Case Study Proposal-Beyond Meat PDF

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GROUP ASSIGNMENT COVER SHEET STUDENT DETAILS Student name: Nghiêm Quỳnh Anh Student name: Nguyễn Hữu Hoàng Phúc Student name: Nguyễn Quỳnh Như Student name: Nguyễn Hà Kiều Oanh UNIT AND TUTORIAL DETAILS Unit name: Strategic Management Tutorial/Lecture: Lecturer or Tutor name:

Lecture

Student ID number: Student ID number: Student ID number: Student ID number:

31181021357 31181021447 31171025125 31171023540 Unit number: SM 2021-21 T2

Class day and time: Fri Aft & Sat Mor

Michael Saram

ASSIGNMENT DETAILS Title: Length :

Team 6 Final Case Study Proposal - Beyond Meat Due Date date: 17/03/2021 submitted:

17/03/2021

DECLARATION

I hold a copy of this assignment if the original is lost or damaged. I hereby certify that no part of this assignment or product has been copied from any other student’s work or from any other source except where due acknowledgement is made in the assignment. I hereby certify that no part of this assignment or product has been submitted by me in another (previous or current) assessment, except where appropriately referenced, and with prior permission from the Lecturer / Tutor / Unit Coordinator for this unit. No part of the assignment/product has been written/ produced for me by any other person except where collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator concerned. I am aware that this work may be reproduced and submitted to plagiarism detection software programs for the purpose of detecting possible plagiarism (which may retain a copy on its database for future plagiarism checking). Student’s signature: Anh Student’s signature: Phuc Student’s signature: Nhu

Student’s signature:

Oanh

Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above declaration has not been signed.

Beyond Meat’s Case Study

Group 6 Nghiem Quynh Anh Nguyen Huu Hoang Phuc Nguyen Quynh Nhu Nguyen Ha Kieu Oanh Strategic Management SM-DH44ISB-2 Mr. Michael Saram March 17th, 2021

TABLE OF CONTENTS I. II.

Executive Summary Company background 1. Vision 2. Mission 3. Core values

III.

Industry Insight

IV.

Current Strategic Plan and Strategy Execution Actions A. Current Strategic Plan 1. Business Model 2. Value chain 3. Strategic and Financial Objectives 4. Strategy (3 levels) B. Current Strategy Execution Actions 1. Organization Building Actions 2. Operations Management 3. Corporate Culture 4. Leadership

V.

Evaluation A. Current Internal Environment Evaluation 1. VRIO 2. Strategic Group Map 3. Competitive Profile Matrix (CPM) 4. Internal Factors Evaluation (IFE) B. Current External Environment Evaluation

1. PESTLE 2. Porter’s 5 forces Model 3. External Environment Analysis VI. VII.

Assessment of Current Strategic plan and Strategy Execution Actions Proposed Strategic Plan and Strategy Execution Actions A. Proposed Strategic Plan B. Proposed Strategy Execution Actions 1. Organization building actions 2. Operation management 3. Culture & Leadership

VIII.

Conclusion

IX.

References

X.

Appendix

I. Executive summary: Beyond Meat (BYND), a US plant-based meat producer, was once considered by investors as one of the greatest IPO of all time. This case study is conducted with a view to analyze BYND’s current* (to Quarter 1, 2021) internal and external business environments. Through our comprehensive assessment, we have identified potential strategic issues in BYND’s current operation, primarily from their deficient positioning as “a plant-based brand”, but not so much as “the Beyond Meat brand''. The management team may need to consider this issue for the IPO to be more competitively and financially successful from the 1st Quarter of 2021. Our key recommendations for BYND are to: -

Change from targeting the broad market of “meat eaters” to one key segment - the Flexitarians (66% of US populations). Consider Social Marketing, R&D, Distribution strategies with regard to this segment’s key values.

-

Enhance its “Beyond Meat” brand image in the consumer’s minds with its unique selling points (USP) - the pioneer in plant-based meat innovation in terms of Taste and Health Attributes, thus differentiating itself from other plant-based competitors.

-

Strengthen BYND’s innovation capability in 3 ways: (1) change into an Adaptive Culture with key focus on Incremental Innovation, (2) secure its supply of pea protein, (3) transit the capital to widen co-manufacturing network to invest technology in its 2 US facilities to promote finished-good production.

II. Company background: BYND is a US meat producer established in 2009 by CEO Ethan Brown. They create meat directly from plants which is an innovation that allows customers to experience the taste, texture, and other sensory attributes of popular animal-based meat products. BYND now is presented in more than 80 countries and territories with approximately 122,000 outlets of retail and

foodservice footprint. 1. Vision BYND's vision statement shows their ambition to alter the future of protein from animals to plants. They strive to become a global protein company and are committed to building an infrastructure capable of supporting their long-term growth. 2. Mission BYND's mission is to help solve the major health and global environmental issues in which plant-based eating habits can give positive impacts. They believe that their authenticity and long-standing commitment will build a strong relationship with customers and attract more potential customers. 3. Core values BYND is a driven-business with the long-standing core value. They try to build diversity environment in which innovation is a core competency. Besides, the accountability culture is created to incentivize and reward for attraction and retention employees. III. Industry insight: BYND identifies themselves as a plant-based meat producer, competing in the highly concentrated US meat industry - against both animal-based and plant-based meat producers. Around half of the industry is dominated by a few big players with a mix of similar strategies: mergers and acquisitions, supply chain integration, and consolidation in livestock farming and meat processing to gain the advantage of scale and efficiency. Plant-based meat was not a new concept, but has recently become famous since the success story of BYND. Many new players have introduced their plant-based offerings, including the conventional meat producers. This competitive business nature is driven by the increasing demand from 326 million US citizens. For convenience of the research, we categorize them into three main segments which value (to different extent) the foundational drivers of Taste, Cost, Convenience; and the evolving drivers of

Health & Safety, Social Impact, Familiarity.

Figure 1: Meat-Choice Motivations for United States Consumers Despite growing competition, the US meat market is expected to reach USD 862.97 billion by 2027, exhibiting a CAGR of 6.24% until 2027.

Figure 2. North America Processed Meat Market Size, 2016 - 2017 (USD Billion) IV. Current Strategic Plan and Strategy Execution Actions A. Current Strategic Plan 1. Business Model With a vision to replace animal-based protein meal in the near future, BYND targets a broad market segment of meat-eaters which include 30% of Americans who primarily eat meat (Carnivores), and 66% of Americans who alternatively eat animal and plant-based products. The vegetarian is a by-segment which BYND does not target, but a few support their products.

Carnivores (30% of US population)

Psychography

Flexitarians (66% of US population)

Vegetarians (2% of US population)

Voracious Carnivores

Wavering Budgeters

Family Nutritionist

Young and/or Athletic

Attitude

Love meat and consider it to be the essential main dish of their meals

Constrained by income and budgets Want ease in purchasing and less time cooking

Concern about their family’s health,

Active, highly concern about weight loss/ strength and endurance

Willing to change their diets for both health and animal welfare reasons

Income

Medium

Low

Medium - High

Medium- High

Medium- High

Gender

Mostly males

Both

Mostly females

Both

Mostly females

Food-choice motivations

Habit

Barriers to purchase BYM

Taste, Cost, Convenience

Cost, Convenience (ease of purchasing, less time cooking)

Taste & Cost, Health, Convenience

Health, Taste, Cost

Social Impacts, Health, Cost

Consume meat in mostly every meal; sharing meat with their family; hold barbecues at weekends

When shopping, look for the cheapest possible options, use coupons and promotions

Spend the most time preparing meals to please their family; use national brands and known products that they trust

Strict concern on their diet; read the labels and product attribute before purchase,

Support ethical brands they know and trust Have differentiated ways of cooking

Unfamiliarity with the taste, masculinity belief with animal meat

High cost

Health concern over product attributes

Ambiguity over animal versus plant-based meat’s true health impact

Dislike the resemblance of animal-meat taste

Table 1: Beyond Meat’s Current Target Segments The key value BYND proposes is that by eating their plant-based meats, consumers can enjoy more, not less, of their favorite meals, and help to address concerns related to human health, climate change, resource conservation and animal welfare. Details of their cost structure and revenue stream are indicated in the Business Model Canvas (Appendix 1). 2. Value Chain BYND outsources a majority of their value chain activities with 3rd-party partners, except for Research and Development, the production of woven pea protein (key intellectual properties), as well as certain lines of product in their Columbia and Missouri facilities. Their limited consumption of resources in the materials sourcing, and dedicated focus to innovation and quality assurance are some aspects which set them apart from the conventional players.

Figure 3. Beyond Meat’s Value Chain (In US Market) 3. Strategic and Financial Objectives Short-term Financial ● Reduce cost of goods sold ● Continue to grow our sales within U.S. retail by focusing on increasing market share

Long-term Financial (more than 5 years) ● Under price the animal-based meat

Short-term Strategic ● Introduce two new versions of the Beyond Burger in the U.S. ● Highlighting “Go Beyond” message and the global benefits that come with eating BYND products ● Continue to create relevant content with our network of celebrities, influencers and brand ambassadors ● Continue to expand the network of foodservice partners, including large full service restaurant (“FSR”) and QSR customers in the US Long-term Strategic (more than 5 years) ● Become a leader in the global meat category ● Continue to explore establishing more of their own internal production facilities domestically

Table 2. Beyond Meat’s Current Strategic & Financial Objectives 4. Strategy (3 levels) ● Generic competitive: Best-cost Strategy (Broad Differentiation and Low-cost) ● Intensive growth strategies: Market Penetration and Product Development ● Strategic action: Offensive and Horizontal Integration (Appendix 2) B. Current Strategy Execution Actions 1. Organization Building Actions (Appendix 2) 2. Operations Management (Appendix 2) 3. Corporate Culture (Appendix 2) 4. Leadership (Appendix 2) V. Evaluation A. Current Internal Environment Evaluation 1. VRIO (Appendix 3) 2. Strategic Group Map (Appendix 4, 5, 6) 3. Competitive Profile Matrix (CPM) (Appendix 7) 4. Internal Factors Evaluation (IFE)

(Appendix 8) B. Current External Environment Evaluation 1. PESTLE (Appendix 9) 2. Porter’s 5 forces Model (Appendix 10) 3. External Environment Analysis (EFE) (Appendix 11) VI. Assessment of Current Strategic plan and Strategy Execution Actions Through our comprehensive assessment of BYND’s internal and external business environments (Appendix 12), we have identified certain problematic issues which we believe are rooted from a major problem - BYND’s strategic positioning. To our understanding, BYND is identifying themselves in the market as “a plant-based brand” but not so much as “the Beyond Meat brand”. This strategic positioning is reflected in certain aspects of their strategies, namely (1) main competitors, (2) target segments and (3) social marketing. First, they view the animalbased meat companies as main competitors, and their effort is to gain a balance between quality and cost (“underprice the animal counterparts by 2025”, CEO Ethan Brown). While product quality is a strength from their competitive advantage of consistent innovation, cost is not a privilege they can achieve in the near future, as many companies with deeper pockets and more distribution power are entering the plant-based market. BYND is also having problems upscaling their production by co-manufacturing. Second, BYND targets a very broad segment of both carnivores and flexitarians with distinctive values. Targeting only at the flexitarians will be more beneficial for BYND since this latter segment (66%) is double the size of the former (30%), and they also resonate with BYND’s key product attributes of Taste and Health. Third, while BYND is doing extremely well with their social marketing, the key message is about the benefits of plant-

based products. They have forgotten to stress their unique selling points (USP) of consistent innovation, better taste and higher quality, etc. which set them apart not only from the conventional players, but also from other plant-based alternatives. With these reasons, they play their own risk of being crushed by the plant-based companions. Our assessment of BYND’s current strategies relative to their internal and external business environments (in the QSPM1 table) confirms this hypothesis, with a low total attractiveness score especially at its generic strategy of Best-cost. VII. Proposed Strategic Plan and Strategy Execution Actions A. Proposed Strategic Plan We identify that with limited financial strength, medium competitive advantage in a fairly attractive but volatile meat market, BYND should follow the generic strategy of product differentiation (Appendix 13), and the intensive growth strategy of market penetration and/or product development (Appendix 14). Taking into account that the aggressive posture of BYND (Appendix ) is also significant, we would like to test two options of strategy: Broad Differentiation (Carnivore and Flexitarian segments like BYND’s current strategy) or Focus Differentiation (only focus on the Flexitarians). The result of the QSPM (Appendix 15) shows the strategic direction that the company should employ. To sustain BYND’s position in the market and ensure their future growth, the company needs to focus on meeting the value of taste and health of the flexitarian market (Focus Differentiation). They should encourage this segment to buy more products of BYND through effective social marketing which highlight the USP of “Beyond Meat” (Market Penetration), and through constantly offering innovative products which meet their values (Product Development). The strategic actions that they could employ are to sustain their competitive advantage of constant innovation (Defensive), learn from the successful examples of companies in other industries and be the first to implement such practice in their own (Firstmover), and increase production efficiency to accelerate the quality and speed of innovation

(Vertical Integration). B. Proposed Strategy Execution Actions Acknowledging that the main issue for BYND is their deficient self-positioning and inefficient focus on both cost and innovation, we thus propose that the company switch their focus on sustaining and accelerating the competitive advantage of innovation, following the general flow of strategic plan as proposed. The execution of this strategy will happen on two parallel aspects: the “soft side” culture of BYND, and the “hard side” value chain of BYND. In detail, we recommend BYND to embrace an adaptive culture which prioritize innovation, flexibility and challenge-accepting. This type of culture is not very distant from the high-performance culture that BYND is adopting, yet it has the strength of helping the company thrive on change - driving it, leading it, and capitalizing on it - as most successful examples of leading companies in innovation such as Amazon, Google, Apple have shown. What’s more, to accelerate the speed of innovation, we follow the successful example of Zara. The fashion company has made its competitive advantage in strategy execution by gearing every step of its value chain execution toward making quality, trendy new products quickly available to the public. Adapting to their successful model, we propose significant change to BYND’s value chain as follow: Material Sourcing Because Beyond Meat currently relies on third-party suppliers (for pea protein), we suggest that Beyond Meat should own their own crops for a stable source of yellow peas. However, raw peas are not Beyond Meat’s product ingredient, but the pea protein. For this reason, acquiring the technology of extracting pea protein is also suggested. Aiming to innovate & perfect the products, having an active position to decide the materials sources (quantity, quality) would be a competitive advantage to differentiate their products. Research and Development As the pea crops & technology for pea protein extraction are suggested for the changes in

the value chain, Beyond Meat’s R&D department will be changed due to the pea protein being extracted by their own facilities, which requires expertise & knowledge to use the machines. As a suggestion, there will be a Pea protein R&D team being built in the R&D department, and a Pea protein R&D Team Manager who has experience in the pea protein industry and management will be hired to track and manage the processes. Besides the Pea protein R&D manager, we also suggest Beyond Meat to build a WRIKE information system that helps the manager keep track of the Pea Protein R&D process, update real-time data to ensure expected outcomes. Manufacturing The purchase of pea protein extraction machines would lead to the changes of manufacturing. By purchasing the machines, a step of extracting pea protein from owned pea crops (parallel with the pea protein supplier in the sourcing stage) will be added to the manufacturing stage. Distribution Due to Covid-19, the company should reduce fine dining restaurants channels cost and effort, then optimize existing retailers, supermarkets, groceries, family stores channels on both direct distribution and online. E-commerce also needed to be highly maintained and developed together with market trends. Marketing and Sales The company should focus marketing activities on flexitarian consumers to grow this segment while strengthening Brand resources and position in industry. Rethink product messaging not only about healthy and environmental friendly, but also promote product’s tasty and delicious, brand innovation. To execute this change in strategy, the company should consider human resources, resources and capabilities in the Marketing and Sales department which impact on Organization Building, Organization Management and Leadership & Culture of Strategic Plan.

1. Proposed org...