The success of any business to a large extent is determined by how the business strategy and operation strategy are connected. At all times, the operating strategy should support the business strategy. This can only be achieved if certain aspects such as competitive priorities were carefully decided upon, and are being emphasized in all operation function. Value chain analysis provides a frame work that business managers can use not only to gauge the effectiveness of their strategy but, also enhance the competitive edge. A careful analysis of Birds Eye Foods Company illustrates that the business has so far been able to incorporate the various aspects of strategic management successfully.
For a business to be competitive it must have a long-term plan which clearly outlines how it is going to achieve its long-term goals. A long-term plan that is created to ensure a business achieves and sustain its goals and objectives is referred to as a business strategy. By examining this strategy one should be able to understand the main reason the businesses exist. However, for the business strategy to be implemented every other function of the business should be aligned to the chosen strategy. Operating strategy is along-term plan that elaborate how managers intend to organize various business functions in order to support the business strategy. An effective business strategy can only be developed after an understanding of the company’s existence is established and clearly stated as mission statement, the operating environment is scanned, and key strengths noted (Smook & Bhilmani 2005).
The Case of Birds Eye Foods, Inc,
The mission statement of Birds Eye Foods, Inc implies that it aims to become an accomplished leader in food processing and marketing by using various partners and available talent. The strategic managers of this company were effective in using the mission statement to answer the ‘what’ question pointing out it is food processing and marketing, and similarly the ‘how’ which is through partnership and employing necessary talent. In addition, the top management has categorically accepted that their operating industry is very competitive (Reference for Business 2010). This conclusion can be assumed it was reached after a conclusive environmental scan was conducted. Therefore, to survive such an environment the business strategy adopted should either be based on cost, focus, differentiation, or any other strategy that minimize or altogether eliminates competition.
By observing the company continuous effort of trying to expand its presence and distribution networks, one can conclude that its main long term goal is focused on growth. However to achieve this, the company has to gain a substantial market share. All indications points out that the strategic managers were well aware of this fact and therefore adopted a market dominance business strategy. However in this scenario, whereby new players can easily enter the market, Birds Eye Foods, Inc needed a more than effective operating strategy. The managers of this company saw it fit to leverage on the resources, knowledge, and experience of other firms. Therefore, they opted to adopt an acquisition approach to be the operating strategy of the business (Reference for Business 2010; Boland 2004).
When developing a strategy, it is paramount for the strategic manager to focus on certain key aspects. Smoke & Bhilmani (2005) explains that these aspects give a company a competitive advantage and hence they are referred to as competitive priorities. Although they include cost, quality, time, and flexibility, a company should at least excel in one of them. The basis of choosing which one to focus on should be based on the extent to which it supports the business strategy (Smook & Bhilmani 2005). In the case of Birds Eye Foods Inc, flexibility seems to be the more important priority. This conclusion is arrived after observing the company’s effort of trying to achieve both the product and volume flexibility.
Its acquisition strategy has served well in ensuring this flexibility endeavour is achieved and as result contributes to the implementation of the business strategy. A brief history of the company will prove this fact. Evidently the company begun as a small grocery store in 1868 and merge its way up (Reference for Business 2010; Birds Eye Foods 2010). Recently it changed its name from Agrilink Food Inc after being acquired by Vestar Capital. What started as small business now controls a great market share in 4 primary product lines namely: frozen vegetables, fruits, snacks, and canned meals (Boland 2004). As result, the business has been able to offer its customers with product flexibility. For instance, the company website provides a platform that allows customers to customize and exercise their cooking creativity by using the various available recipes (Birds Eye Foods 2010). Similarly, it production capacity can allow the company to either increase or reduce volume of production to meet the needs of customer. When a product is not inline with the business strategy, it can now be easily dropped as was the case with the non-branded frozen products.
Operation efficiency and operating strategy
According to Smook & Bhilmani (2005) managers fail to differentiate between operation efficiency and a strategy. Michael porter differentiated the two, citing that operational efficiency is the performing of an operation task in perfect manner, perhaps better than competitors. On the other hand, operational strategy is a plan to increase competitive edge in the market. The two must work hand in hand to support the overall business strategy. If for instance an organization is very effective in its operations but lacks the right strategy, the output will be undesirable (Smook & Bhilmani 2005). A good analogy might be that of using a wrong map effectively, the traveller only ends up reaching the wrong destination faster. As much as the Bird Eye Food Company uses acquisition as function of achieving it market dominance strategy, it must ensure it has proper plan. Therefore, its operational strategy (acquisition plan) must set a criterion by defining certain policies and specification that will guide them in selecting the firm to acquire. For example, the location, size, market size, and position of the firm to be acquired should be critically considered. A question that needs to be answered by managers is how the acquired firm will improve our market share.
Clearly, the managers of this company are well aware of the above factors. Authoritatively, it can be assumed that a firm’s nature of business, location, and market position are among the factors used to gauge whether it qualifies to be acquired. For instance the acquisition of California and Washington Company (C&W) was strategic. This is because the acquired firm at the time was a top a marketer of frozen vegetables and fruits. Therefore, Bird Eye Food Inc expected to use the strength of the firm to enhance its presence in the western United States. Since C&W appeared capable of selling Birds Eye Food products particularly in California, Arizona, and Pacific Northwest, its market dominance strategy would be implemented by increasing market share in this region. Similarly, another strategic acquisition was that of Green wood Beets Company. Bird Eye Food Inc acquired this company due to its reputation and top position as national best seller of branded pickled beets. Birds Eye Food Inc could leverage on its branding and packaging ability (Reference for Business 2010).
Having a great operation strategy, one that fully supports the business strategy is not by itself sufficient. An organization should take a step further and design a production process that ensures the goods and service produced are of high quality. To achieve this, the company should streamline its structures and infrastructure. Structure hereby, refers to those operation decisions related to the development of the production system: they include the technology adopted, facilities, and finally the movement of goods within those facilities. On the other hand, Infrastructure relates to the operation decisions that guide the process of planning and controlling the operation process. For example, the role of operating managers, necessary skills, talent, and quality control measures. It is important to note that both of the decision should work concurrently so as to ensure business strategy is implemented. Similarly the operation manager should at all times keep in mind the competitive priority acting as the order winner in the market place (Smook & Bhilmani 2005).
Automatically, a product has to be developed first. Without a product an organization has no basis of existence. Therefore developing one that matches the needs of the customer is a priority. By assessing the customers’ needs, the operational manager becomes aware of the key features and characteristics which if incorporated will boost the demand. Similarly, the facilities, machinery, as well as the system of monitoring the product performance, should be included in the system design process. As cited by Smook & Bhilmani (2005) the technology or processes choice highly determine the success of the business. Up to this end, Bird Eye Foods inc, seems to be favourably performing as indicate by its number one market position in frozen vegetable category and number two in the complete bagged meals (Reference for Business 2010)
This success can be attributed to the fact that both the structure and infrastructure decision of the organization are working effectively and simultaneously. At the same time, the two decision a guided towards supporting the identified key competitive priorities. For instance, cost minimizing was not a key element in deciding the business strategy but as mention earlier flexibility was. Therefore, the organization directed all its production process to ensure it achieved it. This included as mentioned earlier having a system that allows customization of its products and an effective acquisition strategy. However, it is paramount to note that a perfect balance among the key priorities must be maintained. For example the element of quality is reflected through various characteristics and product feature. These features communicate certain information to the consumer. By looking at the company products customers get the message that the product are authentic, fresh and are associated with a lot of heath benefits(Birds Eye Foods 2010).
How the website is portrayed and the packaging methods used, justify the relatively high premium brand (Birds Eye Foods 2010). However, keeping the prices reasonable is worthwhile goal in this industry. In addition, a company needs to increase its margins. Therefore, the use of the acquisition approach enabled Birds Eye Food Company to benefit from economies of scale. Economies of scale, is an important component of the production process. It helps a firm benefit in many ways including, cost reduction, and vertical integration when it acquired a firm whose mode of business is an operation function of the acquiring firm (Boland 2004).
A strategic facility layout should ensure overall productivity is maximized by minimizing the movement of people and conveniently locating points (Smook & Bhilmani 2005). Bird Eye Food, discovered that it had weakness in this end, considering it had quite number of facilities spread over various geographical locations. As result, it embarked on a restructuring and re-organizing endeavour. This process involved not only divesting from low return business but also selling some of its non-performing assets. As off June 2003 it had a total of 33 production and warehouses amenities, covering approximately a total of 6 million square feet. Although these facilities were found in 13 states plus Mexico, they were heavily concentrated in only selected states. New York, Michigan, Pennsylvania, and Wisconsin were the mostly concentrated area taking about 55% of the total (Boland 2004).
It can be rightfully assumed that this restructuring and re-organizing bore fruits, since the following year the company enjoyed increase earning. To be precise, despite the fact that, in the fiscal year 2004 the company experiencing a 2.3% decrease in sales revenue to $843.4, net income still rose by 53% to 31.9$(Reference for Business 2010). Public available information points out that it currently it has adopted a high breed layout plan. By using available technology the company has incorporate some useful attributes of a fixed position, process, cell, and product layout. For example since free flow of information is important, the website is created to enable customer freely send feedback or acquire information of how to use the products; therefore, a process type layout is adopted. However, it can be rightfully assumed that a certain products are highly demanded than others. The business therefore would have to adopt a product layout since it is the most appropriate for producing a high volume product in the most effective manner (Smook & Bhilmani 2005; Birds Eye Foods 2010).
Evidently technology is an integral part of strategic and operational management. It plays a critical role of ensuring the company achieves a competitive edge. The using of technology effectively raises the standard of operation process by managing the competitive priorities. Therefore a company should choose the best type of technology to adopt. Basically, technology can be categorized into 3, namely product, process and information technology. Product technology refers to a new technology which a particular firm develops. For example a business might create a new product which has enhanced features. As the name suggest, process technology is a type of technology which is developed to aid the operation process. Last but not least is the famous information technology which facilitates free flow of information and communication process (Smook & Bhilmani 2005).
A company should at all times keep abreast with the technology trend. However this does not mean that it should go on a rampage of adopting any over hyped one. Purchasing and implementing a certain technology can be an expensive affair considering the initial cost of acquiring, cost of training and that of support and maintenance. However, the merits of adopting a good one outweigh the risk involved. Clearly Birds Eye Foods is properly utilizing the existing technology. Starting from the founder, who discovered away of keeping food fresh through freezing, to using its website as a way of sharing information with the customer. By quickly browsing the website, one is navigated through most of its subsidiaries which offer different variety of products (Smook & Bhilmani 2005; Birds Eye Foods 2010).
Value Chain Analysis
Michael porter made a significant contribution by creating a model that would see businesses analyze the way they converts input to output. This comprehensive value chain analysis identifies ways which a business can gain competitive edge, by adding value to a raw material therefore creating an end product. Michael porter went a head and identified primary activities that a common in the value addition process. Important to note is that a business can only achieve a competitive advantage if it has a cost advantage. That is to say the cost of producing and providing the goods and services is compensated and surpassed by the value created, leading to a higher profit (Smook & Bhilmani 2005).
The activities outlined by Michael porter are; Inbound logistics which including the process of managing input or raw material, Followed by operation, which include the activities of transforming the input into finished product. Outbound logistic is the other set of activities involving the delivering of finished goods to consumers. However, this cannot be achieved unless buyers are aware of the existence of this product and therefore the need of marketing and sale activities. Finally, to enhance the product value remain intact, activities such as customers support must be incorporated. Porter categorized those activities under services. Competitive advantage can be developed by all or any of these activities. Bird eye food is effective in utilizing the value chain especially in activities relating to marketing and sales activities. A case in point, is its partnership with Acosta sales and marketing agency. Not only was the partnership expected to increase the value through its specialized activities but also it would reduce the cost. Acosta Company claimed it had the capability of providing Birds Eye Food Company with economies of scale. In addition Birds Eye Foods Company focused on services activities by offering customer services through its website (Smook & Bhilmani 2005; Birds Eye Foods).
Porter went ahead and outlined other activities that support the above primary activities. These activities are categorized under procurement, technology development, human resource management and the organization infrastructure (Smook & Bhilmani 2005). Bird Eye Food company has portrayed that over the year it has been able to master these activities. Finances fall under company infrastructure and therefore the company in question has used its acquisition and partnership endeavours. Still on the same, technology development has enable the company offer quality products and support services. Another factor that motivated acquisition was to gain skills and talent from the acquired firm (Reference for Business 2010).
Quality management is not only a performance of objective but also a support activity falling under infrastructure. Similarly it is also a competitive priority that most firms should strive to achieve. Despite quality being subjective, a business should ensure it consistently fulfil its customer requirements (Smook & Bhilmani 2005). Bird Eye Food company has been able to maintain its quality in two ways. The first one is through high performance process, which means its operation process and strategy is designed in a way that focus on certain aspects. These aspects improve the operation system and consequently result in improved quality. Case in point is acquiring firms which a reputable for their effectiveness. Another similar strategy is ensuring it has maintained consistence high reputation in its goods and services. A good indication is the fact that customer know they can get exactly the same product in most parts of country. For example if a customer is happy with the ingredient, packaging, and taste of its frozen vegetables, reliving the experience is possible provided he or she buys the product under the brand.
Ultimately, any business that manages to link its operating strategy to business strategy will achieve a competitive edge. It is important to consider the competitive priority that supports the company business strategy and therefore dedicate sufficient effort to it. At the same time, the company should strive not only to achieve an effective operating strategy but also operational efficiency. The potential can further be enhanced and quality assured by adequately using frameworks such as value analysis. This analysis will gauge how business employs various primary and support activities such as technology development, customer service, and human resource management among others. Available information about Bird Eye Foods indicates so far that its strategic management process is well on course.
Birds Eye Foods, Inc 2010, Our History. Web.
Birds Eye Foods, Inc 2010, Birds Eye Food Home Page. Web.
Boland, M 2004, Birds Eye Foods, Inc. Web.
Smook, G & Bhimani, H 2005, Strategic Management in Context: Operation strategy and Competitiveness, Prentice Hall, New Jersey.
Reference for Business 2010, Birds Eye Foods, Inc. – Company Profile, Information, Business Description, History, Background Information on Birds Eye Foods, Inc. Web.