Case_31_Smithfield_Foods - Assignment Questions 1. What are...

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Assignment Questions 1. What are the chief elements of Smithfield Foods’ strategy? How important is the vertical integration component of the company’s strategy in eastern North Carolina? Smithfield has a direct focus on reducing costs chiefly through the use of vertical integration. By controlling all the elements of their supply chain, Smithfield is able to ensure cooperation with the corporate entity. The greater number of segments they do not have an ownership stake in, leaves greater opportunity for those who disagree with Smithfield's methods to create havoc within their company. For instance, if Smithfield had outsourced the trucking of their meat to another firm, and that firm decided they did not agree with their business practices, who's to say they couldn't refuse service and ruin lead times created by supply chain management. Vertical Integration does not guarantee things like this won't happen, but it greatly reduces the risk by keeping as many parts of the process in house as possible. 2. Is there a moral problem with Smithfield Foods’ vertical integration strategy and its resulting concentration of thousands of hog farms and several meat-packing plants within a relatively small geographic area? Can Smithfield Foods’ strategy pass the test of moral scrutiny (as discussed in Chapter 1)? Why or why not? Is it socially responsible for a company like Smithfield Foods to pursue a rapid growth strategy when that strategy poses environmental problems and adversely affects living conditions in the communities where it operates? Should the company be proud of its business model and strategy? There is a moral trade off cost created by Smithfield concentrating their hog farms and meat-packing plants. On one hand, you have a local population who has an extremely poor view of the company and likely spreads bad press to all their friends and relatives complaining about them. The main complaint voiced by this crowd was the horrific smell created by the hogs manure. If Smithfield were to ship the manure off somewhere else for storage instead of leaving it to compost in open pit lagoons, they create another problem however. Inevitably, they will be accused of not incorporating green practices, because of the fuel it takes to transport said manure and the carbon emissions created by shipping it. The bad press created by this would likely be on a national level and far out way the
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This note was uploaded on 02/23/2009 for the course SBAD 478 taught by Professor Tanyel during the Spring '09 term at South Carolina Upstate.

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Case_31_Smithfield_Foods - Assignment Questions 1. What are...

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