In 2010 Royal Greenland purchased Westfalia Strenz, a lumpfish roe factory in Cuxhaven, Germany from...

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In 2010 Royal Greenland purchased Westfalia Strenz, a lumpfish roe factory in Cuxhaven, Germany from its competitor, Icelandic. The main motive for the purchase was the fact that Royal Greenland had become the prime producer of lumpfish roe raw material in Greenland; and this way it could control the entire value chain. Icelandic was not in this position and had to sell off the plant because of the financial problems in the Iceland’seconomy as a whole and the Icelandic company in particular. This acquisition will be discussed in detail later, but first we look at the seafood industry in general with focus on the lumpfish roe industry and then turn to Royal Greenland specifically.

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Aalborg University MSc. International Business Economics Spring Semester 2013 Mini-project Module 3b Case: Royal Greenland Submission of Mini-project - Module 3b: rd Wednesday 3 April 2013 at 12.00 2 copies of the project are to be handed in at the secretariat. Furthermore a copy in PDF format must be sent by e-mail to Birgitte: [email protected] Please name the electronic version as follows: Your group number + Module 3b-IBE Please write this in the subject line, when sending your e-mail to Birgitte. Oral examinations will take place on: Wednesday 10/4, Thursday 11/4 and Friday 12/4 2013.Royal Greenland Case Study Page 2 of 33 Consolidation of European Seafood Industry: 1 The Case of Royal Greenland A/S In 2010 Royal Greenland purchased Westfalia Strenz, a lumpfish roe factory in Cuxhaven, Germany from its competitor, Icelandic. The main motive for the purchase was the fact that Royal Greenland had become the prime producer of lumpfish roe raw material in Greenland; and this way it could control the entire value chain. Icelandic was not in this position and had to sell off the plant because of the financial problems in the Iceland’s economy as a whole and the Icelandic company in particular. This acquisition will be discussed in detail later, but first we look at the seafood industry in general with focus on the lumpfish roe industry and then turn to Royal Greenland specifically. Seafood Market in Europe This case will focus exclusively on the European seafood market, not the worldwide seafood industry, as that is where Royal Greenland does most of its business. 2 3 First, we present some key facts about the European seafood market (EU) in 2010. ? Total market supply has grown by 1% to 15.1 million tonnes in 2010. ? Imported share has grown to 9.394 million tonnes and equals 62%. ? Whitefish import has stayed stable at 89% and 91% for wild catch and aquaculture products,...

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Robert · Accepted Answer

Chapter 2 Strategy Part 
In the following, we will discuss the strategic perspective of Royal Greenland’s acquisition of 
the German lumpfish roe processing factory Westfalia Strenz. There are a number of aspects 
a company has to consider both before and after a merger and acquisitions. Both qualitative 
and quantitative factors such as marketing, finance accounting, production, new product 
development and HR must be considered before merger. In the following section , we will 
discuss the strategic considerations leading up to the acquisition as well as the post-
acquisition process for Greenland.
2.1 Industry overview 
Highly Competitive and Imported dependent Industry
The European seafood industry has become highly competitive in the past years. The total 
seafood consumption has grown in stable way since 1999 and consequently, the total market 
supply has increased (Moini, 2013; 3). The European market is becoming more dependent on 
imported seafood and thus 62 % of the total market supply is imported from countries outside 
Europe. Consequently, the EU catches has also been decreased in the same period and in 
2012 it decreases by 2,3% (Moini, 2013; 2). This trend is also reflected in the decreasing 
export of seafood from EU countries. Thus, the European consumption relies heavily on 
imported seafood. The main suppliers of seafood to the European market are Vietnam, China, 
Norway and Iceland (Moini, 2013; 5).  
Fractured and Fragmented Market is towards Consolidation 
The European seafood processing industry is among the most fractured in the world and the 
sector consists of roughly 4000 companies where the majority have less than 20 employees 
(Moini, 2013; 5). However, in the past couple of years the European Seafood industry has 
been consolidated with a growing number of mergers and acquisitions, which has created 
several large-scale companies. The turnover of the processing industry was valued at € 23 
billion in 2010 where the top 30 seafood companies accounted for € 16.22 billion. The 
majority of production is done in Spain, Italy, France and the UK (Moini, 2013; 5). 
Generally, the vertically integrated companies which catches and process seafood have 
performed better than the companies that only are responsible for processing as a 
consequence of higher prices on raw material (Moini, 2013; 8).  
Royal Greenland-A consistent performer
Royal Greenland has been able to maintain the position as the seventh biggest company in the 
European seafood industry based on revenues since 2008 (Moini, 2013; 7). However, in the 
past years, Royal Greenland has struggled to remain profitable (Moini, 2013; 12).  
There are several challenges in the European seafood market that Royal Greenland have to 
overcome and take into acount in their strategy as well as the management of the company in 
order to remain profitable in the next three to five years.   
Challenges Ahead & Requisite Strategy 
Firstly, the business environment in the industry is highly competitive and has become even 
more demanding and chaotic in recent years (Moini, 2013; 12). Furthermore, the number of 
strategic mergers and acquisitions between the top companies within the industry serves to 
intensify the level of competition (Moini, 2013; 8). This puts a big pressure on both the price 
and quality of Royal Greenland’s products. Thus, it is essential for Royal Greenland to 
optimize value chains in order to save costs. Internationalization of the value chain is 
essential to maintain competitive. However, global value chains require a great deal of 
management and transfer of control. Thus, a global value chain can be seen as a strategic tool 
in the global competition. However, Royal Greenland still misses the knowledge on how to 
carry this out. Royal Greenland does have worldwide operations, however according to the 
sales and marketing director of Royal Greenland; “Royal Greenland still misses the 
knowledge of how o carry this out” (Moini, 2013; 12).

In 2010 Royal Greenland purchased Westfalia Strenz, a lumpfish roe factory in Cuxhaven, Germany from its competitor, Icelandic. The main motive for the purchase was the fact that Royal Greenland had...

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