Dean Foods Executive Summary

The company I work for is Dean Foods of California, a dairy manufacturer located in Buena Park, California. We are solely owned by Dean Foods Inc, the countries largest supplier of milk. Dean Foods, Inc. currently controls over 65% of milk business in America. However each subsidiary is considered a separate company and encouraged to compete with each other. Dean Foods of California (DFC) is sole supplier of milk for all the Southern California Albertson's stores.

Market Structure

For Dean Foods of California we are in a monopolistic competition market. Even though we have a contract for the next three years, to be the supplier of milk to Albertson's, there are still a number of other suppliers who would love to have that business, even some of our sister companies. The amount of volume would be a large enough to help any milk manufacture.

Understanding your Buyers: Buyers Power

Since we only have one customer, they have a huge influence on Dean Foods of California. We must make sure that we always meet their needs, while trying to control our cost. To be able to re-negotiate the contract with Albertsons we need to make sure that the service they are receiving is the highest we can deliver, if not they will consider going with a different supplier. They can do this because the name brand sold is theirs and any company can produce it.

Number of Suppliers: Suppliers Power

Since we are owned by a larger company we must follow their policies, and one of these is to use their milk brokers. We currently use two different brokers who buy milk from dairy farmers throughout California and Arizona. I am not sure what kind of power they have in their purchasing power, but they do dictate what farms are used. They also provide the price we use, within certain guidelines from the state.

Governmental Rules and Regulations

Both the state and federal governments have regulations controlling the milk business. California regulations take preference, except when we buy or sell milk outside the state. The milk board controls the cost of milk and regulates the dairy farms to make sure everyone is equal in their pricing. The state feels the milk is necessity and they do not want the price to go so high that low income households cannot afford milk. If we try to increase the price and it goes outside the states guidelines we have to pay a penalty, and the fees can be rather large. We must also pay all the taxes that