WEEK 6 FINAL PAPER
Agnes Pettway
BUS640: Managerial Economics
Instructor: Robert Tocker
February 17, 2014

This paper will discuss the history of Tyson Foods how it got started during one of the most difficult periods of American history during the great depression in 1931 by John W. Tyson when he moved his wife and small son to Springdale, Arkansas searching for new opportunities. This is where he found them, thousands of them, all feathered and squawking. At this point he begins delivering chickens to larger markets in the Midwest.
History of Tyson Foods
Tyson Foods, Inc. [NYSE: TSN], founded in 1935 with headquarters in Springdale, Arkansas, is one of the world’s largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. We produce a wide variety of protein-based and prepared food products and are the recognized market leader in the retail and foodservice markets we serve. Tyson provides products and service to customers throughout the United States and more than 100 countries. We have approximately 115,000 team members employed at more than 400 facilities and offices in the United States and around the world.
Tyson corporate responsibility is to strive and operate with integrity and trust and is committed to creating value for its shareholders, customers and team members which is a very vital part of their success. The company also strives to be faith-friendly, providing a safe work environment and serve as stewards of the animals, land and environment entrusted to it.
Tyson Foods also strives to give back to the communities wherever it does business. The company has a community outreach program that donate million of dollars each year to a host of causes from children and family shelters to libraries, community parks and recreation areas. Tyson foods are also a major contributor to United Way campaigns. Team members along with company were committed to raising approximately $3.6 million for the fiscal year of 2008 and 2009. Also in 2008 and 2009 Tyson donated more than $5.9 million to charities and nonprofit organization, primarily in communities where the company operates.
The company operates four main business segments including chicken, beef, pork, and prepared foods, and is: Dedicated to developing a best-in-class, value-added product portfolio that meets the needs of it customers and consumers. Well positioned to provide the products people want, from the most basic cuts of meat to fully-prepared meals and The only company selling chicken, beef, and pork through all major distribution channels including consumer products, foodservice, and international.
Tyson Foods in my opinion is the best chicken company on the market and the quality of his products is very good and is sold at a reasonable price and very affordable for any family and especially those on a budget. Tyson foods are my favorite products to purchase and I purchased it on a regular basis for my family.
Tyson Foods Finance Tyson Foods Inc. (NYSE: TSN) closed Wednesday's trading session at $23.86. In the past year, the stock has hit a 52-week low of $14.06 and 52-week high of $23.92. Tyson Foods (TSN) stock has been showing support around $23.37 and resistance in the $24.17 range. Technical indicators for the stock are Bullish and S&P gives Tyson Foods (TSN) a positive 4 STARS (out of 5) buy rating. For a hedged play on Tyson Foods (TSN), look at the Jul '13 $23.00 covered call for a net debit in the $22.06 area. That is also the break-even stock price for this trade. This covered call has a duration of 156 days, provides 7.54% downside protection and an assigned return rate of 4.26% for an annualized return rate of 9.97% (for comparison purposes only). A lower-cost hedged play for Tyson Foods (TSN) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Tyson Foods (TSN) Jan '14 $18.00 call and selling the Jul '13 $23.00 call for a total debit of $4.45. The trade has a lifespan of 156 days and would provide 5.91% downside protection and an assigned return rate of 12.36% for an annualized return rate of 29% (for comparison purposes only). Tyson Foods (TSN) has a current annual dividend yield of 0.68%” (MarketIntelligenceCenter.com). “The company posted net income of $249 million, or $0.68 per share, compared to $76 million, or $0.21 per share, during the year-ago quarter. Revenues increased 5.7% year-over-year to $8.73 billion.
"As expected, we are delivering robust results in the second half of our fiscal year," said Donnie Smith, Tyson's CEO. "Our chicken segment achieved record operating income, and our beef segment rebounded to generate solid returns.
Chicken sales rose 10.6% over the past year to $3.16 billion, largely on the heels of higher demand. Beef revenue jumped 6.8% to $3.72 billion, also due to increased demand, but production efficiency and more stable cattle markets helped improve operating income. The company's pork segment saw a slight decline in sales, while prepared foods grew throughout the year” (Scott Gamm, Forbes Staff).
Risk or Uncertainty In 2011, Tyson Foods agreed to pay $4 million in penalties after being accused of bribing officials in Mexico and violating the Foreign Corrupt Practices Act. The company has also faced a handful of lawsuits from employees who claim Tyson had shorted them on pay and violated the Fair Labor Standards Act. Although Tyson Foods paid the money the totally disputed many of the charges the government’s accused them of doing even though they agreed to pay a civil pentaly. The alleged violations came to light through and Environmental Protection Agency examination of records provided by Tyson for its facilities in Iowa, Kansas, Missouri and Nebraska. The company has said to be fully corporating with the EPA investigation and acknowledged that there were times when its risk-management system “fell behind schedule” and did meet federal obligations. After learning of EPA’s concerns Tyson immediately made improvements and cooperated with EPA officials throughout the process the company senior Vice president and chief safety officer, Kevin Igli stated that they is developing an audit system to make sure its plants are in compliance with ammonia regulation. The EPA considers ammonia an “ extremely hazardous” substance and regulates its industrial use. Burning of the eyes , nose, and throath after breathing even small amount is symptoms of human exposure to anhydrous ammonia. Tyson operate in four segments: Chicken, Beef, Pork and Prepared Foods. Chicken: Chicken operations include breeding and raising chickens, as well as processing live chickens into fresh, frozen and value- added chicken products and logistics operations to move products through the supply chain.
Beef: Beef operations include processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal meat cuts and case-ready products.
Pork: Pork operations include processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case- ready products.
Prepared Foods: Prepared Foods operations include manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. The risks, which should be considered carefully with the information provided elsewhere in this report, could materially adversely affect our business, financial condition or results of operations.
Fluctuations in commodity prices and in the availability of raw materials, especially feed grains, live cattle, live swine and other inputs could negatively impact our earnings.
Market supply and demand and the prices we receive for our products may fluctuate due to competition from other food producers and processors.
Outbreaks of livestock diseases can adversely impact our ability to conduct our operations and demand for our products.
We are subject to risks associated with our international activities, which could negatively affect our sales to customers in foreign countries, as well as our operations and assets in such countries.
Government Regulation
Tyson operations are always subject to extensive federal, state, and foreign laws and regulations by authorities who oversee the food safety standards and processing, packaging, storage, distribution, advertising, labeling and export of their products.
Tyson are routinely subject to new and modified laws, regulations, and accounting standards. If the company is out of compliance with applicable laws and regulations in these or other areas then they could be subject ot civil remedies, including fines, injunctions, recalls or their asset could be seized and they would face potential criminal sanctions that could have adverse effect on their financial outcome.
Tyson productivity level seem to be up because and profit is continuing to go through the roof which give Tyson time to venture out on opportunity to acquire new business and different avenue other than meat product.
Since companies have a responsibility to their shareholder and societies who grant them the right to operate which allow them to fulfill both responsibility profitably.
Intro of New Product
Since we all know that Tyson Foods strives to introduce new products for it customers and consumer. Tyson just recently introduce its new Day Star breakfast sandwich into societies. Tyson foods has been a long-time leader in providing families with nutritious meal options and is always striving for better products to meet consumer needs.
“The line of frozen breakfast sandwiches offer protein-rich meals made with high quality ingredients like real cheeses, zesty vegetables, farm fresh eggs, and Tyson® proteins such as Tyson® sausage, ham and chicken. Day Starts™ breakfast varieties include biscuit sandwiches, breakfast flatbreads and wrapped omelets – ready to eat in less than two minutes – ideal for busy families who value a warm, delicious meal to start the day. Tyson® Day Starts™ breakfast sandwiches can be found in the freezer aisle at leading food retailers.
Tyson® Day Starts™ breakfast sandwiches are available in seven varieties: Southern Style Chicken Biscuit; Sausage, Egg and Cheese Biscuit; Natural Colby and Monterey Jack Cheese Crispy Wrapped Omelet; Ham, Onion and Green Pepper Crispy Wrapped Omelet; Egg, Bacon and Colby Jack Cheese Flatbread; Egg, Sausage and Colby Jack Cheese Flatbread and Ham, Egg, Cheese, Onion and Green Pepper Flatbread” (www.Tyson.com).