Reference no: EM133674838
After having successfully grown to be the leading US protein producer by the early to mid-2000s Tyson Foods found itself struggling to improve its profitability. As an essentially domestic US protein producer it was feeling the margin squeeze of increasing feed prices (partly as a result of the US program to turn corn into ethanol), and an inability to pass on price increases to consumers. Consultants suggested global expansion to one of the BRICs economies as a way to capture both investor excitement, and as a future potential growth opportunity. The Tyson Foods entering China cases (A) and (B) focus on James Rice and the short and long-term strategic decisions he must make in opening and leading Tyson Foods in China. The first decision was determining whether Tyson should even "put steel in the ground" in China. Rice is faced with making a series of complex interrelated decisions with very little reliable data. If he recommends entering, he needs to determine which protein to focus on, how to enter, and how to market Tyson's products. As a conservatively managed company, Tyson's board is unwilling to risk a lot on the China venture.
The Tyson case offers us an opportunity to apply the WBMH framework systematically to a new foreign market entry decision.
The "Why?" Is there sufficient justification for even expanding to China beyond its highly profitable export business.
The "Bring/Build?" What competencies and advantages can Rice leverage when entering China? What strategies and operations must he build in China? By operating in China and the US can Tyson build any new global advantages?
The "Meet?" As a market what is the Chinese protein industry like? What are the upside market opportunities; and what are the voids, and challenges, exist in China that might cause problems for Tyson becoming a successful competitor.
The "How?" How should Rice actually do it? Should he enter alone or with local partners? Should he bring in Tyson "expats" or hire local Chinese executives? What distribution channels should he develop? Should Tyson try to establish itself as a brand or simply sell protein to retailers "under plastic?" The case also encourages the use of decision tree analysis to map out the sequence of decisions, and the analyses that Rice must make.
Read: Tyson Foods: Entering China
- Should Tyson expand its presence in China beyond its current export activities?
- What should be the focus of Tyson's business in China? Chicken? Pork? Or beef? Or a combination of these? Should Tyson seek to enter all protein markets in China? If so, should Tyson enter them all at same time, or sequence its entry over time?
- How large is the protein market in China? Estimate market size and profit pools. How aggressively should Tyson pursue a position in the protein market in China, if at all?
- What are the most important considerations that Jim Rice should focus on when entering China? Apply the CAGE framework to the China protein market.
- Evaluate the strategy Jim Rice has developed to enter the chicken market in China. Has he made the correct choices? What if, anything, would you change in the Tyson China strategy?
- How should Tyson enter China? Should they do so through joint ventures, acquisitions or greenfield, or all three? What are the pros and cons of each entry approach?
- If Tyson were to choose to enter through acquisition who should they seek to acquire? Well-managed companies with solid market positions that would likely require a large premium to purchase, or a distressed struggling firm that would offer Tyson a lower cost of entry?
- What should be the short-term and longer-term focus of Tyson's strategy; retail, quick service restaurants, or food service?