Outsourcing, Poultry

Executive Summary

Outsourcing business functions help poultry companies to remain competitive in the fierce competitive environment of today. Not only can outsourcing reduce cost for poultry conglomerates, it also greatly benefits specialty poultry companies. This paper discusses the various types of outsourcing poultry companies employ with emphasis on the different outsourcing motives for conglomerates and specialty companies.
In the discussion, business functions are separated into core functions and support functions. The benefits of outsourcing for each core functions listed below are contrasted with the drawbacks:
- Day-old Chicks
- Feed
- Farming
- Processing
- Marketing
Explanation on why outsourcing is important for each aforementioned core function is compared with different levels of vertical integration of poultry companies. Weighing the potential benefits of economy of scale and the problems of outsourcing, this paper concludes and recommends that specialty poultry companies have to carefully outsource both support and core functions after weighing the risks and benefits diligently to remain competitive in the marketplace. 
In the highly competitive environment in the food industry of today, there are essentially two types of poultry companies in the marketplace: conglomerates and specialties. Conglomerates like Tyson Foods, Inc. of Arkansas and Foster Farms of California, are extremely vertical in their business structure, often owning or controlling most parts of the value-added process. However, this level of vertical integration “requires maximum investment to equipment.” (Saruliene & Vilkas, 2010, p. 745). On the other hand, specialty poultry company like the one I work for is comparatively small in size and revenue with a horizontal business structure. Specialty companies often rely heavily on outsourcing and strategic alliances to strengthen its competitiveness, decreased capital expenditure and reduce risks. This paper...