Charoen Pokphand: Thailand's Largest Agribusiness Conglomerate
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Case Details:
Case Code : BSTR109
Case Length : 18 Pages
Period : 1921 - 2004
Organization : Charoen Pokphand Group
Pub Date : 2004
Teaching Note :Not Available
Countries : Thailand
Industry : Agriculture
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Chicken Flu - A new Ailment for the Corporate World Contd...
Dr. Hans Wagner, a senior regional officer (Bangkok) of
U.N.'s Food and Agriculture Organization, supported CP's claim that their farms
were safe. He added that enclosed factory farms such as the ones CP had, were
the safest means to prevent the spread of such viruses.
CP also launched
advertisement campaigns (on television, radio and newspapers), to ensure people
of the safety of its food products and regain consumer trust. It reportedly
spent over 22.2 million baht on these campaigns.
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Meanwhile, the disease spread to many more provinces in Thailand. The financial crisis associated with the epidemic worsened when the EU and Japan extended their ban on chicken imports from Thailand. After these developments, CP could no longer remain unscathed by the crisis - it had to forecast a 6% decline in chicken sales. Even as things seemed to be worsening, many analysts, investors and company sources, expressed confidence that CP would tide over the crisis eventually. Given the company's a record of emerging more successful and powerful from several earlier crises (including the major economic crisis of 1997), there was a definite possibility of it remerging with greater strength this time around too.
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Background Note
Charoen Pokphand Group ('Charoen Pokphand' in the Thai language means 'commodity development') was founded as the Chia Tai seed shop in 1921. The founders were two brothers of Chinese ethnicity, Ek Chor (who took on a Thai name 'Chearavanont') and Siew Whooy.
The brothers sold seeds and vegetables imported from China. Due to the duo's strong focus on quality, the seed shop became very successful. In 1951, the brothers and their families (the Chearavanont family) decided to expand their business.
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CP's expansion plans were based on its fundamental three-benefit philosophy 'to benefit the nation, benefit people and benefit the company.' The family decided on vertical integration as the mode of growth and established the Charoen Pokphand Feedmill - the first vertically integrated business of CP.
In the next few decades, the company expanded into poultry, swine and duck breeding, and processed food products such as processed meat and chicken products, for national and international markets. Vertical integration was highly developed at CP - reportedly, nothing went waste at the group companies... |
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