Feihe: Strategic Adjustment under a Pandemic Crisis

When the outbreak of COVID-19 in early 2020 affected commercial circulation in various regions around the world, Heilongjiang Feihe Dairy Co. Ltd. (Feihe), a leading Chinese dairy company, had been facing difficulties for a while. The company’s enterprise strategy was actively adjusted, and various measures were taken to protect the company’s supply of raw materials and the business operations of its production, distribution logistics, sales, and other departments from adverse effects of the pandemic in the first quarter of 2020. Feihe announced that its revenue growth rate in the first quarter of 2020 would not be less than 30 per cent. However, due to the impact of COVID-19, the pattern of competition among milk powder brands had quietly changed. Although Feihe had successfully gained a share of the high-end market, which had previously been dominated by foreign brands, its proportion of this market was still not high. At the same time, the rapid rise of other domestic brands had disturbed Feihe’s brand appeal of being “more suitable for Chinese babies” and its claim that its sales were far ahead in China. How should Feihe further adjust its strategy to properly deal with its competitive relationship with other brands?

This case is suitable for undergraduate- and graduate-level strategic management courses, where it can be used to illustrate and discuss flexible strategy and dynamic capabilities in strategic adjustment processes in unpredictable work environments. It helps students deepen their understanding of strategic adjustment by discussing the development of a traditional Chinese milk powder company and its brand dilemma during the pandemic. After working through the case and assignment questions, students will be able to do the following:<ul><li>Identify the increasingly dynamic and unpredictable elements of a firm’s environment and explain why managers need to dynamically adjust corporate strategies from the perspective of reform and innovation.</li><li>Explain the logic of a company’s strategic adjustment during an extraordinary period.</li><li>Describe the concepts of dynamic capabilities and flexible strategy.</li><li>Analyze the practical significance of a flexible strategy and dynamic capabilities in the strategic adjustment process of a large agricultural manufacturing company.</li></ul>

• dynamic capabilities
• flexible strategy
• COVID-19