Tyson Food Case
History In 1935, John Tyson started what would later become Tyson Foods Inc. Through forward and backward integration the family business grew into a fully integrated leader of the poultry industry. Their mission is to become the undisputed world leader in growing, processing, and marketing chicken and chicken-based food products.
Stated and Implied Objectives Profit - Net Income increased 816.7% in 1999; Mostly attributed to divestments from meat and seafood business lines; maintain a profit growth Growth - Sustain growth, achieve success in present environment and position Tyson for the future Citizenship - Obey safety and health regulations, take good care of their people, and be socially responsible Survival - Continue to grow and defend Tyson’s share in targeted markets Stated and Implied Strategies Forward Integration - Tyson is already fully integrated; increase Western U.S. distribution Backward Integration – Acquired Hudson Foods and Holly Farms Horizontal Integration – International Markets, Increase value-added products, i.e. prepared frozen chicken patties, chunks, fillets, breaded tenders, etc. Diversification – Concentric diversification: Turkey, Beef, Pork; Synergy through common end use Financial Audit
Liquidity: Tyson Foods had Sales of $7,363,000,000 in 1999, a decrease from 1998 (sales = 7,414b). The Company’s Current Ratio, 1.75, and Quick Ratio, 0.75, are not great and are lower than the Industry averages, CR 2.0 and QR 0.8. Tyson’s Debt to Equity, 1.39, is higher than the Industry Average of 1.1. This is risky to creditors because they have 1.39$ of debt per dollar of equity. The Debt to Asset Ratio for the firm, 0.58, is higher than the Industry Average, 0.535. This means Tyson has .0.58$ of debt per dollar of assets.
Performance: Tyson foods performance is better than average. The industry GPM, 15%, is lower than Tyson’s GPM, 18%. The CGS to sales ratio, 82%, is better than the Industry Average, 85%. Tyson
Stated and Implied Objectives Profit - Net Income increased 816.7% in 1999; Mostly attributed to divestments from meat and seafood business lines; maintain a profit growth Growth - Sustain growth, achieve success in present environment and position Tyson for the future Citizenship - Obey safety and health regulations, take good care of their people, and be socially responsible Survival - Continue to grow and defend Tyson’s share in targeted markets Stated and Implied Strategies Forward Integration - Tyson is already fully integrated; increase Western U.S. distribution Backward Integration – Acquired Hudson Foods and Holly Farms Horizontal Integration – International Markets, Increase value-added products, i.e. prepared frozen chicken patties, chunks, fillets, breaded tenders, etc. Diversification – Concentric diversification: Turkey, Beef, Pork; Synergy through common end use Financial Audit
Liquidity: Tyson Foods had Sales of $7,363,000,000 in 1999, a decrease from 1998 (sales = 7,414b). The Company’s Current Ratio, 1.75, and Quick Ratio, 0.75, are not great and are lower than the Industry averages, CR 2.0 and QR 0.8. Tyson’s Debt to Equity, 1.39, is higher than the Industry Average of 1.1. This is risky to creditors because they have 1.39$ of debt per dollar of equity. The Debt to Asset Ratio for the firm, 0.58, is higher than the Industry Average, 0.535. This means Tyson has .0.58$ of debt per dollar of assets.
Performance: Tyson foods performance is better than average. The industry GPM, 15%, is lower than Tyson’s GPM, 18%. The CGS to sales ratio, 82%, is better than the Industry Average, 85%. Tyson