Managing in Organisations Market and Industry Formation

Question: Discuss about theManaging in Organisationsfor Market and Industry Formation. Answer: Summary of Market and Industry Formation The present report is based on a multinational dairy company named Fonterra co-operative group, functional in New Zealand. The country is considered to be one of the largest dairy distributors across the globe with an annual export of approximately NZ $13.7 billion and comprises of more than around 37,000 industry employs (Robb, 2013). Fonterra plays a major part in supplying dairy products to the whole world and hence is also responsible for significantly contributing towards nation GDP. In 2001, the company was formed by the union of two major dairy industries, Kiwi co-operative diaries, and New Zealand Dairy group. The companys annual turnover was approximate NZ$ 16 billion. With progressive development of the company, the total assets value of Fonterra for the year 2015-16 is noted as NZ$ 17.118 billion. Its total equity value for the year 2015-16 is indicated as NZ$ 6.947 billion (Sacks, 2015). Nowadays the current market trend across the global and New Zealand is following the pattern to produce low fat and high calcium milk, which can be seen in the present production line of Fonterra dairy products. It is noteworthy to mention that business organization nowadays depends on and influenced by the environment in which it functionalities. The environment of any business organization is further divided into internal environment, task environment and external environment that affects the overall operational procedure, competitiveness, and strategic framework. General Environment of the Company Introduction General environment analysis is a vital tool for the determination of external and internal elements involved in the organizational activity. General environment includes the PESTEL analysis of the organization which helps to enhance the operational efficiencies as well as improves the environmental performance. These analyses are further evaluated in the decision-making process of the Fonterras marketing activities. PestelAnalysis of Fonterra Includes the Following Tools: Political Political factors determine the taxation, trading policy and labeling action in Fonterra. Being the fourth largest dairy production group in the world, the political environment for the company is standard. For the export of dairy products, the New Zealand government has provided free trade arrangements which account for more than 60% of nations economic activity. Furthermore, the government has imposed minimal foreign-trade regulation in the market as per Free Trade Agreement and also according to Business Growth Agenda (BGA) Directions 2014 (Delaney Haworth, 2016). Economical The economy of Fonterra mainly depends on the increase or decrease in the foreign currency value. According to BGA, export represents 30% of GDP, which is further assumed to increase by 40% by 2025. Notably, due to the sudden slowdown in the economy of New Zealand, the company has to cut the price from $5.35 per liter of milk to $3.85, leading to economic inequality in the global dairy market during the year 2013 (Nilsson Rydberg, 2015). In contrary, with an ample amount of sales of the product leads to $409 million of net profit after tax in the first half of 2016. This is reflective of the fact that production line, trade affairs, and active engagement into trading service (free trade agreement) is responsible for the economic growth of the nation as well as for the company. Social With the production of nutritive and healthy quality of milk, the demand for Fonterra dairy products has increased worldwide. Factors that are responsible for the growth of the company include (i) managing the condition; (ii) improved the labelling standard of the products; (iii) Regular concern of company to maintain the brand popularity in the market, which in turn is responsible for the increase in the sales figures (Galtry, 2013). Technology The use of modern technology such as microfiltration technique is responsible for providing support with which the milk can be stored for maximum two weeks in the fridge. This is also responsible for managing the increased demand for the product by the company. Also with the installation of ultra-filtration technology, 60% of more lactose can be extracted, which are useful in manufacturing of other dairy products (Stojkov, Noy Sa?lam, 2016). Environmental The supply of dairy products solely depends on upon the climate of New Zealand and seasonal nature of milk production. New Zealand commonwealth, as well as government, have keen focus in maintaining the efficiency of the agricultural practices and its concerned business line, which is valuable for the company (Harris Gibb, 2016). Legal Fonterra abides by the legal rights of the farmers and other workers in the company to avoid any legal problem in the future. With the increase in the environmental regulation will increase the legal issue of Fonterra is reflective with paying and that after-tax profit of the company is reflective to be NZ$ 1.88 billion in 2016 (Rowarth, 2013). Task Environment of the Company Customers The customers of Fonterra include the population from 140 countries from all over the world. The company mainly targets the market of Asia, Middle East, Africa, America and Oceania (Siddiqui Ahmed, 2016). Suppliers The economy of Fonterra depends on upon the continuous union of vendors and consumers. Its suppliers include around 11000 farmers and also their dairy cows. They provide around 1.6 billion liters of milk per year. Their continuous supply of milk is necessary to fulfill the need of the growing demand of customer (Nilsson Rydberg, 2015). Competition Besides local dairy companies, numerous foreign dairy industries emerged in New Zealand dairy market, which is responsible for maintaining quality and comparatively low price dairy products for the commonwealth. Dairy companies like Tatua Co-operative, Synlait and Westland milk and other dairy products, are the fierce competitor (rivalry companies) for Fonterra (Siddiqui Ahmed, 2016). Goodman Fielder is a domestic competitor for the company in the production of domestic milk (Delaney Haworth, 2016). Labour Market Being one of the worlds large dairy industry, the company employs around 22000 employees in different sections. They are responsible for the manufacturing and sales of the product. Labors are considered to be a competitive advantage for the company. This labor leads to an operating income of NZ $ 266 million for the year 2015-16 (Jay, 2016). Impact of the Environment on the Future Management Planning of the Company The general, task and internal environment have several effects on the future management planning of the Fonterra. Technological advancement always has a positive impact on the companys future prospect. The company has recently used the ICT technology for better access to the information (Carney, 2014). Besides implementing technology in the company for the production line, it should also focus on making its employees technologically competent. The natural factors involve the maintenance of product quality and perishability till it reaches the customers. In this consideration, it should focus on ecological cycle and proper decomposition of the packaging material. To maintain ecological balance and healthy lifestyle, less chemical products should be used, which also have potential to bring competitiveness. Focussing on socio-cultural factors, the company exports its dairy products to almost 140 countries, but it always has to consider the market trend in local and global dairy market in order to sustain in the competitive market. Considering economic faction, the company has to cut the price from $5.35 per kilo of milk to $3.85 due to the sudden slowdown in the economy of New Zealand, the company, which has a great impact on the South Island economy. New Zealands economy is fundamentally based on the foreign trade, especially the dairy products. Thus, change in currency exchange rate will adversely affect the economy of the company. As per legal factors, New Zealand government provides free trade arrangements with minimum trade regulation. Due to the sudden slowdown in the economy led Fonterra to pay less to its farmers. This made the farmers file a case against Fonterra and registered the court case (Carney, 2014). The international market is the great source for New Zealands economy as 95% of its total milk is exported to overseas markets like Australia, Malaysia, China, US, Singapore, European union and Saudi Arabia (Siddiqui Ahmed, 2016). The internal environmental factors of Fonterra include the culture and tradition, coordination and capabilities of its employees and its competitive strategy. The company comprises of 11000 farmers and 15600 employees for supply and marketing of milk products. With the proper execution of the suppliers and employees the company able to achieve the strong market position. Its vision is to create significantly, and long-term bonding with its stakeholders and have total control over the lower level of the company. it targets on bringing new and latest products into the market as per the customers demand (Pinxterhuis, 2015). Conclusion In summary, Fonterra Company has a well-established and safe task environment, and it has to be properly analyzed for its future impact on the company. The company has its customers from all over the world of different diversity. Thus, to maintain the taste and need of customers of varying market, the company need know the local customer preference through their local teams. Additionally, there exists various domestic and international diary competitor for Fonterra which includes Tatua Co-operative, Synlait, and Westland milk products. In the future prospect, these companies may use the diverse skills of the business. Thus, innovation and technological competent are the only solutions to overcome competition. The company has around 11000 farmers as milk suppliers who are the equal shareholder of the business. While with slowdown of the company economy, the supplier may switch over to other businesses. Thus, it is necessary to have a good relationship with the farmers and pay them the requisite amount. The labor market of the Fonterra are also very efficient and loyal and comprise of around 15600 employees who are engaged in the daily processing of milk. References Delaney, H., Haworth, N. (2016). Partnership in Practice in New Zealand: Improving Productivity in Fonterras Whareroa Site. InDeveloping Positive Employment Relations(pp. 305-325). Palgrave Macmillan UK. Carney, P. (2014). Collaborating to compete.Food Australia,66(5), 28. Galtry, J. A. (2013). Improving the New Zealand dairy industry's contribution to local and global wellbeing: the case of infant formula exports.The New Zealand Medical Journal (Online),126(1386). Harris, C., Gibb, J. (2016). Strategies to Prepare and Plan for Market Shocks: A Study from New Zealand Businesses.Journal of Asia Entrepreneurship and Sustainability,12(1), 77. Jay, M. (2016). 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