The recent acquisition of Hillshire Brands Co.
by Tyson Foods takes meat sales to a whole new level. The protein providing
giant won the bidding war against Pilgrim’s Pride Corp. In an interesting turn of events, Hillshire
was poised to purchase Pinnacle Foods – Bird’s Eye frozen food producer.
Hillshire gained attention while negotiating this deal, and ended up on the
other end of a bidding war for Hillshire. In the end, Hillshire was bought by Tyson and
was forced to forgo the purchase of Pinnacle Foods and Pinnacle’s accompanying
debt.
In this battle of the meats, and with ‘The
Coherence Premium’ and ‘Seven Ways to Fail Big’ fresh on the brain, I have to
wonder how the decision makers of Tyson, now a meat giant, will poise itself to
avoid disaster. One way they may be doing this is by playing devil’s advocate. Where Tyson’s executives and negotiators caught
up in their bidding war and desire to become a meat giant, or did they do their
due diligence of asking the tough questions we learned from our readings…Did
they make their process transparent to the board? Did they establish a limited charter and
clear ground rules? Are they organized
for success? Are they focusing on a
strategy and not the process? Are they
asking the right questions and not just thinking that this acquisition is the
answer to all their problems?
If we use the CaseStudy: when Expansion Is
the Enemy of Coherence to examine this merger.
We see some areas that set this new organization up for success are
similar regulations, comparable in store locations, more vying power for
grocery shelf space, and analogous distributions. However, this does not mean this blending
will be an easy one. Some experts, like
Joe Cahill of the Chicago Business, believe in order for Tyson to improve their
profitability they will need to make deep cost cuts, especially on the cusp of
such an overpriced purchase. Tyson
reports they will expect to find $300 million in cost synergies from the merger
of these companies. Additionally, a
larger presence on grocery shelves for Tyson with products that carry a higher
profit margin seems like it could be a win-win for the new organization. And then there is the culture and marketing practices
and focus, will Tyson embrace the Hillshire successes or in the heat of efficiencies
loss one of the most profitably features of the Hillshire purchase?
I am also curious to know if Tyson will have the right
recipe to become coherent. Do they have strong
enough leadership within Tyson to integrate these two brands and companies? With Hillshire leaders leaving the
organization, does Tyson have what it takes to take Hillshire’s signature
brands - Jimmy Dean sausage and Ball Park Franks- and create the tight focus
needed to be the biggest meat protein company?
I believe consumers will be the judge and jury on this one. Can this closer alignment to their
core business be more successful - will consumers still embrace this successful
chicken provider with their sausages and franks? Customer preferences
and consumers love for all things meat could be the ticket to Tyson’s
capabilities-driven strategy. Only time
will tell…as Leinwand and Mainardi tell us coherence “requires hard choices,
including divesting businesses, streamlining nonessential functions, and paring
product and service lines. It means
resisting the temptation to leap into a hot new market where your capabilities system
can’t help you or to pursue easy profits at the expense of strategic focus.” One
fact is clear Tyson will need to make some hard decisions and be intensely
focused on its strategy to be the clear leader in the prepared foods business.
Reuters Top News
Tyson wins bid for Hillshire in battle
of meat titan
10 Brands That Will Disappear in 2015 - AT&T (NYSE:T) -
24/7 Wall St. http://247wallst.com/special-report/2014/07/08/10-brands-that-will-disappear-in-2015/#ixzz3gOXuHm8u
Is the grim reaper next at Hillshire Brands?
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