader. Cost leadership implies that you strive to be the low-cost producer in your particular industry. This is to the contrary for Perdue; they have marketed in a way to make the consumer pay a little more for a better product. In fact, this did not happen by accident. Perdue did not want to be known as the cheapest but to be the best quality for the consumer, at a fair price. What Perdue does take from cost leadership is that they are highly efficient, low overhead, their intolerance to waste, broad span of control, rewards linked to efficiency and cost cutting measures and open lines of communication between workers and upper management. Perdue’s successful strategy of horizontal integration to gain competitive advantage was to purchase Showell Farms which made Perdue the third largest broiler company in the United States.

I see Perdue as being highly successful with differentiation, which implies that they produce products, and services that are considered unique, industry wide and directed at consumers who are relatively price-in-sensitive. Perdue has ongoing product development, which states that they seek to increase sales by improving, or modifying present products or services. Perdue has been an industry leader with constant attention paid to consumer wants and needs. They watch trends such as fitness and weight consciousness, by introducing the Fit n Easy line that markets skinless and boneless chicken parts with nutritional information and recipes. Perdue also followed the trend of the working family and began to market prepared foods, which has done extremely well. Prepared foods such as pre-cooked chickens, turkeys, parts, nuggets, and the like sell easily to working families.

Finally, I see Perdue’s strongest strategy according to Porter is focus. Perdue has wonderful R&D; that constantly follows market trends and changes that will be beneficial to their growth. Perdue has never forgotten where they came from and this is what makes them strong. Focus allows them to change with the times and not become over diversified where they overlook their cash cows and forget to nurture their stars. Perdue knows that quality and efficiency are at the heart of their operation and do not stray from that. Their innovation and integrity to be the leader has brought them customer loyalty and appreciation for quality where price is not the number one factor.

Perdue’s ability to focus on strong team management has allowed them to penetrate and develop new markets with ease. Perdue has a high penetration of advertising on TV and print along with opening up new territories to further expand their market share. Their vision has been a good guide and has led them to a very successful value chain. Perdue’s attention to detail in every aspect of the business has been proven successful and the financial status of the company reflects it.

Today, Perdue, is further expanding with new acquisitions and product lines. Their innovative thinking and drive to be the leader shows in all they do. In 1997 they started marketing their Café Perdue line and have seen slow, with steady success. Perdue’s prepared foods are selling incredibly well with the American family on the run. As of September 1998, Perdue made a new acquisition, toward horizontal integration, with GOL-PAK, a competitor in the foodservice and prepared foods business. The new relationship will further enhance Perdue’s prepared food and foodservice business. GOL-PAK specialized in the development and production of products primarily for the foodservice industry with a list including the top 100 chain restaurants. Perdue sees this as a significant purchase to enhance their reputation and make them strong contenders in the prepared food and foodservice industry.

CEO, Jim Perdue, feels that they are well positioned in the market place and continued growth along with R&D; will help them to maintain quality and efficiency, along with strong market penetration and market share.

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