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

Regulated industry standards (Norway, Canada, Ireland/Scotland - High; Chile - Medium)

Political/Legal Salmon import/export restrictions in some areas of the world
Antitrust laws in Norway, limiting market share to 25%

Currently - farmed, wild with demand growth driven by increasing population

Economic
Volatile prices, shifting with large swings in worldwide supply; demand regionalized

Health benefits increased popularity

Sociocultural
Sushi and less fishy consumer taste trends

Technological Farming technologies allowing for large scale production

Movement towards preservation of wild fisheries

Ecological
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

Fast growing industry (production grew 60% in 8 years)

Economic 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

Established best practices

Technological Changes in feed

of wild fishing stocks collapsed from overfishing

Possible cross breeding
Pollution
Ecological Negative impact of antibiotics and pesticides
Spread of disease
Feed contains fish
 High Buyer Power
Perishable goods with short
delivery window
Commoditized supply/demand
driven economics

High Supplier Power Moderate Rivalry High Threat of

Represents portion of cost Among Competitors Substitutes
structure Many types of seafood/protein
Few competitors after recent
Proprietary nutrition formulas that are less oily and expensive
consolidation
Low number of large suppliers Farmed fish less desirable than
Market share regulations
Low price sensitivity wild for most of consumption

Low Threat of Entry

Strict government regulations
Access to distribution channels
High set-up production costs
Politicized licensing
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
relationships Low intangible value B: Diversify seafood market exposure
Patented sea flea control R: Existing barriers to entry in other markets
fish
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
R: Misidentification of consumer demand
Salmon Overregulated industry
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.