GROWTH OPTIONS
The CEO of the company has three options in order to pursue the future growth of the company. The first option considered by the CEO of the company is to raise the current salmon raising capacity of the company to meet the increased demand in its domestic market. However, this would require huge initial paybacks by the company and the payback of this strategy was huge ranging between 6 to 14 years. The capacity of salmon raising could be increased by optimizing the production methods of the company in the developed markets of the world. Therefore, the company would have to meet the regulations of the different countries. For instance, in order to start a salmon farm, the company needed a site and a license from the government of that country. Possible choices of countries for Marine Harvest were Scotland, Chile and Canada.
The second option proposed by the CEO of the company was to add a value added distribution channel. The previous distributor of marine Harvest known as the Pieter’s was acquired by Fjord Seafood, the other company of the merger along with Marine Harvest. If the company distributed its products along with this distributor it would increase its client base significantly. However, this meant that the company would have to market its products directly to its consumers and this was the area where the firm had little experience. Another question for value added distribution expansion was that whether the company should extend its Bruges business on other countries, extend its private labels or develop branded products.
The third option was to integrate backward into the Feed such as fish oil and fish meal. These two were the two main ingredients of the agricultural feed. The demand for these ingredients was high, whereas, the supply was high which impacted significantly upon the prices of the final products of the company. Each of these options would have significant impact upon the stakeholders of the company, therefore, the final option chosen would be the one which is aligned with the interests of the stakeholders of Marine Harvest.
RECOMMENDATION/CONCLUSION
Looking at the pros and cons and all the associated risks tied to the above three options, the most recommended option for Marine Harvest seems to be the third option. Marine Harvest should integrate backwards into the feeds such as the fish oil and fish meal. This would ensure that the company has control, efficiency and transparency throughout its entire supply chain. In addition to this, this would allow the management of Marine Harvest to continue its constant growth, drives the prices of its products down by increasing the supply of the core ingredients used for salmons and building an optimal nutritional blend. Apart from this, the first two options would not be recommended at this point of time for the company, since they would pose significant threats to the company outside its domestic markets and also require huge capital investments to be made......
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