JBS S.A.: A Latin American Success Story
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Case Code: BSTR497 Case Length: 20 Pages Period: 2006-2016 Pub Date: 2016 Teaching Note: Available |
Price: Rs.600 Organization: JBS, SA Industry: Animal Protein Countries: Brazil; Global Themes: Growth Strategy, Competitive Advantage, International Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In 2015, while Brazil, one of the fastest growing economies in the world, was heading toward its worst recession in 25 years, one Brazilian company that remained stable and coped well with the recession was São Paulo-based JBS S.A. (JBS), a global industry leader in animal protein production. In the second quarter ended June 2015, the company posted net revenues of R$238.9 billion, which marked an increase of 34.3% compared to the corresponding quarter of the previous year. Net income totalled R$80.1 million. According to Wesley Batista, Global CEO of JBS, "The numbers for this quarter once again demonstrate the solidity and consistence of our results, thanks to a business model developed throughout the years, with the construction of a diversified production platform, with extensive access to consumers across the globe and a broad and diversified portfolio of products. Our focus on operational excellence and our financial discipline has permitted us to mitigate the effects of volatility associated with our business."
Founded in 1953 in Anápolis in central Brazil, JBS was credited with consolidating the beef industry in Brazil into a global powerhouse and contributing to the country's efforts to leverage its economic power abroad. JBS evolved from a small family business in Brazil into a global leader in the processing of animal protein, serving more than 300,000 customers across 150 countries. The company was involved in the processing of beef, pork, lamb, and poultry in addition to leather and other animal by-products. According to industry observers, JBS's growth was driven by low-cost production, a diversified portfolio of products and brands, a strong and efficient management, and global expansion through an aggressive acquisition strategy.
The strategic goals of JBS were achieving operational excellence, generating profits in its global markets, complying with the best social and environmental practices, improving its value-added products and brands, and expanding its distribution network. However, in a journey marked by serial acquisitions, the company had to face some challenges including economic instability, fluctuations in domestic currency, environmental concerns, political disturbances in its home country, persistent livestock disease issues, and issues related to animal health and welfare and
cattle sourcing.
Going forward, JBS planned to focus on organic growth, establish strategic partnerships, develop new businesses, and capture operational synergies in order to achieve economies of scale, generate cash flow, and maintain customer loyalty in the future. Experts felt that despite Brazil's weak economic outlook, JBS would be able to achieve substantial growth in the future as its fate was not entirely tied to its home country. They pointed out that in 2014, the company had derived 83% of its net revenue in US dollars, which reduced its dependence on the Brazilian market. However, according to them, going forward, the challenges for JBS would be to meet the rising global demand for animal protein, focus on innovation rather than just scale and operational excellence, and expand and profit in a sustainable way while preserving its simplicity and essence.
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