Dakota Growers Pasta Company
Full Case Analysis
1. Situation Description
2. Strategic Analysis
3. Decision and Support
1. Situation Description
Pasta consumption has been on the rise, according to the US Department of Commerce 1998 report. Contributing drivers of industry change, which contributed to the annual increase of 2-3% in consumption, are changing lifestyles, increased availability of pasta sauces, healthy conscious consumers and the increased number of Italian restaurants. Pasta purchases for ingredient use in easy to prepare dishes, make up 43% of the market share. A contributing factor is the fact that couples, who both work, have less time for preparation in the kitchen.
The region in which Dakota Growers is situated is the idea climate for growing quality durum wheat. Production facilities are close to rail system where the products can be easily distributed.
Currently, DGP is using a vertical integration strategy that has worked well in the past.
Grafico EXCEL creato da DTuzzeo
Durum Wheat crop
Preparation of pasta: durum wheat and eggsWith the changing industry, DPG have responded to competition as well as other changes such as price changes within the past decade.
5 Competitive Forces
Rivalry is strong, especially in the private-brand segment because of larger margins and more choices in brands in which to market. It seems evident that consumer perceive an added value to Italian sounding brand names of pasta since imported pasta is regarded as having a higher value. Large producers have exited private-label production in order to focus on their own brands.
Well known companies have exited the process of durum milling and others have entered. Since production exceeded consumption in the late 1990's, the industry is not as attractive for new entrants.
Availability of substitute products, such as potatoes and rice, is moderate since consumer tastes may change. For example, consumers may prefer using rice in a recipe instead of pasta. Historically, pasta consumption...