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Perdue Farms Inc: Responding to 21st Century Challenges

Perdue Farms began in 1917 when Arthur W. Perdue bought 50 leghorn chickens for $5 and he began selling table eggs. Since that time, Perdue has been on a long journey towards the successful poultry business it is today. Though Perdue has faced its challenges, it has always landed on top through its commitment to quality and continuing and proactive drive for excellence.

Perdue has been a successful business with profits in all but a couple of years. Although they are a thriving company, there are a few things that could be improved. The SWOT Analysis highlights a few key points.

Strengths

„X Vertical integration

„X Connected to the international market, 5% of total revenue in 1999 ($140M)

„X Strong brand recognition - Branded a commodity

„X Large product mix

„X Strong R&D, created a reputation for innovation.

PerdueÐŽ¦s most obvious strength is their high quality. The quality is a key component through every department of their business. When Perdue decided to vertically integrate, they made one of the best decisions their company could make.

Perdue was also quite efficient when moving into the international market. While Americans enjoyed the white meat of the chickens, foreign countries enjoyed the dark meat. This made great use of the entire chicken.

Through a variety of products, Perdue adapted to the changing life styles of consumers. They were able to produce the bulk fresh deliveries to the supermarkets, domestic frozen foods and further processed products, and the consumer packaged goods. Perdue was the first company in their industry to package their products in microwavable tray. Perdue was willing and able to capture consumers in about all possible ways.

Perdue also developed a strong research and development department. Perdue spent more on research as a percent of revenues than any other poultry processor. This was important when it came to differentiation of their product. The most significant result was when they began to selectively breed their chickens. This allowed the chickens to produce bigger breasts, which produced more white meat.

Weaknesses

„X Geographically limited to the eastern shore for fresh chicken (Could change with frozen trend)

„X Brand image and marketing centered on fresh chicken

„X Large product lineup could be difficult to organize and distribute

„X Not always well-adjusted to foreign cultures & practices

Perdue is not without any faults. Their main business is only located the Eastern portion of the United States. This is due in part because their philosophy not to freeze the birds. Arthur decided early on that Perdue would not freeze their chickens because it makes the bones turn black and they would lose their flavor. This hindered their distribution area since they could only send fresh chickens a certain distance.

PerdueÐŽ¦s main brand image and marketing centered on their fresh chickens. Today many families are buying the quick and easy meals to prepare. Perdue should market to this group.

Perdue, despite concentrating on their fresh chickens, does have a large product lineup. Given all the different products, it is difficult to organize and distribute them.

Opportunity

„X Chicken is the most-consumed meat in the world

„X Expansion into the convenience market (Frozen chicken and meals)

„X Westward expansion in the U.S.

„X Growth of the international business

„X Develop the brand internationally, in most countries, chicken is still a commodity

„X Acquire other processors as the business consolidates, use this to expand geographically

„X Work with restaurants and food service as Americans dine out more often

„X Reduce lead time for fresh chicken from 18 months to improve forecast and focus on frozen products that do not require such a lead time

Perdue may have a great opportunity in the convenience market. The trend of Americans is they donÐŽ¦t have time to prepare a meal from scratch. If Perdue can market and produce a quality product that can dominate this market segment, they could see more profits.

Perdue needs to expand westward. There is evidence that producing the chickens in the west is cheaper than in the east. Since Perdue does not freeze their whole chickens, they would need to