Harvard Case - Tender Greens: Can They Keep the 'Green' Promise in Beef Sourcing?
"Tender Greens: Can They Keep the 'Green' Promise in Beef Sourcing?" Harvard business case study is written by Marilyn Anthony, Neha Mittal. It deals with the challenges in the field of General Management. The case study is 8 page(s) long and it was first published on : Feb 11, 2021
At Fern Fort University, we recommend Tender Greens adopt a multi-pronged approach to address their beef sourcing dilemma, prioritizing transparency, ethical sourcing, and customer engagement. This involves a combination of supplier diversification, robust traceability systems, and transparent communication with customers.
2. Background
Tender Greens, a popular fast-casual restaurant chain, has built a reputation for fresh, healthy food and a commitment to sustainability. However, their reliance on a single supplier for beef, a company with questionable sustainability practices, has raised concerns from customers and stakeholders. This case study explores the ethical and strategic challenges Tender Greens faces in maintaining its 'green' promise while navigating the complexities of the beef industry.
The main protagonists are Tender Greens' leadership, grappling with balancing their commitment to sustainability with operational efficiency and customer satisfaction, and their beef supplier, who faces scrutiny over their environmental and ethical practices.
3. Analysis of the Case Study
Using a SWOT analysis framework, we can identify key factors influencing Tender Greens' decision:
Strengths:
- Strong brand reputation: Tender Greens has a loyal customer base drawn to its commitment to fresh, healthy food and sustainability.
- Established supply chain: The company has a well-established network of suppliers for other ingredients, providing a foundation for sourcing ethical beef.
- Customer engagement: Tender Greens actively engages with customers through social media and other channels, allowing for direct feedback and transparency.
Weaknesses:
- Single-source reliance: The company's reliance on a single supplier for beef creates vulnerability to ethical and sustainability concerns.
- Limited transparency: The lack of clear information about beef sourcing practices has led to customer mistrust and negative publicity.
- Potential for higher costs: Diversifying suppliers and implementing robust traceability systems may increase operational costs.
Opportunities:
- Growing demand for ethical sourcing: Consumers are increasingly demanding transparency and ethical practices from food companies.
- Innovation in traceability technology: Emerging technologies can enhance transparency and track beef from farm to table.
- Partnerships with ethical suppliers: Tender Greens can collaborate with suppliers who prioritize sustainability and ethical practices.
Threats:
- Negative publicity: Continued scrutiny over beef sourcing practices could damage the brand's reputation.
- Competition from other ethical brands: The fast-casual restaurant industry is competitive, with other brands emphasizing sustainability.
- Rising beef prices: Fluctuations in beef prices could impact Tender Greens' profitability and pricing strategies.
Porter's Five Forces analysis reveals the competitive landscape:
- Threat of new entrants: The fast-casual restaurant industry is relatively easy to enter, posing a potential threat to Tender Greens' market share.
- Bargaining power of buyers: Customers have a high degree of bargaining power, as they can easily switch to competitors offering similar products.
- Bargaining power of suppliers: Tender Greens' reliance on a single supplier gives the supplier significant bargaining power.
- Threat of substitutes: Vegetarian and vegan options are increasingly popular, offering potential substitutes for beef-based dishes.
- Rivalry among existing competitors: Competition within the fast-casual restaurant industry is intense, with numerous players vying for market share.
4. Recommendations
Tender Greens should implement the following recommendations to address their beef sourcing dilemma:
1. Diversify Suppliers:
- Identify and partner with multiple ethical beef suppliers: Tender Greens should actively seek out suppliers who prioritize sustainable and humane practices, including pasture-raised, grass-fed, and certified humane options.
- Develop clear sourcing criteria: Establish detailed criteria for selecting suppliers, focusing on environmental impact, animal welfare, and transparency.
- Negotiate contracts with suppliers: Secure long-term contracts with ethical suppliers to ensure consistent supply and build strong relationships.
2. Implement Robust Traceability Systems:
- Invest in technology for tracking beef: Utilize blockchain technology or other advanced systems to track beef from farm to plate, providing complete transparency to customers.
- Develop a clear labeling system: Implement a labeling system that clearly communicates the origin, sourcing practices, and ethical certifications of their beef.
- Partner with third-party auditors: Engage independent auditors to verify the accuracy of traceability data and ensure adherence to ethical standards.
3. Enhance Customer Engagement and Transparency:
- Communicate sourcing practices openly: Publish detailed information about their beef sourcing practices on their website and social media platforms.
- Engage with customers directly: Respond to customer inquiries and concerns openly and transparently, demonstrating a commitment to ethical sourcing.
- Host events and workshops: Organize events and workshops to educate customers about their sourcing practices and the importance of ethical beef consumption.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Diversifying suppliers, implementing traceability systems, and enhancing transparency align with Tender Greens' core values of sustainability and ethical sourcing, strengthening their brand reputation.
- External customers and internal clients: These recommendations address customer concerns about ethical sourcing, while also providing internal stakeholders with clear guidelines for sourcing practices.
- Competitors: By adopting a proactive approach to ethical sourcing, Tender Greens can differentiate themselves from competitors and attract customers seeking sustainable options.
- Attractiveness: While implementing these recommendations may involve initial investment, the long-term benefits include enhanced brand reputation, increased customer loyalty, and reduced risk of negative publicity.
6. Conclusion
Tender Greens faces a critical juncture in its commitment to sustainability. By embracing a multi-pronged approach that prioritizes transparency, ethical sourcing, and customer engagement, the company can maintain its 'green' promise while navigating the complexities of the beef industry.
7. Discussion
Alternatives not selected:
- Continuing with the current supplier: This option carries significant risks, including reputational damage and customer backlash.
- Switching to a different supplier without due diligence: This could lead to similar ethical concerns and lack of transparency.
Risks and key assumptions:
- Increased costs: Diversifying suppliers and implementing traceability systems may increase operational costs.
- Supplier availability: Finding ethical suppliers with sufficient capacity to meet Tender Greens' needs may be challenging.
- Customer acceptance: Customers may not be willing to pay a premium for ethically sourced beef.
Options Grid:
| Option | Pros | Cons |
|---|---|---|
| Diversify Suppliers | Enhanced ethical sourcing, reduced risk, increased transparency | Higher costs, supplier availability issues |
| Implement Traceability Systems | Increased transparency, improved customer trust, reduced risk | Investment costs, potential for technical challenges |
| Enhance Customer Engagement | Improved brand reputation, increased customer loyalty, reduced risk of negative publicity | Requires ongoing effort, potential for customer backlash |
8. Next Steps
- Develop a detailed implementation plan: Outline specific timelines, budgets, and resource allocation for each recommendation.
- Engage key stakeholders: Involve leadership, operations, marketing, and procurement teams in the implementation process.
- Monitor progress and adjust strategies: Regularly assess the effectiveness of the implemented strategies and make adjustments as needed.
- Communicate with customers: Keep customers informed about progress made in ethical sourcing and transparency initiatives.
By taking these steps, Tender Greens can demonstrate its commitment to sustainability and build a stronger, more resilient brand for the future.
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Case Description
In October 2015, the co-founder and chief executive officer (CEO) of Tender Greens faced his most difficult decision yet: should the company continue to pay a premium price for sustainably sourced beef, or should it switch to conventionally raised beef to boost profit margins and improve the company's prospects for national growth? Tender Greens, a thriving fast-casual restaurant chain in California, was ready to expand its operation to the East Coast with backing by equity investors. As the expansion plans grew closer, the CEO began to address the foreseeable supply chain issues that his company would face with the next level of expansion. The company had faced sustainably raised beef supply shortages before, but this time the CEO had more stakeholders to satisfy. He faced a dilemma, one that required him to weigh competing stakeholder interests, the company's stated values, and significant financial implications to arrive at the best long-term outcome for the company. What would be the best way for the company to achieve scale while maintaining a commitment to food that was local, sustainable, and affordable?
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