Dean Foods Company Case Study

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Dean Foods Company

Dean Foods is in a challenging industry. The company is focused on the sale of milk and dairy products, soy milk and tofu. The five forces analysis will help to explain why the industry environment is so challenging.

The power of suppliers is high. Soy is traded globally on commodities markets, so Dean has very little pricing power for that product. The company has some pricing power with respect to milk because they are one of the nation's leading dairy companies, but the price of milk is also subject to support from the federal government so Dean does not have total pricing power over that key input. Owing to the company's size, however, Dean does have pricing power over labor, equipment and non-food supplies such as packaging. The power of buyers is moderate. While end consumers have little pricing power in Dean's product lines, Dean typically sells either to wholesalers or direct to grocery store chains. Some of these firms are very large and will typically not really on Dean for their volume. Dean can also spread its volume around different customers, but ultimately Dean needs to bring major retailers and wholesalers on board in order to fill its capacity.Buy full Download Microsoft Word File paper
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Case Study on Dean Foods Company Assignment

There is only moderate threat of new entrants. Dairy and to a lesser extent soy are not hugely profitable industries due to relative lack of pricing power. As dairy in particular is subject to consolidation, the risk of new entrants is relatively low. With the entry into the soy business, Dean has actually addressed one of the major threats of substitutions. Milk and dairy, however, are firmly entrenched in American food culture so there is little risk that… [END OF PREVIEW] . . . READ MORE

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