Bernard Matthews Expansion Strategy (Competitive Strategies in the Marketplace (NYU Stern - Czepiel)

1. Jason Rawlins, Rachel Travis, Thomas Schmid, Cintia Arrieta, Ramsy Safadi, Tony Lew

2. PRESENTATION OUTLINE
1. Strategic Situation
2. Recommendation Preview
3. Analysis
4. Strategic Alternatives
5. Recommendation

3. 1. Strategic Situation

4. Recommendation
Strategic
Alternatives
The challenge:
How will we ensure continued growth in sales and profits in the new decade?
Bernard Matthews is the Steve Jobs of Turkeys
We are very successful but facing many complex decisions
Analysis
Recommendation
Preview
Strategic
Situation

5. 1950
Launch of
first value-
added turkey
roast
Became the
biggest turkey
farmer in
Europe
1968
Matthews
bought first
20 turkey
eggs
Built first custom
turkey factory in
the UK
1959 1963
Developed
the first
mini turkey
Company
went public
1971 1974
19801976 19871984 1987
Acquired Armour
Le Grys and
started producing
self-basting
turkeys
First TV AD
Campaign Launched value-
added red meat
roasts
100 millionth
turkey roast
sold
Launched
fish
products

6. UK Turkey Market
Bernard Matthews Is The #1 Turkey Producer In The UK
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation

7. 18%
11%
15%
21%
5%
30%
U.K. Market Share Whole Turkeys 1989
Mark & Spencer Bernard Matthews
Swift
Hillsdown
Private Label
/Other
Sainsbury
But Our Position Is Threatened
Private Label Brands And Hillsdown Are Gaining Market Share
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation

8. 18%
11%
15%
56%
U.K. Market Share Whole Turkeys 1989
But Our Position Is Threatened
Private Label Brands And Hillsdown Are Gaining Market Share
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation
Bernard Matthews
Swift
Hillsdown
Private Label
/Other

9. But Our Position Is Threatened
Private Label Brands And Hillsdown Are Gaining Market Share
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation
29%
15%
56%
U.K. Market Share Whole Turkeys 1989
Bernard Matthews
Hillsdown
Private Label
/Other

10. 29%
27%
22%
15%
UK Turkeys Hatched 1989
The Future Of UK Turkey Production
In 1991 Hillsdown Will Produce More Turkeys Than Us
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation
Bernard Matthews
Hillsdown
Unigate
Sun Valley

11. Large UK Retailers Are Consolidating
Over 60% of Food Sales are handled By 5 Leading Supermarkets
Threatening our margins
and channel supremacy
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation
Sainsbury
£4,791.5M
M&S
£4,577.6M
Tesco
£4,119.1M
Gateway
£3,768.5M
Argylll
£3,236.3M
£135.758M
★ ★★

12. Regulatory Changes
EC Is Opening Borders To Freer Trade, Including Processed
Meats
Bernard Matthews 1990
UK
95%
Export
5%
Bernard Matthews
% of Sales (1990)
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation

13. Competitive Advantage: Technology
We Need Continue To Utilize Technology And R&D
Technology
And
R&D
Focus on invention,
innovation, and
vertical integration
Patented processes
Control inputs to
keep costs low
One of the lowest
cost producers in the
world
Rapid new product
development
80% of profits in last
decade are from new
products
Two were Food
Product of the Year
Patents prevent
imitation
PROCESS PRODUCT
New market entries have succeeded when utilizing proprietary technology
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation

14. Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation
Competitive Advantage: Brand
Brand Equity Worth Over £30M And 98% Consumer
Recognition In The UK

15. Turkey
Other Protein
Brand
Private Label
Europe
UK
Processed
Turkey
Whole Turkey
Decisions For The Future
Bernard Matthews Has Many Choices/Opportunities To Balance
Recommendation
Strategic
Alternatives
Analysis
Recommendation
Preview
Strategic
Situation
Technology
- License
Technology
– Internal use Only

16. 2. Recommendation Preview

17. Gost Framework For UK Market
• Maintain #1 Market Leadership in Branded
Turkey Market in UKGoals
•Increase Processed Turkey Sales by 8% CAGR in UK
•Maintain Whole Turkey Sales of 20% or Accept
Decrease up to 15%
•Maintain Private Label Turkey Sales of 5% or Accept
Increase up to 10%
Objectives
•Invest in Technology and Marketing for Processed
Turkey
•Maintain Whole Turkey and Private Label Investment
and Sales
Strategy
•Invest £4.5M in Technology to Develop Additional Innovative
Products
•Increase Marketing by £1M to Promote New Products and
Grow the Market
•Continue to Only Sell PL if Retailers also Sell Branded BM
Products
Tactics

18. • Be #1 Branded Processed Turkey Market
Leader in EuropeGoals
•Increase Turkey Sales by £200M Total in 5 years in
Continental EuropeObjectives
•Invest in Establishing Business in a European Country
•Invest in UK Turkey Production to Export to European
Countries
•Invest in Marketing in Europe to Establish Brand
Strategy
•Invest £3.7M in UK Farm to increase Turkey Hatching
to Export to Europe
•Invest £29.6M to Build Turkey Farm and Factory in
Germany
•Invest £9.6M in marketing over 6 years in Europe
Tactics
Gost Framework For European Market

19. 3. Analysis

20. NON - TURKEY
ANALYSIS

21. Bernard Matthews’ New Product Lines
• FOOD SERVICE
 Bernard Matthews used their knowledge to
create a range of turkey products and
introduce them to school meals.
 In 1990 only 10% of the company‟s sales
came from food service.
 The U.K school system served over 3.5 million meals
per day.
 Its product range was ideally suited to this market.
 Children were used to Matthews products
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

22.  RED MEATS
 FISH
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Lamb Pork
Beef
Bernard Matthews’ New Product Lines

23. 149
173
199
182
220
259
285
341 338
383
420
435
494
594 605
316
359
381 392
415
100
200
300
400
500
600
700
1984 1985 1986 1987 1988
Sales
Processed Fish Fresh Fish Prepared (incl fish products) Frozen (incl fish products)
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
UK Fish Sales

24. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Red Meat Market
100
89 90
94
96
87
85
78
80 79
84
100
92
85 85 86
91
81
89 88
84
86
100 99
112 113
124
122
124
127
130
122 123
40
50
60
70
80
90
100
110
120
130
140
1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
PERCAPITACONSUMPTION
Beef/Veal Mutton/Lamb Pork
Meat Market declines
Red Meat Roast
launched
BM Red meat gained
1-2% share

25. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Bernard Matthews – Non Turkey Market
U.K. MARKET SIZE
% Held by Matthews
25%
50%
1%
3%
2% 1.5%
0%
10%
20%
30%
40%
50%
60%
Whole Turkey Processed
Turkey
Beef Lamb Pork Chicken

26. UK MARKET
ANALYSIS

27. Since 1988
Industry Capacity Decreased Approximately 20%
 Salmonella and listeria
scares
 Drought which increased
soya meal prices
 Higher barriers for entry for
new manufacturers
 Increased competition
amongst manufacturers
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Industry
Capacity

28. UK Turkey
Production Continues To Grow Despite Market Conditions
Interest and taste is growing in the UK for Whole and Processed Turkey products
190000
195000
200000
205000
210000
215000
220000
225000
1988 1989
Turkey Production
(000 m tonnes)
10 %
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

29. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Leading Manufacturers In UK
Will Supply 93% Of The Turkey Meat In 2 Years
Percentage of Turkeys Hatched
0
20
40
60
80
100
120
Others
Unigate
Sun Valley
Bernard
Matthews
Hillsdown
Power of leading manufacturers is still growing as smaller competitors remain on the sidelines

30. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Hillsdown Holdings
Matthew’s Largest Competitor
High
Volume
Low
Margin
Found value in approaching the
whole turkey industry as a commodity
market
 Corporate Strategy
 Minimum overhead
 High volume, low margin
 Purchase failing competitors
 Expand capacity
 Leverage existing brand
names

31. No Share For Independent Operators
Major Retailers Fight Amongst Themselves In Attempts To
Capture Market Share From Each Other
Retail
Competition
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

32. Major Margins
Retail Demands Aim To Squeeze Manufacturers
•Data: Current gross margin provided to retail
•Interpretation: Retail wants more – looks to
private labels
Retailer
Margins on
BM+25%
•Data: Price differential between Sainsbury
private label turkey steak and Matthews
label
•Interpretation: Private label manufacturers
offer more competitive margins at retail
Price Premium
5.6%
•Data: Under 5% of BM sales came from
private labels
•Interpretation: Can retail power surpass the
brand power of Bernard Matthews?
BM Private
Label Sales
< 5%
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

33. Bernard Matthews
Brand Equity Not To Be Lost On Private Labels
Bernard Matthews is the ONLY
consistently stocked nationally branded poultry
line
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

34. Bernard Matthews Profits
Whole and Processed Turkey contributions
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
PercentofProfits
Poundsinmillions
-2
0
2
4
6
8
10
12
0
10
20
30
40
50
60
70
80
90
100
1984 1985 1986 1987 1988 1989
Whole Turkey % Processed Turkey % Whole Turkey $ Processed Turkey $

35. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
BM Competitive Advantage over Hillsdown
Cost
Retailer
Relationship
Brand
Recognition
Technology
Product
Offerings
Bernard Mattews
Hillsdown

36. EUROPEAN
ANALYSIS

37. Europe Has Large Turkey Market
UK
20%
Other
Europe
80%
TOTAL EUROPEAN MARKET SIZE £1.2B
UK Other Europe
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

38. ...and Room To Grow
3.4
2.85
UK Other Europe
Per Capita Turkey Consumption (kg)
Europe 20% lower than UK Avg
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

39. .. Even More Room to Grow In Processed
Processed
10%
Whole Turkey
90%
European
% of Turkey Sales
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

40. Europe Is Very Diverse
 12 countries
 Each w/ different languages
 Each w/ different cultural background
 Varied Turkey Consumption
 Lowest Turkey consumption is .4Kg/capita in
Denmark
 Highest Turkey consumption is 4.9Kg/capita in France
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

41. UK
West
Germany
France
Italy.
-100
-80
-60
-40
-20
0
20
40
60
-1 0 1 2 3 4 5 6
TurkeyShortage(000mtons)
Turkey per Capita Consumption (kg)
EC Turkey Shortage vs Consumption
w/ Population Size
Germany, Italy, UK, France Markets Look
Attractive
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Spain Portugal Ireland

42. Major Countries Qualitative Comparison
UK France Germany Italy
BM
Presence
3 2 3 2
Government
Support 2 1 2 2
Competitor
Strength 1 1 2 2
Close
Distance
from BM HQ
3 3 2 1
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
(3=Favorable; 2=Neutral/No Data; 1=Not Favorable)

43. Bernard Matthews Does Very Little Export
UK
95%
Export
5%
Bernard Matthews
% of Sales (1990)
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

44. 1979 19861984 1985 1992
US: License
technology
to Sara Lee
"not
as successful”
JV w/ Doux
S.A fail as
Retailers find
alternative
suppliers
Germany:
Competitors
Enter
Market and
bring price
down
?
JV w/ Doux S.A
with Small
chicken gain
10% of UK
Frozen chicken
market
New Zealand:
Build Lamb
factory in
NZ
with great
success
BM has major
role in setting
Turkey standards
/Export
code in EC
Germany:
BM Enter
Market
with
Oven-Ready
turkey profitably
What Has BM Done So Far In Exports
or with Foreign Companies?
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

45. 4. Strategic Alternatives

46. For the UK the strategic alternatives are as
follows

47. Competition is strongest in private label
segment
 Profitability
 Higher margin on Bernard Matthews products
 Competitive strengths
 Doesn’t match our brand strength
 Retailer power
 Retailers encourage us to expand private label for whole turkey
 Retailers encourage Hillsdown to increase private label for processed turkey
-> Avoid direct competition by focusing on brand
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation

48. For the UK the strategic alternatives are as
follows

49. The Profitability Of Whole Turkeys Declined
In The Past Years
 Whole Turkey:
 Commoditization/affected by market trends
 Herfindahl-Hirschman Index around 1200 (<1000 competitive market)
-> Compared to over 5600 processed turkeys
 Big international players
 Relative market share to Hillsdown/Swift 0.52
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation
*1987: estimated
*

50. The strategic alternatives for the UK are as
follows

51. We Are Competitively Advantaged In
Processed Turkeys…
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation
Competitive
advantage
Use our strengths
countering
Hillsdown/Swift
1986: 82% of profits
from processed
meats
Brand
98% awareness
over over £30M brand value
Technology
Patents still valid
Product range
Broad offering of processed turkey
Value chain/production
Vertically integrated
Cost competitive
Distribution
Only branded poultry at most of big retailers

52. … And There Is Still Growth Potential For
Processed Turkey In The UK
 Our market share at
processed turkey is 75%
 Based on previous years
forecast of 4% annual
growth in poultry
consumption without
additional from our side
 The UK turkey consumption is
below large European
countries
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation
+29% +44%

53. For Europe there are two main strategic options
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation

54. European Community Will Soon Be Open For
Processed Turkey
 Finally European market will be open for value-added products
 Turkey market size France, Italy and W. Germany is 3.5 x UK market
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation

55. The focus will be on the most attractive
markets
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation

56. The focus will be on the most attractive
markets
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation
 Market segment attractiveness
 BM strengths
 Competitive response

57. Continental Europe Provides An Opportunity
To Develop Processed Turkey Segment
 Processed turkey in Continental Europe significantly below UK market

 Largest poultry producer in Europe: French Doux S.A.
 Most of sales are commodity products
 Large percentage being sold to non-EC markets
-> Avoid direct competition on unprocessed turkey
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation

58. 5. Recommendation

59. Defend UK With Investments In Advertising
And Innovation
 Increase R&D budget by £4.5 million pounds to strengthen
current competitive advantages
 Product R&D to develop consumer products that
exploit current patents
 Process R&D innovation to cut costs
 File new patents
 Increase advertising by £1 million pounds to market new
products and grow the overall market
 TV advertising
 Print advertising
 In-store promotions
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation

60. 88% Probability Of Positive NPV From
Additional Investments Into UK
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation
 Average: £6,115,398 (UK 1990)
 $18,941,834 (US 2013)

61. Entry Into Europe Will Follow A Three-phased
Approach
Revenues begin from
Italy and other EC
countries as marketing
expands
Harvesting turkeys
generate £2.3 million in
profits in 1994
£1.4 million marketing
pounds invested to build
brand
Revenues begin from
Germany and France as
marketing expands
Harvesting turkeys generate
£3 million in profits in 1992
£1.8 million marketing
pounds invested to build
brand
Invest for entry into Italy
and other EC countries
(Spain, Portugal, and
Ireland)
£2.7 million pounds in
building capacity and
inventory
Invest for entry into
Germany (whole and
processed) and
France (processed
only)
Build infrastructure in
Germany
 3 year build-up
 £5 million pounds
Lay extra eggs in UK
for exporting
 £230 k pounds
Building relationships
with retailers in
Germany and France
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation

62. European Investment Will Break Even In
4 Years
-£6,000,000
-£4,000,000
-£2,000,000
£0
£2,000,000
£4,000,000
£6,000,000
£8,000,000
£10,000,000
£12,000,000
£14,000,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Cash Flow Projections - Entry into Europe
Germany France Italy Others
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation

63. 82% Probability Of Positive NPV From EC Entry
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation
 Average: £62,779,652 (UK 1990)
 $194,453,694 (US 2013)

64. Risks And Other Considerations
 UK
 Market is saturated – unable to grow market through advertising
 Mitigated through low production costs and new capacity to export surplus
 Entrance of Aldi’s discount chain into the UK could squeeze margins further
 Europe
 Risk that EC community will not be formed and processed export restrictions will
continue
 Mitigated by setting steel in Germany
 Customer needs may be very different than the UK
 Mitigated by deep consumer research
 Exchange rate risks
 Need to set a hedging strategy
 Some risks can be mitigated through our two-phase approach
 Both
 High debt/equity ratio
 Wide swings in commodity prices
 Sensitive to consumer safety fears
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation

65. Summary Of Recommendations
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation
UK
Increase
R&D budget
Increase
Advertising
Increase Processed Turkey Sales
Maintain Whole Turkey & Private Label
£6.1 NPV from £5.6
investment
Maintain
Retailer
Relationships
EC
Export initially
from UK
Build EC HQ
in Germany
3-phased entry into (1) France, Germany, and (2)
Italy, Spain, Portugal, and Ireland focused on Branded Processed
Turkey
£62.7 NPV from £9.3 investment
Invest in
Marketing
to Build EC Brand

66. Management Request For Approval
We request the following investments to protect
our position in the UK:
 £0.65 million additional investment in 1990
 £5.60 million investment over the next 5 years
We request the following investments to begin our
foray into Europe:
 £1.89 million initial investment in 1990
 £9.26 million investment over the next 5 years
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation

67. THANK YOU

68. APPENDIX

69. ANSOFF GROWTH MATRIX
Current
Market
New Market
Current
Product
UK, Turkey Europe,
Turkey
New
Product
UK, Fish etc. Europe, Fish
etc.

70. PERFORMANCE QUALITIES
Performance
Categories
BM Hillsdale Unigate
Price Lowest ? ?
Small Size Smallest
Convenience Most
Variety Most
Freshness Best
Low cook loss
(Shrinkage)
Best
Easier to cook Best
Taste Best

71. ADVANTAGES
It is easier to gain share in growing markets:
Share gains in growing markets have greater long-
run value
Growth markets experience less price pressure
Early entrants gain experience advantages
Early entrants gain technologically
Early can deter potential competitors

72. DISADVANTAGES
 Too many competitors may enter
 Technology may change
 Resource needs are high
 The promised growth may not arrive
 Key success factors may change

73. ...but still #1 in Europe
Company Turkey Producer
Ranking in
Europe
Bernard
Matthews
1
Hillsdown 2
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

74. Germany, UK, Italy, France Have Largest
Turkey Market Size
UK
W.Germany
France
Italy
Spain
Holland
Denmark Belgium
Greece Portugal
Ireland
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
0 1 2 3 4 5 6
Population(millions)
Per capita consumption (kg)
Population vs Per Capita Turkey Consumption
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

75. Some Potential Exists For Spain, Portugal
And Ireland
UK
W.Germany
France
Italy
Spain
Holland
Denmark Belgium
Greece Portugal
Ireland
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
0 1 2 3 4 5 6
Population(millions)
Per capita consumption (kg)
Population vs Per Capita Turkey Consumption
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

76. ISSUE TREE:
EUROPEAN
MARKET
European
Market?
What are the most
profitable and
largest geographic
markets?
Competition?
Market size?
Current profit margins?
Market structure?
Key success factors?
Competitive rivalry?
Risks?
Consumers?
Turkey consumption &
current trends?
Demographics?
Acceptance by
retailers & other
distribution channels?
Brand recognition?
Protein buying habits?
Segmentation?
Regulatory risks?
Marketing
Retailers and distribution?
Growth?
Household size?
General
cooking/eating
household habits?
Power of
retailers/others?
Economic growth?
Reception to
advertising?
Limited experience outside
UK?
Build out?
Startup costs Partner?
Acquire?
Pricing?
Investment?
Political risks?
Expected margins>Profitability?

77. RACHEL

78. 19%
26%
11%
5%
14%
26%
U.K. Market Share Oven
Ready Turkeys 1989
Hillsdown Barnard Matthews
Other Manufactureres Marks & Spenser
Sainsbury Other Private Labels
BUT HIS POSITION IS THREATENED
Hillsdown is signalling that they are going after Bernard Matthews’
key segments

79. JASON

80. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Value Map
Bernard Matthews Vs. Hillsdown
Price
Quality
Hillsdown
Bernard
Matthews
 Price Only
 Price
 Performance

81. Top of
Mind
Brand Recall
Brand Recognition
Unaware of Brand
By 1990
BM Boasts A Brand Awareness Level Of 98%
Bernard
Matthews
Hillsdown
$30MM
to achieve
this level of
consumer
awareness
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis

82. MARKET FACTS (1989)
Country Population
(millions)
Production % Change
production
Exports Imports Per capita
consumption
(kg)
UK 56.8 220,000 10 32,000 5,000 3.4
Turkey
(000 m tons)
• The UK is the third largest producer of Turkey in the EU region
• 27% of Turkeys hatched in UK belonged to BM
• Production has increased 10% over the last year
• Interest and taste is growing in the UK for Whole Turkey and
Processed Turkey products

83. UK whole turkey share by volume (1989)
29%
15%
56%
Hillsdown (Buxted/Twydale)
+ Swift
Barnard Matthews
Private Label/other brands
 Bernard matthews has the smallest whole turkey share in the UK
 Private label brands are prevalent in the UK
 Hillsdown provides both branded products and private label
turkeys
REINFORCE
but remove
graph

84. COMPETITION NEAR AND FAR
• Give background on competitors, past and present
• Attractive/reactiveness with Doux
•Spider graph
• Cost
• Price
• Brand recognition
• Technology
• Product offerings

85. BMS CORE PRODUCT MIX IN THE
UK
Processed
Turkey
Other
Meats
Whole
Turkey

86. UK WHOLE TURKEY SHARE
METRICS
0 10 20 30 40 50 60
Hillsdown
Matthews
Swift
Sainsbury
Marks & Spencer
Private Labels
31
26
19
36
9
52
by Tonnes ('000)
ProducerName
UK Whole Turkey Share by Tonnes ('000)
1987
Series1

87. RAMSY

88. NPV ASSUMPTIONS: EC
 Market penetration
 5% initial market penetration
 30% annual growth in first 3 years
 5% annual growth in later years
 Product mix
 95% processed turkey
 5% whole turkey
 Margins
 12% profit margin for processed turkey
 7% profit margin for whole turkey
 Financing
 10% WACC
 Advertising investment
 Approximately 750,000 pounds extra investment per year per country in the first 3 years of entering the country
adjusted by relative size of population to UK‟s population
 9.6 million pounds total additional investment
 Others
 2 year production cycle from hatching eggs
 3 years are required to build the plant in Germany
 Turkey will be exported initially into Germany in 1992 until factory is completed
 Assets can be built incrementally proportional to expected revenues per year
 Financing and tax costs not considered

89. NPV ASSUMPTIONS: UK
• Revenues
• 7% increase in sales in the first 5 years
• 4% annual growth in later years
• Product mix
• 95% processed turkey
• 5% whole turkey
• Margins
• 12% profit margin for processed turkey
• 7% profit margin for whole turkey
• Financing
• 10% WACC
• Investment costs
• 0.5 million pounds incremental advertising
• 4.5 million pounds incremental R&D
• Others
• First new products in market after 1 year
• Additional R&D investments can be reduced after 3 years

90. NPV NUMBERS: UK

91. NPV NUMBERS: EC
Initial Mkt Share 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Germany 5% £8,704,663 £11,316,062 £14,710,881 £19,124,145 £20,080,352 £21,084,370 £22,138,588 £23,245,518 £24,407,794
Whole Turkey £435,233 £565,803 £735,544 £956,207 £1,004,018 £1,054,218 £1,106,929 £1,162,276 £1,220,390
Proceseed £8,269,430 £10,750,259 £13,975,337 £18,167,938 £19,076,335 £20,030,151 £21,031,659 £22,083,242 £23,187,404
France 5% £17,098,446 £22,227,979 £28,896,373 £37,565,285 £39,443,549 £41,415,727 £43,486,513 £45,660,839 £47,943,881
Processed £17,098,446 £22,227,979 £28,896,373 £37,565,285 £39,443,549 £41,415,727 £43,486,513 £45,660,839 £47,943,881
Italy 5% £15,917,098 £20,692,228 £26,899,896 £34,969,865 £36,718,359 £38,554,276 £40,481,990
Whole Turkey £795,855 £1,034,611 £1,344,995 £1,748,493 £1,835,918 £1,927,714 £2,024,100
Proceseed £15,121,244 £19,657,617 £25,554,902 £33,221,372 £34,882,441 £36,626,563 £38,457,891
Other 5% £4,103,627 £5,334,715 £6,935,130 £9,015,668 £9,466,452 £9,939,774 £10,436,763
Whole Turkey £205,181 £266,736 £346,756 £450,783 £473,323 £496,989 £521,838
Proceseed £3,898,446 £5,067,979 £6,588,373 £8,564,885 £8,993,129 £9,442,786 £9,914,925
Total Revenue £25,803,109 £33,544,041 £63,627,979 £82,716,373 £93,358,927 £106,485,630 £111,809,912 £117,400,407 £123,270,428
Revenues
Operating margins
Operating Profits 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Germany
Whole Turkey £30,466 £39,606 £51,488 £66,935 £70,281 £73,795 £77,485 £81,359 £85,427
Proceseed £992,332 £1,290,031 £1,677,040 £2,180,153 £2,289,160 £2,403,618 £2,523,799 £2,649,989 £2,782,488
France
Processed £2,051,813 £2,667,358 £3,467,565 £4,507,834 £4,733,226 £4,969,887 £5,218,382 £5,479,301 £5,753,266
Italy
Whole Turkey £55,710 £72,423 £94,150 £122,395 £128,514 £134,940 £141,687
Proceseed £1,814,549 £2,358,914 £3,066,588 £3,986,565 £4,185,893 £4,395,188 £4,614,947
Other
Whole Turkey £14,363 £18,672 £24,273 £31,555 £33,133 £34,789 £36,529
Processed £467,813 £608,158 £790,605 £1,027,786 £1,079,176 £1,133,134 £1,189,791
Total Operating Profits £3,076,603 £3,998,988 £7,550,522 £9,815,082 £11,070,279 £12,617,598 £13,248,379 £13,910,699 £14,606,135

92. NPV NUMBERS: EC
Capital Investments
Cash Flows
Capital Investments 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Germany
Fixed asset investment £558,610 £558,609.67 £558,610 £1,619,968 £653,573 £849,645 £184,090 £193,294 £202,959 £213,107 £223,762
Changes in working capital £77,485 £23,245 £107,704 £62,530 £116,216 £71,468 £125,600 £81,321 £135,946
Extra marketing £1,027,289 £1,027,289 £1,027,289 £0 £0 £0 £0 £0 £0
France
Fixed asset investment £1,097,269 £1,097,269.00 £1,097,269 £3,182,080 £1,283,805 £1,668,946 £361,605 £379,685 £398,670 £418,603 £439,533
Changes in working capital £152,203 £45,661 £211,562 £122,828 £228,281 £140,383 £246,714 £159,738 £267,037
Extra marketing £732,835 £732,835 £732,835 £0 £0 £0 £0 £0 £0
Italy
Fixed asset investment £1,021,458 £1,021,458 £1,021,458 £2,962,227 £1,195,105 £1,553,637 £336,621 £353,452 £371,125
Changes in working capital £141,687 £42,506 £196,945 £114,341 £212,509 £130,684 £229,669
Extra marketing £755,282 £755,282 £755,282 £0 £0 £0 £0
Others
Fixed asset investment £263,345 £263,345 £263,345 £763,699 £308,113 £400,547 £86,785 £91,124 £95,681
Changes in working capital £36,529 £10,959 £50,775 £29,479 £54,787 £33,692 £59,211
Extra marketing £690,581 £690,581 £690,581 £0 £0 £0 £0
Total Capital Investments £1,885,566 £1,655,879 £4,879,020 £7,915,880 £6,747,432 £7,929,203 £4,086,993 £2,882,834 £1,664,646 £1,481,721 £1,821,964
Total Cash Flows 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Perpetuity
Germany -£636,095 -£558,610 -£563,100 -£1,340,865 -£60,038 £1,334,911 £2,059,136 £2,212,651 £2,272,725 £2,436,920 £2,508,207 £25,082,074
France -£1,249,472 -£1,097,269 £221,710 -£1,293,218 £1,239,364 £2,716,061 £4,143,340 £4,449,819 £4,572,998 £4,900,960 £5,046,696 £50,466,956
Italy £0 £0 -£1,163,145 -£1,021,458 £93,520 -£1,328,678 £1,013,406 £2,440,981 £3,765,277 £4,045,991 £4,155,840 £41,558,402
Others £0 £0 -£299,873 -£263,345 -£471,749 -£838,410 -£234,591 £629,315 £970,735 £1,043,107 £1,071,428 £10,714,275
Total Cash Flows -£1,885,566 -£1,655,879 -£1,804,408 -£3,918,885 £801,096 £1,883,884 £6,981,290 £9,732,767 £11,581,735 £12,426,978 £12,782,171 £127,821,706
Present Value
PV (BM Label) NPV 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Perpetuity
Germany £12,232,892 -£636,095 -£507,827 -£465,372 -£1,007,412 -£41,007 £828,875 £1,162,328 £1,135,440 £1,060,243 £1,033,492 £967,023 £9,670,225
France £27,788,878 -£1,249,472 -£997,517 £183,231 -£971,614 £846,502 £1,686,460 £2,338,807 £2,283,461 £2,133,337 £2,078,485 £1,945,720 £19,457,196
Italy £18,829,796 £0 £0 -£961,276 -£767,436 £63,875 -£825,005 £572,041 £1,252,609 £1,756,529 £1,715,895 £1,602,256 £16,022,563
Others £3,928,088 £0 £0 -£247,829 -£197,855 -£322,211 -£520,587 -£132,421 £322,938 £452,855 £442,379 £413,082 £4,130,817
Total PV £62,779,652 -£1,885,566 -£1,505,344 -£1,491,246 -£2,944,316 £547,160 £1,169,744 £3,940,756 £4,994,448 £5,402,965 £5,270,252 £4,928,080 £49,280,801

93. Entering EC With Current Brand Maximizes NPV
£62,779,652
-£109,362,900
£16,457,691
1
NPV of Brand Options
Private Label New Brand Existing Brand
Strategic
Alternatives
Analysis RecommendationRecommendation
Preview
Strategic
Situation

94. EXTRA SLIDES

95. For entering a specific country we need to
address the following questions.
Enter a new
country
Export
Build new
operations
Joint
Venture/M&A
Whole Turkey
Processed Turkey
Whole &
Processed
BM brand
Other Brand
Private Label
Analysis Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation

96. C: ANALYSES OF FACTS (10-
12MINS)
 Analysis in neutral form
 Compares competitive offering feature by
feature
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic Situation Analysis

97. UK MARKET ANALYSIS
 Separate presentation slides by Jason!

98. ATTRACTIVENESS/RESPONSIVENE
SS
 For UK Market
 European market

99. COMPETITIVE ADVANTAGES
Leverage Verticals
BM not as affected by commoditization due to
its competitive advantages in both Farming &
Processing
FARMING MANAGEMENT
• Operating 21 Turkey farms
•Outsourcing production of other meats in our portfolio
• Operating our own feed mill
•Lower costs and more control over feed quality
PROCESSING & PRODUCTION
• Development and patenting of machines like the „de-boner‟ to
ensure automation and speed in processing
• R&D receives significant attention directly from Bernard to ensure
that the group‟s efforts remain aligned with the needs of the
customers

100.  Also obtained patents on foods, not just machines
 Turkey Breast Roast
 Self-Basting Turkeys
 Ownership of these products and machines allow us to enjoy
uninterrupted success in the new processed foods categories we
created (FOR NOW – what happens once patents expire?)
 Should BM hoard the technology or license it out for additional
revenue stream???
 See short-lived Sara Lee partnership
Competitive Advantages
Intellectual Property

101. DEFENSIVE POSITION
 Direct attacks from retailers and their private label
brands
 BM does not negotiate with terrorists (j/k)
 Partnerships only occur under strict conditions composed
by the BM team
 Private label product must be a different size and be displayed
adjacent to BM product
 Flank attack from Hillsdown [whole turkey
mkt], Unigate [turkey meat supplier], and smaller
competitors in new regions we attempt to
penetrate (pg. 210)

102. GROWTH STRATEGY
 Expand further into Europe
 Also provide B2B service and not just B2C, by
undertaking Food Service contracts with
coporations and schools
 Sell the technology on expiring patents

103. BM TURKEY SHARE METRICS
18%
15%
11%
21%
5%
30%
UK Whole Turkey Share by
Volume
Hillsdown
Matthews
Swift
Sainsbury
Marks & Spencer
Private Labels
0 10 20 30 40 50 60
Hillsdown
Matthews
Swift
Sainsbury
Marks & Spencer
Private Labels
31
26
19
36
9
52
by Tonnes ('000)
ProducerName
UK Whole Turkey Share by Tonnes
('000)
Series1

104. THE MARKET SELECTIVITY HIERARCHY
Market Selection: Poultry, Red Meat, Fish
Segment Selection: Whole Turkey, Roasts, Food
Services
Niche Selection: Turkey Roasts &
Other Value Added Products
across all protein choices
Customer Selection:
Industry Selection: Food (proteins)

105. STRATEGIES
COMPETITORS
 HILLSDOWN HOLDINGS: Purchasing failing competitors to expand capacity and gain
access to additional brand names - operate high volume low margin.
 UNIGATE: Focus on supplying turkey meets to other companies.
 Smaller 2nd tier players: Concentration on production of whole birds and basic value
added products.
RETAILERS / MARKS AND SPENCER, SAINSBURY, TESCO, GATEWAY, ARGYLL
 Develop multiple sources of supply to weaken the relative position of individual
manufacturers and ensure lower prices
BM STRATEGIES
Permanently develop potential value added products
Purchase failing competitors - additional facilities, market share, differentiation
Series of new products that allowed a more complete use of turkey meat.
Company´s marketing: understand the consumers and develop new, innovative products suited to the
changing marketplace.
How to stay close to the consumer - Based on Vision, motivation, differing levels of backward integration and learning from
experience.

107. COMPETITIVE FORCES
Competitive Rivalry
- High Standards production
- Extensive market research to
develop next breakthrough
- Strong brand identity
- Differentiated products
- Cost position compared to main
competitors
- Saturated market
- Hillsdown Holdings (whole turkey
segment)
- Unigate
Potential Entrants
- Regulations differ between
countries and sometimes states
- Patent protection in the U.S.
- Retailers
Substitutes
- Chicken market
Supplier Leverage
- No suppliers, BM
controls all the
production processes
from the breeding
and rearing right
through to the end
product.
Buyer Leverage
- Development of the mini
turkey
- Innovative products
developed making turkey
a more everyday meat
Turkey
Horizontal Competition: BM seeks to gain competitive advantage versus other firms.

108. COMPETITIVE FORCES - TURKEY
- Regulations differ between
countries and sometimes states
- Patent protection in the U.S.
- Retailers
Potential Entrant
Competitive Rivalry
- High Standards production
- Extensive market research to
develop next breakthrough
- Strong brand identity
- Differentiated products
- Cost position compared to
main competitors
- Saturated market
- Hillsdown Holdings
- Unigate
Substitutes
- Chicken market
Buyer Leverage
- Development of the
mini turkey
- Innovative products
developed making
turkey a more
everyday meat
Supplier Leverage
- No suppliers, BM
controls all the
production processes
from the breeding and
rearing right through to
the end product.

109. COMPETITIVE FORCES – RED MEAT
- Slow product development
- Patent protection in the US
- Required technology
- European Competition??
Potential Entrant
Competitive Rivalry
- Competitors became more
responsive to market trends.
- Maintain products without
additional investment
- Joint Ventures
Substitutes
- Unprocessed red meat
- Turkey
- Chicken
- Fish
Buyer Leverage
- Overall demand for
red meat fell
- Retailer power
Supplier Leverage
- Contracted lamb of
New Zealand

110. COMPETITIVE FORCES
Competitive Rivalry
- Competitors became more
responsive to market trends.
- Maintain products without
additional investment
- Joint Ventures
Potential Entrants
- Slow product development
- Patent protection in the US
- Required technology
- European Competition??
Substitutes
- Unprocessed red meat
- Turkey
- Chicken
- Fish
Supplier Leverage
- Contracted lamb of New
Zealand
Buyer Leverage
- Overall demand for red
meat fell
- Retailer power
Processed red Meat Market
(lamb, pork, beef)

111. BERNARD MATTHEWS PRODUCTIVE
PROCESS

113. CREATING STRATEGIES IN
EVOLUTIONARY MARKETS
BM saw significant potential in overseas
markets. While Europe offered tremendous
potential for the company, it would take time
before these sales became a large percentage of
total revenues.

114. 3 MAIN OPERATING COMPANIES
United Kingdom-based
Bernard Matthews Limited
Germany-based Bernard
Matthews Oldenburg
Hungary-based Saga Foods
Based in the East of
England and produces a
range of fresh, cooked
and frozen turkey
products which it sells
across the UK. It employs
around 2,200 staff and
farms around 7 million
turkeys per annum.
Based in the north of
Germany and employs
around 130 staff. It
produces a range of
fresh, cooked and frozen
poultry products which it
sells across Germany and
northern Europe
Saga Foods is based in northwest Hungary and
employs around 800 staff. It produces a range
of poultry products which it sells across Central
Europe

115. ADVANTAGES
It is easier to gain share in growing markets:
 Share gains in growing markets have greater
long-run value
 Growth markets experience less price pressure
 Early entrants gain experience advantages
 Early entrants gain technologically
 Early can deter potential competitors

116. DISADVANTAGES
 Too many competitors may enter
 Technology may change
 Resource needs are high
 The promised growth may not arrive
 Key success factors may change

117. BM PRODUCTS
Product Category Products Supply % of Profits % of Sales Profitability % Market Share
Turkey Processed -
Turkey Sausage
21 Turkey Farms,
Feed mill (80%+)
51% (1985 all
processed)-
>48% (1986)
28% of UK Frozen
Sausage in 1st yr.
50% (1986) of 120M
pounds
Whole Turkey –
Oven Ready
21 Turkey Farms,
Feed mill (80%+)
19% (1985)->18%
(1986)
Loss for
year (1988)
25% (1986) of 120M
pounds -> 26% (1989) (#1
per Brand but Hillsdown
#1 if PL included)
Red Meat Beef, Mini-Beef 24% (1985 all red
meat)->34%
(1986 for red
meats)
1% (1986) of 1900M
pounds
Lamb
Cutlets, Mini-
kievs, Mini-lamb
3% (1986) of 600M
pounds
Pork, Mini-pork 2% (1986) of 600M
pounds
Chicken 1.5% (1986) of 600M
pounds
Fish (Norfolk Bay) Shaped Fish
Pieces
Contract large
fishing fleet
4% of 84M pound Fish
Finger Market
Sea Pearls (Mini-
kievs)
Contract large
fishing fleet
Food Service 10% (1990)
Technology License
Private Label 5% (1990)
European Market 5% (1990)
UK Processed
Market
57.5% (1986)-> 75% (1989)

118. COMPETITORS
Competitors Strengths Weakness
BM Fully integrated for Turkey (Quick response, Quality Control, Lower cost)
Cost leader in Turkey
Technologically Advanced (Speed, automation, cost)
Efficient Process
Leader in value-add
Brand recognition in UK
Strong Marketing,
Strong Prod Development,
Patents (Roast, Co-extrusion Process)
#1 in Turkey in EC
5% extra margin per Turkey pounds (1.96 for Private label vs 2.07 BM)
No presence beyond UK
No brand value beyond UK
Don‟t understand Europe‟s
tastes
No relation in Europe
France weird
Hillsdown
Holdings
Leading market share in whole turkey
Commodity at low cost (High Volume, Low-margin, minimum O/H)
Private Label relationship
Expand via buying failing companies
New Vaue Add Brand name w/ purchase of Swift Butterball
Less integrated
Unigate Large food and transport company in US and Europe w/ $4B annual rev. Only
turkey in the meat space.
Exited from value add & oven
ready
Sun Valley Part of giant US feeding company Cargill
Other regional
players
Whole birds, basic value-add Highly Labor intensive
Supermarket
Groups
60% of food sales by 5 Supermarket groups (Strong buyer power) Retailers fighting each other as
UK market near saturation; High
%margin attracting foreign
companies
French Relationship with small farmers
Major consumer of grain
Received EC grants => Build Export Market
French – Doux
S.A
Largest combined chicken & turkey producer in Europe, 3rd largest in the world
Commodity sales
Strong non-EC market (Middle East)
85% owned by Doux family (swift decision)

119. MARKET ANALYSIS
Country Category Size
UK 2 or few per family 50% of Population
UK Beef Market $1.9B pounds (Early 1980s)
UK Food Service 3.5M meals per day
UK Fish Market 1795M pounds (1989)
Fish- Processed and shell 220M pounds (1988)
Fish-prepared incl products 605M pounds (1988)
Frozen – incl products 415M pounds (1988)
UK Beef 18.9KG per capita (1988)
Chicken 16.7kg per capita(1988)
Pork 14KG per capita(1988)
Lamb 6.5KG per capita(1988)
Turkey 2.8kg per capita(1988)->3.4 (1989) of
56.8M population
France Turkey 4.9kg per capita(1989) of 55.5M
population
Europe except UK Turkey Look at Exhibit 13
Europe Turkey Sales 90% of Market is Unprocessed

120. PERFORMANCE QUALITIES
Performance
Categories
BM Hillsdale Unigate
Price Lowest ? ?
Small Size Smallest
Convenienc
e
Most
Variety Most
Freshness Best
Low cook
loss
(Shrinkage)
Best
Easier to
cook
Best
Taste Best

121. ISSUES
Issue Options
Export/Enter EC Market Use existing Brand
Develop new Brand
Private labels
Build breeding/processing in mainland
Identify Consumer needs Low-calorie
Free range chickens
Efficiency and reduce cost
Utilize Tech Expertise Sell Technology to small group of
countries
Sell Technology to all countries
Fighting retailers

122. -10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
-1.00.01.02.03.04.0
UKMarketGrowth
Relative Market Position
BCG Product Portfolio

123. Product line Market share Market growth
UK Whole Turkey
1987
15%/29% = 0.52
(Hillsdown +
Swift)
UK Total Turkeys
hatched 1989
27%/29% = 0.93
Oven Ready
Turkey
1989
19%/26% = 1.37
Case p. 26

124. HHI COMPETITION INDEX
Segment HHI, top 4
market players
Market Shares
top 4 market
players
UK Whole Turkey 1111 21, 18, 15, 11
Estimated Total
Turkeys Hatched
UK
2279 29, 27, 22, 15
Oven Ready
Turkey
1258 26, 19, 14, 5

125. PAYOFF MATRIX NEW ENTRANT
Not enter
Enter EC
Enter
Germany
Enter France

126. Direct
competitor
s
Indirect
Competitors
Emerging
or potential
competitors
US & European
Continental Producers
Private Label
Competition
Substitutes

127. Turkey market
Need States
Quality/Price
Distribution
Whole Turkey
Processed
Turkey
Private label BrandedNo label
Supermarkets
Oven ready
turkey
Other retailers
Sales market UK
European
Community
Overseas
Read
Meats
Chicken
Fish
4P‘s

128. Turkey market
Need States
Quality/Price
Distribution
Whole Turkey
Processed
Turkey
Private label BrandedNo label
Supermarkets
Oven ready
turkey
Other retailers
Sales market UK
European
Community
Overseas
Read
Meats
Chicken
Fish
4P‘s

129. Company Facts
Bernard Matthews One of the lowest cost producers; high process capabilities; innovative
Hillsdown
(Buxted/Twydale)
+ from 1990 Swift
Largest competitor, leading in whole turkeys; buying failing competitors
-> capacity/brand, aim produce low cost; less integrated then BM ->
High volume, low margin
1990: Bought Butterbull (wanna enter value-added),Interest in
European business whole birds and UK private label business
Doux S.A. French, family-owned, largest chicken producer in Europe
Sun Valley Wholly owned UK poultry subsidiary of giant US feed company Cargill (-
> high feed prices)
Unigate Large food and transport company with interests in US and Europe.
Annual revenues over $4billion
Smaller second-tier
competitors
Were used to replace BM in chicken market by retailers for privat labels
Private label Increasing importance in UK market, due to high retailer power and
retailers„ wish to increase margins
In general: High cost of cereal-based feed inputs in European
Community

130. http://www.telegraph.co.uk/foo
danddrink/foodanddrinknews/8
162189/Bernard-Matthews-
analysis-from-20-chicks-to-
seven-million-turkeys.html
http://www.google.co.uk/search?hl=de&qscrl=1&rlz=1T4LENP_deDE496DE498&q=turkey+under+attac
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131. http://www.youtube.com/watch?v=_Q
p2npH0fLo

132. http://www.barking-
moonbat.com/index.php/weblog/2009
/11/P14/
http://www.funny-lolz.com/ready-for-
thanksgiving/thin-turkey/

133. Whole
Turkey
Processed Turkey
Beef
Lamb
Pork
Chicken
Fish
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
-1.0-0.50.00.51.01.52.02.53.03.54.0
UKMarketGrowth
Relative Market Position
BCG Product Portfolio
Growth rate assumptions determined by per capita consumption trends

134. WHAT DOES BCG PRODUCT
PORTFOLIO TELL US?
 Strive to maintain share dominance in processed
turkey products until it becomes a cash cow
 Use extra funding from turkey products to
strengthen fish, chicken and whole turkey
competitive positioning
 Maintain red meat products without additional
investments when possible or divest
 Very simplistic results; not that helpful

135. GROWTH RATE AS PROXY FOR INDUSTRY ATTRACTIVENESS IS
LIMITING
Competitive
Rivalry
Supplier
Power
Customer
Power
Threat of
Substitutes
Threat of
New Entry
Market
Growth
Overall
Attractiveness
UK Oven Ready Mini Turkeys High Low High High High High Low
Eastern Europe Whole Turkey High Low High High High High Low
UK Turkey Roast Low Low High High Low High Medium
German Oven Ready Turkey High Low High High High High Low
European Self-Baste Turkey Medium Low High High High High Low
UK Turkey Sausage Low Low High High Low High Medium
UK Turkey Steaks Low Low High High Low High Medium
UK Beef Roast Medium Low High High Medium Low Medium
UK Pork Roast Medium Low High High Medium Medium Medium
UK Lamb Roast Medium Low High High Medium Low Medium
UK Mini Chicken High Low High High High High Low
UK Fish Products Low Low High High Low High Medium
UK Private Label Turkey Low Low High High Low High Low
UK Food Service Low Low Medium High High Medium Medium
EC Turkey Products Low Low Medium High Low High High

136. RELATIVE MARKET SHARE AS PROXY FOR BM MARKET POSITION IS
LIMITING
Differentiated
Product
Cost
Advantaged
Technology
Advantaged
Brand
Advantage
Market
Penetration
Overall
Positioning
UK Oven Ready Mini Turkeys Low High Low High Medium Medium
Eastern Europe Whole Turkey Low High Low High Low Medium
UK Turkey Roast High High High High High High
German Oven Ready Turkey Low High Low High Low Medium
European Self-Baste Turkey Low High Medium High Medium Medium
UK Turkey Sausage High High High High High High
UK Turkey Steaks High High High High High High
UK Beef Roast Medium Medium High Low Low Medium
UK Pork Roast Medium Medium High Low Low Medium
UK Lamb Roast Medium Medium High Low Low Medium
UK Mini Chicken Medium Medium Low Low Low Medium
UK Fish Products High Medium High Low Low High
UK Private Label Turkey Low Medium Low Low Low Low
UK Food Service High High High Medium Low High
EC Turkey Products High High High Medium Low High

137. UK Mini-Turkeys
UK Lamb Roast
UK Turkey Steaks
UK Beef Roast
EC Self-Baste Turkey
UK Turkey Sausage
UK Turkey Roast
German Mini-Turkey
UK Pork RoastEastern Europe
Mini-Turkey
UK Mini-Chicken
UK Fish Products
UK Private Label Turkey
UK Food Service EC Turkey Products
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
-3 -2 -1 0 1 2 3
Company’sCompetitivePosition
Prospects for Market-Sector Profitability
Unattractive Average Attractive
Strong
Average
Weak
The Directional Policy Matrix

138. WHAT DOES DIRECTIONAL
POLICY MATRIX TELL US?
 Leaders: UK Turkey Products (roast, steak, sausage)
 Maintain position
 Extra resources may be needed to expand capacity
 Try Harder: UK Fish Products & European Community Turkey Products (when feasible)
 Judicious application of resources to move product to leadership
 Extra resources may be needed to grow
 Double or Quit: UK Private Label Turkey
 No future in private labels so quit
 Growth: UK Food Service
 Investments should be made to allow the product to grow with the market
 Generally should be self-sufficient
 Proceed with Care: UK Pork Roast & European Community Self-Baste Whole Turkey
 Major investments should be made with extreme caution
 Phased Withdrawal: UK Mini-Turkeys, UK Lamb & Beef Roast, Eastern European & German
Mini-Turkeys
 Realize the value of the assets on a controlled basis to make the resources available
for redeployment elsewhere
 Disinvestment: UK Mini-Chicken

139. UK Mini-Turkeys
UK Lamb Roast
UK Turkey Steaks
UK Beef Roast
EC Self-Baste Turkey
UK Turkey Sausage
UK Turkey Roast
German Mini-Turkey
UK Pork RoastEastern Europe
Mini-Turkey
UK Mini-Chicken
UK Fish Products
UK Private Label Turkey
UK Food Service EC Turkey Products
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
-3 -2 -1 0 1 2 3
CorporateStrengths
Market Attractiveness
Low Medium High
High
Medium
Low
Attractiveness/Strength Matrix

140. WHAT DOES ATTRACTIVENESS/STRENGTH
MATRIX TELL US?
 All-out struggle: UK Turkey Products (roast, steak, sausage)
 Concentrate entire effort on maintaining strength
 If necessary, maintain profit structure by investment
 Selective Growth: UK Fish Products & European Community Turkey Products (when feasible)
 Concentrate investments in areas where strength can be maintained
 Serious entry into market: UK Private Label Turkey
 Withdraw as sustainable growth is lacking for private labels due to retailer power
 Maintenance of superiority: UK Food Service
 Build up ability to counter competition, avoiding large-scale investment
 Emphasize profitability by raising productivity
 Selective expansion: UK Pork Roast & European Community Self-Baste Whole Turkey
 Concentrate investment and expand only in segments where profitability is good and risk is relatively low
 Overall harvesting: UK Mini-Turkeys, UK Lamb & Beef Roast, Eastern European & German Mini-Turkeys
 Promote switch from fixed to variable costs
 Emphasize profitability through value analysis and value engineering of variable costs
 Loss-minimizing: UK Mini-Chicken
 Prevent losses before they occur by avoiding investment and lowering fixed costs
 When loss is unavoidable, withdraw

141. THE LIFE-CYCLE PORTFOLIO MATRIX
Embryoni
c
Growth Mature Aging
Dominant UK Turkey Roast
UK Turkey Steak
UK Turkey Sausage
Strong
Favorable UK Food Service
EC Turkey Products
EC Self-Baste Turkey
UK Mini-Turkeys
Tenable UK Fish Products
UK Lamb Roast
UK Pork Roast
UK Beef Roast
Eastern European Mini-Turkeys
German Mini-Turkeys
Weak UK Mini-Chicken
Nonviable UK Pet Food
Review with per capita
consumption trend

142. WHAT DOES LIFE-CYCLE PORTFOLIO
MATRIX TELL US?
 UK Turkey Products (roast, steak, sausage)
 Hold position and grow with industry
 Reinvest as necessary
 UK Mini-Turkeys, European Community Self-Baste Whole Turkey, UK
Food Service & European Community Turkey Products (when feasible)
 Custodial or maintenance strategy
 Find niche and attempt to protect
 Minimum and/or selective reinvestment
 UK Fish Products, UK Pork Roast, UK Lamb Roast, UK Beef Roast, Eastern
European & German Mini-Turkeys
 Find niche and hang on
 Phased withdrawal when necessary
 UK Mini-Chicken
 Turnaround or phased withdrawal
 Invest selectively or disinvest

143. BM FOLLOWS AN ADAPTIVE
STRATEGY
 ADAPTIVE strategy: “Concerned with the
development of a viable match between the
opportunities present in the external environment
and the organization‟s capabilities and resources
for exploiting these opportunities”
 For example, BM entered UK Beef Roast market
because it saw an opportunity to use its co-
extrusion technology (resources) to exploit the
trend for modern families of looking for
convenient smaller portions and value for money
(external environment)

144. BM DOES NOT SEEM TO FOLLOW A
PROCESS OF NORMATIVE MODEL
OF STRATEGY
 A NORMATIVE model is logical, rational, comprehensive
and relies on a formal strategic planning process that is
linear and analytic: situation assessment, strategy
generation, strategy selection, and implementation
• “Matthews relied on his own belief
in the potential for turkey rolls, not
market research reports or analysts‟
sales forecasts”
• “Turkey roll machinery was bought
before anyone knew if it could
work”

145. NO EVIDENCE OF BM USING A
CONSTITUENCY-BASED MODEL OF
STRATEGY
 A CONSTITUENCY-BASED model suggests that the major
functional areas of a business be viewed as specialists in
providing particular resources for the firm from external
sources and strategy is formulated by each area promoting
the best course of strategy for own strategy as best for the
entire organization
 No evidence of Farming, Processing and Production, and
Marketing following this type of model for BM. Decisions
seem to be centralized.

146. BM FOLLOWS THE
PROACTIVE MODEL OF
STRATEGY
 Strategy is based on visions (what do we want to happen)
rather than forecasts (what do we think is going to happen)
 For example, “(Matthews) believed that being the best at
what you do could not be confined solely to an obsession
with cost containment. He wanted to go further and
develop value-added products”

147. BM FOLLOWS THE MEANS-
WAYS-ENDS MODEL OF
STRATEGY
 The company focuses on building capabilities
and then encouraging the development of plans
for exploiting them
 After BM invested heavily in the roast and co-
extrusion process technology, it has been
opportunistically focused on exploiting other
market opportunities as they developed: beef,
lamb, fish

148. BM FOLLOWS THE LEVERAGE
APPROACH MODEL OF
STRATEGY
 The company focuses on building and
leveraging the “core competence” of the
business and then set out to leverage that
competence through a clearly articulated
“strategic intent”
 “BM built its position on innovative, heavily
branded products and needed to stay
innovative, stay close to the consumer, and use
pull advertising to ensure its products were must
stock items in every supermarket”

149. BM STRATEGY FORMULATION
PROCESS
 “Good strategy formulation process is those
which blend both models (normative and
behavioral), using normative, planning model for
the ongoing fine tuning of existing strategies and
as the support system for the incremental
approach used when new strategies or major
changes in strategic direction are needed”
 BM might do well to add some normative
aspects to their strategy formulation process

150. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
Rise Of The Private Label
Feast Or Famine
Retailers are pushing manufacturers to supply private label products,
sometimes at the expense of the manufacturer’s branded product
Manufacturer’s Dilemma
Pros Cons
• Less overhead costs • Less control over product(s)
• Shared packaging risks • Highly competitive space
• Guaranteed volumes across
multiple retail outlets
• Meager margins
• No marketing/branding spend • Less resources available to
manage branded products
• Zero brand recognition
Private label turkey manufacturers are leaving their fates in the hands of retailers

151. Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis
UK Turkey Market
Concentration Levels
#1
Bernard
Matthews
#2
Hillsdown
Rank:
EC Turkey
Meat
Producers
(1990)
#1
Doux S.A.
Rank:
EC Poultry
Producers
(1990)
#1
Louis Rich
(US
Company)
#2
ConAgra
(US
Company)
#3
Bernard
Matthews
Rank:
Processed
Turkey Sales
(1990)
Segment HHI, Top 4 market
players
Market Shares Top 4
market players
(percentages)
UK Whole Turkey 1111 21, 18, 15, 11
Estimated Total Turkeys
Hatched UK
2279 29, 27, 22, 15
Oven Ready Turkey 1258 26, 19, 14, 5

152. Bernard Matthews
Focused On Processed Turkeys
 In 1986, Matthews profits for processed turkey were 271%
higher than those of whole turkeys
 Sales for roasts (inclusive of both turkey and beef) reached
record highs in 1986-87, surpassing the £50M mark for two
consecutive years
 By 1989, Matthews share of the processed turkey market was
approximately 75%
Recommendation
Strategic
Alternatives
Recommendation
Preview
Strategic
Situation Analysis