Perdue Farm Inc

EXECUTIVE SUMMARY

Perdue Farms, Inc. (“PFI”), a large and successful family-owned company, has grown from 40 employees in 1950 to 20,000 employees. Its current organization structure does not support the rapidly changing environment. PFI needs an organizational structure that quickly responds to environmental changes that will affect the future direction of the company.

We have provided some analysis analysis that reviews the current organization design and its fit with the environment. This includes Organizational goals and strategy, Organizational structure, Information systems, Culture, Human Resources Management and Organizational effectiveness.

Based on the analysis, we recommend the hybrid structure that combines the functional design with divisional structure. With this design core functions are centralized that enable PFI to maintain its excellence in quality, improve efficiency and reduces production cost which at the end will improve PFI’s overall profitability.

PROBLEM IDENTIFICATION

Key Facts

• Arthur W. Perdue a former Railway Express Agent established PFI in 1920 when he left the Railway Express and entered the egg business full time. PFI began as a small egg farm company. After 80 years of operation the company has grown to a multi-billion dollar operation with the seven themes dominating and characterizing it’s history: quality, growth, geographic expansion, vertical integration, innovation, branding and service.

• PFI is a privately held family owned company. Over the years PFI has become vertically integrated in order to be more competitive and maintain financial stability.

• PFI has a mission to provide the highest quality poultry and poultry related products to retail and food service customers; recognized as industry leader in quality and service, providing products and services that meets and exceeds customers’ expectations.

• PFI maintains a tradition of pride in their products, growth through innovation, integrity in the management of their business, and commitment to Team Management and the Quality improvement process.

• PFI is vertically integrated (Exhibit A) - it produces chickens, breeds, hatches the eggs, selects the growers, builds Perdue chicken houses, formulates and manufactures feed, oversees care and feeding, operates its own processing plants, distributes via truck and marketing. PFI also sells what used to be waste, such as the chicken feet that is sold to the Orient as a delicacy.

• PFI extensively integrates the use of technologically in its operation. The company was a pioneer user of personal computers by customer service employees to track customer orders. This shortens the distance between customers and the farm as orders are expedited and assisted in early delivery to customers.

• PFI is an industry leader in research and development. The company spends more on research as a percent of revenue than any other poultry processor. As a result PFI has the most expensive and extensive vaccination program in the industry. USDA involves PFI in its field test with pharmaceutical suppliers as a result of it’s advancement in R&D.

• PFI keeps overhead lower ensuring the highest product quality and diverse product line that adapts with consumer changes.

• PFI is an organization that highly emphasized its social responsibilities code of ethics as well as environmental responsibilities as it relates to waste management.

• PFI has a successful and effective marketing campaign that has ensured its product differentiation and price leadership of its products and services.

Problem and Symptoms

Problems Symptoms

Change in management style not supported by the change in organization design • Frank’ centralized management style vs. Jim’s people-first management style

• Decentralized units as ideas are transmitted throughout the organization

Production efficiency and costs are threatened by environmental and occupational issues • Disposal of hatchery waste

• Serious problems continue to develop that have called for conservation measures that limit the density of chicken houses

Industry Hazards

• Disease is always a danger for all parts of the poultry industry. The advent of bird flu has senior mangers worried

• Chickens are extremely sensitive to viruses.