Possible future with Brazil
BRF has a string foundation for growth and expansion in Brazil. The company should take advantage of the experience that its parent companies Sadia and Perdigao have of about 70 years each in the food industry. The company should create a human resource master plan to help iron out the ideological differences between the employees from both companies because this will be a solid launching pad to help BRF harness the benefits of synergy emanating from mergers and acquisitions. BRF has experienced impressive growth in the recent years with frozen meals and frozen pizza categories of food growing by 99% and 75% respectively between 2006 and 2011. BRF should maintain and improve the quality standards, continue with aggressive marketing and improve its public relations in order to cement its position as a true and authentic Brazilian brand. Proper public relations and favorable pricings will help BRF overcome competition from companies such as Tyson Foods, JBS SA and Marfrig Alimentos that have shown recent domination in some food categories. BRF should also pride in being the a dominant exporter of meats in order to gain loyalty in not only the domestic market but also gain some mirage in the international market.
Future for BRF
BRF has very strong core competencies that can help it to penetrate and gain substantial market shares in emerging markets such as China. According to Bell and kindred (2013), BRF’s products are present in more than 140 countries around the world. Going by the global presence and experience in the food industry BRF is able to adapt to changing markets and maintain global standards on food safety, issues that aid it to create value for differing markets. BRF can leverage on its strong foundation and sound structures in logistics and production to compete with the companies dominating the emerging markets. Asia, parts of the Middle East and Africa have great a great opportunity for BRF’s plans for international expansion. Unlike the Brazilian market where BRF controls 60-80% market shares in different food categories, emerging markets in China, India, South Africa, and Iran do not have dominant market leaders. The market leaders control between 15-30% of market shares in different food categories. Approximately 6-15 companies control market shares of about 30-40% in each food category.
BRF can plan to plan to enter the South African market. The market has two core supportive issues. The first is the availability of receptive market for processed foods that is valued at more than USD1.2 billion. The second issue is the availability of good cold chain. BRF needs to invest in strategies to improve foods safety since the domestic food industry is considered low in safety and quality. In addition, BRF needs to come up with marketing strategies suited for that market in order to overcome strong competition from companies such as McCain Foods (21.8%) of market share and Irvin & Johnson (14.7%) in the processed foods categories.
Besides the South African market, BRF can look into investing in fast growing economies in Africa. Botswana, Ghana, Nigeria, Kenya, Uganda and other countries that have are have a fast-growing middle class due to their discoveries of oil and expanding service sectors. Like the aforementioned South Africa, Iran and other third and second world countries, the emerging economies do not have dominant market leaders. Although they may lack the infrastructural capacity to support the food industry, these countries have vibrant, abundant, and cheap labor to support en entrant food multinational. The recent embracement of technology in the emerging markets portends to be a huge boost to any industry.
The Iranian and the Indian markets pose unique challenges that portend difficult penetration and or sustainable market shares. However, the improvement of the impeding conditions could provide BRF with great future markets. Iranian firms are using stringent government regulations towards foreign firms in order to dominate their domestic market. India’s failure to offer a potential market for BRF results from its small market size. For instance, in 2010, India- a country with more than 1.2 billion people consumed 14740 tons of processed foods in comparison with South Africa, which has a population of about 50 million and consumed 102, 000 tons of processed foods. India also has a weak economy in terms of the food industry and poor cold chain.
Action plan for China
Relatively, China is a favorable market because it has a big market (in 2010, the Chinese market consumed 2.1 million tons of processed foods). The current Chinese market for processed foods is USD$17 billion. There is good potential for the growth of the Chinese food Market for the next five years due to the absence of dominant competitors and a large market to sustain the business. BRF needs to restructure itself to suit the specific uniquenesses and cultures of the Chinese market. BRF can also plan to acquire local Chinese companies such as Shineway Group that controls 15.2% of the Chilled processed Foods market. BRF needs to BRF has to invest in effective and sustainable food safety measures such as addressing insufficient cold chain that raises food safety concerns among Chinese consumers. BRF can use it core competencies in logistics to address issues of ineffective cold chains in China.
