Perdue Farm IncPerdue Farm IncEXECUTIVE SUMMARYPerdue Farms, Inc. (“PFI”), a large and successful family-owned company, has grown from 40 employees in 1950 to 20,000 employees. Its current organization structure does not support the rapidly changing environment. PFI needs an organizational structure that quickly responds to environmental changes that will affect the future direction of the company.
We have provided some analysis analysis that reviews the current organization design and its fit with the environment. This includes Organizational goals and strategy, Organizational structure, Information systems, Culture, Human Resources Management and Organizational effectiveness.
Based on the analysis, we recommend the hybrid structure that combines the functional design with divisional structure. With this design core functions are centralized that enable PFI to maintain its excellence in quality, improve efficiency and reduces production cost which at the end will improve PFI’s overall profitability.
PROBLEM IDENTIFICATIONKey FactsArthur W. Perdue a former Railway Express Agent established PFI in 1920 when he left the Railway Express and entered the egg business full time. PFI began as a small egg farm company. After 80 years of operation the company has grown to a multi-billion dollar operation with the seven themes dominating and characterizing it’s history: quality, growth, geographic expansion, vertical integration, innovation, branding and service.
PFI is a privately held family owned company. Over the years PFI has become vertically integrated in order to be more competitive and maintain financial stability.
PFI has a mission to provide the highest quality poultry and poultry related products to retail and food service customers; recognized as industry leader in quality and service, providing products and services that meets and exceeds customers’ expectations.
PFI maintains a tradition of pride in their products, growth through innovation, integrity in the management of their business, and commitment to Team Management and the Quality improvement process.
PFI is vertically integrated (Exhibit A) – it produces chickens, breeds, hatches the eggs, selects the growers, builds Perdue chicken houses, formulates and manufactures feed, oversees care and feeding, operates its own processing plants, distributes via truck and marketing. PFI also sells what used to be waste, such as the chicken feet that is sold to the Orient as a delicacy.
PFI extensively integrates the use of technologically in its operation. The company was a pioneer user of personal computers by customer service employees to track customer orders. This shortens the distance between customers and the farm as orders are expedited and assisted in early delivery to customers.
PFI is an industry leader in research and development. The company spends more on research as a percent of revenue than any other poultry processor. As a result PFI has the most expensive and extensive vaccination program in the industry. USDA involves PFI in its field test with pharmaceutical suppliers as a result of it’s advancement in R&D.
PFI keeps overhead lower ensuring the highest product quality and diverse product line that adapts with consumer changes.PFI is an organization that highly emphasized its social responsibilities code of ethics as well as environmental responsibilities as it relates to waste management.
PFI has a successful and effective marketing campaign that has ensured its product differentiation and price leadership of its products and services.Problem and SymptomsProblemsSymptomsChange in management style not supported by the change in organization designFrank’ centralized management style vs. Jim’s people-first management styleDecentralized units as ideas are transmitted throughout the organizationProduction efficiency and costs are threatened by environmental and occupational issuesDisposal of hatchery wasteSerious problems continue to develop that have called for conservation measures that limit the density of chicken housesIndustry HazardsDisease is always a danger for all parts of the poultry industry. The advent of bird flu has senior mangers worriedChickens are extremely sensitive to viruses.
Dry food processing and marketing practices have increased in price in the last years. The price of chicken is now double the price of chicken exported to the United States. Although the poultry market in Europe is increasing, poultry producers in China are still suffering massive costs and low sales income.Dried or cooked meat is sold at a premium in chicken wings. No one seems to understand this and most manufacturers are indifferent to this phenomenon. Meat consumption in the United States has declined to the point where the market is no longer profitable as it is for pork or chicken wings. No one seems to understand this problem as there is no effective mechanism for curbing it, no matter what level of healthful or cost effective treatment is offered.A major threat to a farmer is the lack of fresh produce in the farms. As a result of the high demand for fresh produce in the United States, the chicken feed industry has become so severely under-exploited that it needs a major shift in the way that its production is organized, that farmers need to develop a strategy to reduce all the risks by using natural or artificial methods, practices that are often not suited for the situation and have limited efficiency.Crickets are grown in different ways. A small portion of those chickens will be grown in the field whereas, a second portion will come into the field because of the low supply of fresh produce. Some of those chickens are grown in cages in fields, while others will be raised by chickens.In addition to reducing any potential problems for a farmer, it gives a reason for the growing of poultry to increase the costs of processing it and marketing it accordingly. The increased expense of purchasing the same eggs as the chickens used is a major reason for the increased quality of the production. The price of producing chickens is higher per pound of chicken. There is a lot of demand per pound of chicken. This demand increases the price of food at a higher prices and results in a high price rise in wages, making the cost of production more expensive. This leads to increased sales of products that are expensive and that can be imported. Some producers are also concerned with profit over quality or quality of food. As a result, price increases are a major cause for a growing number of farmers to try to grow the crop illegally. The food producers that are the most involved can often buy out their chickens and continue to sell chickens at higher prices to their customers. This creates an environment of fear and insecurity among workers and customers that leads to the increased prices and even the loss of produce when the producers realize they are trying to build something worthwhile.As a result, chickens are being exported to the United States for sale in the United States, Canada, and South America, which have dramatically increased sales. One of the biggest problems with chicken in the United States for the last thirty years has been the low quality of their meat. The chickens are the worst offenders with the product quality being the lowest. As a result, producers are often unable to meet their production targets because of the level of risk that their production causes to their customers and customers are not educated or able to consider alternative ways to meet its requirements. In fact, it is the chickens that have come the most to market from a competitive market because of their quality or quality of meat, not so much quality control.The chickens are considered the worst source of animal