Purdue Farms Case
Perdue Farms the producer of broiler chickens have a decision to make on where they want the company to head in the future. In 1976 Don Mabe, the executive vice-president of Perdue Farms asked Mike Moriarty, who is the assistant divisional controller if he would do research to find out whether or not it would be profitable for Perdue Farms to produce chicken hot dogs. The problem that is faced in this particular case due to the fact that Perdue Farms must make the decision on whether to go into the chicken hot dog market or not.Perdue Farms has made a name for themselves in the Chicken market because of the unique color of their chicken as well as the fresh taste. Perdue Farm chickens are yellow in color mostly due to the fact that Perdue Farms feed their chickens yellow corn, alfalfa, corn gluten, and marigold petals which would make the color of the chicken yellow (Johnson & Shaw 10). Another technique that Perdue Farms use is that they never freeze their chicken at any time. This helps to make the chicken more flavorful because the chicken will not lose its natural flavor during the unthawing process. "Perdue broilers were usually more tender because they were never frozen during process
This analysis will include customers, suppliers, entry barriers, and substitute products or services to show how they affect the industry. It provides insights on profitability. If they are unwilling to pay a high price for hot dogs then it will force the hot dog companies to reduce the price of their products, or suffer bigger losses. Substitutes limit the profit potential of an industry by placing a ceiling on the prices it can charge for the products. They can also exert influence and increase environmental uncertainties by threatening to raise prices, reducing the quality of goods or services provided, or not delivering supplies when needed" Harrison 2003, 54). They as well use this quality standard as a marketing tool where they broadcast commercials on both radio and television stations. In brief this is a tough decision for Perdue Farms due to the fact that they will need to use facilities other than their own. This category also relates to complementary products. I think that Perdue Farms needs to go ahead and start producing chicken hot dogs. One of the reasons that I can see Perdue Farms being able to succeed in this market as a possible new entrant is because of these specific reasons. The Five Forces analysis allows for determining the attractiveness of an industry. Perdue Farms has set a price that is a little higher than the industry average for chicken hot dogs, so if they decide to produce them they might have problems selling them at that price. To find a more in depth analysis of the problem I will conduct a five-force analysis, which is a way of determining the type and level of competition and ultimately the industry's profit potential (Harrison 2003, 52). Thus, it supports decisions about entry to or exit from an industry or a market segment.
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