Question

Case 6-1  Chobani

Chobani LLC, is a producer and marketer of Greek yogurt. The company was founded in 2005 by Hamdi Ulukaya, an immigrant from Turkey, who recognized the lack of options for high-quality yogurt in the United States. The company is headquartered in Norwich, New York, and it employs approximately 2,000 employees. It operates two manufacturing plants—its original facility in central New York and a second new state-of-the-art facility in Twin Falls, Idaho.

The mission of the company is “To provide better food for more people. We believe that access to nutritious, delicious yogurt made with only natural ingredients is a right, not a privilege. We believe every food maker has a responsibility to provide people with better options, which is why we’re so proud of the way our food is made.” Chobani’s core values are integrity, craftsmanship, innovation, leadership, people, and giving back.

The company’s beginning in 2005 occurred when Hamdi Ulukaya discovered a notice about an old Kraft yogurt factory in South Edmeston that was closed. He decided to obtain a business loan in order to purchase it. Between 2005 and 2007, Ulukaya worked with four former Kraft employees and yogurt master Mustafa Dogan to develop the recipe for Chobani Greek Yogurt. Between 2007 and 2009, the company started to sell its yogurt in local grocery stores including Stop and Shop and ShopRite. By 2010, Chobani Greek yogurt became the best selling Greek yogurt in the United States. The company pursued global expansion by entering Australia in 2011 and the United Kingdom in 2012. In 2013, the company opened its international headquarters in Amsterdam, and Hamdi Ulukaya was named the Ernst and Young World Entrepreneur of the Year.

Chobani has achieved its success in large part due to its ability to innovate in its product lineup. For example, in 2016, it launched a new line of yogurt drinks, more flavors of its Flip mix-in product, and even a concept café in Manhattan.

The company also created a food incubator program that is designed to provide resources, expertise (e.g., brand and marketing, packaging and pricing), and funding to small, young companies that have promising ideas for new natural foods that they aspire to develop.

Although Hamdi Ulukaya has been extremely successful in his founding and establishment of Chobani, he has recognized that there are some key lessons learned from his experience as the head of a young but very successful and industry-leading company. These include the importance of hiring people with functional experience such as marketing, supply chain, logistics, operations, and quality control, as they were essential to the smooth operation of the company. In addition, remembering to respect the competition and not to underestimate it is critical, as Chobani’s two main competitors, Dannon and Yoplait, launched their own Greek yogurt lines, and they were able to win back some of Chobani’s market share over time.

Discussion

1. Start with a brief (1-2 paragraphs) summary of the case.

2. List the management issues short term & longer term you see in the case.

3.Propose a solution to fix the major current problem and a longer term course of action to prevent the problem.

Answer 1

(1) The case study highlights about Chobani LLC, a marketer of Greek yogurt. The company operates in New York and has its two manufacturing plants located in New York and Twin Falls. The company works with an am to serve its customers the best quality products, using natural ingredients and working with integrity and innovation.

The company progressed in its operations and expanded it business on yearly basis, starting its struggle from the year 2005. It started selling its seed to local shops in 2005, followed by becoming the best selling Greek yogurt in the year 2010, and opening its international headquarters by 2013. The company was working successfully by innovating it its product line from time to time.

(2) Short term and Long term management issues seen in the case:

There are some of the short term as well as long term management issues that can be spotted from the case, such as:

Short term management issues:

• No emphasis was laid down on the competition being cropped up in the market and rivals were ignored, this could affect the strategies to be formed by the company as they would not consider the actions of the rivals and form weak strategies.
• Importance was laid down only on innovative production and expanding the product line. No emphasis was given to advertisement of the cheese they manufacture hence increasing the chance of customers moving towards the rival products immediately.

Long term management issues:

• No importance was given in hiring the employees for the organization. No steps were taken to judge the presence of expertise in employees regarding different functional areas. This would weaken the foundation of management over time as employees won't be able to take specialized decisions.

(3) Solution to fix the major current problem and a longer term course of action to prevent the problem:

The major current problem is that competition being cropped up is being ignored and not taken into consideration, and no additional efforts were made in advertisement of the product. One of the solution to fix the issue immediately is reviewing the market for competitions available and using word of mouth as an immediate measure of advertising its product and attracting customers towards the Greek Yogurt.

A long term course of action to prevent the problem would be spending money on advertising the product more vigorously, using different ways, and attracting and retaining customers for longer time. Moreover, market survey can be conducted on a large scale so that position of the rivals in the market could be judged.