International Business study: Case Study: Jamaican National Chicken Company $($JNC$)$: Expansion Endeavors and Strategic Shifts

Jamaican National Chicken Company $($JNC$)$ is poised to amplify its investments in its US ventures, with a focus on enlarging its poultry processing plant located in South Carolina, USA. The poultry and animal feed distributor has witnessed exponential growth from its US operations, which currently encompasses chicken production under The Best Dressed Chicken Inc in South Carolina and fertile egg production from International Poultry Breeders LLC in Norman Park, Georgia. The acquisition of the poultry processing plant from Gentry's Poultry Company Inc in September $2019$ has led to a surge in demand for processed chickens. Consequently, JNC is allocating approximately US$$20$ million towards the expansion of this facility to further enhance its production capacity.

$"$At our virtual annual general meeting, we discussed our ambitious plans for the South Carolina plant. Since our acquisition, we've seen our production numbers soar from $150,000$ birds a week to much more. This expansion is a testament to our commitment to making our US investments align with the company's stature. We foresee even more growth in the near horizon," remarked JNC$\text{'}$s President and CEO, Christopher Levy. The company's USA operations accounted for $39\%$ of the $$75\mathrm{.}72$ billion revenue in $2022$ and $34\%$ of the $$7\mathrm{.}26$ billion operating profit.

Despite the challenges posed by the global pandemic, The Best Dressed Chicken brand has made its presence felt in over $20$ states, with aspirations of achieving national brand status. JNC also operates mills and hatcheries across various US states. A potential acquisition of Simply Essentials Poultry Plant in Iowa was on the cards in $2021,$ but it didn't come to fruition. Financial data up to July $30$ revealed a revenue of $$9\mathrm{.}21$ billion, with the US subsidiary contributing $$814$ million. This is a significant leap from the $2019$ figures, with the total asset base now at $$37\mathrm{.}69$ billion.

Levy expressed his enthusiasm about the brand's growing recognition and the potential for expansion in the US$.$ He confirmed that the Jamaican operation has surpassed its pre$-$pandemic volumes in the first quarter, with revenue exceeding $$13\mathrm{.}69$ billion and a segment result of $$1\mathrm{.}88$ billion. Levy also highlighted a $60\%$ year$-$over$-$year growth in exports for the $2022$ financial year, attributing it to the company's antibiotic$-$free stance.

JNC$\text{'}$s strategic pricing decisions, including a $10\%$ price increase in January followed by a $$12\mathrm{.}50$ per kilogram reduction in August for Grade$-$A Whole Bird and mixed parts, were influenced by the current inflationary environment. Levy emphasized the challenges posed by volatile logistics$,$ raw material costs, labor costs, and overall inflation. The company's focus remains on long$-$term strategies, encompassing purchasing, logistics$,$ and pricing.

In a bid to optimize costs and enhance efficiency, JNC is exploring avenues to cut energy costs and integrate technological advancements. Recent additions include a deboning machine, which has contributed to improved margins. The company is also piloting a $1$ MW LNG $($liquified natural gas$)$ plant and considering solar options for its operations.

JNC$\text{'}$s assets have grown by $18\%$ year$-$over$-$year to $$62\mathrm{.}68$ billion, with current assets valued at $$42\mathrm{.}25$ billion. Liabilities have increased by $20\%$ year$-$over$-$year to $$40\mathrm{.}58$ billion, with borrowings amounting to $$25\mathrm{.}03$ billion. Levy noted the company's strong position in terms of its weighted cost of capital, despite rising interest rates.

After a $12-$year presence in Haiti, JNC has decided to cease its operations in the country, which has been grappling with political and financial turmoil. Despite investing in Haiti Broilers SA and its subsidiary T&S Rice SA$,$ Haiti, the Haitian operations witnessed a $44\%$ revenue drop in FY $2022.$ This led to JNC recording significant impairments on its consolidated financials and its investment in its Haitian operations.

Levy commented on the challenging situation in Haiti, emphasizing the human impact and the consequences of poor governance. Despite the exit from Haiti, Levy remains optimistic about JNC$\text{'}$s prospects in the USA and Jamaica. The USA segment has seen a $26\%$ revenue increase to $$9\mathrm{.}21$ billion, and the Jamaican operation's revenue has climbed by $38\%$ to $$13\mathrm{.}69$ billion. In conclusion, Levy expressed confidence in Jamaica's performance, particularly the thriving tourism sector. Question: How do you think JNC could have managed the political risk that it faced in Haiti? How do you think JNC can manage the political risk that it faces in the USA? Explain and justify your answer in each case.