Strategy, Food Producer The Yee-Haw Pickle Company in Park City, Utah, has grown in four years to supply 600 retailers nationally. The products include pickles and pickled green beans. YeeHaw's products are unique for their unusual ingredients, such as wildflower honey used in some of their products. The owners of Yee-Haw are considering how to make the company grow. A discount store chain with 500 stores wants to add the Yee-Haw product. Required

1. What type of strategy, cost leadership or differentiation, should Yee-Haw use?

2. Should the owners accept the offer of the large discount chain?

3. What are the key factors you considered in answering requirements 1 and 2? 

ANSWER:

Summarized the information provided in the question; The Yee-Haw Pickle Company in Park City, Utah, has grow in four years to supply 600 retailers - 

(1)What type of strategy, cost leadership or differentiation, should Yee-Haw use:

For the first part, we need to apply the generic strategy framework of Porter in order to determine what kind of strategy Yee-Haw should adapt.

From the given information we need to judge Yee-Haw on two scales, they are:

# Strategic advantage.
# Strategic target.
Considering that the product is unique (due to the presence of unusual ingredients) they have a strategic advantage of being unique product. In addition to this, their product is basically green beans pickle. The target market for this is wide and there will be variety of products in the industry. This results the choice of Differentiation strategy as the generic strategy to adapt.

Yee-Haw should use differentiation as their strategy.

(2) Should the owners accept the offer of the large discount chain:

Now, coming to the second part, we need to consider the benefit and the cost of doing business with a large discount retailer. In terms of growth opportunity and actual growth of the company, we need to consider the following factors.

What will be the impact of doing business with this retailer on our existing partner and supply chain? If there is no impact, then it may be a good choice. However, if this retailer is focused on lowering the market price and puts the pressure on our product to reduce cost, then it needs to be considered carefully. While there is an opportunity to apply economies of scale, there is also a possibility that we will lose our existing retail partners. That will be regressive and should be avoided.
Second consideration should be the factor of branding and market perception. While it is comparatively commoditized product, we want our customers to have a strong (positive) perception about the product. Will it be harmed if we associate ourselves with a discount store? If so then the decision needs to be considered. Many local organic brands choose not to sell their products on large retail shelfs. This is one of the reason.
The final consideration is financial and sustainability related decision. Is the retail chain a reliable partner and has the track record to prove that? What are their values? How will it impact our industry and the company 10 years down the line? These questions need to be answered and considered strongly as a factor before we make a decision.
(3) What are the key factors you considered in answering questions 1 and 2:

Based on these factors, the owners should decide. However, given the limited details, it appears that it will be a good opportunity for Yee-Haw to grow if they can partner with the large retailer. However, they should do so in their own terms of pricing strategy.