Â EVANS FOODS CASE ANALYSIS Case Solution
Â Â Â Â Â Â Â Â Â Â Â Evans Food has a number of opportunities to overcome its dilemma and expand its pork business. The company is already serving many international markets such as Venezuela, Mexico etc. It can further expand its business by entering new markets and this would prove to be profitable for the company as the margins on pork pellets are much higher as compared to the margins on pork rinds which are sold in the domestic market only. Apart from this, Evans Food can also merge with its close peer in the industry which is Rudolph Foods. The prices, cost structure and size for both the companies are same and hence, by merging with one another both the companies can generate significant cost and revenue synergies. By merging with Rudolph Food, Evans Food can also resolve its current dilemma as the management of Rudolph Foods had no plans of increasing its selling prices.
Â Â Â Â Â Â Â Â Â Â Â The supply and demand for pork skin is never stagnant. In the recent years, the demand for the pork skin has increasing dramatically whereas, the supply of the pork skin has decreased as a result of the pork virus. This is a severe threat to Evans Food as they have not kept a pace with the rising costs of pork skin in the past. Another threat for Evans Food is the competition faced by the company in the industry. Evans Food is facing competitive from its close competitor Rudolph Foods. Apart from this, there were numerous local small competitors in the US market which exported and supplied their products to the local markets. Finally, the rising raw material costs were also a threat to the business continuity of Evans Food Company.
Porterâ€™s Five Forces Model
Â Â Â Â Â Â Â Â Â Â Â The Porterâ€™s Five Forces Model has been utilized here to analyze the attractiveness of the overall industry and how well Evans Food is strategically positioned within the industry(Tang, 2014).
Bargaining Power of Suppliers (High)
Â Â Â Â Â Â Â Â Â Â Â The company bought its raw material, pork skins, from a number of different global suppliers. As the supply of the pork skin was limited as a result of the recent outbreak of the pig disease and decline in the population of pigs therefore, this suggests that the bargaining power of suppliers is high in the market. They have increased their prices for pork skin and Evans Food is acquiring its raw material at those prices.
Bargaining power of Buyers (High)
Â Â Â Â Â Â Â Â Â Â Â Evans Food is a small company but it sold its products to large retailers of the US such as Wal-Mart, ALDI, Meijer and HEB and other snack food companies. Outside of the US, the company sold its products to large customers, who processed these pellets in their own factories and then, sold them under their own brand names in their convenience stores and supermarkets. Therefore, the majority of the customers of the company are some of the larger accounts of the company and losing them would mean losing a market share of 40% to 50%. Moreover, there are also a number of local producers of pork products therefore, the bargaining power of the buyers is high in this industry.
Threat of the Substitute Products (Low to Medium)
Â Â Â Â Â Â Â Â Â Â Â Pork Rinds are considered as a popular snack in the US and also along the US-Mexico border, as African American and Hispanic Americans love pork rinds. Although this is a good alternative for protein to beef and chicken products, however most of the customers liked them for their crunchiness and taste. Apart from this, there were no carbohydrates and 60% protein in pork rinds, which is much higher than the protein level in chicken and beef products. This made it more popular among the weight conscious customers and it was also considered as a junk food by Menâ€™s Health Magazine which was good for their health. By looking at these facts, we can say that the threat of substitute products is low to medium……………………
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