Opportunity abounds in the natural and organic sector of the food industry. The WhiteWave Food Company, however, has focused solely on growth through expansion. While this has provided economies of scope both in product diversification and geographic diversification, it will not supply the economies of scale needed for WhiteWave to become a cash cow in the industry, like Kraft, General Mills and Danone. Economy of scale is important in competing against bigger companies as it provides more efficient plant operations, better bargaining with suppliers and the opportunity to strengthen its relationships with retailers of all sizes. WhiteWave can stay true to its natural and organic roots, while fending off bids to be acquired by the larger firms, by shifting its corporate-level and business-level strategies to achieve greater economies of scale.
At the corporate level, WhiteWave should broaden its strategy from related-constrained to related-linked by entering into the wholesale food industry. In particular, WhiteWave should form a strategic alliance with Sysco. By going with a
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While the private label business can be seen as a threat to the industry, WhiteWave can effectively stave off this threat by becoming a supplier to retailers who want to provide their own lines of natural and organic products. At the same time, WhiteWave would maintain its current brands. The risk of cannibalizing sales of their current brands is less than the opportunity to be gained from increasing the target market through lower-priced store brands. Like the shift in corporate strategies, this expansion of its business-level strategy would allow WhiteWave to increase distribution of similar products, thereby increasing WhiteWave’s economies of