Brasil Food Case - Corporate Strategy

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Grow their Core Businesses. They seek to further develop their core businesses of producing and selling poultry, pork and processed food products by, among other things, investing in additional production capacity to gain scale and efficiency. For example, we are expanding our Rio Verde Agroindustrial Complex in the central-west State of Goiás and constructing a new agroindustrial complex for the processing of turkey and Chester® roosters, also in Goiás. Their objective is to pursue balanced growth of their domestic and export businesses so that each represents approximately 50% of our annual net sales.

Diversify their Product Lines, Especially Value-Added Processed Foods. They are diversifying their product lines, focusing on processed foods that tend to be less price sensitive than their in natura poultry and pork cuts and can be targeted to specific markets. For example, we recently introduced a line of margarine products, and we acquired in June 2006, 51% of the capital stock of Batávia Indústria de Alimentos, that produce dairy products, which can be distributed along with their existing frozen and chilled products through their distribution network. We also introduced beef cuts in December 2005 and plan to increase their beef sales, particularly to export customers who already purchase poultry or pork from them. They may pursue selective acquisitions to support these strategy goals.

Expand their Domestic and International Customer Base. They seek to strengthen their customer base through superior service and quality and increased product offerings. They believe there are considerable opportunities for further penetration of export markets, particularly as they broaden our product lines to include beef products and additional processed foods. They are also positioning their company to be able to enter new export markets when existing trade barriers are relaxed or eliminated.

Enhance Global Distribution Network. They are developing our distribution capabilities outside Brazil to enable us to expand our export customer base and to improve our services to existing customers. They are focusing on expanding their distribution network in Europe to broaden our coverage and to support more targeted marketing efforts in this key region. In limited cases, they may explore the processing of some products abroad to allow us to deliver those products to customers in those markets.

Continue to Seek Leadership in Low Costs. They are continuing improving their cost structure in order to remain a low-cost producer and enhance the efficiency of their operations. They seek to achieve greater economies of scale by increasing their production capacity, and we are considering the expansion efforts primarily in the central-west region of Brazil because the availability of raw materials, land, labor, favorable weather and other features allow us to minimize their production costs. Also continuing to implement new technologies to streamline their production and distribution functions.

1d. As the CEO I will seek solution first for The domestic market problem due to brazil policy. indeed, Brazil's antitrust agency, suspending sales of certain Perdigao-brand products for three to five years, plus reducing the production capacity by divesting BRF from several factories, slaughterhouses, poultry farms, and distribution centers, all these assets accounting for about 13% of BRF revenues. So BFR would focus on maintaining its retail share (within the bounds of the antitrust ruling) and gaining share in the fast-growing food service sector. Developing a single Brazil Foods culture in our point of view will be very valuable to the firm. Indeed, in the sector the firm get strong competitors like the U.S “Tyson Foods, Inc.” about continent competitors and above all and I think more important local competitors with “JBS S.A.” and “Marfrig Alimentos S.A” two brazil-based company. Internationally, the company would seek to transform from an exporter into a multinational modeled after Nestle, to be achieved by building units or acquiring companies with strong brands in emerging markets. In order to doubling revenues, the BRF team next needed to focus on an international geography, weigh their options for expansion, and decide where to expand firms, greenfield development or acquisitions. Also Build a team capable of executing the vision. To conclude they need to tend to the domestic market and stay attuned to consumer trends, strengthen brand loyalty, capitalize on food service growth, and expand within the limits of CADE's rules. Then seek solutions to get a particular place between its competitors, In December 2011 the divest assets were negotiated with Marfrig, and an asset exchange agreement was signed on March 20, 2012. In return, BRF will receive the entire shareholding in the Argentina-based company Quickfood S.A. And Finally find the best place to can evolve in a multinational but after a well prepared study about the market and possibilities, for example China can be seen like a good choice for global expansion because of the size of the market and it can penetrate the market using acquisition and restructuring the acquired company to meet the requirements.

2a. What are the key markets for international expansion of BRF? What is the performance of BRF international division in comparison to Brasil?

According to legal domestic growth restriction in the Brazilian soil, Brasil Food SA’s team looked for any different international opportunity to sell its protein-based and processed products. The choice of expansion led the company to focus on developing countries with large, rich and growing middle classes. Instead of simply exporting commodities (products) and low-value-added goods to foreign customers, BRF wanted to integrate the value chain by establishing local manufacturing facilities, distribution channels and marketing operations in international markets. The company followed using Brazil as the major source of raw materials, but it implemented the establishment of regional supply hubs all over the world. According to these changes, in 2010 export revenues increased 4.3% (reaching $9.2 billions on volumes), recording a growth of 40.2% in total sales revenues.[pic 1]

Internationally, the company would seek to evolve from an export into a multinational operator, achieving business units or acquiring companies with strong brands in emerging markets. Brasil Food SA is the world’s largest poultry exporter and is now looking for opportunities to implement its international expansion thanks to partnerships and potential acquisitions. A good and recent example is represented by the opening, between 2014 and 2015, of the first Middle East production facility in Abu Dhabi, that could have