Sysco Corporation Is an American-Based Company Engaged Term Paper

Excerpt from Term Paper :

Sysco Corporation is an American-based company engaged in the distribution of food and associated products mainly to the foodservice or food prepared away from home industry. The company supplies its products and services to customers inclusive of restaurants, healthcare and educational facilities, lodging enterprises and other food service customers. Sysco functions under three segment divisions which are broadline, SGYMA and others. The revenue earnings of the company during the year ended July 3, 2004 was $29,335.4 which is an increase of 12.2% compared to 2003. The increase was because of the rise in the SYGMA segment sales during the year. Net profit recorded by the company was $907.2 million during the fiscal year 2004, which is an increase of 16.6% compared to the corresponding year 2003. (Sysco Corporation: Computer Business Review Online)

The various products distributed by the company include a complete range of frozen foods, like meats, wholly prepared entrees, fruits and vegetables and desserts and complete range of canned and dry foods, fresh meats, imported delicacies and fresh produce. The product range at Sysco covers both everyday to the exotic, from classic menu ingredients to imported chocolates, fresh-cut steak to fresh-picked produce, savory soups. Apart from the food items, the company has interests in non-food equipment and also kitchen amenities and disposables. These can be segregated into 5 segments which are ChefEx, Food and Beverage, Healthcare, Supplies and Equipment, and Disposables. ChefEx is a novel program designed to supply the culinary world's finest products to the discerning chefs. Sysco is committed to supply the highest quality products and ingredients from the artisan producers. (SYSCO Corporation: University of Oregon Investment Group)

During April 2004, Sysco took over Overton Distributors, Inc. And again in May 2004, it acquired International Food Group, Inc. Food and Beverage constitutes the major products of Sysco. It contributes approximately 87% of the total revenues of 2004. Under the Food and Beverages, the items covered are Appetizers, Bakery, Beverages, Dairy, Fresh and frozen meats, Frozen fruits, vegetables, bakery, poultry, seafood, beverages etc. Increasing number of consumers have been taken care of along the way, numerous dining trends and meal choices have come up, and the decision to consume meals prepared outside the homes has become as much necessity as option. (SYSCO Corporation: University of Oregon Investment Group)

Analysis (Opportunities and Threats)

(i)Macroeconomic environment:

Sysco launched its services in Warren County which was welcomed by Governor Mark. R. Warner. During July, 2002, Sysco made public its proposals to establish its inaugural U.S. redistribution centre in Warren County, creating 388 new employments by way of a $53 million investment. The distribution network of Sysco is manned in excess of 46,000 workforces, at present it spans across the all of U.S. And Canada. (Sysco Breaks Ground In Warren County)

(ii) Technological Environment:

On the technological front Sysco's automation of the procurement cycle is the main objective of the eSupplier Solutions or eSS Department. Curtailing of paper-based processes has been the goal of the company, where pertinent, and to reduce the costs in the supply chain. eSS looks after execution and maintaining of an E-Commerce partnership with supplier community of Sysco. Apart from that eSS also interacts with the operating companies of Sysco at the customer service point to extend support with their supplier E-Commerce matters. (eSupplier Solutions)

Sysco Corporation is also part of the EFS Network providing Internet-based Supply Chain Management or SCM products and services to foodservice manufacturers, operators and distributors. The EFS Network was launched in Aug 2000 through the collaborative initiative of four market-leading foodservice companies including Sysco, McDonald, Tyson Foods Inc. And Cargill Inc. Through the facilities of the eFS network, it is possible to put in place a cost-efficient electronic network among the trading partners who utilize contrasting information technology systems. Their network furthers a company's enterprise information across its own organization and also the trading partners to supply the basis in case of other EFS Network solutions. (Sysco eSupplier)

Another revolution in the use of technology by Sysco is CanPRO 2KM that is a patented lid removal procedure which reverses the can's original sealing process, removing the lid's exterior seam and preventing contact with food ensuring that it is safe, fast and sanitary. Some of the important features are that the blade never touches the food, thereby making CanPro 2KM hygienic, eliminating any possibility of contamination and negating the need for cleaning. Besides, Can lids do not fall into the Can, making sure that nasty lids never comes in contact with the food contents of the Can. The patented CanPro 2KM procedure makes no metal shavings or silvers that could accidentally drop into the food. (CanPro 2KM: Nothing Short of a Revolutionary)

(iii) Social Environment:

The Diversity Objective at Sysco is to build a competitive and inventive business environment through leveraging the diversity of thought, experience and people. Rick Schnieders, CEO, believes that a critical success factor in distribution of food service is identification that similar to other industries; Sysco's is shaped by the transforming socio-economic and cultural trends in our marketplace. Recognition of diversity needs a reverence and understanding of differences. Through supporting and espousing diversity, Sysco gains new concepts and learning new ways to resolve problems and render better business decisions which will put far-reaching and enduring benefits in case of our customers, the shareholders and the personnel of the company. To leverage the benefits of diversity, Sysco has built a strategic business model that develops, executes and integrates the best business practices in four separate, yet related spheres: these are leadership, workforce, supplier and community. Sysco maintains that this approach will give the best value and the maximum opportunity so as to honor the commitment of the company. Diversity plays a considerable part to a competitive advantage and permits us to achieve the objective of the company to assist in the success of the customers. (Sysco Corporate Culture)

(iv) Demographic Environment:

Consumers in North America like the whole experience of eating out- new places, new foods and new experiences. The recent trend has been that more and more people are consuming more meals cooked away from their homes. Because of the rise of both-worker, single parent families, the aging population, and individuals' ever-busy life lifestyle, this tendency is getting increasingly popular. Industry sources anticipate that during the first decade of the 21st century, the restaurant sector of the foodservice industry will display a growth of a shade higher than 3% per year. Majority of the baby boomers will attain the climax years of visiting full service restaurants and the Gen X segment will attain their trading up years. They will rise through the value chain to full service from quick service. The people who dine coming under the casual segment persist to draw increasing number of consumers. Yet another trend is gradually developing which is the 'High Protein Diet Health and Nutrition.' (SYSCO Corporation: University of Oregon Investment Group)

The culinary habits of consumers are changing. A lot of consumers are conscious of the nutritional concerns and are actively endeavoring to eat more healthily. There is persistent stress on fresh products, and healthy food. The diners also believe it is crucial to be able to customize an order to cater to their wishes. Food service operators are challenged to fulfill popular trends like low carbohydrate, low-fat, organic. They should present those alternatives to stay competitive without disposing of standard menu success. Every generation of dining consumers has diverse requirements and wishes. The food choices of these segments are rather diverse. At the time of a family dinner, there is increased attention to the choices of children at the time of arriving at the decision regarding the place where to take food; thus, the restaurants are able to fulfill multiple generations in a better manner and will have an enhanced competitive advantages. (SYSCO Corporation: University of Oregon Investment Group)

(v) Political/Legal Environment:

In the financial year ended 2004, the sales and earnings of the company once again scaled new highs, recording profits for the 28th year. Sales for the 53-week year went up to $29.3 billion, a 12.2% rise compared to the $26.1 billion of 2003, and diluted earnings per share were $1.37, or 16.1% above the $1.18 earned the previous year. The company went on making efficient use of shareholder's funds with the Return of Equity attaining 38.7% and Return on Average Total Capital of 24.9%. The performance of the company was stellar in a year manifest by substantial uncertainty in the foodservice industry. Sysco's product cost inflation, generally ranging from 1% to 3%, went up to 5% at the starting of the year and stayed higher than that for full year resulting in 6.3% inflation for the year. This situation has come to be acknowledged as intricate for the customers, who are constrained to select from hike in menu prices, taking lower profits, lowering quality standards, or substituting products. The marketing associate's capability to steer them through these intricate options has been commendable, but the company has remained watchful…

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