Tyson Foods SWOT and PESTLE Analysis

Strength

1. Leader in protein based products in the world: Tyson Foods is one of the world’s largest food companies and a leader in manufacturing and processing of a variety of protein based products. The firm’s high market penetration and brand loyalty is facilitated by its vertically integrated chicken operations as well as its recognizable packaged food brands such as Jimmy Dean, Hillshire Farms, and Ball Park. All their products, including chicken, beef & pork are absolutely fresh, affordable and they strive in maintaining the highest quality possible. The Company is also a leading poultry breeding stock supplier in the world and believes in continually developing their product to make their proteins more sustainable.

2. Recognized brand name across the United States: The Tyson brand is well known in the United States for its largest and robust protein portfolios in the market and this helps keep the demand for its products high. The reason why the company has a competitive advantage over other companies lies in the fact that the company has efficiently managed to reduce its fixed costs through economies of scale. The Company has also proved itself as a leader in terms of 3% growth in revenues with $2,931 million in 2017 fiscal year & sales valuing at $38,260 million. The company has also been listed in Fortune’s “Most Admired Companies” for five consecutive years and has been named a leading company in “Faith Equality Index”

3. Customer loyalty through superior quality products: The organization has a customer base which is spread across 117 countries (with some of its major markets being Canada, Central America, China, the European Union, Japan, Mexico, the Middle East, South Korea and Taiwan) and is under constant pressure to provide all its customers the same fresh & affordable meat products. The Company controls all aspects of production “from egg to plate” with further processing being the focus of most of the Tyson’s production facilities. In order to achieve this, the company has its own Laboratory & Research services group which keeps a check on the production and quality of meat being manufactured and supplied to the retailers.

4. Association with big brand retailers in consumer foods segment: Tyson Foods Inc. sells its products to retail food distributors, grocery stores, supermarkets, club stores, and restaurant chains. Among them, Wal-Mart Stores Inc. is the single largest customer of Tyson Foods in all four major segments, accounting for 17.5% of the company’s fiscal 2017 consolidated sales. No other customer claimed over 10% of Tyson Food Inc’s fiscal 2016 sales. Sanderson Farms, Hormel Foods, and Pilgrim's Pride recognize 17.5%, 13.7%, and 14.4% of sales respectively, with no significant (i.e. >10%) sales to any other single customer.

5. Strong presence with more than 300 facilities globally: Tyson produces and ships fresh, frozen & refrigerated products worldwide. Their distribution system extends to a broad network of food distributors and is supported by their own or leased cold storage warehouses, public cold storage facilities & a robust transportation system. Internationally, they rely on both rail & truck refrigerated transportation to domestic ports, where consolidation takes place to transport to foreign destinations.

Weakness

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Opportunity

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Threat

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Political

1. Variations globally in terms of federal, state & local laws & regulations: There are numerous laws & regulations given by the United States Department of Agriculture (USDA) & the Food & drug Administration (FDA) that Tyson Foods and its other shareholders must observe and obey. The company’s dealings with federal, state, and local governmental officials must comply with all applicable laws and regulations, and they should be free from any kind of wrong doings in terms of taxes, food safety & quality etc. All the Team Members and directors, as well as consultants, lobbyists, agents, and other representatives are required to adhere to the highest ethical standards of conduct when dealing with government personnel.

2. Government restrictions on imports & exports, trade barriers & quotas: Tyson Foods Inc. due to its global operations is subject to various risks & uncertainties relating to the international market. The imposition of tariffs, quotas, trade barriers, closing of borders by foreign countries due to animal diseases in addition to import or export licensing requirements adversely hampers the organizations’ business such as the ongoing tensions between US & China has led to the fall in the share prices of Tyson Foods Inc. while the organisation was already looking for other exporting countries due to the ban on pork imports by the Chinese government from the US market. In 2016, China’s reverse taxation on American products specifically targeted U.S. agriculture and food producers where Beijing imposed new tariffs on meat, fruit and other American products in response to new U.S. taxes on Chinese goods and this trade war continues in 2018 heightening the political tensions between the two nations. For the U.S pork producers, China, combined with sales from Hong Kong is the second-largest export market, more important for premium products, second only to Mexico, accounting for juicy revenues for Tyson Foods. In April 2018, China’s revised retaliatory tariff included 25% tariff on pork which caused fear of U.S. pork pileup and sent Tyson’s share prices tumbling.

Economical

1. Seasonal demand for consumer goods: Demand for beef, chicken and certain prepared foods products, such as hot dogs and smoked sausage, generally increases during the spring and summer months and generally decreases during the winter months. Pork and certain other prepared foods products, such as meat dishes, appetizers, frozen pies and breakfast sausage, generally experience increased demand during the winter months.

2. Fluctuation in currency rates: Rapid changes & volatility in the currency rates have a major impact on the daily operations of Tyson Foods Inc. in the following ways- (i) fluctuations in the cost of inputs & raw materials (ii) Competitive pricing of products (iii) Problems related to imports & exports of raw materials & finished products. Sales for fiscal year 2017 was negatively impacted with a decrease of $2.6 billion because of this issue.

3. Volatility in capital markets & interest rates: Changes in interest rates and the market value of plan assets has an impact on the funded status of the various benefit plans that the organization implemented for its employees and causes volatility in the net periodic benefit cost and our future funding requirements affecting the credit capacity of the organization as well. Volatility in capital markets in terms of the growth of real GDP in future fiscal years will have a positive impact on Tyson Foods Inc. as this shows that the consumers will be willing to spend more on newer products as consumer confidence and consumer expenditure depends a lot on capital market volatility.

Social

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Technological

Legal

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Environmental

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