You are on page 1of 7
Caitlin Vickowski, Caitlyn McBride, Maria Fortes

Caitlin Vickowski, Caitlyn McBride, Maria Fortes

An Introduction to Marine Harvest

Core Competencies

Raising and distributing Atlantic farmed salmon

Situation

Established position as a market leading salmon producer

Complication

Have completed Phase 1, need to initiate a Phase 2 to continue to grow

Salmon Industry Expanding to Fulfill Global Protein Demand

Political/Legal

Regulated industry standards (Norway, Canada, Ireland/Scotland - High; Chile - Medium) Salmon import/export restrictions in some areas of the world Antitrust laws in Norway, limiting market share to 25%

Economic

Currently - ⅔ farmed, ⅓ wild with demand growth driven by increasing population Volatile prices, shifting with large swings in worldwide supply; demand regionalized

Sociocultural

Health benefits increased popularity Sushi and “less fishy” consumer taste trends

Technological

Farming technologies allowing for large scale production

Ecological

Movement towards preservation of wild fisheries Negative reaction towards some negative externalities of both overfishing and farming

Aqua-Culture: A Growing Industry with Consumer Concerns

 

Overregulation in the industry

Political/Legal

  • - Market share regulation within Norway

Marine Stewardship Council set high standards for sustainability

Economic

Fast growing industry (production grew 60% in 8 years) Accounts for half of the supply of fish

 

Growing population increasing the demand

Sociocultural

  • - China, specifically, has a big demand Lack of trust from consumers

Technological

Established best practices Changes in feed

Ecological

⅓ of wild fishing stocks collapsed from overfishing Possible cross breeding Pollution Negative impact of antibiotics and pesticides Spread of disease Feed contains fish

High Supplier Power Represents portion of cost structure Proprietary nutrition formulas Low number of large suppliers
High Supplier Power
Represents portion of cost
structure
Proprietary nutrition formulas
Low number of large suppliers
Low price sensitivity
High Buyer Power Perishable goods with short delivery window Commoditized supply/demand driven economics
High Buyer Power
Perishable goods with short
delivery window
Commoditized supply/demand
driven economics
Moderate Rivalry Among Competitors Few competitors after recent consolidation Market share regulations
Moderate Rivalry
Among Competitors
Few competitors after recent
consolidation
Market share regulations
Low Threat of Entry Strict government regulations Access to distribution channels High set-up production costs Politicized
Low Threat of Entry
Strict government regulations
Access to distribution channels
High set-up production costs
Politicized licensing
High Threat of Substitutes Many types of seafood/protein that are less oily and expensive Farmed fish
High Threat of
Substitutes
Many types of seafood/protein
that are less oily and expensive
Farmed fish less desirable than
wild for most of consumption

Future Options: Driving Beyond Organic Growth

 

Strengths

 

Weaknesses

 

Strategic Options for Marine Harvest

Dominant market share

Limited distribution due

Backward Integration into Feed

Geographic

to perishability

 

B:

Increased control of supply chain/largest cost

diversification

No connection to end

R:

Possible R&D failure in competitive feed

Strong distributor

consumer

Diversify into Other Farmed Seafood

B:

relationships

Low intangible value

Patented sea flea control fish

   

R:

Diversify seafood market exposure Existing barriers to entry in other markets

 

Volume Growth

     
 

Opportunities

 

Threats

 

B:

Further market leading salmon position

   

R:

Legal market caps and exposure to disease

Growing industry

Loss due to disease

 

Global need for protein

Environmental pollution

Value Added Distribution

Health benefits of

and other issues

 

B:

Better margins/brand value, lower buyer power

Salmon

“Overregulated” industry

R:

Misidentification of consumer demand

 

High supplier power

Expand into Wild Salmon Operations

Many other substitutes

 

B:

Diversify into entire salmon industry

available

R:

No experience with new operating structure

   

Selecting a Plan for Growth

Aarskog should consider which strategic options best leverage existing competencies and resources to generate growth and competitive advantage

Next, stakeholder interests must be investigated and prioritized

 

As a public company, shareholders are the largest stakeholder - seeking long-term growth

Internal stakeholders such as employees and managers - seeking sustainable business model

Government regulators and environmentalists - seeking responsible actions and preservation

Finally, Aarskog must weigh trends within the broader industry to determine which strategic option best addresses opportunities and/or mitigates threats

Marine Harvest should integrate backwards into the feed industry in order to capture higher margins, growth opportunities, and valuable knowledge.