WLR Foods and Tyson Foods
Tyson Foods:
Tyson Foods is the largest poultry producer and the processor in the United States with the market share of 17.7% almost double than its next competitor ConAgra. The company has grown over the years and has dominated the market through acquisitions in several areas.
The company has integrated its operations horizontally and has 35 hatcheries, 24 feed mills and 45 poultry processing plants and has sales over $5 billion in year 1993. Tyson has also diversified its business and is the dominant player in areas like litter-to-mature swine production, floor and corn tortillas, and poultry by-products for the pet-food industry, North Pacific cod and Pollack.
WLR Foods:
WLR Foods, Inc. is based in Hinton Virginia and it is a leading poultry processor and marketer. The company grows, slaughters, processes and distributes whole turkeys and chickens, turkey and chicken parts, and value added poultry products to the retail food and food-service markets. WLR is ranked third largest turkey producer and the fifth largest chicken producer in the country.
The company has the strategy to grow internally and through the acquisition in the related field. The company also operates on the lean cost structure, high quality product line, and strong brand position, which helpit to achieve the expected growth in the turkey products.In 1993, WLRhad sales of $617 million and earned $15 million.
Industry Trend:
The poultry industry is expected to grow at an annual rate of 4% with chicken being the main driver of the growth. The export levels are expected to grow because of the cost effective position of the U.S industry across the world in poultry. The growth of the industry due to the demand in previous years is expected till the foreseeable future.
WLR and Tyson Foods:
WLR and Tyson Foods both operate their business in the same industry of poultry. Tyson Foods is the largest producer and processor in the United States while the WLR is the third largest Turkey producer and the sixteenth largest chicken producer. WLR and Tyson foods both have diversified the business through acquiring the small businesses.
LR is a leader in ice and cold storage business in the mid-Atlantic region while Tyson Foods is among the dominant producer in areas in wine production, flour and corn tortillas, poultry by-products and also in the fishing business.
Through the merger, both companies will be able to gain a more dominant position in the market. Tyson Foods will be able to get a higher position in the Turkey market and WLR will become the largest chicken producer in the U.S. after the merger.Both. companies can exploit the export market, which is growing rapidly due to the cost effectiveness in U.S. and can export chicken and turkey.WLR already exports its products to more than 40 countries with particular strength in the Far East and Caribbean and also to the U.S military installations.
Through the merger WLR will eliminate the risk of high feed prices and hatcheries costs because of Tyson Foods’ hatcheries and feed mills. Tyson Foods will also be able to get into the retail industry and boost its sales and eventually earn more profit.
The lean cost structure of WLR can be adopted by the both companies to reduce the costs and make business more efficient. The merger will also help WLR and Tyson Foods to eliminate the threats from the competitors by achieving the economies of scale............
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