Sysco Corporation Term Paper

  • Length: 22 pages
  • Subject: Business
  • Type: Term Paper
  • Paper: #2444764

Excerpt from Term Paper :

Sysco Corporation's Competitive Position Today

External Environmental analysis

General Environmental Analysis

Demographic Segment

Economic Segment

Political/Legal Segment

Socio-Cultural Segment

Technological Segment

Global Segment

Summary of General Environment Analysis

Driving forces

Industry Analysis

Description of the industry

Industry dominant economic factors

Market Size

Market Growth Rate

Industry Trends

Summary of industry analysis

Five Forces competitive analysis

Threat of new entrants

Power of Buyers

Power of suppliers

Threat of substitutes

Intensity of rivalry

Summary of five forces competitive analysis

Competitive analysis

Industry competitors

Rivals anticipated strategic moves

Summary of competitive analysis

Key Success factors

Internal analysis

Organizational Analysis

Corporate Mission

Products and services


Organizational culture

Organizational structure

2.1.6 Summary of Organizational Analysis

2.2.0 Analysis of firm's resources

2.2.1 Tangible resources

2.2.2 Intangible resources

2.2.3 Capabilities

2.2.4 Core competencies and sustainable advantages

2.2.5 Summary of firm's resources

2.3.0 Analysis of objectives

2.3.1 Short-term objectives

2.3.2 Long-term objectives

2.3.3 Financial objectives

2.4.0 Financial analysis

2.4.1 Valuation analysis

2.4.2 Growth analysis

2.4.3 Profitability analysis

2.4.4 Financial strength analysis

2.4.5 Dividend analysis

2.4.6 Management efficiency analysis

2.4.7 Stock price analysis

2.4.8 Summary of financial analysis

2.5.0 Strategic analysis

2.5.1 Corporate level strategy and international strategy

2.5.2 Business level strategy

2.5.3 Value chain analysis

2.5.4 Summary of strategic analysis

2.6.0 SWOT Analysis

2.6.1 Strengths

2.6.2 Weakness

2.6.3 Opportunities

2.6.4 Strengths

2.6.5 Summary of SWOT analysis

1.0.0 External Environmental analysis

1.1.0 General Environmental Analysis. Even though everyone has to eat, consumers enjoy a broad-based selection of food choices from around the world today thanks to mature distribution systems and efficient supply chain networks that create a highly competitive environment. In this regard, Sills and Novosel (2012) emphasize that, "Food companies face a challenging and volatile environment. The need to understand changing consumer needs, innovate effectively and put goods on the shelf at a price that works for manufacturer, customer and consumer continues" (p. 3). The wholesale food industry has also relied on thin profit margins and high volume, but the current competitive environment is going to require even more efficiencies to remain competitive. As Sills and Novosel point out, "As emerging markets players take their place on the global stage and start challenging for share in both developed and developing markets, food manufacturers are focusing more closely than ever on the need to maximize volume to maintain growth" (2012, p. 3).

Despite the constraints to growth noted above, the wholesale food industry is expected to grow commensurate with population growth patterns in the regions companies compete (Sysco annual report, 2013). Other factors, though, including the prevailing economic conditions and consumer confidence can also influence the demand elasticity for purchases and amounts consumers spend on food outside the home which can affect food wholesalers' revenues (Sysco annual report, 2013). At present, consumer confidence in the foodservice market remains lower than normal because of unemployment issues and stagnant personal income growth (Sysco annual report, 2013). Current estimates concerning the total foodservice market in the United States indicate a real sales increase of about 1.3% during 2012 following a decline of 0.1% the year before (Sysco annual report, 2013). These changes in real sales estimates, though, do not take into account the effects of inflation or deflation (Sysco annual report, 2012).

1.1.1 Demographic Segment. Although lingering issues concerning unemployment and a stagnated economy have affected consumer confidence, there have been other factors involved as well that have contributed to a recovery rate in the foodservice sector that has been slower than anticipated (Sysco annual report, 2013). Although these types of trends are typically cyclical in nature, industry analysts believe that improved consumer confidence will be need in order to make any substantive reversals to these trends (Sysco annual report, 2013).

1.1.2. Economic Segment. Industry analysts also project real sales growth for the total foodservice market in the United States to be modest over the long-term (Sysco annual report, 2013).

1.1.3 Political/Legal Segment. Wholesale food companies must comply with a wide range of laws and regulations in the United States (Parker, 2001). These laws and regulations are subject to changes from federal agencies including the U.S. Census Bureau which is responsible for industry classifications and periodically changes those classifications affecting the company's product lines (Parker, 2001).

1.1.4 Socio-Cultural Segment. Increasing numbers of American consumers are eating outside the home as the result of busier lifestyles and the competitive prices of these food products (Shields, 2009). Higher disposable income levels in many of the company's market regions have contributed to Sysco's faster-than-expected recovery from the 2009 economic downturn (Shields, 2009).

1.1.5 Technological Segment. A number of innovations in transportation and food service technologies have made the industry more efficient in recent years (Kudo & Kipping, 2009), including industry-specific software applications that facilitate inventory, transport and marketing (Sysco annual report, 2013).

1.1.6 Global Segment. Wholesale food companies are experiencing slow rates of recovery following the global economic downturn, but are recovering to pre-crisis levels (Sysco annual report, 2013).

1.1.7 Summary of General Environment Analysis. The global wholesale food industry was not immune to the effects of the Great Recession of 2009, and many competitors have been slow to recover to their pre-recession profitability levels.

1.2.0. Driving forces. The driving forces for the company's products differ according to market sector. For instance, according to the company's most recent annual report, "The food processing industry sells its products to groceries, restaurants or specialty stores (e.g. liquor stores), and the importance of each avenue for sales can vary by product" (Sysco annual report, 2013, p. 4). As a result, the respective driving forces for each of the market segments will be different. In this regard, Sysco reports that, "Within a sector, individual firms may pursue different strategies" (Sysco annual report, 2013, p. 4).

1.3.0. Industry Analysis

1.3.1. Description of the industry. The wholesale food industry in North America has distribution networks that have existed for centuries, but despite innovations in telecommunications and transportation, competition in many of the NCAIS categories in which Sysco competes is high. For example, according to the IRS' "Food Service Overview" (2013), "As it exists today, the domestic food and beverage industry is a very competitive and mature industry with little domestic growth" (para. 3). The major current NAICS categories for the Food Industry are as follows:

311 Food Manufacturing

312 Beverage Manufacturing

445 Food and Beverage Stores

722 Food Services and Drinking Places (Food Service Overview, 2013).

The Food Industry is also comprised of a number of sub-industries in which Sysco competes, including the following representative sample:

31123 Breakfast Cereal Manufacturing

31141 Frozen Food Manufacturing

31151 Dairy Product (except Frozen) Manufacturing

31181 Bread and Bakery Product Manufacturing

31211 Soft Drink and Ice Manufacturing

31212 Breweries

31214 Distilleries

44511 Supermarkets and Other Grocery (except Convenience) Stores

72211 Full-Service Restaurants

72221 Limited-Service Eating Places

72241 Drinking Places (Alcoholic Beverages) (Food Service Overview, 2013).

1.3.2. Industry dominant economic factors. The industry-dominate economic factors affecting Sysco include the saturation of the domestic market and the need to expand its operations beyond its current Ireland presence. In this regard, the IRS emphasizes that, "Overall most growth comes from international expansion. With the passage of NAFTA and GATT, many domestic companies are either entering into alliances with foreign entities, or acquiring them" (Food Industry Overview, 2013, para. 6). These dominant factors are attributable to a number of factors, including the fact that many companies competing in this industry want to exploit existing distribution networks or any plant capacity that may be underutilized (Food Industry Overview, 2013). In addition, some acquisitions, such as Sysco's 14 new companies in Fiscal Year 2012, may be the result of federal income tax considerations (Food Industry Overview, 2013).

1.3.3. Market Size. Industry analysts estimate that the market size of the foodservice, or food-away-from-home, sector accounts for nearly half (48%) of the total dollars spent on food purchases made at the consumer level in the United States annually (Sysco annual report, 2013).

1.3.4. Market Growth Rate. Most competitors in the wholesale foodservice market have experienced sluggish growth following the global economic downturn of 2009 (Sysco annual report, 2013). Because the market size is finite, competition is fierce and any gains achieved by one competitor inevitably result in losses for others rather than more consumer demand. In this regard, the IRS emphasizes that, "Increases in a company's market share usually come at the expense of a competitor's loss of market share (cannibalization)" (Food Industry Overview, 2013, para. 5).

1.3.5. Industry Trends. Industry sources estimate the total foodservice market in the United States experienced a real sales increase of approximately 1.3% in calendar year 2012 and a decline of 0.1% in calendar year 2011. Real sales changes do not include the impact of inflation or deflation (Sysco annual report, 2013, p. 2).

1.3.6. Summary of industry analysis. There is not much more room for growth in the North American food industry, and capturing additional market share requires taking it from competitors rather than encouraging additional consumer demand. These limitations have resulted in growing number of competitors in the food industry, including Sysco Corporation,…

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