Tyson Foods Case Analysis
Jim Rice sat in the back seat of a black Mercedes S-class as it drove the streets of Handan. He referred to the city, roughly 450 KM south of Beijing, as “a small Chinese town of 8.9 million people”. While it wasn’t part of his immediate plans, Rice was here to form the ties necessary to set up a future poultry operation. Beside him sat the Vice Mayor for agriculture, his chaperone on a tour of the city designed to showcase the quality of its land and its animal husbandry practices. Looking ahead he could see the flashing lights of their police escort, behind were a trail of black sedans ending in another police escort. The motorcade never stopped. Each intersection was barricaded by more police, as Handan residents gawked at the procession.
As he was escorted from location to location, Rice took stock of his strategy in China.
Tyson’s China Position
Rice had made a number of key decisions. First things first, there had to be a China strategy: “China is the ultimate growth market, and if you are the world leader in any kind of product and you’re not participating in China, you have a chance of losing that lead.” He gives the example of Boeing and Airbus, matched so evenly in the rest of the world that China could determine who is winning globally.
Secondly, Jim decided, without exception, that the focus of his operation would be on selling to Chinese consumers. “That doesn’t mean we won’t take any export business we can…but [it won’t] built into the business plan.” He explained: “Tyson’s first operation in China was an export business making a specific product for one customer in Japan. And it started off immensely successfully, and then Japan and China had a trade problem, and we couldn’t export anymore and the plant went to 0.” (Rice was referring to a 2003 ban on all raw or partially cooked Chinese chicken into Japan.) In other words, a solely import/export model is too risky.
Finally, the protein of choice would be chicken. The pork
As he was escorted from location to location, Rice took stock of his strategy in China.
Tyson’s China Position
Rice had made a number of key decisions. First things first, there had to be a China strategy: “China is the ultimate growth market, and if you are the world leader in any kind of product and you’re not participating in China, you have a chance of losing that lead.” He gives the example of Boeing and Airbus, matched so evenly in the rest of the world that China could determine who is winning globally.
Secondly, Jim decided, without exception, that the focus of his operation would be on selling to Chinese consumers. “That doesn’t mean we won’t take any export business we can…but [it won’t] built into the business plan.” He explained: “Tyson’s first operation in China was an export business making a specific product for one customer in Japan. And it started off immensely successfully, and then Japan and China had a trade problem, and we couldn’t export anymore and the plant went to 0.” (Rice was referring to a 2003 ban on all raw or partially cooked Chinese chicken into Japan.) In other words, a solely import/export model is too risky.
Finally, the protein of choice would be chicken. The pork