Reasearch Tyson Foods’s International Strabusiness.pdf

Lecturer : Tran Ngoc Mai

Subject : International Business StrategyGroup : Dream Chaser

Hanoi, September 29, 2022

FULL NAME STUDENT CODE

LIST OF GROUP 8’S MEMBERS

Table Of Contents

I Brief description of the firm 2

II Phases of global Strategy 2

III External environment 8

IV Internal Environment 23

V Internationalization process 30

VI Subsidiary and corporate level strategy 37

VII Strategy formulation 42

VIII Recommendation 49

I Brief description of the firm

Tyson Foods, Inc is an American multinational corporation, based in Springdale,Arkansas, that operates in the food industry.Tyson food was founded in 1935 byfounder John W Tyson The company is the world second-largest processor andmarketer of chicken, beef, and pork after JBS S.A It annually exports the largestpercentage of beef out of the United States Together with its subsidiaries, itoperates major food brands, including Jimmy Dean, Hillshire Farm, Ball Park,Wright Brand, Aidells, and State Fair Tyson Foods ranked No 79 in the 2020Fortune 500 list of the largest United States corporations by total revenue.

II Phases of global Strategy1.Buy back and invest strategy

The Tyson logo, used as the company symbol from 1978 to 2017 It has been used,with minor changes, since 1972 It continues to be used as a symbol on thecompany products Tyson brand In 2001, Tyson Foods acquired IBP, Inc , thelargest beef packer and the number two pork processor in the United States, gaveUS $3.2 billion in cash and stock Along with the purchase of IBP, it alsopurchased the naming rights to an event center in Sioux City, Iowa Tyson has alsoacquired companies such as Hudson Foods Company, Garrett bird, WashingtonCreamery, Franz Foods, Prospect Farms, Krispy Kitchens, Ocoma Foods, CassadyBroiler, Vantress Pedigree, Wilson Foods, Honeybear Foods, Mexico Original,Valmac Industries, Thung Heritage Valley, Poultry Lane, Cobb-Vantress, HollyFarms, Wright Brand Foods, Inc and Don Julio Foods.

On May 29, 2014, the company announced a cash offer of $6.13 billion to acquireall shares of Hillshire Brands, two days after a $6.4 billion bid face and stock forHillshire by Pilgrim Corp In June 2014, Tyson won the bidding war against

Pilgrim Pride, agreeing to buy sausage maker Jimmy Dean and Ball Park sausagefor $8.5 billion

On 28 July 2014, the company said it would sell its Mexican and Brazilian poultrybusinesses to JBS SA for $575 million and use the proceeds to pay off debt fromthe Hillshire purchase Brands pending $7.7 billion Co.

In May 2018, Tyson announced the acquisition of American Proteins, Inc andAMPRO Products, Inc for about $850 million In early 2018, Tyson, through itsventure arm Tyson Ventures, invested in Beyond Meat, Memphis Meats and FutureMeat Technologies, companies developing plant-based meat and meat alternatives.Clean culture Former CEO Tom Hayes said that this may seemparadoxical," but the investments are part of an effort to meet futureconsumer needs in a sustainable way.

On June 1, 2018, Tyson announced that it would be selling Sara Lee, Van, ChefPierre and the Bistro Collection brands to Kohlberg & Company Theacquisition was completed on August 1, establishing Sara Lee Frozen Bakery,based in Oakbrook Terrace, Illinois.

On August 9, 2018, Tyson announced that it would sell its pizza crust business,including TNT Crust, to Austin-based Peak Rock Capital, who completed theacquisition on September 4.

On August 20, 2018, Tyson announced its intention to acquire grocer KeystoneFoods from Marfrig Tyson announced it had completed the acquisition onNovember 30, 2018.

On February 7, 2019, Tyson Foods reached an agreement to acquire the Europeanand Thai businesses of Brazilian food company BRF The acquisition wascompleted on June 3, 2019.

On January 10, 2020, Tyson Foods announced that it had sold its hit Golden Islandbusiness to Jack

2 Prepared Foods Strategy

Tyson is one of the largest raw meat producers in the world, but raw meats havelower margins than prepared meat that firms such as Hormel Foods (and HillshireBrands) produce Many analysts view the raw meat industry, especially in theUnited States, to have limited growth To counter this trend, Tyson is expanding itsraw meat business outside the United States, but also increasing its presence in theprepared food industry both in the U.S and globally This is why, in 2013, Tysonacquired Don Juilo Foods, a tortilla and snack manufacturer; Circle Foods, aproducer of Mexican foods; and Bosco Pizza Tyson’s acquisition of HillshireBrands for $7.7 billion was primarily to gain quick market share in the preparedmeat industry Tyson sold Heinold Hog Markets partly to pave way for theacquisition, but Heinold accounted for only around 1 percent of total Tysonrevenues.

3 Drivers for a global strategic perspective3.1 Market drivers:

Global customer, similar customers needs:

Historically, Tyson has purchased chicken from independent farmers in closeproximity to Tyson’s chicken processors This remains the firm’s main strategy inthe United States However, due to recent food safety concerns in China, Tyson isspending millions to backward integrate in China by building its own chickenfarms In early 2014, Tyson operated around 20 farms in China and expects tooperate 90 by late 2015 Tyson’s CEO, Donnie Smith, was quoted as saying, “Wejust can’t build the chicken houses (in China) fast enough, and we’re going

absolutely as fast as we know how to go.” This is likely an important strategy forTyson, considering that traditionally many chicken farms in China are nothingmore than mom-and-pop homesteads producing a few hundred birds at a time inopen-air farms that are subject to bird droppings from above Research shows birddroppings could lead to increased cases of the bird flu Incontrast, one Tyson farmin China typically can house over 330,000 chickens in 16 climate-controlledbuildings each the size of two Olympic swimming pools Trucks are sprayed threetimes before entering the facility Numerous sanitation procedures are followed byworkers on the floor.

Chicken also remains one of the higher margin-generating proteins available.Tyson’s chicken sales in Mexico are expected to remain static in the near future butTyson projects large gains in both China and Brazil India is projected to have thelargest percent increase, but the volume of chicken in India remains well belowother regions Despite having principle operations in the U.S., Mexico, Brazil,China, and India, Tyson does business worldwide.

Transferable marketing:

To help maintain its supply of chicken, Tyson pays chicken farmers in the UnitedStates on an incentive-based system with farmers who produce the largest quantityof healthy birds earning more To keep chicken from different farms as constant aspossible, Tyson provides farmers with both the chickens and chicken feed Thisalso protects farmers from volatile prices of corn and other grains by transferringthe volatile nature of feed prices to Tyson In addition, Tyson provides mentoringfor all farms, especially farms that are struggling The typical contract in theUnited States lasts 3 to 7 years, but it can be as long as 15 years for excellentfarms.

3.2 Cost drivers:

Outside the United States, one of Tyson’s primary strategies is to increase chickenproduction since lower corn prices, increasing incomes, and a demand for safefoods in many foreign markets are driving up demand for Tyson products.sferablemarketing

3.3 Achievement

In 2021, it is estimated that this company slaughtered about 1,900 million broilerchickens, down 4.5% compared to 2020 Total revenue in the fourth quarter of2021 is estimated at 12,811 million USD, up 11.8% compared to 11,460 millionUSD in the same period In the period of 2020 In which, revenue in the chickensegment increased to $ 3,873 million from $ 3.433 million in the fourth quarter of2020.

Tyson main income forecast in 2022 continues to be from the broiler business asthe field has achieved consecutive high profits in the last 2 quarters of 2021.Nowaday, Tyson is one of 10 poultry enterprises in the world, as follow:

Top 10 poultry enterprises in the world (Photo: Watt)

3.4 Sumary

Hear Mr John Tyson, President of the Company, also one of the 1,000 richestpeople in the world, share his company growth story on the Harvard BusinessReview: Tyson is a company that achieves growth through is an acronym for theterms Mergers and Acquisitions is an activity to gain control of a businessthrough a merger or acquisition between two or more businesses to own part or allof that business.From the mid-1960s to the present, we have done over 30 deals.Including the merger with IBP a few years ago This acquisition doubled the size ofour business and paved the way for us to enter the beef and pork business At thetime of the merger, Tyson had been in poultry production for more than 15 years.And also a few years before that, IBP acquired 14 companies specializing in theproduction of high value-added items Since these companies have not beenincorporated with IBP, the merger is essentially a merger: IBP, the 14 companiesacquired by IBP, and Tyson We have worked hard to create business culturalharmony between the merged companies The good news is that most of theM&A deals are successful because our predecessors had foresight, such aspredicting an increase in demand for convenience foods.

Thanks to the acquisition of IBP, we have an additional line of canned beef andpork products So we found a way to get chicken into the canning branch Tysonalso confronts the reality that there are too many places where consumers can eatalone or with family, can buy food almost anywhere - in the park, on the street, viavending machine automated goods We needed to make products suitable for

different distribution systems In other words, you need to make sure your productis in front of people anytime they feel like eating Another strategic direction is toparticipate in the final stage of the production system: purchasing processed rawmaterials This is a necessary way for us to focus on adding value to the endproduct The strategy we use depends in part on each country agricultural tradepolicy.

Thus, a company, whether it is growing on its own or growing through M&A,must have 3 factors to be successful The first is the ability to predict trends Thesecond is decisiveness and timely response If you know someone wants to sell thecompany, you must act quickly (if you intend to buy), otherwise you will lose theopportunity The third is the network of industry relations Since livestock is still afamily business and there aren't many staffing changes, you'll see a fewfaces on a regular basis If you establish a good network of contacts, you will haveaccess to many important sources of information, such as the owner of a certaincompany that is intending to sell the business Opportunities also follow.

III External environment

1 DIAMOND MODEL OF TYSON FOODS1.1 Factor Conditions

Basic factors of production Labor

This includes the skill levels, and performance of the human resources at TysonFoods Inc It also involves the training programs and all other investment programsundertaken by Tyson Foods Inc in relation to its human resources and employeesacross the globe It also includes all human resource functions from recruitment toperformance management which work towards employee development and growth.

Capital resources

These include the financial resources that are available to Tyson Foods Inc ForTyson Foods Inc, these are available through equity capital resources and debtfinancial resources Equity-based capital is largely generated within the company,using internal resources and channels only Debt-based capital, on the other hand,involves debt taking from external sources and organizations.

Natural resources:

These are the natural resources available to Tyson Foods Inc in its home country, aswell as in the countries where it has set up operational and production plants.These include, for example, the presence of natural resources such as waterchannels These natural resources are available to a firm because of its location andare relatively cheaper for the firm to access They do not need to be developed orcreated but refined for usage generally.

Advanced factors

Technological innovation

The presence of scientific knowledge will also lead to frequent innovations –technologically as well as otherwise Technological innovations are important inhelping firms achieve economies of scale and reduce overhead costs and otheroperational costs to be able to expand into other markets with profitmaximizations.

Scientific base

This involves the scientific and technical knowledge available to a firm and itsknowledge base This may be acquired through countrywide resources, industry-wide resources, or resources specific to the firm Scientific knowledge is important

for a firm in developing a competitive advantage that helps it stand out from itscompeting players.

Infrastructure

The infrastructure is also an important factor for Tyson Foods Inc which has helpedit grow and expand- not only locally but also globally The infrastructure includesthe physical as well as the technological network that has allowed Tyson Foods Incto successfully complete and carry out operations in other countries and markets This infrastructure is largely developed by the country itself based on internalresources However, in cases of firm need and market potential, firms such asTyson Foods Inc have also engaged in developing the local infrastructure – whichhas not only helped the firm in the development but has also led to the growth anddevelopment of the society and market where it has expanded to.

1.2 Demand Conditions

Size of the domestic market

The size of the domestic market has been important for Tyson Foods Inc in itsinternationalization and expansion measures This is because of two primaryreasons Firstly, the increased size of the local markets and domestic consumers isimportant for companies to understand the dynamics at play with larger markets,and helps them strategize, and plan operations accordingly This increased marketsize and domestic players have allowed Tyson Foods Inc to measure and identifyits own strengths and weaknesses with respect to growth, and contain themaccordingly Secondly, larger market size is also important for pushing the firm,and brand into exploring the possibility of expansions and new markets.

Sophisticated and demanding domestic customers

Sophisticated and demanding domestic sounders for Tyson Foods Inc have pushedthe firm into utilizing its resources towards innovation, and have led the firm intodeveloping unique products for the customers With demanding domesticconsumers firms such as Tyson Foods Inc have been able to realize their crate andinnovative capabilities, and have put them into use to develop new products, orprocesses to help the business grow.

Customer needs that anticipate those elsewhere

Domestic consumers and consumer behaviour patterns are also important forpredicting and anticipating the behaviour and demands of consumers in othermarkets For consumers with the same profile, companies can often predictbehavior of market-specific consumers in relation to the behaviour displayed bythe same profile consumers in other markets

Firms like Tyson Foods Inc can also influence the behaviour of the consumers inone market based on the response they have received in another market This isimportant for strategic development within the firm for global strategies as well asglobal expansion and development in other countries and markets.

1.3 Firm Strategy, Structure & Rivalry Company strategy

Tyson Foods Inc’s strategy is to focus on customers to provide them with quality products that offer continually consistent quality and taste in the offering.Tyson Foods Inc promises value for money and satisfaction to customers anddesigns its strategic focus and decisions in the same manner – to allowmaximization of value for money to customers through efficient processes that alsolead to cost-saving for the company.

high-Structure of the organizations

Tyson Foods Inc is a flatter organization that supports open and freecommunication The company offers easy and quick access to managers andsupervisors, and thus allows a creative and trusting organizational culture thathelps in the growth and progress of the company Moreover, the flatter organizationalso allows employees at Tyson Foods Inc to easily approach and discuss matterswith the leadership at Tyson Foods Inc.

Managerial system

The managerial system at Tyson Foods Inc is supportive that works towardsemployee growth and development Supervisors and managers work continuallywith employees to help them develop personally and professionally Tyson FoodsInc has designed a number of different training programs for the same purpose, andemployees have suggested these programs based on their skill gaps, andperformance levels

Intense competition between local rivals

Competition with local rivals influences its strategic development and focus Thecompany is often pressured into creatively exploring novice ways and technologyto incorporate these into its routine operations In this way, intense competitionwith local and domestic players has allowed Tyson Foods Inc to introduce noviceprocesses and technologies to develop unique competitive and cost advantages forTyson Foods Inc to help it attract a greater number of consumers

Competition with global players

With global competition, Tyson Foods Inc has gained an understanding of differentregional and international business practices and cultures which have helped itdevelop more intricate, and region-specific products and offerings The globalcompetition has also allowed Tyson Foods Inc to predict global trends and

consumer behavior patterns which in turn have allowed the firm to maintain acompetitive advantage internationally.

1.4 Related and supporting industriesPresence of related industries

The presence of related industries in domestic and international markets has alsobeen a source of growth and development in terms of expansion andinternationalization for Tyson Foods Inc This is because related industries havehelped Tyson Foods Inc in the business operations by providing support materialsneeded for successful operational excellence Tyson Foods Inc, for example, hasbeen able to source packaging materials, and raw materials locally in differentconsumer markets, which have helped it control costs and expenses, and achieveeconomies of scale.

Presence of supporting industries

The presence of supporting industries is a facilitator for Tyson Foods Inc ingrowing and expanding its business This is true for the presence of supportingindustries in domestic as well as international markets In domestic markets,supporting industries have helped the development of the overall industry, which inturn has also allowed firms like Tyson Foods Inc in progressing and developing inbusiness operations and attracting consumers and creating awareness in customermarkets for product awareness and recognition

Presence of rival industries

The presence of rival industries is also an important factor for the growth anddevelopment of business operations and growth for Tyson Foods Incinternationally This is because rival industries have pressured the firm’s ownindustry into developing, and advancing to be able to perform better and maintain

Foods to integrate different cultures, structures and technologies, and its managers have strong attachment to the parent firm.

-> Prime example would be Tyson Foods building its own chicken farm in China to ensurethe best quality and gain competitive advantage.

M&A helps Tyson Foodsrely on pre-existing relationships, and get access to existing managers and employeesthat are familiar with the market It also does not add capacity to the market.

-> Tyson Foods acquired Don Julio Foods to expand to Mexico market.

-> Building its own chicken farms inChina requires a lot of time and money: In early 2014, Tyson operated around 20 farms in China and expects to operate 90 by late 2015.

M&A may face problems of integrating subsidiaries into the parent’s system, and its managers may have weak attachment.

VI Subsidiary and corporate level strategy 1 Corporate level strategy

1.1 Diversification StrategyIndustrial diversification

Tyson Food 's business model is diversified across the three leading proteins(chicken, beef and pork), all major distribution channels, types of products andgeographies of production and distribution Their diversification helps mitigatechanges in market fundamentals affecting segment performance in each protein.They understand consumer needs and trends and are well positioned to provide theproducts people want, from the most basic cuts of meat to fully-prepared meals,whether eaten at home or away from home Consumer Products - the Tyson brand isone of the most recognized brands in the U,S, retail channel including all majorgrocery chains, wholesale club stores convenience stores, drugstore chains andmilitan commissaries They sell hundreds of different products in this channel,including case-ready fresh chicken, beef and pork, bacon, canned chicken,individually quick frozen chicken, chicken nuggets, strips and patties, deli meatsand rotisserie chicken, to name a few They also manufacture products for leadingcustomers' in-house, or private label, brands.

Global diversification

Tyson Foods exports protein to more than 90 countries and has in-country poultryoperations in Mexico, Brazil, China and India They also have a verticallyintegrated beef operation in Argentina In addition to commodity exports, Theyhave branded international products developed for the tastes and lifestyles of thelocal consumers Tyson also supports the growth of U.S restaurant chaincustomers as they expand internationally, particularly in China.