The new entrants required help with the distribution and production, which again stimulated the emergence of specialized intermediaries like Flying Goose, which specialized in this segment. Birds Eye should consider selling or spinning off its procurement and distribution businesses, thus decrease overheads and achieve parity in cost structure with the rest of the competition.
For the raw materials peasfarmers needed help with investments in harvesting equipment and with farming expertise. This led to difficulties with marketing as promoting such widely different products was proving to be difficult.
The following are chiefly the reasons why Birds Eye developed as a vertically integrated producer. The emergence of smaller firms opened up opportunities to offer specialized services to manage the various functions in frozen food retail.
Birds Eye did not cater to this niche market whose requirements were different from the consumer market in the sense that they need larger packaging sizes at a lower cost. Development in the food retailing led to the emergence of super market chains this development led to shift in the balance of power from producers to retailers.
The specialized suppliers enjoyed lower overhead costs as they were specialized in single product, which did not involve any changeover costs.
Over a period of time product proliferation occurred at Birds Eye in order to compete in several different market segments.
Birds Eye should consider selling to private labels as their share in the market place has been increasing at a rapid rate.
Did a vertically integrated producer have a competitive advantage over more vertically specialized suppliers of frozen food during the early s?
The products sold by Birds Eye had to be high quality because of the additional overhead of freezing and the products had to be frozen at the right moment within hours to justify the premium. The following factors were chiefly responsible: This process did not let Birds Eye have enough control so they fixed the process by vertical integration.
The reason for the difference can probably be explained by the fact that in the vegetable market Birds Eye was able to secure the supply of raw materials with longer-term contracts with the farmers, However with the fish supplies, there process was more adhoc where the supplies were either bought from dock side auctions are imported from Scandinavia.
The significant infrastructure capital investments by vertically integrated producers when the market was not mature prevented them exiting less profitable businesses. Birds Eye should consider concentrating on the most profitable product lines, use it s brand image as leverage and promote higher margin products while doing away with the unprofitable product lines.
As the industry matured the rate of technological breakthroughs increased which led to decrease in the amount of capital to enter the business making the barriers to entry low. For fish and poultry Birds Eye did backward integration by building capacity and acquiring controlling stake in the suppliers.
The infrastructure needed to support the business was not fully developed. For vegetables however they worked closely with the farmers providing them with both capital and expertise with the growth of high quality produce.
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 the entire supply chain. Vertically integrated producers were able to capture both the upstream and downstream profits.
Although vertically integrated producer did enjoy some competitive advantages relative to the specialized suppliers, but over time their structure led to some disadvantages in other areas, which negated their advantages. Both the models allowed Birds Eye to have a tight control over it supply chain.
Retailers found it profitable to introduce their own brands in the market.
Emergence of Specialized Intermediaries: During such remarkable growth periods it makes sense for companies to vertically integrate so as to secure the raw materials, ramp up distribution and production capacities in order to keep up with the demand.
Owning the entire value chain meant that, entering into this market would become significantly difficult for new entrants due to high capital needs. In the distribution, retailers needed financing help with the purchases of refrigerators.
These factors led to the emergence of competitors like Menu master Ltd to cater to this segment.Session Market Failures Case: BIRDS EYE and the U.K. FROZEN FOOD INDUSTRY (A) Objective: This case describes the history of Birds Eye and the U.K.
frozen foods industry, starting with its establishment during WW II, and continuing through the mids. Birds Eye, which pioneered the industry, began as a vertically-integrated. Birds Eye and the UK Frozen Food Industry TEACHING NOTE When this occurred, Birds Eye’s product breadth and vertical integration became a competitive disadvantage that resulted in its rapid loss of market share and profitability.
7/17/Strategic Analysis of the Birds Eye and the UK Frozen Foods Industry: Strategic Analysis of the Birds Eye and the U Birds Eye. Search Search. Upload. Sign In. Join. Home. Saved. Ross and Findus were also following the vertical integration strategy and the industry structure and the maturity around this time forced the business 5/5(1).
Birds Eye and the U.K. Frozen Food Industry (A) Case Solution,Birds Eye and the U.K. Frozen Food Industry (A) Case Analysis, Birds Eye and the U.K. Frozen Food Industry (A) Case Study Solution, Describes the evolution of forty years the UK frozen food industry, as well as traces the emergence, dominance, and reducing the height of bird flight.
When Birds eye came into the industry, as it pioneered the frozen food industry, it used vertical integration approach. It had lot of profit and competitive advantage over its competitors.
It had high profitability and market share as compared to its competitors. Examines vertical integration as a strategy to be the analytical logic Read more» Describes the forty-year evolution of the UK frozen food industry and traces the emergence, dominance and the demise of the Birds Eye.Download