Subjects:
Five forces of Competition 7 - 8
Strategic Alternatives 13 - 14
Plan of Implementation 16 - 17
Tim Dodd was the general manager of Dakota Growers Pasta, an integrated pasta company headquartered in Carrington, North Dakota. Dakota Growers Pasta Company (DGPC) is an agricultural cooperative that processes its members’ durum wheat into flour and pasta products. The cooperative was incorporated on December 16, 1991 and became fully operational in 1994. By 1998, Dakota Growers was one of the three largest pasta producers in the United States, with facilities located in North Dakota and Minnesota. It has approximately 1,100 members located in North Dakota, Minnesota, and Montana. DGPC was one of the first successful new generation cooperatives in the 1990s. Their success has been an inspiration to others. Many new cooperatives have used DGPC as a model.
Produce the finest dry pasta with the lowest cost using the highest s
. . .
· Disease: In North Dakota, durum wheat prices rose because of increased demand for pasta and lower production yields because of disease problems. During the late 1990s, consumption of organic products increased at an annual rate of 20 percent. The branding that AIPC brings is another way to withstand competition. They should immediately start to promote its merge to make name recognition strength for the company. For instance, DGP was profitable by increasing its value that members received for their durum wheat relative to nonmembers in North Dakota who had not invested in DGP.
Liquidity Ratios
(Inventory to net working capital)
2003
28,082
43,673 – 30,244
=22%
2002
19,636
44,064 – 21,051
=85%
This is a measure of how much DGP’s capital is tied up in inventory. DGP, along with AIPC, has all of these competitive advantages. For 2003 their ratio rose by 39%, which rose from 12% in 2002. This idea had its disadvantage because DGP was perfectly integrated, any increase in pasta capacity would require an increase in durum milling capacity in order to remain internally self-sufficient across all production stages.
Finally, the most important issue is that additional capital is needed to support any capacity expansion or brand product development. DGP was trying to produce their brand, which was limited because of the growth in the private-label business. If the weather is bad, there will be poor crops. With the merge, they should be able to reduce 5 percent of companies’ expenses. Bad weather will result in having a high cost of durum wheat. DGP mission was to help its member become more profitable.
Essay's Topics
All research is for reference purposes only.