Select a Generic Business Level Strategy for Beyond Meat Inc Case Study Questions

1) Select a Generic Business Level Strategy for Beyond Meat, Inc. and Develop aStrategic Proposal for the firm
2) Select TWO goals from your strategic proposal (from the Mandatory Question above)
that would be most important to improving the firm’s performance. For each goal,
provide detailed implementation plans for the actions necessary to accomplish that
goal.
3) Provide convincing evidence to support at least five important differences in resources or
capabilities (strengths and/or weaknesses) which, taken together make Beyond Meat, Inc.
unique relative to its competitors and substitutes. For each difference, explain how that
resource supports your proposed strategy (from the mandatory question) or the changes
you will make to improve the fit between that resource and your strategy.
3) Draw the Diamond-E (SERVO) model of strategic management and explain the
relationships between each element of the model
Beyond Meat Inc.
By The Corporate Development Consultant team
Vasilisa Polunova, Pilar Jaurena, Karolina Glowinska,
Nina Pigeassou, Preston Holmes, Kevin Womack
April 21, 2022
Beyond Meat Inc. 1
2800 West Gore Blvd
Lawton, OK 73505
April 19, 2022
Dear Beyond Meat,
Corporate Development Consulting would like to take a moment and thank you for
providing us with the opportunity to work with your company. We noticed some areas in which
the company is experiencing some trouble. So, together with our team we provide a strategic
proposal which you will hopefully find useful for the future betterment and success of your
business.
Attached you will find different analyses of the company which will be addressed and
linked to the suggested changes. We believe this is the big step towards a rising and exciting future
for the company. We will be more than happy to make adjustments as your need may require. If
you have any questions or comments regarding the plan please contact us.
Sincerely,
Corporate Development Consulting.
Beyond Meat Inc. 2
Table of contents
Introduction……………………………………………….……………………………………….4
Environmental Analysis……………………………….…………………………………….……4
Defining the Industry…………………………….…………………………………..……5
Assessing the industry……………………………….……………………………………5
Key success factors………………………………….……………………………………6
Interpreting the assessment……………………….………………………………………6
Internal Analysis……………………………………………….…………………………………7
Weaknesses………………………………………….……………………………………7
Strengths……………………………………………………….…………………………7
Strategic Choice………………………………………………………….……………………….8
Strategic Proposal……………………………………………………….………………………..9
Competitive Premise……………………………………………….……………………..9
Product/Market Focus………………………………………………………….…………9
Business system Focus……………….…….………………….…………………………10
Goals………………………………………………….………………………………….10
Corporate Level
Strategy…………………………………………………………………………11
Functional Implementation/Integration Plans……………………………………………………12
Finance……………………………………………………………………………………12
Technology……………………………………………………………………………….1
2
Human Resources………………………………………………………………………..14
Marketing………………………………………………….………………..……………14
Procurement………………………………………….………….………….……………15
Operations…………….………………………………………………………………….16
Organizational Structure Design…………………………………………………………………16
Values, Mision, Vision,
CSR………………………….………….……….…….………………..17
Conclusion…………………………………………….…….……….…………………………..17
Support Chart…………………………………………………………………………………….18
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Introduction
It is beyond doubt that plant-based food consumption has increased over the past few years.
However, we are convinced that this is just the beginning for an industry that has nothing but room
to grow. This is why in reviewing the internal and external analysis of Beyond Meat Inc. we
discovered that we can help the company reach its fullest potential by increasing the price per
pound. This is going to be done by capping research and development expenses which is the area
in which the company is investing the most. The fact that Beyond Meat has already established
themself in the industry with competitive advantage, by providing a lot of evidence of the clear
benefits that their product offers to consumers and the environment, will give us enough brand
loyalty and power to increase the price of the product. Together with this, lowering costs in areas
where we found that we are spending extra money will leave room to reduce the existent profit
losses. We are confident that these proposed changes will add value and strengthen the company’s
success.
Environmental analysis
Define the industry
Beyond Meat, Inc is known to be one of the fastest growing companies in America,
specifically in the plant-based food industry. This market is identified by plant-based meat
replacements which look and taste just like animal meat. Beyond Meat was the first to compete
head-to-head with animal meat in multiple restaurants and grocery stores.
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Because of the increasing market value, it is noteworthy to mention that the plant-based
industry is very attractive. Among other companies in this industry, we can find Impossible Foods.
However, Tyson Foods wouldn’t be considered a competitor since they focus on animal meat food
production. An environmental analysis will prove to us why this industry and its increasing growth
rate has caught the attention of many.
Assessing the industry: Porter’s 5 forces
Competitive rivalry: HIGH
Since we are dealing with a relatively new market, the need for new infrastructure and technologies
tend to throw weak competitors out. Which leaves the industry with a relatively severe rivalry with
just a few companies such as Impossible Foods and Kellogg’s that have power to compete with
Beyond Meat. Among these companies there is low product differentiation and low customer
switching costs. They are very similar in product, origin and culture. It all comes down to market
attractiveness and customer preferences.
Bargaining power of suppliers: LOW
Beyond Meat acquires its main ingredient from many different suppliers. Even though supplies
are highly differentiated because they seek good quality, the fact that there are a wide number of
suppliers, low customer switching costs and no threat of forward integration leaves the industry
with little to no power of suppliers.
Bargaining power of buyers: HIGH
Even though plant-based foods are becoming more popular, we are still dealing with a small
number of customers. This added to the fact that there is no consumer switching costs as well as
low product differentiation and an increasing variation of plant-based brands results with the
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buyers having a high bargaining power which is not good for the industry because it leaves little
room for higher prices which would allow higher profitability.
Threat of substitute products: HIGH
The threat of substitute products is one that Beyond Meat must be on the lookout for. Consumers
have low switching costs among different types of foods, meaning they can easily change
industries. As of now, Beyond Meat offers sausage and burger products. Tyson foods announced
the production of plant-based products made with beef and plants, which would include nuggets
and burgers. Therefore, if Beyond Meat cannot keep up with this, they might lose business.
Threat of new entrants: LOW
Because of the increasing popularity in green movements and healthy eating, new entrants are
clearly trying to expand the industry. However, due to large firms already being settled in the
market, it is hard for new small businesses to access distribution channels. Not only small
companies are trying to enter the market but also the already existing big traditional meat firms as
well. We have to position ourselves by strengthening our relationship with our already existing
consumers and try to capture new ones to take competitors off the market.
Key success factors:
● Low customer switching costs
● Low differentiation
● Limited amount of consumers with high power
Interpreting the assessment (industry attractiveness):
The increased consciousness towards environmental protection and a healthier lifestyle has
definitely made the industry more attractive and desirable to new entrants. However, the high
rivalry with the companies already established in the industry combined with the existing low
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product differentiation and a high variety of substitute products, makes it very hard for new
companies to remain competitive in the market while also earning a profit.
Internal Analysis
Weaknesses:
–
Experiencing net loss of $182,105 million.
–
Beyond Meat used a limited number of suppliers for the pea protein needed for its products
(but did not have long-term supply agreements with most of the other suppliers).
–
High production costs
–
Volatile stock price.
–
High amount of money invested in research and development expenses.
Strengths:
–
Improves human health, positively impacts climate change, adresses global resource
constraints and improves animal welfare.
–
Soy free, gluten free, non-GMO, no cholesterol, half saturated fat than beef meat, cooks
from raw unlike other plant-based burgers.
–
Its production uses 99% less water, 93% less land, 90% less GHGE, 46% less energy.
–
With the exception of Beyond Beef Crumbles, all the products were certified Kosher and
Halal.
–
Appeals to a broad range of consumers such as Gen Z, millennials, families and health
conscious consumers.
–
High customer brand loyalty.
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–
1.5MM engaged fans across social media.
–
Highly qualified marketing and R&D team.
–
Provides employee benefits as well as rewards for performance achievement.
–
They count with patents and trademarks while also treating their production as a
confidential trade secret.
–
Use co-manufacturers in various locations in the United States, Canada, China, and the
Netherlands as well as producing by the company itself.
–
High presence in distribution channels. 122,000 retail stores and many food service
partnerships.
–
Establishing growth by PLANeT Partnership, LLC, a joint venture with PepsiCo, Inc.
Strategic Choice
We will incorporate a differentiation strategy by ceiling research and development
expenses and consequently raising the product price to eliminate net loss. We have observed that
Beyond Meat is putting and investing too much money on this department, which leaves room for
improvement and better profitability. The fact that we offer a unique and high quality plant-based
meat, which also contributes to protecting the environment and customers’ health, gives us enough
power to raise the price. As seen in our analysis, Beyond Meat has a high commitment toward
consumers’ needs and desires. Throughout their large number of distribution channels they are able
to reach a wide group of people, positively impacting them and providing a rewarding experience.
The fact that Beyond Meat goes an extra mile, leads to high brand loyalty and customers who are
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willing to pay a bit extra for this attribute. In our proposal we will show ways for Beyond Meat to
reduce loss by cutting costs and increasing their product price while also maintaining their sales.
Strategic Proposal
Competitive Premise
Beyond Meat provides a plant-based product with benefits. It looks, cooks and satisfies
just like beef. The product offers value because it contains 20g of plant based protein, half the
saturated fat of a beef meat, it is soy-free, gluten-free, non-GMO and no cholesterol. Moreover, its
production is more environmentally friendly since it uses 99% less water, 93% less land, 90%
fewer GHGE and 46% less energy. The company’s nutritional value and environment benefits
definitely enhances its competitive advantage over other firms in the industry.
Product/Market Focus
Our product focus is plant based food which focuses on foods primarily from plants,
generally classified into fruits, vegetables, legumes, grains, nuts, and seeds. We would rely on the
proven health benefits that the research and development team offer as Beyond’s Meat unique
product attribute. Our market focus would be vegetarians, vegans and flexitarians, but not only, it
will also focus on people following religious dietary laws, and consumers cutting down on meat
consumption for other reasons, or meat-eaters who occasionally want a healthier, high-quality
option.
Business Strategy Focus
The marketing and the research and development department are the ones that allow the
company to achieve the company’s desired sales as of today. The fact that we are strong on R&D
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with proof of the product benefits allows Beyond Meat to become a well known brand with a high
presence in the market. As well as having a competitive advantage over competitors by
establishing an early brand loyalty with our customers. However, we proposed a strategy of
limiting the expenses in the department of research and development because they have achieved
a desired goal, so there is no need to keep investing and increasing the money spent in this
department. A cap will allow the company to regain some of the money they are losing.
Goals
–
Cap research and development expenses at $20 million.
–
Raise the average price per pound by $.50.
–
Eliminate the $182,105 net loss.
–
Maintain our 700 employees to keep our efficiency in production.
–
Keep investing around $.3 million per year on marketing since it drives our sales.
–
To expand our international awareness.
–
To stay mission focused and stay true to our values while improving profitability.
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Corporate Level Strategy
The main focus of our strategy is to expand the growth of the company and maximize
revenues. This requires the firm to increase the selling price of the product and maintain sales.
This will provide Beyond Meat with higher return for their stakeholders and allow them to expand
their production. The firm needs to maintain their core competency strategy by being one of the
leading plant-based meat producers in the market. The health benefits provided by Beyond Meat’s
products allows the firm to sell their meat at almost double the price of other meat producers which
gives the competitive advantage.
The Plant-Based Meat industry is on the rise and is expected to grow endlessly as
consumers are joining the charge of tackling climate change and reducing the carbon footprint by
consuming alternative meat products. According to an article done by CNBC, the Global Meat
Substitute Sector is expected to grow its value from $20.7 billion to $23.2 billion by 2024.
Therefore, Beyond Meat should continue to conduct business in the meat industry as the market
value is increasing.
Beyond Meat should maintain their push of an international strategy and extend their reach
on a global scale as they recently developed a manufacturing facility in Jiaxing Economic &
Technological Development Zone in China as well as a manufacturing facility in the Netherlands.
By doing so, the firm has entered into a co-manufacturing agreement with one of their international
distributors for both production facilities. They should continue to build this relationship and seek
other manufacturing agreements with distributors in order to increase production and keep up with
rising demand.
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Functional Level Strategy
Finance
Our proposal will require raising the average price per pound by $.50. The change in price
will net us $52 million more in revenue compared to 2021. The current average price per pound is
$5.61, we suggested changing the average to $6.11. We also suggest capping research and
development at $20 million. The company just keeps dumping more money each year into R&D
without a direct correlation with revenue.
Technology
Beyond Meat emphasizes the Research & Development component of their business
model, which is critical for a pioneer company to achieve such as this one. Even though Innovation
contributes to a competitive advantage, there is an excessive amount of spending from this expense
that is not reflecting on its revenues. After calculating the Return on Research Capital in 2020
(RORC), the company generates $5.92 per every one dollar spent on Research and Development.
Although they are still producing a return, it is not enough to make them profitable. From a
business standpoint, we suggest that Beyond Meat incorporates an expense limit of $20 million
per year on their Research and Development to save revenue and eventually generate profit. To
make it easier, Beyond Meat should temporarily extinguish the research and development that
involves extending their product line, and channel their focus on improving taste and texture of a
single product such as the Beyond Burger.
According to the Good Food Institute, the plant-based burger led sales at $241 million in 2019
compared to other plant-based products such as nuggets, links, patties, meatballs, etc…
Despite the implemented budget, Beyond Meat should focus on enhancing their technology
to find new sources of protein, such as soy protein, which can be supplied at a cheaper cost and
Beyond Meat Inc. 12
expose them to more suppliers. The lower production costs would allow the firm to optimize their
profit margin.
Human Resources
Because of our proposed strategy of increasing the product price and capping research and
development, we won’t be investing in acquiring more human resources or increasing salaries
because it would require counting with money that the company doesn’t have available. Beyond
Meat is able to produce efficiently at large scale without the need for a huge amount of employees,
only 700 across all departments. This is due to the fact that we are selling to retailers, therefore it
demands low employee capacity since the company doesn’t count with specific business stores.
Marketing
Over the past few years, Beyond Meat has spent roughly $0.3 million per year on
advertising their plant-based product. The firm achieves consumer awareness through marketing
components of social media platforms, influencers, and strategic partnerships. Beyond Meat also
formulated a marketing team split into four different sectors: retail, foodservice, international, and
strategic partnerships. The Target Market of Beyond Meat is the Millennials and Generation Z.
Therefore, the great way to connect with this audience is through social media advertising
We would like to stay at the same level of the marketing expenses as we need to keep up
with the competitive rivalry and all it comes down to is brand loyalty and consumer preferences.
Therefore, we need to keep up the pace of the marketing expenses and strategy, or otherwise the
competitors will overtake.
Currently, the company is doing social media marketing, social media content creation,
and media and influencer relations. We would propose to resume the social media advertising and
the collaboration with the influencers and professional athletes as we need people talking to people
Beyond Meat Inc. 13
about the products and not just the advertising itself. We also need to pay attention to the fact that
vegan meat is not bad for those who want to get muscles, strength and health as meat is often
associated with getting strong and athletic. Therefore, the company needs to keep working with
the professional athletes who are supporting the vegetarian lifestyle.
Procurement
We came up with the concept of continuing to use the same pea protein suppliers, such as Puris
and Roquette Frères, because they have been with us for a long time. Contracts with them are set
to expire at the end of the year. However, we would want to extend the contract for a longer length
of time, such as 5 years or more. Furthermore, Beyond Meat uses a variety of different components
to create meat. Yellow peas, mung beans, sunflower seeds, fava beans, rapeseed, and coconut oil
are used in Beyond Meat. Beyond Meat should enter into long-term partnerships with additional
firms in order to avoid spending a lot of money changing suppliers each time the components
stated above are needed. As a result, they should expand their collaboration with Puris and
purchase yellow peas from them. Beyond Meat should start buying fava beans from Roquette
Frères since they can receive better costs for a long-term contract, and they also buy pea protein
from both firms. Targray sells mung beans as Beyond Meat. Sunflower seeds and canola oil are
available from Vigon, while sunflower seeds and coconut oil are available from ADM. Long-term
partnerships with these firms will save you a lot of money and time since Beyond Meat will no
longer have to waste time and money seeking for new suppliers all the time.
Operations
As of right now, Beyond Meat counts with organized and noteworthy operations. Their
ability to effectively produce the product in all their manufacturing and co-manufacture facilities
Beyond Meat Inc. 14
while also successfully delivering their items throughout retail stores and food service distribution
channels is remarkable. Therefore, operations in the company is not an area that seeks change.
Beyond Meat serves its product to approximately 130,000 retail stores and numerous foodservice
restaurants. However, easier and better access to products is never enough, there is always room
to grow. So, we are open to expanding operations as long as it is a good deal and it contributes to
our main goal of improving the company’s profitability.
Organizational Structure and Design
Regarding the organization of the company we are going to keep using a functional
structure where we departmentalize people depending on their function and authority in the
company. The design of our organization won’t change either. We are going to remain using a
horizontal centralization of power, where we distribute decision-making authority evenly across
the organization. Everything is going to remain the same because we believe that there is no need
to change since their operations are very effective and efficient.
Values
We believe that Beyond Meat’s main mission is strong on improving customers’ overall
health, as well as positively influencing climate change and supporting animal welfare by
providing our customers with nutritious plant-based meat that taste delicious and deliver the same
experience from that provided by animal meat. Reaching a wide consumer spectrum and
successfully producing the desired product drives the company to a higher performance. Our vision
of being a global protein company capable of serving consumers’ growing demand for nutritious
and sustainable protein will be enhanced with our proposal. The experience, loyalty and trust that
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Beyond Meat transmits is something that can’t be replicated by any other company. Our “Eat What
You Love” slogan not only promotes human well being but also the environment and world we
live in. Our actions towards producing a meat-free-meat while increasing the company
effectiveness, efficiency, and profitability as well as doing good to the society will drive Beyond
Meat overall success.
Conclusion
All in all, we are confident that our proposal will take Beyond Meat a step forward. Not
only regarding profitability as a whole but also from a functional standpoint. Following these
suggestions will increase their net revenue taking the company out of the financial difficulties that
they were experiencing. It will also allow them to keep growing and move ahead of competitors
by enhancing their position in the industry since the company’s attractiveness will notably increase
for all stakeholders. We are excited to see the future possibilities created by Corporate
Development Consulting.
Brand loyalty percentage of importance for consumers when choosing plant-based foods.
Source: Mintel 2018 Plant-Based ProteinReport
Plant based products are seen as healthier and worth the premium paid for them.
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Source: Mintel 2018 Protein alternative Report
Health is the key factor driving success.
Source: GlobalData 2016 Q4 global consumer survey
Beyond meat 5 forces and their related influence in the industry
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