Birds Eye and the UK Frozen Food Industry Case Solution
After installing production facilities, the other problem was to secure the supplies of high-quality raw materials. Therefore, Bird Eye worked closely with the farmers to determine and ensure the quality of vegetables and other supplies. The company has a close control and coordination with farmers over the crops, supplying seeds and approving fertilizers for the crops and insecticide used. Furthermore, the company provided farmers with technicians and expertise check the factors associated with the crops and harvesting time.
However, for fish and poultry, Bird Eyes used backward integration by developing capacity and acquiring controlling stake in the suppliers. It had built a capacity for producing millions of birds per year. Bird Eye had built 20 farms for to have a tight control over its supply chain.
The reason to have control in its operation was that in the vegetable market, Bird Eye was capable to secure the supply of raw materials with the long-term contracts with the farmers. On the other hand, the process was ad-hoc with the fish supplies, where the supplies were purchased form dock side auction. Due to this, Bird Eye was not able to have enough control, so it fixed the process by vertical integration.
The distribution cost was high for Bird Eye due to the limited capacity were available in cold stores and these were also expensive and costly. Therefore, the company invested in cold storage and refrigerated distribution through its sister company SPD (speedy prompt delivery). By the end of 1960, SPD built a national system of frozen distribution for Bird Eye and enabled it to directly serve the number of outlets. However, Bird Eyes had franchised selected wholesalers to distribute its frozen foods to retailers, particularly in those areas where SPD couldn’t help Bird Eyes to serve cost-effectively. The coordination with SPD enabled Bird Eyes to increase its sales volume at a remarkable 40% per annum.
Another biggest barrier in developing frozen food industry was the situation of retail distribution. In the supply of frozen items, the major manufacturers had lent the cabinet and refrigerator to retailers. However, this approach required enormous capital investment.
Although Bird Eye decided to convince Prest cold and Frigidaire (producers of industrial refrigerators and air conditioning equipment) to start the production of open top exhibit cabinets, which should be suitable for the frozen food storage and display, instead, it lent the cabinets to retailers.
2. Industry Life Cycle:
1. Introduction Stage:
Bird Eye entered the market by the initiative of Unilever’s by acquiring Bird Eye. It has entered in the UK frozen food industry with the aim to become a market leader and pioneer of the frozen food industry where the major competitors had already developed the market.
In its introductory stage, the company had faced many problems due to lack of skilled labor and developed business operations. The UK market lacks the efficient system of producing, supplying, distributing, manufacturing, storing and retailing frozen food due to the lack of well-developed infrastructure.
Apart from this, the company also had to rely upon the import of the major equipment from US and Canada. This process was highly expensive. Other than this, the location of the factories also depended upon the resource availability. This has posed severe problems for the company to efficiently conduct its business to achieve its objective. In addition, retailing the frozen food was also another problem for the company.
These all circumstances had contributed in slow grow rates of Bird Eye frozen food business. However, intense competition was also present in the market, as many of the major players had acquired the significant market share. Therefore, it was difficult for the company to position its self successfully in this industry and to acquire a greater market share. Nonetheless, there was little know how and recognition of frozen food in the industry due to which company was also forced to developed strong marketing strategies to spread awareness……………
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