HW#4 (Nest Fresh Eggs)_Problem_Set_Solution

HW#4 (Nest Fresh Eggs)_Problem_Set_Solution - Professor...

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Professor Brent Gloy Agribusiness Strategy AEM 427 10/20/2008 Nest Fresh Eggs (A) (Response) Why Change Strategy Nest Fresh began its operations as a 100% cage-free producer of eggs in 1991, continuing to realize substantial growth through 2004; however, in 2005 the market place began to change and nest fresh saw its first drop in profit in over 14 years of operating . The cage free business, due to the higher cost of operations, sold eggs in the market at a premium to eggs produced from caged conditions . Many of the larger players were beginning to realize this trend . Consumers were willing to pay a premium of up to 300% for eggs produced under the cage-free conditions . To Nest Fresh, cage-free was always just the right thing to do, but to these larger companies such as Land O’ Lakes, Rose Acre, and Cal-Maine Foods, cage-free became just another way for them to boost their bottom lines . With these larger players entering the cage-free market, Nest Fresh would have to adopt a new strategy in order to remain competitive . The top three competitors combined had nearly 63 million hens in their facilities compared to Nest Fresh which only had around 300 thousand in their facilities . This meant even worse news for Nest Fresh . The larger companies began employing strategies of caged and non-caged production methods . This way they were able to benefit from the margins of the caged industry and apply them to cutting cost in the non-caged market . That way they were able to offer non-caged eggs a premium to their caged eggs, but still below the prices set by Nest Fresh and other small producers of eggs . Prior to these larger egg companies entering the cage free market Nest Fresh had other problems to deal with . The egg market was both regional and seasonal . This meant they needed to figure out ways to supply their customers on a national level, and be able to meet demand needs when they spiked around the winter time . Nest Fresh had been relying on pure guarantees in order to enter into the larger supermarket chains they felt were necessary in their continued success . They needed to find ways to continually meet their demands and this was a large cost for Nest Fresh . On top of everything else were new products entering the market that claimed to be healthier, or more organic . There products were said to come from hens who had been fed special feed in order to decrease the amount of cholesterol found in most eggs . This meant even more competition in a relatively already competitive market . Nest Fresh was being hit from all sides and it was really beginning to be hard to maintain a balance between their values and ethics, while trying to maintain a working, profitable organization .
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Strategy 1- Education Nest Fresh recognized societies concern for the proper treatment of animals early in the game . They developed Nest Fresh on the principles of “providing food for people and the human treatment of hens . This strategy was proven to be sound and highly profitable, as seen
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HW#4 (Nest Fresh Eggs)_Problem_Set_Solution - Professor...

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