Birds Eye Case – notes
1) Why did they develop as a vertically integrated producer?
They had to build it all up from scratch because there was no one else. They wanted to be able to guaranteehigh quality by quality control and this was easier to attain by themselves. They got the raw food from farmers. They supplied the farmers with the right materials. Contract costs.
They are thefirst firm – so they had to. Competitive advantage
4) Did a vertically integrated producer have a competitive advantage over more vertically specialized suppliers of frozen foods during the early1980s? (It is better to have a supplier or not?)
It is better to be Birds Eye or Christian Salvesen?
No. But it depends on the circumstances. It is easier to have a supplier. The new technology was badfor them
Why Birds Eye developed as a vertically integrated producer:The following are chiefly the reasons why Birds Eye developed as a vertically integrated producer.
UndevelopedInfrastructure: The frozen food market during 50’s and early 60’s was in its infancy with the raw material suppliers, distributors and retail stores relatively unsophisticated. The infrastructure needed to supportthe business was not fully developed. For the raw materials (peas), farmers needed help with investments in harvesting equipment and with farming expertise. In the distribution, retailers neededfinancing help with the purchases of refrigerators. In such scenario, it made sense for Birds Eye to both forward and backward integrate as it had the both the capabilities and resources to manage theentire supply chain.Rapid Growth: During the 1950’s and 60’s the tonnage sales were increasing at a rapid rate of 40% per annum. During such remarkable growth periods it makes sense for companies tovertically integrate so as to secure the raw materials, ramp up distribution and production capacities in order to keep up with the demand.
Quality of the Product: The products sold by Birds Eye...