Going to great lengths to produce the highest quality chicken in the exact manner they promise their customers Perdue refuses to outsource any portion of the process. Instead they maintain complete control of the process, from creating their own feed and growing their own stock, to processing and transporting the final product. This ensures that no resources are wasted, nor are shortcuts taken that might compromise the quality of the chicken. (Daft, 2010, pp. 45-46) As the regional and global market for chicken grows however, maintaining these operations becomes inherently more difficult and new issues surface with the increased production.
With chicken being the most popular meat in the United States and quickly gaining similar popularity around the world Perdue Farms and other chicken producers are working hard to keep up with demand. The short shelf-life of fresh chicken makes the job of forecasting how many chickens to grow to meet demand 18 months later vital and difficult. Failure to forecast correctly could result in detrimental shortages or overages that may cost Perdue more than just money, but major contracts with vendors. (Daft, 2010, p. 49)
Demand is not the only difficulty Perdue is facing however, for as production increases to meet demand so do environmental and safety issues. Increased workloads and demands for absolute efficiency are going to take their toll on workers and increased production is going to ultimately have an impact on the environment. Perdue has, for the most part, maintained a very proactive stance on these issues by creating different committees and processes to improve working conditions and lessen environmental impact. While these programs appear successful and some of the changes have resulted in additional revenue for Perdue, such as selling waste products as manure, the overall costs for these programs have been significant. (Daft, 2010, pp. 46-47) Furthermore, some experts do not feel these measures are enough and are calling for conservation measures that would decrease the number of chickens allowed in a chicken house or force house to close for a period of time each year which could ultimately decrease production and efficiency at Perdue (pp. 48-49).
Beyond any governmental control that might negatively affect Perdue these issues may also negatively impact consumer perception. With environmental and animal activists shouting, stories of inhumane conditions and chicken coop protests littering the headlines (Daft, 2010, p. 46) Perdue has to work hard to maintain their customer’s trust (p. 49) as this trust is an important part of their new differentiation model (p. 51). Perdue’s customers have to believe that the chicken they purchase is not only of the highest quality, but trust that it achieved that quality a way that they feel comfortable with. It is only once the customer trusts that what they are purchasing is indeed what they truly want, that the rest falls into place. Unfortunately, as the market grows and Perdue increases production to meet demand the opportunity to lose face with already established customers and potential new ones also increases.
Perdue’s extremely vertical structure puts those at the top of the hierarchy in the decision making roles. While the overall organization is diversified the subdivisions of the company sport tightly vertical hierarchies which, according to our text, help keep Perdue in control of every aspect of production. It is this utter need for control that may derail Perdue’s efforts.
While a very vertical hierarchy worked well for Perdue when it was a smaller company, many things about the company and its external environments have changed. Initially, workers were unskilled and ill-educated. That is changing as those in management hold degrees and Perdue offers educational opportunities to its employees. Also, as mentioned before, Perdue can no longer compete only on the premise of quality, but must differentiate the brand in another way and thus change their practices to best exemplify these new goals.
Because Perdue wishes to distinguish itself from its competitors based on exceptional customer service they must create a differentiation strategy (Daft, 2010, p. 67). As noted earlier, Perdue wishes to become so easy to do business with that their customers would simply have no reason to go elsewhere. They further explain how they are going to do this by stating that they wish to be “indispensible” to the customer providing what they need, when and where they need it. (p. 51) To do this Perdue must be able to forecast what their customers want and when they will want them, then get them to the location they need them at in a timely manner. According to Richard Daft this type of innovation requires creative employees (p. 68) working in a flexible environment that encourages learning and discovery (p. 73). Perdue’s current vertical structure may stifle the fluidity necessary to allow for this innovation. While a more chaotic organizational type would not likely be a good fit for Perdue overall, adapting the appropriate subdivisions into a more fluid mechanism with a flatter hierarchy would likely improve communication, creativity, and flexibility (p. 31) all of which would better support Perdue’s new goal set.
Implementing this flatter hierarchy, but to a lesser extent, throughout the company could also go a long way in further improving working conditions without increasing the already high costs. While management and researchers may mean well when they look and how processes can be improved for safety or efficiency reasons, they do not always have all of the data since they do not work in those positions. It is the actual worker who performs these tasks daily that has the greatest understanding of their function and, when empowered to do so, a likely candidate to offer innovative solutions to current problems (Daft, 2010, p. 34). As suggested by Daft, employees must be rewarded for their creativity and risk-taking (p. 72) rather than simply expected to continue to do only what they are told. Rather they should be encouraged to search for solutions to the problems they encounter each day.
Furthermore, to help keep Perdue competitive and better support their differentiation strategy they should consider building relationships outside of their customers such as Wyeth Pharmaceuticals did with Accenture (Daft, 2010, p. 89). This type of relationship would allow Perdue to focus on what it knows how to do best, produce quality chickens, while allowing another company to use its talents and resources to improve Perdue’s efficiency in areas they may not be as comfortable in. However, because Perdue is steadfast about maintaining control of every aspect of production this would be a difficult move that would require a great amount of trust in any company they decided to work with. Therefore, selecting those areas that do not directly relate to production would be the most feasible such as research and development regarding environmental impact, employee education and benefits, and administrative functions.
These steps would create a more flexible and fluid company. This flexibility would serve Perdue well and make it easier for them to change proactivity with the growing market. This ability to change and adapt is an absolute necessity for Perdue given the growing competitiveness of the market and their new focus on customer service. Without these changes, Perdue’s undying focus on quality could potentially become lost as their drive to keep up with market demands increases. By creating a more collaborative and innovative environment now while their focus is still clear they will be able to better maneuver to achieve their goals while still maintaining the values instilled by their founder, Arthur W. Perdue.
Works Cited
Daft, R. L. (2010). Organization Theory and Design. Mason, OH: South-Western Cengage Learning.
