Page 24 - Minerva Foods | Annual Report 2017
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Strategic
MANAGEMENT
103-3
Meat has become an increasingly global com- modity, with food safety and tax hurdles de- scending out of every country, in addition to industry leading supplier ever more present in international markets. Among all exporting re- gions, South America is unbeatable in compe- tition and is currently the largest player in the international trade. Markets are opening up to South American suppliers, all the while main- tain a thriving domestic market in their own countries. Mercosul is the primary supplier to the Far East, with Southeast Asia accounting for 40% of exports, notably there has been an increasing preponderance among buyers from the Middle East. It is within this context of high competitiveness in South America and a world with an ever growing demand for more meat, that the strategy used by Minerva Foods based on three pillars: increase in distribution, allowed for the Company to serve all of its do- mestic markets in which it operates; expand its penetration into exports based upon a large network of international offices and represen- tatives, that of which currently covers a large part of high-demand markets; and geographic diversification in South America, resulting in
capturing the value in the countries in which it operates, according to the economic conjunc- ture aforementioned.
The Company’s strategic pillars have been ef- fective on three fronts: low-cost operation, with operational management dedicated towards this objective, in an effort to handle any mar- ket volatility; increasing the capacity of distri- bution flow in order to not only transport its own products, but third-party products as well, which has reinforced the Company’s commer- cial characteristic; and risk management. These areas work in harmony, adjusting to each other, with risk management playing a fundamental role in the alignment of operations by consid- ering issues such as the creation of margins and financial indicators such as working capital and profitability when making decisions.
This business model was developed behind a backdrop in which Brazil has been experienc- ing significant market consolidation, in addi- tion to Paraguay demonstrating a major poten- tial market growth and competitive production costs. Argentina is going through a period of inserting itself into the international market, in addition to showing a promising domestic
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