Case Study 3
Birds Eye and the UK Frozen Food Industry
1. Why did Birds Eye develop as a vertically-integrated producer?
-Birds Eye became a vertical integrated producer because of the undeveloped infrastructure of the market. In the 50’s and 60’s the frozen food market was in their infant stage from raw materials suppliers, to distributors, and retail chains. Since Birds Eye had the resources and capabilities they invested in harvesting equipment for raw material supplies, financed purchasing of refrigerators to help distributors and retail chains. With Birds Eye using all their resources and capabilities it allowed them to control and manage their entire supply chain.
-Also, since Birds Eye product was knows as a premium due to the fact of the overhead it cost to freeze the product at its highest quality usually within hours to maintain high quality. This allowed Birds Eye to maintain total control of the quality of their product. With Birds Eye becoming a vertically integrated producer it allowed new entrants in this market extremely difficult due to the needs of high capital investments.
2. Why did specialized intermediaries emerge?
In the late 60’s and early 70’s there were several changes and breakthroughs in the industry that led to specialized intermediaries emerge. One of the specialized intermediaries was the maturity of the industry that led to technological breakthroughs. The technological breakthroughs allowed new entrants to enter the market with a decrease amount of capital.
Also catering companies grew from 16% to 30% in 1973 and Birds Eye did not try and capture any part of that niche market. With Birds Eye not tending to the catering market by providing large packaging sizes at a lower cost it led to specialized intermediaries to capture that niche market.
2 (B). Could Birds Eye have prevented this from occurring?
Birds Eye can’t prevent the industry from maturing or the technological breakthroughs, but they could have...
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