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Case Study

From pitchfork to fork: Vertical integration at Otrada Group (Russia)

By Benoit F. Leleux

26 pages

June 2018

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Reference: IMD-7-1988

As a French engineer, nothing predestined Patrick Hoffmann to ever launch and lead a small pig empire in Russia. What had started out as an ambitious high-technology pig multiplication facility in the region of Lipetsk had evolved over the period 2005-2018 into one of the country’s premier multipliers, at the leading edge of genetics and pig raising techniques. The company expanded to cover multiple stages in the pig industry, from manufacturing concrete floor slats for the pig farms to farming 12,000 ha of land, producing high quality animal feeds, slaughtering animals, and further processing meat all the way to running eight French-style butcheries. The company now truly operated “from pitchfork to fork”. But the journey was never over. The vertical integration had happened more by default than by strategic choice, and it was fair now to question the whole montage. Patrick had just been presented with the chance to integrate backward into genetic selection as their Danish supplier restructured. Retail and meat processing had been unqualified disappointments; should they continue to be involved? On the positive side, Patrick had just fielded a call from the governor of the region, informing him of another 12,000 ha of farm land for leasing. Unfavorable price evolutions in the industry also suggested some less efficient competitors would soon face financial distress, creating interesting acquisition opportunities.

Learning Objective

Doing business in Russia
Agro-industries
Vertical integration strategies
Building teams
Managing the value chain
Technology as barrier to entry
Innovation
Genetics
Growth management
Entrepreneurship
Entrepreneurial leadership
Managing stakeholders
Capital budgeting
Business models
Project management
Growth financing

Keywords

Strategy, Entrepreneurship, Value Chain, Vertical Integration, Technology, Innovation, Genetics, Growth Management, Leadership, Capital Budgeting, Business Model, Project Management, Growth Financing, Operations

Settings

Russia
Otrada Group, Consumer Goods, Meat, Food Production, Agriculture
2000-2018

Type

Field Research

Available Languages

English

Related material

Teaching note, Video

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