Analysis

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The decision by Costco to become its own chicken supplier will have a more = positive impact in the company as compared to the earlier move of getting t= he birds from external suppliers. Moreover, it will increase the number of = employed people both directly and indirectly and the quality of the product= s will improve since the company will monitor the birds from the time they = are hatched, there genetics and other relevant factors. The local community will also benefit much from the decision, the company h= as started giving local investors the tenders to build chicken houses acros= s all the Nebraska locations. The investors will also manage the project fo= r the first few months and this is a clear indication that local people wil= l be empowered in way. Further we can speculate that, Costco will single ha= ndedly reshape the economy of Nebraska, the company has the potential to po= sitively impact the local residents, farmers and this will eventually lead = to the overall economy and social uplift of the people. It should further b= e noted that, the decision by the company to make such a move was after a d= eliberate brainstorming and engaging experts.  For example, in 2014, the co= mpany solid 78 million birds and most experts were in the view that, to hav= e a guarantee steady supply and make the price pocket friendly the company = should look for an ideal location (Nebraska) to start raising and processin= g their own chicken. Economically speaking, the move was long overdue since= I would break free of the monopoly that was previously enjoyed by companie= s such as Pilgrims and Tyson. The company will further increase its revenues since their biggest facility= at the Fremont, located west of Omaha will produce an average of 2 million= birds a week or 100 million birds per year. The supply will be enough to c= ater required Costco=E2=80=99s rotisserie birds, the raw birds they sell an= d surplus will remain for new market hence generating new revenue for the c= ompany. The number of employed people will rise. This will be both direct and indir= ect employees. Costco will require a feed mill and more than 600 giant barn= s where broilers, the pullets and the hens will be kept. The company will r= ecruit more than 150 farmers together with their teams to work on chicken b= ans. This is a clear indication that hundred of citizens will get job oppor= tunities and there will be a general economy growth among the local people. However, just like any other business, the deal carries some risks.  The co= mpany will have micro-manage the project at its initial stage or else they = may face huge losses that can even lead to the fall of the giant company. R= aising chicken is a delicate operation that requires a lot of skilled manpo= wer. Nonetheless, from a risk management view, if the project succeeds, it = will be a milestone move that will attract more customers. The company will= own the birds, they will be able to control their growth, their genetics a= nd modes of production. When the above model structure works, it will be a = milestone for the company because the cost of production will be greatly lo= wered hence company will review the price to attract more customers and eve= ntually improving the sales. It is risk worth trying.