Agec 430 - Jbs United

Morganne Miles

Professor Gray and Gunderson

AGEC 430

March 8, 2018

Case Study 2

After overviewing JBS United, there are many opportunities that the company can take advantage of to succeed. With the large Chinese market available for JBS United in the pork consumption, expansion of dairy services, and expanding to markets and areas where JBS United haven’t chartered out to yet, JBS has many chances to make their company stronger and better. According to the case study, JBS United’s potential growth in domestic markets and gaining market shares has the potential in the firm’s profitability.

Four major growth episodes include an emphasis to producing base mixes, establishment of significant in-house R&D capacity, expansion through merger and acquisition, and establishment of international presence for both nutrition and emerging technology products according to the case study. With the shift of producing base mixes, this allows for the company to have more sophisticated feed- mixing systems than their competitors. This will also aid in the quality of the feed and help the feeds become more adequate for each type of livestock. As stated in the reading, for swine, nursery and starter rations are critical. Therefore, getting the rations is key to success and growth. If the rations are not correct it could hinder the operation and become a major risk to the company. Establishment of R&D capacity can aid the innovation for JBS United. With adding more R&D into the company, the employees can discover new ideas to add to their product line or find a way to reduce costs on current products. However, a risk to R&D can be the costs of researching new products and developing the products. The employees might have a great idea, but if it costs too much to make it or the newly invented product doesn’t sell then the company doesn’t make money. With adding expansion including entry into the grain business this opens up so many new doors for JBS United. JBS is able to move their grain from feed mills to ethanol plants to export markets. With the potential of making profits from merchandising their grain, risks are also involved with merging to the grain division. One key issue is the constant fluctuation of grain prices. This can hurt JBS if they are storing a lot of grain and can’t afford to sell it because the prices are so low, and they would be losing money. With emerging technologies this can reduce labor costs and increase production efficiency. With reducing costs in labor and production, the money saved there can be allocated into a different part of the business to help in that section. Emerging technologies can however be very expensive and has the chance to malfunction.
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Porter’s Five Forces

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Breaking down the Porter’s Five Forces, the competitiveness of this market is fairly high.  The threats of entrants are fairly low because of the entry costs that another company would have to pay to begin to make products like JBS United does. The buyer power is moderate because of the specialized products. The supplier power is low because of the low amounts of unique products. Threats of substitutes is low because there aren’t many companies that make the same exact products.  

[pic 3]Midwestern agriculture is a good opportunity for growth. JPS United can keep expanding near and around railroads to be grain transportation easier and accessible. JBS United can succeed the most through expanding their grain operations. This will allow more areas for farmers to take their grain and also allows for more allocation of space for JBS’s grain. Other options are to expand the swine feed production to serve markets in the western Corn belt. This is also attractive to JBS because it would allow their geographical map to expand. The final option is for JBS to expand the dairy feed production.