Food Recall At Tyson Foods Inc.

Running Head: Tyson Foods Inc 1 Capstone project A case study of Tyson Foods Name University Date This study source was downloaded by 100000792047138 from CourseHero.com on 05-02-2021 15:30:26 GMT -05:00 https://www.coursehero.com/file/13014621/Capstone-project/ Th is stu dy re so ur ce w as sh are d v ia Co ur se He ro .co m https://www.coursehero.com/file/13014621/Capstone-project/ Tyson Foods Inc 2 Abstract The project is aimed at analyzing Tyson Foods Company to evaluate the flawed points in the company's operations and come up with strategies that can be implemented to correct the weaknesses. Tyson Foods has also not been able to achieve its vision of becoming the number one food producer globally, the project looks into some of the reasons the company has not archived their vision and what can be done to ensure the goals are achieved. Tyson Foods Inc is an American based food production company that is publically traded on the New York stock exchange [NYSE: TSN] and is a member of the S&P 500. The company was founded in 1935 and has its headquarters in Springdale, Arkansas. Tyson Foods requires a larger market share to grow and attain its goals, market segmentation will aid Tyson Foods to reach a larger market and retain its current clients. The paper suggests that Tyson Foods implement market segmentation. Market segmentation is an efficient and modern marketing strategy; the strategy entails dividing the larger target market into smaller segments. The segments are divided according to their common needs priorities and interests whether perceived or true. Dividing the target market into segments allows the management and strategy department to come up with more efficient marketing strategies. The company Tyson Foods has been left behind by most companies in the adoption and integration of new technology to assist in its daily operations. Automated systems have proven to be more efficient than human operations as humans suffer from boredom and exhaustion which systems and robots do not. Tyson Foods implementing a new computer system that will assist in making more efficient the daily operations of the company is a wise move. Computer systems or This study source was downloaded by 100000792047138 from CourseHero.com on 05-02-2021 15:30:26 GMT -05:00 https://www.coursehero.com/file/13014621/Capstone-project/ Th is stu dy re so ur ce w as sh are d v ia Co ur se He ro .co m https://www.coursehero.com/file/13014621/Capstone-project/ Tyson Foods Inc 3 automated systems will reduce the operating overhead of the company and in the process increase the profits to be realized by the company. For Tyson Foods Inc to achieve its vision and targets the company is required to reduce its running costs while concurrently increasing its profits and sales ‘making more with less’. Tyson Foods Inc in this regard needs to implement ‘stretch’. Stretch strategies or stretch goals are credited with making more with less. For a company that has been in existence for almost 80 years and has achieved great success so far stretch goals are crucial, this is because stretch goals ensure that the company is always on its toes trying to reach goals that have been previously thought of as impossible or difficult to achieve. This study source was downloaded by 100000792047138 from CourseHero.com on 05-02-2021 15:30:26 GMT -05:00 https://www.coursehero.com/file/13014621/Capstone-project/ Th is stu dy re so ur ce w as sh are d v ia Co ur se He ro .co m https://www.coursehero.com/file/13014621/Capstone-project/ Tyson Foods Inc 4 References Al-Hakim, L. (2007). Information Quality Management: Theory and Applications. Hershey, PA: Idea Group Pub. Babbie, E, and Benaquisto, L. (2009).Fundamentals of Social Research, Washington: Education Publishers Contract Law. Mergers and Acquisitions. Delaware Chancery Court Addresses Default Interpretation of Broadly Written Material Adverse Effect Clauses. In re IBP, Inc. Shareholders Litigation v. Tyson Foods, Inc., No. 18373, 2001 Del. Ch. LEXIS 81 (June 15,. (n.d.). Harvard Law Review, 1737-1737. Kerr, S., & Landauer, S. (2004). Using stretch goals to promote organizational effectiveness and personal growth: General Electric and Goldman Sachs. Academy of Management Executive, 134- 138. Sitkin, S., See, K., Miller, C., Lawless, M., & Carton, A. (2011). The Paradox of Stretch Goals: Organizations in Pursuit of the Seemingly Impossible. Academy of Management Review, 544- 566. Zhang, Z., & Jia, M. (2013). How can companies decrease the disruptive effects of stretch goals? The moderating role of interpersonal- and informational- justice climates. Human Relations, 993-1020. This study source was downloaded by 100000792047138 from CourseHero.com on 05-02-2021 15:30:26 GMT -05:00 https://www.coursehero.com/file/13014621/Capstone-project/ Th is stu dy re so ur ce w as sh are d v ia Co ur se He ro .co m Powered by TCPDF (www.tcpdf.org) https://www.coursehero.com/file/13014621/Capstone-project/ http://www.tcpdf.org TYSON FOODS, INC. 6 Running head: TYSON FOODS, INC. 1 Capstone Project - Tyson Foods, Inc. Student name Date Tyson Foods Inc. Strategic Analysis Executive Summary This project is a strategic analysis of the external business environment of Tyson Foods to determine the factors that will influence decision making in the short-term future. The study aims to develop recommendations that will promote the current trend of business success for Tyson Foods. The analysis involves using the PESTEL analysis tool and the Porters Five Forces to examine the company's operating environment comprehensively. PESTEL covers political, economic, social, technological, environmental, and legal factors. Porters Forces cover competition, buyers' power, suppliers' power, substitute products, and new entrants' threat to the industry. The analysis also examines the company's short-term objectives to determine the responsiveness to the external environmental factors. From the analysis, this study finds that the company management has not fully considered the potential impacts of the following issues: market fluctuations, changes in customer preferences; technology applications; food safety; legal suits; and unforeseen circumstances. The study then presents various recommendations for consideration. The proposals include utilizing more hedging strategies to reduce potential losses during volatile markets, applying AI technologies and machine learning algorithms to improve food safety, and developing disaster management plans to reduce the possible effects of unpredictable events. Other recommendations include the extensive application of information technologies to guard against cyber threats and the use of legal compliance plans to prevent the breaching of government rules and regulations. The strategic analysis explores a current business topic and presents practical and real-time solutions for sustainable business success in a complicated business environment. Introduction Tyson Foods, Inc. is the second-largest processor of beef, pork, and chicken meat in the United States after JBS USA Holdings Inc. (Gazdziak, 2018). The company purchases animals, slaughters them, processes the meat, and distributes end products to clients. The customers include restaurant chains, hotels, retail groceries, supermarkets, food processing companies, government agencies, and food distributors. Tyson Foods' products include prepared foods; fresh chicken, pork, and beef meat; fresh and cured sausage; meat toppings for pizza; ham; case-ready meats; supermarket deli chicken products; ground beef (Tyson Foods, 2020b). The company sells its products under a total of 37 brands, which include Ball Park, Jimmy Dean, Hillshire Farm, Hillshire Snacking, Sara Lee, Raised & Rooted, Aidell's, State Fair, Nature Raised farms, Wright Brand, Bosco's, and Open Prairie (Tyson Foods, 2020b). Tyson Foods operates 241 facilities, employs 141,000 staff, and reported $42.4 billion in revenues and $2.022 billion net income in 2019 (Tyson Foods, 2020b). The company also engages in corporate giving to alleviate social problems through partnerships with hunger relief organizations, investing in community projects, and disaster response actions (Tyson Foods, 2020b). Between 2000 and2015, the firm donated over 100 million pounds of food and donated over $50 million in cash and in-kind donations between 2015 and 2020 (Tyson Foods, 2020b). The company revenues and profits have been increasing in the last years. To maintain the trend of business success and grow the market share in a highly dynamicIt is essential to conduct a study of the external business environment to identify the key factors that will influence the firm's decision-making for the short-term future. This strategic analysis will explore the company's external business environment, which consists of various factors. Using the PESTEL analysis tool, this study will explore the political, economic, social, technological, environmental, and legal aspects. The study will also apply Porter's Five Forces to examine the competitive environment within the meat industry. Background Tyson Foods Historical growth Tyson Foods' growth is traceable from its humble beginnings in 1935 to the giant American company and leader in the food industry (Tyson Foods, 2020b). After its founding in 1935 by John W. Tyson, the company continued to grow and became incorporated as Tyson Feed and Hatchery, Inc. in 1947 (Markets.us, 2019). The new outfit was involved in the transportation of chickens and the selling of feeds and chicks. In 1963, the firm transitioned into a public company, adopting the name Tyson Foods, Inc. Tyson Foods continued to grow through sustained acquisitions of existing companies. Some of the historical acquisitions include Garrett Poultry, Honey bear Foods, Krispy Kitchens, Franz Food Products, Valmac Industries, Inc., Prospect Farms, Inc., Heritage Valley, Cassady Poultry Co., Lane Processing, Inc., and Mexican Original, Inc. (Schwartz, 1991). By 1989, Tyson Foods had a fully integrated value chain involving the production, processing, and marketing of poultry products and venturing into the global markets. In 1990, the company strengthened its global expansion with new ventures in Asia, Central and South America, and the Pacific regions (Markets.us, 2019). Other acquisitions from 1992 to 2017 included Arctic Alaska Fisheries Corp., Original Philly Holdings, Inc., Multifoods Seafood, Inc., JAC Creative Foods, Inc., Advance Pierre Foods Holdings IBP, Inc., Louis Kemp Seafood Company, Hillshire Brands Company, and Keystone Foods (Schwartz, 1991). As of 2020, Tyson Foods, Inc. was the second- largest processor of beef, pork, and chicken meat globally and is the leading exporter of beef from the USA. According to Markets.us (2019), the company has four business segments chicken, beef, pork, and prepared foods. The beef segment is responsible for slaughtering and processing cattle meat, fabricating beef carcasses into sub-primal and primal cuts, and case-ready meats (Forbes, 2020). The pork segment processes hogs, fabricate pork carcasses into primal and s-primal meats, and case-ready meat. The chicken segment is integrated, and operations include raising chicken, supplying breeding stock, and processing chicken meat into fresh, frozen, or value-added products (Tyson Foods, Inc, 2019). Value-added chicken products include nuggets, patties, chicken strips. The prepared foods business segment manufactures frozen and refrigerated food products such as bacon, tortilla products, prepared meals, and meat dishes, transportation, and marketing of prepared foods (Forbes, 2020). The percentage revenue contribution from each segment is as follows, 35% from beef, 30% from poultry, 20% from prepared foods, and 10% from pork (Tyson Foods, Inc., 2019). Tyson Foods has a weekly processing capacity of 45 million chickens, 155,000 head of cattle, and 461,000 pigs in all global facilities (Vault 2020). The company serves customers in over 145 countries, and its facilities include broiler hatcheries, breeder houses, distribution centers, processing plants, feed mills, and blending mills. The export destinations include China, Australia, Mexico, European Union, South Korea, Chile, and Japan (Tyson Foods, Inc., 2019). The largest Tyson Foods customer in 2019 was Walmart Inc. accounting for 16.9% of total sales. Some of the factors that affect the company include customer demand, ability to grow and maintain relationships with customers, innovation, access to foreign markets, market prices of products, costs of raw material and animals, and operating efficiencies in production facilities (Tyson Foods, Inc., 2019). Revenues and profits The company revenue and profits have been rising in the past few years. The charts below show the company performance. Chart 1: Tyson Foods revenue from 2010-2019 (Source: Shahbandeh 2020). Miller (2016) attributed the 2016 revenue decline to a fall in pork and beef prices, a 7% reduction in sales, falling raw material prices, and disposal of non-core businesses. The factors had a lasting effect as the revenue figures took four years to pass the 2015 high of $ 41.37 billion. The recovery was also slowed by the onset of the USA-China trade wars. Overall, the company's revenues have been rising in the last ten years. According to Mickelson (2020), the revenue projections for 2020 will be comparable to 2019, but the profit level may significantly decline due to increased operating costs occasioned by the COVID-19 pandemic. The nine- month sales for 2020 (Jan-Sept) reached $31,725, which was slightly higher than the $31,521 recorded during the same period in 2019 (Mickelson, 2020). Chart 2: Tyson Foods net income 2010-2019 (Source: Macrotrends, 2020) According to Meat & Poultry (2019), Tyson Foods recorded a decline in 2019 net income due to a fire at a beef facility, which led to $31 million incremental costs. Net income projections for 2020 will be lower than for 2019 due to COVID-19 related expenses. According to Mickelson (2020), the company incurred costs amounting to $340 million in the third quarter of 2020. The costs arose from production downtimes, purchase of personal protection equipment, sanitization costs for facilities, COVID-19 testing for workers, sick leaves, donations, bonuses for frontline workers, and product downgrades (Ibid). The net income for the nine months up to September 2020 amounted to $1,445 million compared to $1,653 million in the same period in 2019 (Mickelson, 2020). Organizational culture The company's stated purpose is to raise the World's expectations for what good food can do (Tyson Foods, 2020b). Its current strategy is to feed the world sustainably with fast-growing protein brands. The keys to achieving the plan include giving superior value to customers, promoting excellence in operations, and ensuring its sustainability and the world. The firm's culture is founded on the values of honor, integrity, faith-friendly, inclusive, stewardship, and providing a safe working environment (Ibid). The firm fosters organizational behaviors that feature care, listening, creativity, inclusivity, collaboration, commitment, and delivering results. An overview of the USA meats industry According to the North American Meat Institute (n.d.), the meat and poultry industry accounts for United States agricultural production's largest segment. The production levels for beef and chicken amounted to 52 billion pounds and 48 billion pounds in 2017. Production quantities for individual categories were 32.2 million head of cattle, 121 million hogs, 9 billion chickens, 2.2 million sheep and lambs, and 241.7 million turkeys (Ibid). The numbers of processed animals were equivalent to 26.3 billion pounds of beef, 25.6 billion pounds of pork, 42.2 billion pounds of chicken, 150.2 million pounds of lamb and mutton, and 5.9 billion pounds of turkey. The top sources of cattle were Kansas, Nebraska, Colorado, Texas, California, Pennsylvania, Wisconsin, and Washington. Minnesota, Iowa, Missouri, Illinois, Oklahoma, Indiana, and Pennsylvania topped in hog supply (North American Meat Institute, n.d.). Arkansas, Georgia, and Alabama were the leading producers of chicken, while North Carolina, Minnesota, and Arkansas led in turkey production. In 2018, over 800 federally inspected livestock slaughter facilities in the USA, over 3770 red meat processing facilities, and 2980 poultry processing facilities (John Dunham & Associates, 2016). The USA meat and poultry industry contributed $1.03 trillion in economic output, equivalent to 5.6% of GDP in 2016 (Ibid). The various businesses in the industry, such as wholesalers, retailers, and manufacturers, were employing over 1.87 million people, whose wages totaled $71.6 billion. There were over 2 million supplier jobs with a wage value of $104.9 billion, and 1.57 million induced jobs with a wage value of $81 billion (John Dunham & Associates, 2016). The overall value chain employees created over 5.44 million jobs, with corresponding wages of $257 billion. Taxes from the industry were $108.42 billion and $3.26 billion from consumers of the products (Ibid). According to the North American Meat Institute (n.d.), the USA exported 1.26 million metric tons of beef in 2017 valued at $7.27 billion, 2.45 million MT of pork valued at $6.49 billion, and 3.7 million MT of poultry valued at $4.5 billion. External Business Environment Political factors Funding Politics plays a crucial role in Tyson foods operations because of the large size and diverse clientele. The company spends significant resources in shaping political opinion to protect and enhance its business interests. According to City Wire (2015), the company earned over $4.7 billion from federal government business between 2000 and 2015. Tyson Foods also spent $2.1 million on lobbying efforts and $226,649 on electoral contributions in 2014. Lobbying helps to shape federal government decisions at the executive and legislative levels to protect the business interests. According to the Center for Responsive Politics (2020), Tyson Foods has spent over $253,701 during the 2020 election cycle and $1,334,159 in 2019 lobbying activities. Trade wars and tariffs According to BBC (2020), the United States imposed $360 billion worth of tariffs on Chinese goods while China imposed $110 billion worth of tariffs on USA goods. US firms paid for much of the imposed tariffs, estimated at $46 billion. The tariffs brought more loss to US companies because the firms had to reduce profit margins, cut wages and jobs, postpone expansions, raise prices for USA customers to maintain the market share in China (Hass & Denmark, 2020). Meyer (2018) noted that USA trading partners' retaliatory tariffs forced Tyson Foods to reduce profit margins and lower prices in the USA market. The imposition of the tariffs led to an oversupply of meat due to reduced demand and low prices for beef and pork products. The low prices attracted customers away from chicken meat, which is Tyson Foods' main operating profit source. However, after the signing of phase one of the USA-China trade deals in early 2020, Tyson Foods got the opportunity to increase pork exports to China. Half of China pig population was wiped out by an outbreak of African Swine fever, opening the market for USA exporters to fill in the market gap (Zhang, 2020). The trade deal guaranteed a 16% quota for pork among the $200 billion worth of export goods to China. Government responses to COVID-19 pandemic Due to the COVID-19 pandemic, many consumers and government agencies raised concerns over the possible contamination of meat products by infected staff. Bunge and Craymer (2020) reported that the Chinese banned importing meat products from one of Tyson's processing facilities after the staff became infected with COVID-19 in April. Chinese authorities determined it was not safe to purchase products from the factory to prevent contamination of the meat products by infected employees. The ban on exports from the factory led to significant production downtime and increased expenses for Tyson Foods. According to Mickelson (2020), Tyson Foods incurred COVID related expenses amounting to $340 million in 2020. Perez (2020) noted that Tyson had to close a pork processing facility in Iowa after government authorities requested after many employees contracted COVID-19. Economic factors Economic factors of concern include market fluctuations, changes in economic conditions, and customer demand seasonality. Marker Fluctuations According to Tyson Foods, Inc (2019), market fluctuations can impact the company's operations negatively. The fluctuations require the use of hedging mechanisms to prevent portfolio losses. The company uses derivative financial instruments such as options and futures to reduce risks related to changes in foreign exchange rates, commodity prices, and interest rates. Between June 2019 and June 2020, Tyson Foods had foreign exchange rate adjustments amounting to $18 million, which highlights the high risk of market fluctuations on the firm (Finbox, 2020). Changing economic conditions Tyson Foods is subject to prevailing economic conditions. Changes in the economy such as inflation, consumer spending, energy costs, access to capital markets, and government responses to economic challenges can impact the company business. Changes in the economy can disrupt supply chains, customer purchasing power, and the cost of raw materials (Tyson Foods, Inc 2019). Blockages on the global credit system can limit the firm's ability to finance debt, obtain investments, reduce the ability of customers to make payments, and reduce stock value. Taxes Increases in taxation can raise the operating costs of the firm, reduce profitability, make the products more expensive, leading to reduced demand, and trigger investigations for verifying compliance (Tyson Foods, Inc 2019). Overall, increases in taxes could have adverse effects on the firm. On the other hand, reductions in taxes positively affect promoting business as raw materials become cheaper and operating costs reduce. Seasonal demand The demand for Tyson Foods products varies with season. According to Tyson Foods, Inc (2019), the demand for chicken, beef, and some prepared foods like sausage and hot dogs peaks in the Spring and Summer seasons. Demand for pork products and prepared foods like meat dishes and prepared meals rises in Winter due to holidays and reduces Spring and Summer (Ibid). The seasonality of demand means the company experiences irregular high-sale periods during the year, which affects the overall production targets. Social factors Social factors include demographics and changes in customer preferences. Demographics Meat consumption varies by gender, age, and income. According to the North American Meat Industry (n.d), on average, men consume 4.8 ounces of meat per day compared to 3.13 ounces by women. American consumers spend less on meat compared to citizens of other developed nations. In 2018, American customers spent an average of $961 throughout the year (Red TV, 2019). The 35-44-year age group spends an average of $1,205, while the 45-64 years-group spent slightly over $1,000 in 2018. Consumers in the North East regions of the USA spent $1,063, followed by the western region at $1,004, the south at $926, and Midwest at $892 (Red TV, 2019). Changes in attitudes and preferences In 2017, the average individual consumption of chicken was 48.8kg than 25.8 kg of beef (Misachi 2018). The preference for white meat was due to concerns about lifestyle diseases associated with excessive beef consumption. The demand for chicken meat significantly increased the sales of Tyson Foods, making the firm one of the largest meat processors globally. However, the USA-China trade tariffs led to decreased beef prices, which drew most consumers back to beef consumption. The consumption of pork increases within the United States, buoyed by the increased sale of pork meals in restaurant chains. In 2017, the average consumption of pork per individual stood at 23.6 kg (Ibid). Predictions for the future indicate that chicken meat consumption will continue to grow, pork consumption will stabilize at previous levels, while beef uptake will return to the pre- recession quantities (Misachi 2018). The drivers for increasing consumption growth include lifestyle changes, higher disposable income, and low product prices. Tyson Foods, Inc (2019) filings indicate that customer preferences changes could significantly affect the company business. A failure on the part of the company to identify trend s in the industry and customer preferences can be detrimental to its future. Possible effects include reduced demand and low prices. Other triggers for alternative customer preferences include failure to sustain rapport with customers, safety concerns, negative perceptions of the health impacts of the products, new competing products, and poor management of customer perceptions (Tyson Foods, Inc 2019). Customer preferences determine their purchasing behavior and are thus a core determinant of the business success for Tyson Foods. Technological factors Technological applications in the meat industry Some of the most innovative technological applications in the food industry are from relatively new companies. Tyson Foods has embraced some of the technologies by making strategic investments. Through Tyson Ventures, the company has invested in companies that are applying technological applications in food production. Some of the companies that have received Tyson's capital investments include Memphis meat, involved in the production of meat from cells instead of living animals (Tyson Foods, 2020b). Future Meat Technologies is developing a distributive platform for the production of cell-based meat. FoodLogiQ software service useful for value chain tracing, recall management, quality incidence management, safety compliance, and supply chain transparency. Myco Technology that uses mushroom technology to improve the taste and nutrition of food products, develop plant-based proteins and organic bitter blockers for controlling sugar consumption (Tyson Foods, 2020b). The Tovala system offers a weekly delivery of prepared raw food and a wi-fi connected oven that does the cooking. The Clear Labs conducts molecular characterization of pathogens through an intelligent sequencing technique to ensure food safety. New Wave Foods that is producing plant-based shrimps (Tyson Foods, 2020b). Beyond Meat that provides plant alternatives to animal meat. Tyson Foods is capitalizing on technology developments in its external environment to boost performance. The company will derive value from animal products as well as alternative meats. It will ease product tracing through a software application, gain revenue from plant-based products, and minimize food contamination losses. Other vital technological applications include automation and 3D printing. Tyson Foods competitors are making advances in the use of robots. JBS Holdings has invested $1 billion in automation, while Tyson Foods has invested $500 million (Devenyns, 2020). The use of robots and machines in the meat industry will supplement human labor and increase processing capacity, making the companies more competitive. 3D printing technology is yet to pick among the USA meat processing companies, but its future applications could be crucial in the manufacturing of plant-based meats. Risks Some of the risks include cyberattacks on the company's computer systems that could potentially cripple operations. Any inability to protect the systems could lead to massive customer data losses, loss of operation plans, and production downtimes (Tyson Foods, Inc, 2019). Other potential effects of cyberattacks include food tampering, which could turn foods into poison, and steal recipes for producing counterfeit food (Woehl, n.d.). Environmental factors Environmental regulations Multiple regulations govern the handling and discharge of wastes. Failure to abide by the environmental laws could cost the company hefty fines and potential closure of facilities (Tyson Foods, Inc, 2019). Also, new regulations may potentially classify formerly harmless waste as dangerous to the environment, which will increase cleanup costs and raise the risk of fines. Regulations regarding the use of renewable energy in Europe could force the company to ditch the use of fossil fuels within a short time frame raising the risk of high costs. The company has also been facing accusations of polluting the environment and failing to adhere to set regulations. Some of the allegations include contributing to the development of the dead zone in the Gulf of Mexico, resulting from pollution by fertilizer wastes (Furlong, 2016). Tyson Foods has been a perennial polluter of waterways dumping over 104 million pounds of pollutants between 2010-2014 (Ibid). Also, the contamination of Clear creek in Missouri that resulted in $530,000 in penalties and environmental repair costs. The company is also a leading emitter of greenhouse gases throughout its value chain. The failures have resulted in the growth of public apathy towards the company and a growing shift to plant-based proteins. The results of the public opposition could potentially reduce the market share and revenues of the company. Diseases Outbreaks of diseases, such as the COVID-19 pandemic, have had negative effects on the firm's ability to sustain operations. According to Tyson Foods, Inc (2019), disease outbreaks can lead to the breakup of supply chains, reduce customer demand, and increase production downtimes. Diseases such as the African Swine fever can wipe out livestock, severely reducing the stock available for processing. Disease outbreaks can also trigger government interventions on the import or export products, leading to reduced revenues and profitability (Tyson Foods, Inc, 2019). The current COVID-19 pandemic had led to the closure of some of the company's facilities when workers became infected. Such occurrences have serious financial consequences on Tyson Foods. Animal welfare concerns Tyson Foods has routinely faced accusations of condoning animal cruelty in its contract farms and slaughterhouses. According to Crueltyfree Investing (2017), there have been multiple pieces of evidence showing the company workers torturing animals before killing them, keeping chicken in tiny dirty rooms, maiming animals and failing to provide medical interventions, and using electrical stunning methods to hurt chicken. The evidence of animal cruelty has regularly sparked public outrage against the company and triggered a shift to vegetarian diets. Legal factors Food inspection and safety regulations Tyson Foods operations are subject to federal and state-level regulations. According to the United States Department of Agriculture (n.d.), the Food Safety and Inspection Service (FSIS) is mandated under the Federal meat Inspection Act to inspect all commercial meat to ensure safety and proper labeling. The federal inspection covers the slaughter and processing of meat and involves the presence of FSIS inspectors. At the state level, meat processors are mostly regulated under Meat and Poultry Inspection programs that enforce federal standards (Ibid). Facilities that operate within a particular state but are not registered under an inspection program have to undergo federal inspections. The potential establishment of stricter regulations could significantly hinder business operations and increase company costs (Tyson Foods, Inc., 2019). Some of the triggers for stricter regulation could be the recent mass recalls of Tyson Foods products due to contamination with extraneous materials (Polansek, 2019). Authorities in foreign markets could also institute changes in regulations for the company's products, making it harder to sell its products. Potential areas of new regulations include advertising practices, limits on greenhouse gas emissions, and limits on the use of fossil fuels in the production cycle (Tyson Foods, Inc., 2019). The Chinese government placed a ban on the use of ractopamine feed additive in raising pigs. The additive promotes muscle gain in pigs despite consuming less feed. The regulation significantly affects Tyson Foods operations by limiting the sources of pigs to ractopamine-free breeds (Corkery & Yaffe-Bellany, 2020). Legal suits and enforcement actions Legal claims and class action suits are a significant factor of consideration for Tyson Foods. According to Tyson Foods, Inc. (2019), failure to adhere to set laws can lead to an increase in expenses, reputation damage, loss of revenues, and reduced profitability. Being a large company increases the probability that an individual or a group of employees may violate specific laws leading to legal suits and hefty fines. Between 2010 and 2015, the company paid a total of $19,079,850 in 90 settlement claims (Rainforest Action Network, 2016). Most of the fines were levied by the Occupational Safety and Health Organization (OSHA) and the Environmental Protection Agency (EPA). The financial figures constitute a significant portion of the company expenses. The Competitive Environment in the Meat Industry The section will analyze the nature of competition in the meat industry using the Porter Five Forces. Competition The key competitors of Tyson Foods include JBS USA holdings, Cargill Protein-North America, Sysco Corp, and Smithfield Foods. The table below presents a comparison of the competitors. Table 1: summary comparison of the main competitors (Source: Gadziak 2018) Serial no. Company Net sales 2018 (USD Millions) No. of facilities (2018) No. of brands Employees (2018) Operations 1 JBS USA Holdings Inc. 38,260 44 21 73,000 Beef, pork, and chicken slaughter; processing; prepared foods; organic products; packaging and labeling; marketing; export 2 Tyson Foods, Inc. 38,260 111 37 122,000 Chicken production; beef, pork, and chicken slaughter; processing; prepared foods; organic products; packaging and labeling; marketing; export 3 Cargill Protein-North America 20,000 36 14 28000 Beef, turkey, pork and chicken slaughter; processing; prepared foods; veal; organic products; packaging and labeling; marketing; export 4 SYSCO Corp. 16,479 17 21 1,200 Beef, pork and chicken processing; prepared foods; lamb; veal; seafood; packaging and labeling; marketing; exporting 5 Smithfield Foods, Inc. 15,300 60 48 50,000 Hog production, slaughter, and processing; beef and chicken processing; prepared foods; organic products; packaging and labeling; marketing; exporting products The companies compete on brand identification, pricing, product safety and quality, innovation, product offerings, credit terms, and customer service (Tyson Foods, Inc., 2019). All the competitors listed enjoy strong financial positions and a stable market. They have loyal customers because of the unique branding that differentiates their products in the market. The capital-intensive nature of the meats industry means the competitors are not likely to exit the industry, which ensures continuity. Currently, Tyson Foods is the second-largest meat processor in the United States after JBS Holdings USA and can maintain its position in the market. However, higher investments in automation by competitors such as JBS USA could reduce Tyson Foods' competitive advantage. The threat of new entrants Entrance into the USA meat industry can occur at different value chain levels either through startups or acquisitions (Buhr & Ginn, 2011). New entrants utilize novel technological innovation or specialization in a core segment such as beef or chicken production. For example, JBS Holdings entered the USA market by acquiring Swift & Company in 2007. However, investing in the meat industry requires a lot of capital and strict adherence to multiple government regulations, limiting the potential number of new entrants. The threat of new businesses is relatively low because the existing companies sell differentiated products and enjoy strong customer loyalty. Therefore, a new entrant would have to invest massive resources to attract customers from the existing brands. Tyson Foods also enjoys economies of scale that are not attainable by a new company. By focusing on innovation and automation, Tyson Foods can continue to differentiate its products from emerging businesses and thus retain its market share. Power of suppliers According to Tyson Foods, Inc. (2019), the company relies on contract farmers and independent producers to get livestock. The firm also purchases feeds from manufacturing companies. The purchase from the suppliers is either through the open market or marketing contracts (Ibid). Suppliers can deny Tyson Foods the livestock they need in case of failure to uphold the contract requirements. They can also change prices in response to economic conditions or opt to shift to other customers. Some of the commodities Tyson Foods purchases include live cattle, feed grains, swine, corn, soybean, energy, packaging materials, butter, sugar, flour, cheese, corn syrup, fruit, corn oils, and seasoning blends (Tyson Foods, Inc., 2019). The forces that determine supply include weather patterns, disease incidences, supply inventories, agricultural and energy policies. The number of farmers that supply products to the meat industry is many compared to the meat companies, meaning suppliers have less control over prices as buyers can freely shift to other suppliers without incurring huge costs. In 2017, Tyson Foods fired a chicken supplier after accusations of animal cruelty emerged in public (DeLoatch, 2017). Tyson manages suppliers' power by having multiple suppliers in different locations, making it possible to maintain supply chains and freely shift from inefficient suppliers. Using contracts, the company ensures suppliers are bound to fulfill their obligations without fail. Buyers power Tyson Foods customers are diversified, and they include government agencies, supermarket chains, restaurants, grocery wholesalers, and retailers. The high number of buyers compared to the meat producers means companies like Tyson Foods can set prices with little market resistance. Besides, due to product differentiation in the industry, buyers tend to stick to preferred products rather than switching to entirely different alternatives. Most corporate buyers have supply contracts with the meat processing companies that assure them of continued sales for extended periods. However, it also means Tyson Foods and other companies have to offer favorable terms to avoid losing key clients. For example, Walmart contributes over 16% of all Tyson Foods sales (Tyson Foods, Inc., 2019). If Walmart were to pull out of the deal, Tyson Foods would have difficulties filing the gap. The core clients force meat companies to give favorable trading deals, leading to lower profit margins. Buyers are also exercising social market power by passing on the demands of retail customers to meat companies. For example, McDonald's supported meat companies that would phase out gestation crates in pig production and, as a result, forced Smithfield Foods to start phasing out of the crates (Buhr & Ginn, 2011). Tyson Foods manages buyers' power through continuous innovation to maintain customer loyalty, competitive prices, and increasing brand awareness. The threat of substitute products or services Alternative protein businesses are a growing threat to traditional animal meat companies. Some of the emerging businesses like Memphis Meat, Aleph Meat, and Beyond Meat are investing in producing plant-based meat and cell-based meat (Draganov, 2019). The new products appeal to vegetarians, animal meat consumers, and animal rights activists who wield significant influence in the USA meat industry. However, the threat is still low because the emerging companies are yet to gain sufficient capital investments and market share. The technologies for the production of the substitutes are still under development and are quite expensive. Although customers are beginning to shift towards vegetarian diets and plant proteins, the dominant customer preference is animal meat. Tyson Foods is dealing with the threat of substitute products by investing in the development of new products. For example, the company has invested in companies producing plant-based meat, cell-based meat, and food software services. As a result, Tyson foods will get sales from traditional products and emerging substitute products. Analysis and Discussion There are several factors within the external business environment of Tyson Foods that have a significant impact on the company's decision making. They range from political issues such as the USA-China trade wars to demographics, cybersecurity risks, and disease outbreaks. However, from the factors discussed in this analysis, the issues that have a higher effect on the company include market fluctuations, changing attitudes and preferences of customers, technological applications, food safety, legal suits, and unforeseen circumstances. Market fluctuations Changes in commodity prices, foreign exchange rates, and interest rates can cause significant portfolio losses. Tyson Foods uses derivative instruments such as futures and options to hedge against market fluctuations. However, the instruments cannot fully guard against drastic commodity prices that form a significant percentage of the company's raw materials. The prices are determined by factors for which the company has little control, such as weather patterns, disease outbreaks, demand for grain, energy, and agricultural policies (Tyson Foods, Inc., 2019). The company spends significant financial resources in catering to market fluctuations. For example, $18 million expense on foreign exchange rate adjustments in the last year (Finbox, 2020). Market fluctuations will continue to play an increasing role in the business operations of Tyson, especially because the global economy is entering a period of economic recession occasioned by the COVID-19 pandemic. Future changes in commodity prices are likely to trigger drastic shifts in profit levels, stock value, and the market valuation of Tyson Foods. There is a need to develop appropriate response mechanisms in the face of increasing uncertainty. Changes in attitudes and preferences Triggers of customer preferences and attitudes include environmental protection records, animal cruelty, lack of innovation, poor customer relationship management, health and safety concerns about products, and new competing products. One of the major changes currently is the shift towards plant-based proteins. The driving forces behind the adoption of plant-based meats include taste, health concern, and animal cruelty. According to Webber (2018), a Mintel study found that over 52% of Americans choose plant-based proteins due to their taste, 13% because of environmental concerns, 11% due to animal welfare concerns, and 10% diet. The taste was the most significant factor than all other concerns. According to Brooks (2018), an NPD Group research found that 14% of Americans (43 million) frequently chose plant-based proteins instead of animal meat, even though 86% of them were not vegetarians. Bashi et al. (2019) explain that the market for alternative protein is growing and now stands at $2.2 billion. The chart below indicates the increasing interest in plant-based proteins calculated from Internet queries. Chart 3: Internet queries on plant-based protein foods. (Source: (Bashi et al., 2019) The alternatives of choice are traditional plant proteins such as pea and soy, insect proteins, especially crickets, mycoproteins made from fungal biomass, and cultural meat developed using tissue-culture technology (Bashi et al., 2019). Cultured meat is still under development and not yet available on a commercial scale. Within the next five years, there will be rapid growth in the plant-based protein market. Tyson Foods has realized the segment's potential and has already made significant investments in startups focusing on a particular segment. Technological applications Technology is increasingly playing a central role in food production. The application of technology is helping in complementing human labor, reducing operational costs, minimizing losses from downtimes, increasing efficiency across value chains, and developing new products and services. Computer technology has led to increased hacking threats, which can lead to loss of data, imitation of prepared foods recipes, and halting of production activities. Some of the food industry applications include computerized monitoring of entire value chains, production of cultured meats, production of plant-based meats, food deliveries, automated cooking, robotics, 3D printing, and pathogen monitoring. Tyson Foods has made investments in various startups that are focused on emerging technologies. Some of the investments are Memphis Meat, FoodLogiQ, Myco Technology, Tovala, and Clear Labs. Tyson is also investing over $500 million to build an automated production plant (Devenyns, 2020). Food safety regulations There are numerous regulations on the meat industry which aim at protecting consumer health. Meat companies like Tyson Foods are subject to regular food inspections and huge penalties whenever breaches occur. At times, the companies are forced to conduct expensive product recalls, which increases operation costs. In 2019, Tyson recalled over 40,000 pounds of chicken patties due to contamination by rubber pieces (Food Safety News, 2019). In 2019, the company recalled 12 million pounds of frozen, pre-cooked chicken strip products due to concerns of metal contamination. In 2015, the firm recalled over 52,000 pounds of chicken wings because of adulteration concerns due to an "off-odor" (Little, 2015). Apart from the financial expenses of the recalls, the firm suffered a negative brand reputation due to the incidents. Government agencies and consumers are increasing surveillance of commercial food production. Tyson needs to develop appropriate procedures to prevent further incidences of food contamination. Pathogens such as salmonella, Listeria monocytogenes, and E. coli continuously pose the biggest threat of food contamination, resulting in expensive recalls and potential product liability claims (Tyson Foods, Inc., 2019). Legal suits and enforcement actions Legal claims and class action suits are a persistent threat to Tyson Foods business. The claims can result from product contamination, employee and 3rd party injuries, environmental pollution, and failure to follow set regulations. The settlement of the claims leads to significant expenses in court proceedings, time, and human labor. According to Rainforest Action Network (2016), Tyson Foods paid a total of $19,079,850 in 90 claim settlements between 2010 and 2014. The company also spent $2,308,899 in penalties between 2017-2019 (Tyson Foods, 2019). As consumers become more aware of the environmental impacts of commercial meat production, Tyson is likely to face more legal suits resulting in massive financial expenses. The company must develop strategic plans for legal compliance to ensure total adherence to government laws and thus forestall the expenses. Unforeseen circumstances Extreme and unpredictable events can result in high costs for the firm. Some of the unpredictable occurrences include fires, extreme weather events such as hurricanes and flooding, bioterrorism activities, pandemics, which can affect the entire value chain and lead to massive losses. In 2019, a fire at one of the company's factories increased operating costs and significantly reduced the year's profits (Meat & Poultry 2019). As the effects of climate change intensify due to continued pollution of the atmosphere, extreme weather events will become more common. Tyson will be facing the risks of disruptions in production due to potential flooding, fires, hurricanes, water shortages, lack of sufficient livestock, disruption of distribution channels, and reduced spending by customers affected by weather events. It is necessary to develop disaster response plans that include dedicated teams and financial budgets to ensure the company regains production targets quickly after disruptions. Tyson Food's Short-term Strategy Tyson Foods management has instituted various short-term goals. Some include responses to the current COVID-19 pandemic, such as the planned opening of medical clinics in 2021 at selected US facilities to boost the health outcomes of employees and support the fight against Coronavirus (Funk 2020). The company has given bonuses worth $120 million to over 116,000 frontline workers who include truck drivers, hourly-paid workers, and select plant workers (Journal Patriot, 2020). The company is forecasting higher growth in the chicken and prepared foods segments and will be focusing on the segments to increase profitability (Souza, 2019). In the global arena, the company is making investments in the Asia market due to projections that Asia will account for up to 70% of the growth in global protein consumption outside of the USA (Souza, 2019). The strategy for the global market is a 'pull model' aimed at meeting consumer demand and leveraging customer relations and assets. Tyson Foods is also intensifying investments in plant-based proteins and alternative meats. In 2020, the company launched the Raised & Rooted brand products to capitalize on plant-based proteins' demand. Tyson is focusing on automation and technology in its business operations, and the incoming CEO, Dean Banks, will oversee the implementation of the automation and technology processes (Tyson Foods, 2020a). So far, the company has developed an automated deboning and slicing system that will be handling 39 million chickens (Bunge & Newman, 2020). In the 2019 Sustainability report, Tyson Foods committed to reduce greenhouse gases by 30% by 2030, increase sustainability in meeting customer needs by launching 587 new products, and making $97 million investments in research and development (Tyson Foods, 2019). Other commitments included reducing workplace incidents by 10% annually and leading animal welfare through research, innovation, and accurate communication. The company will continue to market its products through the sales staff and target more sales from existing and new clients. Sales promotional activities include advertising, consumer incentives, trade promotions, and volume-based incentives (Vault, 2020). Ethical Considerations Past ethical failures There have been several documented cases of animal cruelty within Tyson Foods processing centers. Some of the actions included cramming chicken in tiny sheds, workers brutalizing chicken by stepping on them, and failing to treat sick animals (Crueltyfree Investing, 2017). Also, the company has previously failed to address animal abuse behaviors in contract farms, preferring to let suppliers manage their farms the way they deem best. Other ethical failures include releasing untreated waste into water bodies, undeclared use of antibiotics to control pathogens in meat, and price-fixing (Reuters, 2020). Recommendations To prevent the repeat of past failures, the company should do the following: Intensify efforts towards promoting animal health, handling, and harvesting by implementing monitoring activities, research, and pilot projects (Tyson Foods, 2019). Fulfill commitments towards reduced water use, reduced air pollution, and proper waste disposal (Tyson Foods, 2019). Ensure all staff adheres to the company policy regarding the handling of animals. Focus on the use of emerging technologies such as molecular sequencing to ensure food safety. Leadership and Collaboration The outgoing CEO, Noel White, will be replaced by Dean Banks. The company's board of directors consists of 14 members and is chaired by John Tyson. There is an enterprise leadership team comprised of 14 officers who head various departments (Tyson Foods, 2020b). The team consists of the CEO; president & director; executive vice president & chief financial officer; group president poultry; president for international business; group president prepared foods; president global McDonald's business; executive vice president & chief customer officer; executive vice president & chief human resources officer (Tyson Foods, 2020b). Other officers include executive vice president & chief technology officer; group president Tyson fresh meats; executive vice president & general counsel; chief sustainability officer; executive vice president alternative protein. The leaders are also involved in championing sustainability within the various business segments (Tyson Foods, 2019). Recommendations Tyson Foods has made great steps in addressing some of the issues this analysis identified. Some of the firm's actions include investments in emerging technologies, alternative meats, plant-based proteins, and increasing food safety procedures. The company has leveraged the first phase of the USA-China trade deal to boost pork sales in China, invested resources in managing the COVID- 19 pandemic, made commitments towards environmental protection, and set goals to improve animal welfare. However, Tyson Foods should consider the following issues to sustain growth in revenues and profits. Market fluctuations Due to the current COVID-19 pandemic, there is a lot of anxiety over economic uncertainties. The World Bank forecasted that the global economy would shrink by 5.2% in 2020 and attain a growth rate of 4.2% in 2021 (World Bank, 2020). The rapid economic performance changes represent periods of extensive fluctuations in commodity prices, exchange rates, and interest rates. The fluctuations can lead to huge portfolio losses for Tyson Foods. This analysis report recommends the adoption of more comprehensive hedging strategies by the company. Previously, Tyson Foods has been using options and futures to protect itself against losses. Still, the instruments may not be sufficient in a time of high economic uncertainty in stock markets. Options can only be applied a few times in a year, they lose value with time, can be costly, and they are only a tradeoff, not a solid solution (Bowman, 2019). Tyson Foods should consider using other hedging strategies such as increasing cash reserves, diversifying its portfolio into assets and stocks, and investing in hedge funds (Ibid). The value of assets tends to remain more stable than that of stocks in volatile markets. Adopting multiple hedging strategies can reduce potential losses significantly and help to retain revenue and profit flows. Food safety Tyson Foods continually invests massive resources in ensuring food safety. According to the 2019 sustainability report, the company had a team of over 2,697 food safety and quality assurance staff and 16 certified labs (Tyson Foods, 2019). However, the company has been experiencing multiple contamination incidents requiring food recalls from the market. This analysis report identified three recent incidences where some of the products had foreign material and bad odor. The contamination could have occurred at different areas in the value chain, making it hard to pinpoint the weak point. The company responded by enforcing various measures, such as increasing foreign object detection technologies and reassessing manufacturing equipment (Tyson Foods, 2019). However, the measures do not provide foolproof solutions. This study recommends the following actions: Application of artificial intelligence technologies in production to improve monitoring capabilities. One of the promising AI technologies in computer vision can be useful in spotting defects and foreign material during the food manufacturing process. Use AI for real-time inspection of products in the processing facilities, which will help to eliminate chances of contamination (Columbus, 2020). Use machine learning technology for predictive monitoring of manufacturing equipment. Machine learning algorithms will help forecast equipment damages (Romaniuk et al., 2019). Without predictive monitoring, factory equipment tends to wear out before workers notice. When manufacturing equipment begins to wear out, they can release pieces of metal and rubber into food products. Disaster Management Climate change is triggering an increase in extreme weather events such as high temperatures that increase fire risks, flooding, droughts, and hurricanes. The events can disrupt the company's supply chain leading to losses. Other events like cyberattacks, bioterrorism, and pandemics can also disrupt business operations. The events tend to occur in unpredictable patterns, which increase the effects on individuals and corporations. This report recommends that Tyson Foods should develop appropriate disaster management plans to help mitigate the occurrences of such events and also manage the effects of such happenings. Such a plan should involve formulating possible responses for different scenarios, designating responsible teams, setting recovery goals, reserving financial resources, and conducting training (Sanfilippo, 2019). A proper plan will help to attain quick recovery after a disaster, but it also helps to protect the brand reputation. Organizations that get flat-footed by unforeseen events tend to lose credibility in public. Technology applications The threat of cyber risks has been increasing rapidly with technological innovations. Computer technologies now play a key role in food production processes. Tyson Foods should raise its focus on cybersecurity to forestall potential attacks. Since Tyson Foods is a highly valued company, it is likely to be a target of hackers who may want to access customers' financial data, information about manufacturing processes, or who may want to disrupt the business operations. Some of the actions could include developing annual information security policies that are reflective of emerging threats, establish operating structures for IT departments, use behavioral analytic programs to spot employee actions that may expose the company to danger, and use advanced encryption for sensitive data (Astani & Ready, 2016). Legal compliance plans Many corporations delegate legal issues to the legal department and do not conduct legal training for all employees. As a result, such corporations tend to incur multiple penalties when individual employees perform actions contrary to the law. For example, most of the animal cruelty actions in Tyson Foods facilities were conducted by individual employees ignorant of animal rights. There is a need to develop legal compliance plans for the different entities of Tyson Foods to help reduce the burden of penalties and negative public perceptions. Legal compliance involves adhering to the set regulations, policies, and best practices in business operations. Best compliance plans for Tyson Foods should incorporate regular employee training about relevant laws, identifying potential violations, forecasting legal issues in company strategies, and developing response actions for breaches (McMenemy, 2019). Conclusion This study was a strategic analysis for determining the factors that will influence decision making in Tyson Foods in the short-term future. The analysis explored the external business environment of the company using the PESTEL analysis tool that covers political, economic, social, technological, environmental, and legal areas. The external environment factors included political funding, USA-China trade wars and tariffs, government responses to COVID-19 pandemic, market fluctuations, changing economic conditions, seasonal demand of products, and taxes. Other factors were demographics, changes in customer preferences, technology applications, technology risks, environmental regulations, diseases, animal welfare issues, food safety regulations, and legal suits. The study also used Porter's Five Forces to explore the competitive environment in the meat industry. The consideration factors were buyers' power, suppliers' power, competition, the threat of new entrants, and substitute products. The study determined that Tyson Foods was well placed within the industry and instituted various mechanisms to respond to threats identified through Porter's analysis. However, there were certain external factors requiring consideration. They included market fluctuations, changes in customer preferences, technology applications, food safety regulations, legal suits, and unforeseen circumstances. The company's short-term objectives were fighting the COVID-19 pandemic, promoting automation and technology, growing the Asian market share, focusing on the chicken and prepared foods segments, investments in plant-based proteins and alternative proteins, animal health, and environmental protection. The short-term goals of the company included sufficient measures to resolve most of the identified external environment factors. However, the analysis found that the company initiatives did not adequately cover market fluctuations, food safety, unpredictable events, technological applications, and legal failures. The report recommended adopting more hedging strategies to protect the company portfolio against losses in volatile markets, the use of AI technologies and machine learning to improve food safety, and formulation of disaster management plans to mitigate the effects of unforeseen events. The study also recommended greater application of advanced information technologies to improve cybersecurity and formulation of legal compliance plans to reduce the burden of penalties. The strategic analysis explored the complex nature of Tyson Food's operating environment and presented practical recommendations for consideration. The application of the recommendation in decision making will ensure the continued growth of Tyson Foods. 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Retrieved 17 September 2020, from https://edition.cnn.com/2020/01/18/business/us-china-pork- trade/index.html. Running head: CAPSTONE PROJECT AND PRESENTATION 1 U06A1 Capstone Project and Presentation By Frederick Wesley MBA 6900 MBA Capstone Dr. S. Manderscheid May 25, 2019 CAPSTONE PROJECT AND PRESENTATION 2 Table of Contents………………………………………………………………..…………..2 Executive Summary…………………………………………………………………………………...……3 Abstract…………………………………………………………………………………4 Introduction………………………………………………………………………5 Background History………………………………………………………………….……………...6-7 Tyson Foods and it Competition.………………………………………...…..8-9 Core Business Functions Human Capital Mgmt…………………………………………………………………..10 Ethics…………………………………………………………………………………..11 Corporate Culture…………………………………………………...………………...12 CSR & Sustainability……………………………......13 Operations………………………………………………………………………..…14-15 Financial Health…………………………………………………………………….…16 Information Technology…………………………………………………...………17-18 Internal & External Environmental Scan Introduction……………………………………………………………………...…19-21 Competitive Analysis………………………………………………………………21-23 SWOT…………………………………………………………………………….....24-25 Recommendations…………………………………………………………………………....26 AI………………………………………………………………………………………27 Increased training for line workers……………………………28-29 Line management training………...….30-31 Other technology…………………..………….32-33 Conclusion Tyson Foods wrap up……………………………………34-35 Lead and collaborate……………………………………………………………....36-37 References………………………………………………………………………………...38-41 CAPSTONE PROJECT AND PRESENTATION 3 Executive Summary In summary Tyson Foods is organization that is primarily a meat processing organization that has a history of providing consumer quality products for many years. Although there habeen changes in the production processes over the years the company still depends on the workforce to manufacture their products. There is an issue that may ultimately harm the company and that is the danger of losing external and internal consumer confidence and that is the recalls of company product especially in the chicken processes which has had two recalls in 2019 already, which actually is two to many for anytime. New leadership sort of inherited this problem but are now tasked with coming up with a long time viable solution for this problem as the company is trying not only to become a modern company but looks internationally for growth potentials. These recalls can hurt the momentum of the largest meat processing organization in the world. There are steps that can be taken to improve the production processes including artificial intelligence, a more engaged workforce and/or better quality assurance procedures. With part of the workforce not being able to understand English this is where the solutions can begin as proper communication can only help going forward. As others look at their employees as human capital, Tyson Foods should take this approach, and begin to invest in the ones that are really the backbone of the organization and that is the production workers. Increase should be the buzz word for these prospective changes. Increase training dollars, the working conditions and the appreciation for these workers which does not have to be monetary means all of the time. Once this problem is rectified Tyson can look to be an industry leader and a benchmark for other organizations to look at to improve their processes. If a consumer gets sick or at waste dies from our products it would be a public relations nightmare and eventually a blow to the competitive advantage the company enjoys. CAPSTONE PROJECT AND PRESENTATION 4 Abstract With more consumers on the go the food and beverage industry has had to make changes. There has been an increase on ready to serve meals and associated products that consumers want to maintain their lifestyles. With Millennials having over $200 billion in buying power companies such as Tyson Foods has to make sure that they are not losing any market share to consumers in this category. Although riding high in profits, introducing exciting new products and being the leading meat processor worldwide, Tyson Foods has had trouble with food recalls of its chicken products with two being in 2019 alone. This could be one of many factors including unskilled labor, a lack of understanding between line management and its subordinates or faulty equipment from one of its manufacturers. Whatever the issues are Tyson Foods needs to fix them as safety conscious consumers could cost the company financially as in lost market share. This paper will look at some of the issues that may have caused the tainted production of the chicken tender products and will show that Tyson Foods may have to make a bigger investment in its human capital of production line workers. Research and development and even artificial intelligence will be some of the ways that Tyson Foods can remedy this situation. The one thing Tyson Foods wants is that a consumer actually dies from one of these tainted products which would cause a public relations nightmare. After coming out a situation where people used social media to bash the ways Tyson Foods slaughtered chickens, the company needs to stay away from any negative publicity as Gen Y and Millennials may not be as loyal to Tyson Foods as Baby Boomers. CAPSTONE PROJECT AND PRESENTATION 5 Introduction The consumer of today is unlike consumers of yesterday. The advent of the Internet has changed and made things such as shopping at a brick and mortar store not as important as consumers have the ability of going online and purchasing products. So much so that consumers has changed the way that these stores do business as most have a dedicated department to physically shop for products that consumers can just walk and pay them and leave with bags already packed with the products they have requested. It’s a matter of time and convenience with time being the optimal reason. So imagine when there is problem such as product recall, a problem Tyson Foods has despite having the competitive advantages of being the leader in the industry and strategic approaches that allows them to stay there, it upsets the delicate balance of the relationship between internal and external consumers. The external consumer has to look for the product that hopefully it has not already consumed, dispose of it and then look for ways to get their money back for the tainted product. The internal customer is perplexed that these recalls are happening as the production of food products must be safe for consumption always. This paper will focus on coming up with viable and sustainable solutions to solving the recalls of food products Tyson Foods is having. It will include subheadings about subjects such as the history of the company, where it intends to go, a SWOT and ethical practices. But the recommendations and the desired outcomes will be what this paper will attempt to communicate. CAPSTONE PROJECT AND PRESENTATION 6 History The history of Tyson Foods is one that shows that if a person is determined to succeed, they can. John W. Tyson began as a salesman who packed his car with chickens and trekked to the Midwest and sold chickens in that area. This was so successful that he was able to branch out and sell other products such as chicks and chicken feed to consumers. In 1947 John W. Tyson incorporates the business as Tyson Feed and Hatchery Company and offers threes services for consumers, the sale of fee, baby chicks and bringing chickens to market. Tyson Foods became so successful that they begin to make acquisitions that gave them a bigger share of the marketplace. In 1963 the company goes public and in 1972 the company changes its name to Tyson Foods Incorporated. This begins a period for Tyson Foods where growth is fast and before the end of the 1989 Tyson Foods begins joint ventures internationally. This was helped by one of its most important acquisitions in its history and that is the purchase of Holly Hill Farms. Holly Farms Corp. succumbed Friday to a sweetened takeover bid by Tyson Foods Inc. and agreed to be acquired for nearly $1.5 billion, ending a bitter eight-month battle between two of the nation's largest chicken producers. The agreement reached Friday afternoon at a New York meeting between the two companies calls for Tyson to acquire Holly Farms for $70 a share in cash, or between $1.4 billion and $1.5 billion, said Ted Bailey, Holly Farms vice president. (Serafino, 1989 par. 10. And in the early 1990’s Tyson Foods had become a large supplier of other areas of the world. “Tyson is the leading chicken supplier in Japan. This year, it will ship 300 million pounds of chicken to Russia, mostly leg quarters which are not as popular in the United States”(Frantz 1994 par. 15). CAPSTONE PROJECT AND PRESENTATION 7 Tyson Foods growth continued along as it was helped by the assistance of then Governor Bill Clinton of Arkansas. Some of the tax breaks given to the Tyson Foods looked to some as underhanded and allowed the company to thrive. “Tyson alone received $7.8 million in tax breaks for expanding its existing plants and work force from 1988 to 1990, according to state records. Whether the assistance the Clinton administration gave Tyson had any impact on the company's decisions to expand is debatable”(Mariniss & Weisskopf, 1992 par 9). Once Mr. Clinton became President Clinton the cozy relationship helped Tyson Foods with so many initiatives to advance its business that Don Tyson needed for Tyson to grow. “The Agriculture Department's failure to impose tougher standards on Tyson Foods Inc. and other poultry processors has prompted widespread criticism--as well as a Justice Department inquiry. And the Commerce Department has been accused of rewriting regulations to benefit Tyson Foods' fishing interests in the Pacific Northwest”(Fritz, 1994 par. 6). The history of Tyson Foods is rich in innovation such as building a chicken processing plants, the ability and even having the foresight to hatch their own chickens for its meat processing. There have been other important aspects in Tyson Foods history such as; “throughout the late twentieth century, Tyson greatly expanded its chicken production by building four new poultry plants at a cost of $400 million and by purchasing competitors such as Culinary Foods, Inc.; Gorges Foodservice, Inc.; McCarty Farms Inc.; and Hudson Foods, Inc”(tyson.foods). The constant pursuit of a competitive advantage and its leadership committed to making all aspects of the company working as strategically has made Tyson Foods a leader in the meat processing world not just domestically but all over the world. Tyson Foods history has shaped for what is to be a great future. CAPSTONE PROJECT AND PRESENTATION 8 Tyson Foods and Meat Processing Industry today The meat processing industry has long been profitable one. “Beef alone is a $95 billion-a- year business, according to the USDA. And the North American Meat Institute (NAMI) estimates that, in total, the meat industry contributes about $894 billion to the US economy”(Shanker, 2015 par. 4). With emerging countries such as China and India coming into play for the meat processing industry, these organizations are pressed to process more meat to keep with demand. The industry as a whole comes under fire for unsafe conditions for its workers but with the financial gain being so big these organizations attempt to use political influence to mask some of these issues. That size translates into political influence: In 2014, the industry spent approximately $10.8 million in contributions to political campaigns, and another $6.9 million directly on lobbying the federal government (calculated by combining totals for the meat processing and products and livestock sectors, as reported by the Center for Responsive Politics’ OpenSecrets website). (Shanker, 2015 par. 5). Along with the unsafe conditions come other issues and one of those is the recalls of food products and that is not only a Tyson Foods problem but industrywide. One of Tyson Foods competitors, Butterball, recently had a recall of one its turkey products and it is a public relations nightmare for this company. “Butterball and the Department of Agriculture’s Food Safety and Inspection Service have announced the recall of 78,164 pounds of raw ground turkey products that might be contaminated with salmonella”(Morris, 2019 par 1). This shows that industrywide that meat processing organizations may need to extensive data to see if there is an industry problem with the workers it has. CAPSTONE PROJECT AND PRESENTATION 9 Most meat processing organizations have unskilled labor doing the production of meat processing and although it’s financially sound there are issues that come along with this type of worker. In the past meat processing organizations had butchers making the cuts of meat but they proved to be costly. One organization saw innovation as declassifying these workers and making them unskilled labor and saw its finances improve drastically. “By getting each meat cutter along the line to make the same cut over and over, Iowa Beef was able to argue that its workers were not skilled butchers but semiskilled laborers and should be paid accordingly”(Friedman, 1981 par 4). This change has been embraced and improved upon by Tyson Foods and its competitors and this could be a factor why these organizations have so many recalls. Meat processing organizations have a history of treating its workers in the worst way. And with all injuries not being reported to OHSA there is not accurate data to see the extent of how hard the work is. These workers are also fearful of more than losing their jobs if they report any injuries. “I think for some workers and slaughterhouses, there are issues of immigration status that make it more difficult to say, ‘I am hurt for the day or the week, and I can't come to work,’ ” Leibler said. “So many continue to work while they are injured, if they can”(Xu, 2018 par 19). The meat processing industry, including Tyson Foods and its competitors can do a lot better in treating its unskilled labor. It also can look at ways to fix hazardous conditions that would allow the workers to do a better job including being able to see defective products before they reach the public. CAPSTONE PROJECT AND PRESENTATION 10 Human Capital Management One of the things that gives Tyson Foods its competitive advantage is its employees. In investing in human capital management it could be a boon for an organization as large as Tyson Foods. Ingham noted “Another improvement has been a switch in the focal point of consideration from finding the best aggressive situating in the market to distinguishing and utilizing an association's very own assets and abilities to give upper hand. The inside condition has turned out to be progressively mind boggling as well however in any event there is some chance to impact it.” In investing in its employees Tyson Foods can gain a bigger market share and it could be a driver for growth. “Tyson Foods employs 114,000 Team Members, including more than 95,000 who work in the company’s U.S. production facilities. This includes chicken, beef, pork and prepared foods operations”(Mickelson, 2017). The workers in these plants are subject to dangerous conditions and still have to produce what is required every day of production. Tyson Foods has a high turnover has rate which means it has an problem with employee engagement and it the business world it cost more to onboard than it is to retain. “The need to increase engagement is pressing. Recent surveys show that it is on the rise, but the overall picture is still pretty bleak. Only about 34 percent of U.S. workers—and 13 percent worldwide—report that they are engaged at work, according to Gallup data”(Lytle, 2016). With more consumers looking for alternatives to meats such as plant proteins Tyson Foods may want to move towards a strategic approach on finding ways to increase employee engagement in the plants that it has and a result it should be a step in finally eliminating the constant recalls it has and it can become a benchmark for other organizations to see if it can treat its production workers better. Proper human capital management can separate the successful organizations from those who are unsuccessful. CAPSTONE PROJECT AND PRESENTATION 11 Ethics All organizations need to well-versed in being ethical. With scandals such engulfing such stalwarts such as Wells Fargo and Enron being brought to the public’s attention, Tyson Foods needs to be aware of what it considers ethical behavior. In its website the following statement describes how Tyson Foods views ethics; Our ethics are guided by our core values, Code of Conduct, Team Behaviors (also known as our 5Cs) and Team Member Promise, which outline team member rights, benefits and responsibilities. Policies and practices follow the human rights principles set forth in the United Nations Universal Declaration of Human Rights and the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.(tyson.com). The above statement seems to one that would satisfy most of its external and internal customers but there have been instances where Tyson Foods integrity has been questioned such as the mistreatment of animals it slaughter. Tyson’s quick reaction is a standard move in a sort of industrial kabuki where “good guys” like the Humane Society or ASPCA work hard to uncover abuse and “industry evil-do’ers” do the minimum needed to quell the immediate controversy without changing the conditions that lead to it until a wave of consumer awareness or outrage forces them to. (Vinjamuri, 2012 par. 4). The way that the organization treats its plant workers who are unskilled seem to different than how the white collar workers are treated and this calls into question the integrity of Tyson Foods and may be the reason there have been so many recalls of its products. CAPSTONE PROJECT AND PRESENTATION 12 Corporate Culture The corporate culture of Tyson Foods is one of that not all embrace as Tyson Foods is one that it is based on some of the principles of the Christian faith. “In 2000, Tyson Foods Chairman John Tyson established a chaplain program for the company’s employees because "he recognized the importance of faith in the lives of our people," explains Rodney Nagel, senior vice president of human resources operations”(Meinart, 2013 par 40). Tyson Foods wants a culture of diversity and integrity. Here at Tyson Foods, we are raising expectations for an inclusive and healthy culture, where there is no place for stigma, and where our team members feel valued for bringing their authentic selves to work each day. In fact, we have an entire team of professionals who are dedicated to cultivating our culture and enhancing our talent—our Talent and Culture Team.(tyson.com). With a global presence that is part of its growth process, Tyson Foods culture is also a strength as it has been voted one of the best places to work for by many publications. “Tyson Foods Inc. was recognized by Fortune magazine as No. 1 on the World’s Most Admired Companies list in the Food Production segment, moving up four places from the company’s 2016 ranking”(fortune.com). Tyson Foods has been a reputable organization when it comes to its employees in the corporate world. The changes needed to replicate this model in the production facilities is something that has to be committed to by management on all levels so that same culture is honored and practiced by all who work for Tyson Foods. CAPSTONE PROJECT AND PRESENTATION 13 Corporate Social Responsibility & Sustainability The business world of today has external and internal customers look for ways that company do things such as sustaining the environment. “In today's socially conscious environment, employees and customers place a premium on working for and spending their money with businesses that prioritize corporate social responsibility (CSR)”(Schooley, 2019). Tyson Foods looks at sustainability through things such how it approaches new products, animal welfare, the environment, in the workplace and in the community. What rises to the top for me is how much we on the Corporate Social Responsibility (CSR) team depend on others to accomplish our goals. We appreciate the input and support from countless Tyson colleagues, leaders, and community partners as we work together to design and implement programs that give our team members opportunities to grow, learn and thrive.(tyson.com). Tyson Foods is an organization that takes pride in feeding communities that are in need of food. There are numerous communities that have benefitted from the generous donations that Tyson Foods is a part of. “By the end of the 2018 fiscal year—only three years after we made the commitment—we were less than $5 million away from reaching our goal, having donated nearly $45.9 million toward hunger relief in the form of product donations and charitable grants”(tyson.com). One of the other things that the company did that was commendable was to continue a mentorship program that Hillshire Brands has started that involved inner city youth in the 7th and 8th grade. Most other organizations would have stopped or discontinued this type of commitment but not Tyson Foods. These examples show how committed Tyson Foods is to CSR and sustainability. CAPSTONE PROJECT AND PRESENTATION 14 Operations Tyson Foods operations is extensive and vast as it is the largest meat processing organization in the U.S. as it has the company makes a wide variety of animal-based and prepared products at its 123 food processing plants and its 54 chicken plants, 13 beef plants, and six pork plants process over 42 million chickens, 150,000 cattle, and 340,000 pigs weekly. Tyson Foods is responsible for over 95% of the pizza toppings worldwide, 100% of Cornish hens and the company supplies leather to car manufacturers for car seats. Each part of the animals are sold as some countries use the excess parts, feet, beaks, etc., for medicinal purposes. It has one of the largest research and development centers in America in Springdale Arkansas. “The center is primarily used to develop food products for Tyson Foods’ customers, who include retailers, club units, quick service restaurants and convenience stores. Considered a hub of food innovation, the center helps in reducing the time of availability of new food products”(foodprocessing- technology.com). The company also is looking at international operations as its market in the U.S is volatile and the organization is looking for a bit more stability worldwide. “A broader international presence would make Tyson less reliant on the ups and downs of the U.S meat sector, where processors like Tyson, Pilgrim’s Pride Corp. and Hormel Foods Corp are grappling with low prices and growing meat supplies”(Bunge, 2018 par 4). This expansion which follows the blueprint on how Tyson has grown, will involve them purchasing a company to help with its goals. Keystone provides a significant foundation for international growth with its in-country operations, sales and distribution network in high growth markets in the Asia Pacific region as CAPSTONE PROJECT AND PRESENTATION 15 well as exports to key markets in Europe, the Middle East and Africa," Tyson said in August”(Miller, 2018 par 4). The processing of food products is what Tyson does so well and there is a need for increased safety for plant workers. With the food industry changing rapidly and the dependence of more automation in plants to increase production, Tyson is looking to benchmark some of its operation practices for other meat processors to use for safety purposes and has, named by an industry publication, Meat and Poultry, 2018 Operations Executive of the Year, Chris Rupp, leading this massive change. I like to think I’m helping to transform our industry into a safer place to work,” he says, admitting it’s an industry-wide effort that he’s proud to be a part of. “My role is making sure that we stay focused on what we believe in and we continue to upgrade equipment and buy the latest technology out there that ensures the safest process. (Crews, 2018 par 3). Tyson Foods is also looking at plant based proteins for some of its consumers as it is a demand for these products have had the company divest from one company, Beyond Meat, and seek to begin their own meatless protein product. “By the end of the year, Tyson Foods Inc.’s new alternative-meat product could already be a major player in the U.S., perhaps giving the likes of the Beyond Burger and the Impossible Burger a run for their money”(Mulvany, 2019 par 1). The operations of Tyson Foods is really the backbone of the organization and with the goals of the company to have more prominent role internationally and continue its leading role in the U.S. as well. CAPSTONE PROJECT AND PRESENTATION 16 Financial Health Tyson Foods is in a position of great financial health. Nunes (2018) noted, “Tyson Foods, Inc. performed well during fiscal 2018 regardless of a few critical headwinds. Most quite, the organization needed to oversee sharp increments in cargo costs during the year, live creation issues in its Chicken business, a flame at one of its buildings and exchange questions with key exchanging accomplices Canada, China and Mexico”. The company is being aggressive when as it continues to look at growth as it continues to acquire companies to sustain their competitive advantage. There is also a concern that tariffs that the U.S government will harm the company financially if they continue. Turner (2018) recognized, “The new projection comes in the midst of taxes the Trump organization has put on imports as the president endeavors to revamp economic agreements with a large group of nations, including China, Mexico and Canada, and the European Union. The Trump organization slapped taxes on $34 billion in Chinese merchandise alone and took steps to put levies on up to $500 billion in Chinese items”. Tyson Foods outlook for 2019 and the future looks bright. As mentioned earlier in this paper, the company looks globally for its growth and being in the position of being the U.S. largest meat processing means that it operates from a position of strength. The Keystone acquisition has placed the company on a path of continued success. Other notable acquisitions of Tyson Foods include — AdvancePierre, Original Philly Holdings, Hillshire as well as Mexican food restaurant chains, Circle Foods and Don Julio Foods. The company under the new leadership of Noel White seems to be on course for success and an organization internal and external customer can approves of. CAPSTONE PROJECT AND PRESENTATION 17 Information Technology For any organization to succeed in this global environment it must be well versed in information technology to maintain a competitive advantage. Most communications between have internal and external consumers is allowed because of information technology. Tyson Foods has a strategic approach as it looks at itself as a technology company. “While we’re keeping our eye on innovative, futuristic technologies, from edible bar codes to 3-D food printers, our primary attention is on five key areas: mobility, advanced analytics, industrial IoT (Internet of Things), robotics and block-chain”(tyson.com). Protein is a perishable product and being able to properly maintain control over this is part of what information technology does for the organization as it can be used as an inventory management system. This shows how much product is on hand and could save the company money by keeping inventory low and not producing more than needed. As with most meat processing organizations in the U.S. there is a surplus of chicken and pork products so if Tyson wants to sustain its competitive advantage it may have to use a POS system to monitor consumer spending habits. “Whether it’s social, economic, weather, demographic or trend data, it all can now be ingested into advanced algorithms (a mathematical process for problem-solving) that we believe will enable us to be way more accurate in forecasting”(tyson.com). Tyson Foods information technology also helps with its data management systems which is vital in a global environment. The systems they had been using had been outdated and things such as compliance could be compromised. It has to look at investing in a better to report data. ““The fact that the system was crashing every week was a sure sign that we needed to upgrade,” said Jonathan Riechert, senior engineer-innovation, Corporate Engineering Group, Tyson Foods. “Beyond the USDA reporting issue, we knew that we couldn’t keep taking hours out of CAPSTONE PROJECT AND PRESENTATION 18 employees’ days to troubleshoot.”(industryweek.com). Tyson Foods is researching improvements to this system. “For example, we’re testing the use of “DeepLens” cameras in one of our plants for real-time product identification and tracking”(tyson.com). Management information systems are also part of Tyson Foods information technology processes. Dynamic organizations utilize that information as a major aspect of their vital arranging process just as the strategic execution of that procedure. Tyson Foods looked outside the company to better utilize the cloud technology that other companies are using. “Tyson's CTO Scott Spradley, joined the company in June of last year and has encouraged digital transformation within the cloud and technology "sprints" that allow employees to effectively test drive new applications and provide feedback”(Schwartz, 2018 par 3). This role is new one for Tyson Foods and shows it is committed to become a modern company. Lastly Tyson Foods is using information technology to better maintain relationships with its customers. Client Relationship Management (CRM) frameworks catch each collaboration an organization has with a client, so an additionally enhancing background is conceivable. It looks to partner with others organizations using something called block-chain. “We expect this to give us, our partners and customers an almost immediate capability for tracking shipments, paying invoices, identifying where food came from and many other great uses”(tyson.com). The investments in IT for Tyson Foods should help foster the growth that the company is looking for especially as it looks at global markets to increase its financial position. And with the recent acquisitions and the expected integrations of the information technology will be a key factor in that being a successful transition. CAPSTONE PROJECT AND PRESENTATION 19 Internal & External Environmental Scan Tyson Foods is in the process of actually trying to become a modern organization in changing times and this was beginning to become a reality before Tom Hayes retired as CEO. He said Tyson Foods is an innovator in the protein market, yet the organization is upsetting itself to have the option to develop better for speculators and customers as the organization raises the world's desire for how much good sustenance can do. He said manufacturing food in a sustainable way is as critical to buyers as cost. (Souza, 2018). Tyson Foods has changed leadership as recent as last year as Tom Hayes retired and was replaced by longtime employee and former group president of Beef, Pork and International for Tyson Foods. Most of the leadership is also new as some group vice presidents have leaving qualified people in the roles but devoid of the actual working knowledge of what the role encompasses by actually doing the job. Consumers taste have changed from obtaining their protein from meat and the company is looking at plant based protein and using animal cells for future products. With all of the positive things that has the company in outstanding financial strength there are internal issues as there have been recalls in the past of their products and two massive recalls of chicken products this year alone. This could erode consumer confidence in the company and have consumers look at other alternatives to buy their protein products no matter how much of a competitive advantage Tyson Foods enjoys over its competitors. At this time the products that have been recalled are chicken products but if not remedied it could spread to other portions of the organization. The company employs workers at its plants that are educational level are mostly high school graduates, some who may not speak English and even in some cases illegal immigrants which put the company in an ethical bind. CAPSTONE PROJECT AND PRESENTATION 20 Externally the company sees that the demographics of consumers are changing as the consumers with the buying power are younger as Baby Boomers are retiring and Millennials are now in the forefront. Staley (2018) reported, taken in general, Millennials do use an unbelievable measure of monetary and social power. This is the reason they scare doomed ventures, and why those enterprises are so frantic to fit themselves into young people's way of life. The importance of being reliable for this demographic can help or hinder an organization as this group communicate via social media more than any other group. When video of the inhumane slaughter of livestock reached other consumers it caused an outrage and a change in these practices. The industry as whole has a talent shortage in the plants as people do not want to work that hard. Prospective employees look at these types of jobs as not ones that appeals to them. The table below obtained from the Bureau of Labor Statistics shows the mean hourly wage for these meat processing plant workers. Percentile 10% 25% Median Wage 50% 75% 90% Hourly Wage $10.00 $11.49 $13.59 $15.49 $18.02 Annual Wage $20,810 $23,900 $28,260 $32,220 $37,480 Source. Bureau of Labor Statistics Perdue Chicken also recently has had a massive recall that should call attention to consumers the seriousness of the lack of talent, training and maybe inferior equipment can harm consumers. Gold (2019) recognized, as indicated by the USDA site, Class I implies that "this is a wellbeing danger circumstance where there is a sensible likelihood that the utilization of the item will cause genuine, unfavorable wellbeing outcomes or demise." Competitive Analysis CAPSTONE PROJECT AND PRESENTATION 21 The external scan showed the average of what production workers across the industry makes but the problems where the recalls have been happening for Tyson Foods has been mostly in chicken production. For all these companies the availability of workers has become an issue. “The pool of available labor is shrinking,” Gonzalez said”(2017). This has to cause companies that has chicken production plants like Tyson and its main chicken production competitors, Sanderson Farms and Perdue Chicken, , to come up with ways to recruit and retain workers. Tyson has already began a pilot program at one of their production plants and are going to increase wages at other chicken production plants. Polanek (2017) “Tyson Foods Inc (TSN.N), the greatest U.S. chicken organization, said on Wednesday it might raise compensation again for workers at all of its poultry plants, an indication of a strengthening fight for employee in a tight labor market”. This has caused Sanderson Farms to act accordingly and see that employee engagement is needed even when doing production work. Recognizing that people are its most important resource, the Company provides competitive compensation, an inclusive benefits package that includes generous retirement plans and comprehensive health benefit plans for which the Company pays 75 percent of the cost for both employees and their family. In addition, the Company provides valuable training and educational resources for its employees.(Neel, 2019 par 5). Sanderson Farms also will raise wages for all its production workers. “Once the pay increase is implemented, hourly line operators who have been employed with the Company for at least 90 days will be compensated to an increased rate of at least $15.00 an hour”(Neel, 2019 par 2). And although there is no increase for its workers, Perdue Farms has an advocate in Washington, D.C. to help with finding employees. Ordonez & Kirby (2019 noted “Agriculture Secretary Sonny Perdue is swimming into lawful migration endeavors driven by Jared Kushner by dispatching a CAPSTONE PROJECT AND PRESENTATION 22 previous ranch lobbyist to work with the agribusiness network on the best way to address their issue for remote laborers without trading off the beliefs of the administration”. These types of jogs are going to need some type of incentives to have employees stay once they have come onboard and to find new employees as well. In comparing what meat cutter/trimmers make for the three companies we can see they are being paid below median average. Organization Meat Cutter/Trimmer Wages Above or Below Industry Median Tyson Foods 12.91 -5.1% Perdue Chicken 12.20 -10.8% Sanderson Farms 11.85 -13.7% The industry as a whole has to create a new image as now only the work is hard but the industry is known for treating workers bad. “Poultry workers are routinely denied basic needs such as bathroom breaks to the point of being forced to wear diapers while on the line, a new report claims”(Chuck, 2016 par 1). And some of the companies that were mentioned above are have been accused of doing this to their employees. “The group named Tyson Foods Inc., Perdue Farms Inc., Pilgrim’s Pride Corp., and Sanderson Farms Inc., quoting workers there using pseudonyms”(Chuck, 2016 par 7). If these allegations are true then all of these companies need to have their line managers retrained. The next section will look at a SWOT analysis of Tyson Foods as compared to its industry. CAPSTONE PROJECT AND PRESENTATION 23 References Bunge, J. (2018). Tyson foods ceo looks to make international acquisitions. Retrieved from https://www.wsj.com/articles/tyson-foods-ceo-looks-to-make-international-acquisitions- 1541623508 CAPSTONE PROJECT AND PRESENTATION 24 Chuck, E. (2016). Poultry workers, denied bathroom breaks, wear diapers: oxfam report. Retrieved from https://www.nbcnews.com/business/business-news/poultry-workers- denied-bathroom-breaks-wear-diapers-oxfam-report-n572806 Crew, J. (2018). Tyson operations executive embraces safety as industry evolves. Retrieved from https://www.meatpoultry.com/articles/19887-tyson-operations-executive-embraces- safety-as-industry-evolves Frantz, D. (1994). How tyson became the chicken king. Retrieved from https://www.nytimes.com/1994/08/28/business/how-tyson-became-the-chicken-king.html Friedman, T. L. (1981). Iowa beef revolutionized meat-packing industry. Retrieved from https://www.nytimes.com/1981/06/02/business/iowa-beef-revolutionized-meat-packing- industry.html Fritz, S. (1992). Clinton ties to tyson scion still drawing critics' fire : politics: some allege arkansan got special treatment from agriculture, commerce departments. he denies it. Retrieved from https://www.latimes.com/archives/la-xpm-1994-06-12-mn-3410- story.html Gold, B. (2019). The USDA just recalled 32,000 pounds of chicken—here's what you need to know. Retrieved from Lytle, T. (2016). 7 tips to increase employee engagement without spending a dime. Retrieved from https://www.shrm.org/hr-today/news/hr-magazine/1016/pages/7-tips-to-increase- employee-engagement-without-spending-a-dime.aspx CAPSTONE PROJECT AND PRESENTATION 25 Mickelson, G. (2017). Tyson commits to better pay/conditions for slaughterhouse staff. Retrieved from https://meatpacking.info/2017/04/27/tyson-commits-higher-payconditions- slaughterhouse-staff/ Miller, B. (2018). Tyson foods ceo is pushing international expansion. Retrieved from https://www.bizjournals.com/chicago/news/2018/11/08/tyson-foods-ceo-is-pushing- international-expansion.html Morris, C. (2019). Butterball recalls 78,000 pounds of ground turkey. Retrieved from http://fortune.com/2019/03/14/butterball-ground-turkey-recall-kroger-food-lion/ Mulvany, L. (2019). Tyson readies alternative-meat debut after exiting beyond. Retrieved from https://www.bloomberg.com/news/articles/2019-05-06/tyson-foods-to-introduce- alternative-meat-products-this-summer NA (n.d.) Culture of tyson foods. Retrieved from https://www.tysonfoods.com/the-feed-blog/our- recipe-inclusive-culture NA. (2018). Tyson Foods improves reporting capabilities and reduces downtime. 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