Strategic Decision Making for
Competitive Advantage
Business strategies:
Cost leadership – economies of size
Differentiation – branding
Corporate strategies:
Internal governance (integrated, hierarchical/flat)
Alliances (non-equity, equity, joint ventures)
Diversification
Franchising
International (centralized, decentralized)
51%
Food Service
Fast Food
Bus. Strategy
Cost leadership
Diff/n - lifestyle
Restaurants
Bus. Strategy
Diff/n - experience
- lifestyle
Corporate strategy
Co-branding
Bundling
Diversification
“load” factors reaching limit
- need broader reach for
competitive advantage
49%
Retail
Bus. strategy Bus. Strategy
Cost leadership
Diff/n
WalMart
Tesco
Carrefour
(services)
Corporate strategy:
International
Food Service/Retail
Mfg/Processing
Bunge
Cargill
ConAgra
Smithfield
•Investment away from commodity
•With a changeover by 2005 towards “customer solutions”
- health, nutrition, food applications
•Contractual relationships
•Alliances- non-equity/equity/joint ventures
•Merger, acquisitions
Corporate
strategy
Farm level production
Commodity
Super-commodity (grade determined, simple contract)
Non-segregated
Business strategy (historically):
Cost leadership
Little differentiation
Corporate strategy: ?
Farm level production
Customer solution approach – desired traits
Business strategy:
Differentiation – segregation, integrity of supply chain
‘effectiveness’ in SR for market access
Cost leadership in LR to sustain competitiveness
Corporate strategy:
Alliances – non-equity contracts, equity, joint ventures (LLC’s)
Mergers, acquisitions – to gain sufficient acreage for market power
Food and Ag Policy
• Farm Bill – focus on farm level – business strategy
• Market facilitation historical focus on business
strategy
• Corporate food processing, mfg, retail & food service
focus on competitive advantage
• Dynamic global markets
• Competitive advantage, exploitation of quasi rents
time sensitive
• Inimitability of differentiation limited in food service
and retail.
TTA as a strategic decision
Is traceability and assurance considered a
business or corporate strategy?
• IT divisions to provide information sharing
– gain efficiencies e.g. in procurement
• Risk management – is T&A for food safety
a public or private good? If public, is this a
corporate strategy, and business if private?