MKTG

4540

SYSCO CORPORATION

Jaime Nowakowski

April 22, 2015

SYSCO

TABLE OF CONTENTS
Executive Summary ..3

Company History .3

Basic Strategy SYSCO Employs ..4

Competitive Advantages .............5
Company Financials ..6
Product Market SYSCO Competes In .6
Porters Five Forces .. 7

Potential Entrants..7

Bargaining Power of Buyers/Suppliers...8

Threat of Substitutes ..8

Industry Rivals/Competitors ..9

Demand Forecast 9
Market Structure .10
Competitive Dynamics .10
Competitive Trends 11
Industry Segmentation Scheme ......11
Segments Sysco Targets .12
Contact Segmentation .13
Trends in Customer Needs, Values, and Usage ..14
Supply Chain 15
Power In the Industry .15
External Trends .17

E-commerce/ Technology .17

Regulation/ New Laws..17

Trends that Impact Business.17

SWOT 18
References 20
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SYSCO Corporation

EXECUTIVE SUMMARY
Sysco Food Corp. is a national distributor of food and other related items. Starting in 1969 and
becoming public in 1970 Sysco continues to come up with ideas to grow the business. Sysco
offers a wide variety of foods and non-food products to tradition and chain restaurants. Sysco
also has a lodging sector offering personal care guest amenities, equipment, housekeeping
supplies, accessories, and textiles. Sysco has multiple branches across the country and is ranked
8th in the worlds largest food retailers.
Sysco trucks can be seen everywhere across the United States and the company continues to
grow. Sysco offers Meat products, tomato paste and sauces, tortillas, coffee, plastic cups,
agricultural products, breads, seasonings, detergents, water, fruit drinks, sugar, cleaning preps
in the food sector, and many more products.
The business strategy that Sysco relies on can be broken down into five areas: Partnerships,
Productivity, Products, Expansion, and People. Each area, or section of the strategy, has
different functions all designed to help Sysco grow and expand as a company. Some of these
functions include: Assessing, exploring, and purchasing new businesses and markets, further
deepening relationships with customers and suppliers, expanding Syscos portfolio of products
and services, and continuously improve productivity in all areas of business. The main goal of
Syscos business strategy is to deliver value to their customers. This five-step strategy assists
Sysco by helping them gain deeper customer insights, develop new opportunities, and further
expand their company.
Sysco is essentially the pinnacle of competitive advantage in the marketplace; meaning because
they own a great majority of market share in their industry, threats of substitutes and new
entrants is close to none. The bargaining power of suppliers and customers are also very small
threats to Sysco. Sysco keeps these threats minimal due to lost costs and high quality products
and services. Because of Syscos immense power in the industry, it is close to impossible for any
new entrants to enter and be successful.

COMPANY HISTORY
John Baugh was the main founder of SYSCO. Herbert Irving and Harry Rosentha were also
involved in the startup of the company. Sysco was founded in 1969 and became public in the
year 1970. John Baugh first got his start in the food industry when he worked part time at a
local store called A&P grocery in Waco, Texas where he grew up.
John eventually founded Zero Foods Company of Houston, which was a Houston-based food
distributor. In 1969 when Sysco was formed John Baugh persuaded either other food
distributors to combine their company with his. His vision was to become a national distribution
organization that could distribute any food despite the current available foods. The eight
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companies that came into business with John and Zero Foods were: Frost-Pack Distributing
Company (Grand Rapids, Michigan); Global Frozen Foods, Inc. (New York); Houston's Food
Service Company (Houston); Louisville Grocery Company (Louisville, Kentucky); Plantation
Foods (Miami, Florida); Texas Wholesale Grocery Corporation (Dallas); Thomas Foods, Inc., and
its Justrite Food Service, Inc., subsidiary (Cincinnati); and Wicker, Inc. (Dallas). These companies
combined and formed what we now know as Sysco.
Sysco became public in the NYSE on March 3rd, 1970. The company continued to grow,
acquiring small food distributors to cater to the geographical regions that have not covered. In
the startup years Sysco showed a brief drop in earnings due to shortages and increased costs
due to the increasing size of the company. Sysco continued to reach into new markets such as
fish, meat, and produce rebounding their sales and by 1981 they were named the largest U.S
food distributor. Sysco continues to be a driving force in todays economy and is largest
marketer and distributor of foodservice products in North America.

BASIC STRATEGY
Sysco compares their business strategy to a great recipe. They take pride in the ingredients
used to deliver the highest quality product possible to their consumers. They focus on
innovating holistic restaurant solutions to insure a positive and memorable experience. Sysco
believes, A successful business recipe starts with our mission: to market and deliver great
products to our customers with exceptional service. It is reinforced by our vision: to be our
customers most valued and trusted business partner(DeLaney, Fernandez, 2014). Syscos
business strategy can be broken down into five key ingredients: Partnerships, Productivity,
Products, Expansion, and People.
The first ingredient of Syscos strategy is Partnerships. This element focuses on further
deepening Syscos relationships with their customers and suppliers. Sysco strives to innovate
and enrich the experience of doing business with both their customers and suppliers. In the
2013 fiscal year, Sysco launched their category management initiative to generate value
through sourcing and pricing of products. This approach stimulated deep partnerships with
Syscos suppliers, as well as encouraged customer insights. This specific approach is expected to
enhance product innovation and help provide the foundation for growth in the upcoming years.
Productivity is the second ingredient in Syscos business strategy. This element of the overall
strategy is designed to continuously improve productivity in all areas of business. For example,
in 2013 Sysco expanded the deployment of their SAP enterprise resource platform. They
expanded to North, West, and East Texas. In addition to expansion of their resource platform,
Sysco completed the rollout of their maintenance model in both the U.S. and Canada. Sysco
continues to develop and innovate new projects and strategies to increase productivity.
Products is the third ingredient in Syscos strategy for success. This element focuses on
expanding Syscos portfolio of products and services by initiating an innovation program
centered on the customer. Sysco uses research results from their category management
initiative program to gain valuable insights that both customers and suppliers have. To test new
products, Sysco created four pilot categories: Salad Dressing/Mayonnaise, Frozen French Fries,
Towels/Tissues/Napkins, and Shrimp. Feedback is very valuable to Syscos success. Customers in
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the four categories responded well to the new variety of products that were offered. In 2013,
Sysco launched Leapset. Leapset is a point-of-sale system that allows restaurants to actively
interact with their customers while running their business. Sysco has a very aggressive
implementation plan and continues to innovate new ways of introducing new products to the
market.
The fourth ingredient in Syscos business strategy is Expansion. Expansion involves assessing,
exploring, and purchasing new businesses and markets. In one of their busiest years to date,
Sysco completed 14 acquisitions in the U.S., Canada, Ireland, and the Bahamas. These
acquisitions accounted for $1 billion in annualized sales. Sysco is committed to pursuing quality
companies both national and international to further expand product offerings and the
company in general.
The fifth and final ingredient in Syscos business strategy is People. This element is designed to
develop and effectively integrate a comprehensive enterprise-wide talent management
process. Sysco highly values their associates opinions and administers Sysco Speaks surveys to
gain meaningful feedback. To bring additional energy, skills, and experience to the team, Sysco
hired three talented leaders: Wayne Shurts, Tom Bene, and Scott Charlton. Not only is Sysco
focused on the internal need of the company, but to their shareholders as well. The whole goal
of Syscos business strategy is to deliver value to their customers. This five-step strategy assists
Sysco by helping them gain deeper customer insights, develop new opportunities, and further
expand their company.

COMPETITIVE ADVANTAGES
Sysco is at the pinnacle of competitive advantage in their marketplace. When it comes to the
threat of substitutes, there is few and far in between for Sysco. They are the number 1
distributor of foods to restaurants, business, and stores nationwide. Their main competitor,
U.S. Foods, may potentially merge with Sysco, which would give them an even greater
competitive advantage when it comes to the threat of substitutes.
The bargaining power of Syscos suppliers is also very low since Sysco is many of its suppliers
cash cow. The bargaining power of Syscos customers is also very low since Sysco maintains
their competitive advantage through low cost and high quality of product and service. Sysco
elevates their service not only through high quality product but through high quality service.
This is shown with their excellent supply chain and near perfect customer satisfaction rating.
Sysco distributes mainly to restaurants, stores, and companies that purchase in bulk. This
makes it extremely hard for new companies to enter the market. To enter the market they
would be going against Syscos low cost, high quality products, with the best service in the
industry. It is for these reasons that Sysco is at the top of the food chain (literally and
figuratively).

COMPANY FINANCIALS
Yearly financials reported by Sysco:

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Financials 2014:
Net Sales:




$ 46,516,712,000
Net Income:



$ 931,533,000
Total Assets:



$ 13,167,950,000
Total Liabilities/Shareholders equity:
$ 13,167,950,000

Stock Information:
Shares Outstanding:

$ 592,340,000
Market Capitalization:

$ 23,580,000,000

Sysco Foods is a multinational company that is publicly traded S&P 500 Company. In 2014 Sysco
foods reported over 46 million dollars in revenue. During the year 2014, Syscos sales grew 4.7
percent to a personal best 46.5 billion dollars. (Delivering, 2014) Sysco believes concentrating
their focus on five strategic pillars; Expansion, People, Products, Productivity and Partnerships
(Delivering, 2014) Sysco uses Expansion to keep up with changing demographics. These
changing demographics provide significant potential for growth. The Hispanic restaurant
segment has grown nearly 20 percent from 2000 to 2010 and Hispanics are expected to
represent almost one-third of the population by 2050 and this will provide a larger market
segment for Sysco (Delivering, 2014). There is a lot of room for expansion within the
foodservice market. Sysco is one of the leading distributors of food service in America with a
large untapped market. By implanting the five strategic pillars Sysco is strategically positioning
itself to take control of a larger segment of the market.
According to the financial information, Sysco got off to a slow start in 2014 due to economic
conditions resulting from one of the harshest winters on record. Things did pick up in the final 4
months however, and Sysco sales increased 4.7 percent. Sysco also returned nearly 670 million
dollars in dividends to shareholders and increased dividends for the 45 time in the 44 year
history of the company (Delivering, 2014)
With a customer driven sales team and careful execution of their strategies, Sysco was able to
have a good year financially in 2014. Overall, the company is performing above the industry
standard by producing profit for the shareholders as well as growth for the firm.

PRODUCT MARKET SYSCO COMPETES IN

The market that Sysco competes in is food distribution (Sysco, 2015) offers a full line of food
products and a wide variety of non-food products to both independent and chain restaurant
customers and other "away-from-home" locations such as healthcare and educational facilities
(Sysco). Looking forward into the market share section it will be apparent that Sysco is a giant
force in this product market.
Sysco offers a line of specialty products including produce and meats. The specialty meat
department offers custom-cut fresh steaks and other meat, seafood and poultry, giving
customers dependable quality, selection and freshness (Sysco, 2015). In the special produce
line they offer fresh-from-the-field flavor to customers kitchens (Sysco, 2015).
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Another product market Sysco is involved in is the guest services market. This can involve
hotels, resorts, cabins, etc. across the country. Lodging industry products company distributes
personal care guest amenities, equipment, housekeeping supplies, room accessories and
textiles to the lodging industry (Sysco, 2015). When the maids are cleaning rooms, many of
those cleaning supplies could be supplied by SYSCO. In the shower at hotels, the small bottles
that everyone steals and takes home with them could possibly be supplied by Sysco

PORTERS FIVE FORCES

ANALYSIS
Potential Entrants
One force that affects the
probability of any company is the
threat of new entrants. Barriers to
entrants play a huge role in
whether or not an industry has
low or high levels of threat of new
entrants. Such barriers include:
first mover advantages,
relationships formed with
suppliers and customers,
economies of scale, ability to gain
distribution access, and certain legal barriers.
If an industry has low barriers to entry, the companies competing in this industry will have to
cut and match prices in order to gain market share. Prices will eventually fall to meet each
companys equilibrium point. Profits will continue to decrease with each new addition of a firm
to the industry.
On the other hand, if the barriers of entry are high in an industry, it is harder for new
companies or firms to enter into the market. The existing companies have an advantage. They
dont have to worry about new competitors and are able to focus on their own success and
sustain more profits.
The level of threat of new entrants in the food-distribution industry is relatively low. Certain
barriers imposed by this industry such as; tariff rates, distribution channels, entry restrictions,
and high capital requirement keep the number of new competitors minimal. There is, and
continues to be, a high level of competition in the food and service industry.
Sysco is one of the largest companies in this industry, meaning they have a strong competitive
advantage. Customers and suppliers are looking for products based on price, quality, variety,
availability and so on. Even though it would be easy to start a new business in this industry,
gaining customers would be difficult.
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Sysco currently competes with both local and international food distributors. Syscos main
competitors include: US Foodservice, McLane Foodservice, Performance Food Group, and
Gordon Food Service Inc. New entrants are not a main concern for Sysco however, the
company is facing immense competition from the retail giants such as Walmart having stronger
supply management network and operational efficiencies than Sysco Thus, the high level of
competition in the food service market(Global Data 2014).

Bargaining Power of Suppliers
Another force that factors into the profitability of Sysco is the bargaining power of its suppliers.
According to Porter, supplier power refers to the pressure suppliers can exert on businesses
by raising prices, lowering quality, or reducing availability of their products(Wilkinson, 2013).
Supplier power is one of the main forces that shape the competitive structure of an industry.
Suppliers can raise prices, and lower product quality and availability. Each has a negative effect
by raising the costs to buyers.
Large company suppliers with well-known brand names are the main wielders of bargaining
power. Sysco recognized this, and introduced the idea of private-label distributor brands. These
brands were tailored specifically to the food-service market, helping to moderate the power of
their suppliers. One of Syscos main strategic goals is to reduce the share of profits that are
leaked to its buyers and suppliers.

Bargaining Power of Buyers
A third element in Porters Five Forces is the bargaining power of buyers. When a large group of
buyers is present in the market, it can have a significant effect on a companys success in that
market/industry. Buyers can demanded higher quality of products and services, increasing
competition between companies forcing them into price wars. One of the strongest powers
that buyers can utilize is to lower prices of products. In this situation, as buyers lower the price,
the potential for profit is lowered as well. Both of these buyer methods have a negative impact
on the attractiveness of the industry they are in.
Buyers of Sysco are very price sensitive because food makes up a large share of their costs.
Another issue that Sysco faces is the free will of buyers to purchase directly from wholesalers or
retailers, completely ignoring distributors. To address the fact that most buyers are price
sensitive, Sysco emphasized value-added services to their buyers. Some of these services
include: menu planning, credit, and inventory management. Not only did Sysco take the focus
off of price alone, they have substantially raised the bar for new entrants as well as making
substitutes less attractive.

Threat of Substitutes
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A fourth element in Porters Five Force Analysis is the threat of substitutes. Substitutes are
alternative products that a consumer can purchase instead of buying the industrys product or
service. The alternative product offers similar benefits as the products produced by firms within
the industry. Certain factors such as the switching cost to the consumer play a role in whether
or not an industry is threatened by substitutes. If the consumer will loose little to no benefits by
buying an alternative product from another industry, the threat of substitutes is high.
Because Sysco is in the food industry, threat of substitutions is generally high. Consumers have
an unlimited amount of alternatives and options when it comes to purchasing food products.
Many suppliers understand the crucial need of their supply chain partners to successfully
deliver products to their customers. It is important for Sysco to maintain quality as well as
reasonable prices for their products to maintain loyal customers in their industry.

Industry Rivals/Competitors
The fifth component of Porters Five Forces Analysis is industry rivals. Rivals are companies
within the same industry that compete for customers and put pressure on each other, thereby
limiting profit potential. If rivalry is high, competitors in the same industry are essentially trying
to steal market share from one another.
In general, the food service industry is highly competitive. As you can see in the figure below,
Sysco holds the majority
of the market share in its
industry. Some of their
top regional competitors
are: Gordon Food Service,
Reinhart, Maines etc.
Sysco faces increased
competition from non-
traditional sources such as
commercial wholesale
outlets and club stores.
Group purchasing
organizations have also
increased the pressure on
this industrys profit
margins. Existing, along
with new competitive
companies cause Sysco to focus on limiting price increases and increased discounting of their
products/services. Syscos annual report states, If we are unable to effectively differentiate
ourselves from our competitors, our market share, sales and profitability, through increased
expenditures or decreased prices, could be adversely impacted(Sysco, 2013). In recent years
Sysco has experienced slowing revenue growth rates while experiencing sales that have grow

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faster than the market. They are anticipating similar trends in the future, placing pressure on
Sysco to maintain good a good profit margin.

DEMAND FORCAST
Forecasting the demand for the future is an integral and complex concept for all companies. It
is challenging when you involve exterior factors such as weather and economic uncertainty. In
the food service distribution industry there is always a high demand for the product. The
foodservice industry is a 255 billion dollar market between the U.S., Canada, and Ireland. That
shows just how high the demand is, especially for the U.S. whose demand is 230 billion dollars
of the total 255 billion dollar market (CAGNY, 2014). Sysco is taking advantage of the high
demand well by being the leader in the food distribution market, where they control 44 billion
dollars of the market sales (CAGNY, 2014)

INDUSTRY AND MARKET STRUCTURE

Sysco is the industry leader in food distribution so they do have some competitors. Three of the
top competitors Sysco has are; US Foods Inc., Meadowbrook Meat Company Inc., and
performance food group company (Sysco, 2015). Sysco is the number one food distribution
supplier in North America, so they are the foundation for the market structure (Sysco, 2015).
Sysco structure is segmented by who their customers are. Their sales broken up by customer
are; 62 percent to restaurants, 18 percent to Healthcare, Education, and Government, 12
percent other customers, and 8 percent travel, leisure, and retail customers (At a Glance, 2014).
What this indicates is that Syscos structure is directed heavily towards the restaurant industry.
This is surprising as most would assume that the leading food distribution company would
mainly focus on grocery stores or retail as their main customer when in fact that only accounts
for 8 percent of sales. With their current structure, Sysco has 425,000 customers with a fleet of
9,400 vehicles and 190 distribution centers in the US, Bahamas, Canada, and Ireland. Sysco is
also comprised of two main distribution networks. The first is Broadline, which accounts for 81
percent of their sales. Broadline is the network that mainly supplies both food and non-food
items to restaurants, schools, hotels, and health care facilities. The SYGMA network Sysco had
accounts for 13 percent of sales and mainly supply chain restaurants (At a Glance, 2014) (Sysco,
2015).

COMPETITIVE DYNAMICS
There are numerous competitive strategies and reactions throughout the businesses competing
in the wholesale food distribution industry that create differential competitive dynamics
throughout the industry. Sysco is continually seeking to maintain and increase their large
market share in the industry. Sysco maintains their market share through maintaining and
improving their strong supplier relationships (Sysco, 2015) . They do this by continually
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improving their level of service and through a streamlined supply chain. However, with the
growing demand for specific foods, such as organic, leave opportunities for the other
competitors to steal loyal customers from Sysco (Sysco, 2015). This is why it is important for
Sysco to evolve with their dining trends and meal alternatives.
Although there are many food wholesalers in the industry, the size of Sysco, and its top
competitors make the industry a tough market to enter. Accordingly, the FDA is continuously
changing its regulations. These fast and continuous changes make it increasingly difficult for
smaller distributers to stay in businesses. These smaller businesses often dont have the capital
or resources to keep up with the new regulations, and eventually go out of businesses.

COMPETITIVE TRENDS
Sysco is in the food distribution industry, along with its biggest competitors, US Foods, Inc.,
Performance Food Group Company, and Meadowbrook meat company, Inc. (Sysco, 2015). All of
their competitors specialize in food distribution and on the logistics necessary to cut the cost
for the company and customers In addition, Sysco offers guest services for their lodging
industry products. (Sysco, 2015) They distribute personal care guest amenities, equipment,
housekeep supplies, housekeep supplies, room accessories, and textiles to the lodging industry.
By doing this they offer their customers not only the primary need of food, but the secondary
need for equipment. In 2014 Sysco experienced a minor decrease in profits likely due to their
competitors (Hoover, 2015)
Sysco and US Foods, are the only two companies with national distribution to hospitals,
restaurants and schools, have been discussion the sale of assets such as distribution centers.
Sysco is currently working on merging with one of their top competitors US Foods. This
merger has been in the works for almost a year now and will immensely expand Syscos market
share over its competitors. If this merger goes through, Sysco will have a serious advantage
over their competitors, especially since they will be acquiring all of US Foods suppliers and
customers. With this growing trend of businesses merging with each other there is fear of
monopolistic tactics. The Federal Trade Commission is still reviewing the 3.5 billion deal that
was announced a year ago. Typically the merger of businesses is between two companies that
offer very similar products. This is not the case for Sysco and US Foods as Sysco offers roughly
400,000 different products to US Foods 350,000 different products. This product gap will likely
be a concern for the FTC as it considers whether the deal preserves choice for consumers.

INDUSTRY SEGMENTATION SCHEME
Sysco is the number one food service supplier in North America. According to Hoovers Inc.,
Sysco serves more than 425,000 customers worldwide (Hoovers, 2015). With their
headquarters located in Houston, Texas, Sysco delivers their products and services using a fleet
of 9,400 delivery vehicles and 194 distribution centers located in the US, Canada, Bahamas, and
Ireland. Syscos core distribution business supplies both food and non-food products to its
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customers, as well as private-labeled goods and nationally branded products. Their main buyers
are restaurants, hotels, schools, and health care institutions. Wendys International (WEN) is
one of Syscos main buyers and accounts for five percent of Syscos sales.
The Hispanic population in the U.S. has increased by over 45 percent in the past decade and
they hold 1.6 trillion dollars in consumer buying power in the food service industry. On January
6th of 2015, Sysco launched a dual-language microsite geared towards the Hispanic segment of
the food service industry titled Sombremesa. According to GlobeNewswire, Syscos new
Sombremesa site provides both English and Spanish speakers a mobile-friendly platform with
culturally relevant content that addresses diverse dining trends in the U.S and better serves the
needs of Hispanic foodservice operators(Olson, 2015). In the Spanish language, Sombremessa
describes the valuable time spent with family and friends after a meal. This new website
includes Latin recipes created by Syscos culinary team, along with cooking tips, Hispanic
snacking trends, and much more. The new site is intended to help Hispanic operators direct
restaurant traffic and improve operations to serve customer needs.
Because Sysco is both a national and international corporation, they need to account for
cultural differences among their buyers. Different regions require different solutions based on
the availability of crops and grower capacity in each region. Sysco also emphasizes the
importance of branding. Branding is essential to increasing the awareness of good food
attributes. Such attributes include how healthy, green, and affordable a product is. Sysco
focuses its branding more towards operators of food service establishments rather than directly
to the consumer. Sysco recognizes the critical importance of building and maintaining strong
relationships across the value chain. To be successful, Sysco needs keep a healthy relationship
from the grower, through their distributors, all the way to the customers.

SEGMENTS SYSCO TARGETS

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Sysco serves four main segments in the market. These market segments include; restaurants,
healthcare facilities, educational facilities, and lodging facilities. Below are graphs representing
Syscos sales in the fiscal year of 2014 by customer type and sales by product type. As you can
see, the restaurant market segment is Syscos largest market at 62%. Healthcare, education,
and government are Syscos second largest market accounting for 18% of annual sales, followed
by lodging, and then miscellaneous.

Sysco serves their customers through various operating segments: Broadline (81% of sales)
companies serve a wide spectrum of foodservice operators, SYGMA (13% of sales) locations
provide multi-unit customers with logistics and operational expertise, Other (6% of sales)
specialty companies enhance Syscos ability to provide their customers niche and exclusive
products, and broaden their reach, through their Produce, Meat, Guest Supply, European
Imports, and International Food Group locations. (At a Glance, 2014)

CONTACT SEGMENTATION (marketing communication)

In Syscos business-to-business market, their primary target customers are in the supplies to
restaurants, health care,
as well as educational
facilities i.e. schools, and
lodging places i.e.
hotels. Since Sysco is a
distribution business and
supplies other business

it may not be a household name. Sysco will not reach its customers in ways such as creative
television advertisements. A company like Sysco has to attract and maintain business by
building a good reputation of quality service, quality products, and lasting relationships with
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current customers. Another part of Syscos business is that they have a vast number of products
they supply to customers, from chemicals to poultry. (At a Glance, 2014)

Media Promotions: Health Care Conference and Expo, Social Media

Sysco Healthcare Conference and Expo
One of the ways that Sysco reaches out or connects with customers is by holding the Sysco
Healthcare Conference Expo. In order to attend the Healthcare Conference and Expo,
businesses are required to register on the Sysco events website. Sysco has their own event
team that puts this on in order to build relationships with customers and to give information on
their products and business. The conference and expo last four days and it is a luxury resort.
There are different events on different days. The second day is when the supplier and
customers arrive, and the third day is when the expo starts. The conference and expo act as a
way for the suppliers, customers, and Sysco to interact and build relationships that are not in
the normal business environment.

Social Media
Another example of how Sysco markets their products and services are through the use of
social media. Sysco actively uses almost all well-known social media sites including; Facebook,
Twitter, YouTube, and LinkedIn. (Sysco, Building. 2015). I think in today days market it is
becoming a reoccurring theme that companies utilize social media. Social media is a form of
free advertising for companies and more often than not it is where most people get their
information in todays digital world. The two social media sites that appear to be most effective
for Sysco are YouTube and LinkedIn. The Sysco YouTube channel has almost 100,000 views on
their videos and the Sysco LinkedIn has 45,477 followers. (SYSCO Corporation Social Media
Page. 2013) I think LinkedIn is a great site to utilize for a company like Sysco who does not sell
to individual customers. It allows them to build their network and prospect for customers.

(LinkedIn. 2015)


Business Review Program
One way Sysco tries to engage the customers is through what they call the Business review
program. What the Business review program is, is a free consulting program Sysco has
implemented. What this means is that Sysco will give free advice on the products that they sell.
This advice can range from helping clients design their menus, train a wait staff, or even how to
market their business. (Palmeri, Christopher. 2009). This is a great way for a company like Sysco
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to market their products and services. It shows that Sysco wants to build lasting relationships
with clients and not just sell them a products(s) or service(s).

TRENDS IN CUSTOMER NEEDS, VALUES, AND USAGE

The depth and breadth of Syscos product offering has made them a leader in the foodservice
industry. Yet even with as strong a product portfolio as Syscos, changing tastes and emerging
trends mean that new products are frequently being added to the mix (Sysco). Even leaders in
an industry have to keep up with customers. Customers needs, values, and usage change on a
daily basis. It is Syscos job to keep up with these trends to keep their company profitable. Sysco
experts study the marketplace to see what types of products are being manufactured by
competitors and purchased by consumers to determine which attributes are driving sales. Is it
the color, freshness, shape, size, cut, condition, aroma? There are literally hundreds of factors
to consider (SYSCO).
Customers value the service and products that Sysco has to offer. They have become an
industry leader offering nothing but the best for businesses and customers. Customers tend to
value the top tier products. Especially when it comes to businesses, business owners want the
best products and supplies for their business to help day to day business run smoothly.
Businesses are much more likely to spend the extra amount of money to receive the best.
Coincidentally Syscos main customer market is businesses and restaurants.
Sysco has remained on top of the food service industry. Sysco reviews usage reports and takes
into effect the needs and values of their customers. Many companies believe their way is the
best way but Sysco realizes that just is not true. What it comes down to is, its all about the
customers.

SUPPLY CHAIN

Raw materials
straight from
Sysco

Restaurant owners,
restaurant chains, hotels
and lodging services.

Consumers

Sysco foods is a U.S food distributor that mainly deals with restaurants. Sysco represents a
business to business relationship. What this means is products come straight from Sysco, to
chain restaurants or lodges. Restaurants will order supplies and products for Sysco to run day to
day business. Whether that is food supplies or cleaning supplies Sysco will provide it. Supply
chain will run day to day operations when it comes to shipping and fulfilling orders. Supply
chain becomes even more important in a business to business relationship rather than direct
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distribution to consumers. Businesses are responsible for opening their doors to consumers
nearly every day. This means orders need to be perfect so businesses can run day to day
without hiccups. If a business has to send something back because it is wrong then they are out
of that product or supply for at least a couple business days. To keep customers and to
continue positive business relationships, supply chain will be essential to upholding this
company.

POWER IN THE INDUSTRY

Sysco is currently the number one supplier in the food service industry in the United States with
its biggest competitor being US Foods. According to CEO of Sysco, William DeLaney, Sysco plans
to take over US Foods with an $8.2 billion acquisition. The deal was announced in December of
2013, but because of concerns with government regulations the deal has yet to be accepted. If,
and when the two companies combine, they will make up for 27 percent of the entire
distribution market. This will include 100 percent of the share of the national distribution
market. Delaney remarks, its a deal that needs to happen amid a changing customer
landscape(NRN, 2015). Together, US Foods and Sysco would have $65 billion in sales, owning
253 warehouses in total.
Performance Food Group is the third largest company in the food service industry with $13.7
billion in sales and 67 distribution centers. DeLaney, along with many others believe that the
combination of Sysco and US Foods will cause a gap that may lead other smaller companies in
the same industry to merge in efforts to compete more effectively. To help alleviate Federal
Trade Commission concerns, Sysco will sell 11 of its US Food Distribution facilities to
Performance Food Group. CEO of Performance Food Group, George Holm responded, The
distribution centers will enable us to compete effectively for national broadline foodservice
customers(NRN, 2015). Even with the divestiture, Sysco-US Foods will be the largest
distributor in the United States.

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DeLaney believes combining the deal will benefit both companies, along with their suppliers
and customers. Wendys Co. is one of Syscos main buyers. The deal is expected to save
Wendys more than $600 million after about four years after acquiring US Foods. This will be
due to better supply chain efficiencies and merchandising. With fear of a monopoly, DeLaney
argues that the market in the food service industry is highly competitive and many restaurant
chains divide their business among many different food distributors. DeLaney is currently
waiting in high hopes that the Federal Trade Commission will allow the acquisition to add US
Foods to the Sysco team.

EXTERNAL TRENDS
E-commerce/ Technology
Syscos e-commerce solutions simplify purchasing and bill paying. With technology, Sysco also
can customize their delivery schedule to meet the needs of their customers. Along with
customized delivery, Sysco offers iCare services which connect their customers with a network
of support in marketing, operations, financial services, human resources and benefits, and
environmental services. For small to mid-sized food service operators, iCare takes some of the
burden out of managing the business so that the customer can focus on delivering a great
dining experience.

Sysco's commitment to healthcare extends well beyond providing high quality products and
service. As a leader in innovation and technology, Sysco offers an extensive selection of valued
services, support and marketing initiatives designed specifically for the healthcare market.
Syscos eNutrition service is an online nutritional analysis tool available to all Sysco customers.
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Just plug in your recipe to see a complete nutritional analysis. Adjust ingredients to see how
changes can affect the nutritional profile of a single dish or a complete meal. Syscos database
includes nutritional analysis for all Sysco brand products as well as a comprehensive list of other
foods. IMPAC is another innovative menu planning service that provides seasonally adjusted
menus, modifiable recipes, production control, ordering guidelines, therapeutic diets,
nutritional analysis, and more.

Regulation/ New Laws
There are many laws that a company must follow when dealing with food that people are going
to consume. Many of the laws and regulations are through the Food and Drug Administration
(FDA). Since Sysco is a distributor of food products, a majority of the regulation has to do with
the transportation of the goods. When transporting food, it requires exact temperatures and
specific times it needs to be delivered by. USDA shipments move via motor carrier, intermodal
marketing company, railroad, or ocean carrier service. (Commodity Operations, March 2008)

Trends that Impact Business
Environmental
When it comes to how well Sysco does in a particular year, the environment plays a pivotal role.
One way the environment can affect Sysco is by climate. A very harsh or long winter can affect
crop production, which can in turn lead to price fluctuation. The same applies if there is a mild
winter. Crops may be in abundance and prices will be significantly lower with the excess.
Another thing Sysco has done is implement an IPM program. IPM or Integrated Post
Management is a program Sysco set up to work directly with farmers to help promote
sustainability in the environment. Sysco uses the program to help famers protect
environmentally sensitive growing areas and water sources (Sustainability at Sysco. 2013).
Sysco is also certified through the FDA program GAP aka Good Agricultural Practices.
Social
A new social trend that is shaping business at Sysco is social media. With the rise of social
media information is readily available. Sysco is using this to their advantage through the use of
social media sites such as Facebook and LinkedIn. This allows Sysco to connect with potential
business partners. Sysco also allows potential customers and business partners to sign up on
their website for the convention and trade show. This is an easy way for customers to get
involved with the Sysco brand.

SWOT ANALYSIS
Strengths

Weaknesses
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Global Market Leader
Inorganic Growth
High Market Share
Strong Distribution Network
Consistent Revenue Growth

Opportunities

Lack of Backward Integration

Geographic Concentration
Debt Level

Threats

Complicated Logistics
High Demand for Organic Products
Expanding Demand for Private Label
Products
Growing Foodservice Sector

Increasing Cost of Materials

Increasing Competition
Shift to Vegetarianism
Government Regulations

CONCLUSION
After doing extensive research on Sysco, our panel of analysts agrees that Sysco is a very strong
company. They are the respected leader in the food distribution industry with a large product
line. After thorough data retrieval and months of research on Sysco, we find it in our best
interests to invest in the company. It is clear to us that Sysco does an excellent job of
diversifying themselves in order to control the market. They are ahead of the game in food
distribution and use innovation to do so. We also think it is wise to invest because food
distribution is a key component to many other business, i.e.; restaurants, hotels, etc. Syscos
stronghold over the market is why we do not think it would be easy for other companies to
enter into the market and survive. It would take a lot for other start-ups to compete with the
industry giant Sysco, and thus why we do not think there is a potential threat of new entrants.
In conclusion, what we have presented proves that the potential for growth is substantial and
we are one hundred percent on board with Sysco.

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