Fonterra is one of the major concerns that have been active in the country of New Zealand. The company majorly deals with the dairy products and is known for providing employment to the indigenous people who have been the residents of the area. The following paper attempts a discussion on the profile as well as the description of the company in discussion, Fonterra. The report also attempts an analysis of the major functions of the several departments that are active within the company. The report proceeds to discuss the various challenges that are faced by the company in carrying out the various operations that are implemented within the concerned company. The report identifies one of the challenges faced by the company and attempts a discussion on the best probable solution to the given challenge. The report then proceeds towards the conclusion with the recommendation of the measures that are necessary for the proper operations of the concerned company.
The business organizations that have been active within the business sector of New Zealand is known to have been dominated by the various organizations that are majorly grouped under the medium and the small-sized enterprises. The company in discussion, Fonterra, is one of the major multinational companies that is based in New Zealand. The ownership of the company is known to lie in the hands of almost 13000 farmers of New Zealand (Fonterra.com., 2018). The company is known to have been exporting almost 95% of the materials that they have been producing and is known to have earned the title of being the largest exporter of the dairy products (Fonterra.com., 2018). The global supply chain of the company incorporates the shareholder farms that are situated in New Zealand. The company is known to have been serving the clientele that is present all over the world in almost 140 countries (Fonterra.com., 2018). The company is known to procure almost 13 billion liters of milk per year as the major raw material and produces over 2 million tons of dairy products that are then distributed among the clients all over the world (Fonterra.com., 2018). This has helped the concerned company to attain the position of being one of the largest procurers, processors and managers of dairy products all over the world. the company is known to have been marketing and the management of over 1000 products that serve as the ingredients to the food industry that exists at the international dairy markets (Fonterra.com., 2018).
The major functions within the company in discussion refers to the functions in the fields of the operations within the company. This considers the functions of the accounting department within the company, the functions of the marketing and the sales department within the company, the functions of the human resources department within the company and the department that deals with the management of the various risks that are faced by the company both in the national and the international markets. The operations department within the given company deals with the monitoring of the various activities that are undertaken by the given company (Rowe, Eksioglu & Eksioglu, 2017). The given company is known to have been working in collaboration with the several farm stores that are associated with the company in order to deal with the lowering of the costs if the farm supplies that are a major requirement of the company. The Fonterra Farm Sources stores are also observed to have been providing the concerned farms with several attractive terms of trading in order to maintain the trading terms with the concerned farms (Li, Kang & Liu, 2017). This is known to have a large number of benefits for the company in discussion. The major benefits according to Nie et al. (2017), lie in the issues that are faced by the farmers, the share-milkers and the younger farmers of the company in discussion, Fonterra. The company in discussion, Fonterra, has been observed to have majorly focused on the factors that are related to the efficiency in the logistics and the manufacturing that are known to impact the competition that exists within the farmers and the co-operatives that are active in the global market. The organization also faces challenges in the financial aspects that are implemented within the company.
Singh and Singh (2015) are of the viewpoint that the prospects of an organization depend to a great extent on the effectiveness with which it being able to mitigate or resolve the operational challenges faced by it. In the particular context of Fonterra, it can be said that there are various operational challenges that the concerned organization is facing currently which is adversely affecting its business prospect. Knutsson and Thomasson (2014) state that one of the major operational challenges that the concerned organization is facing currently is the one related to the procurement of raw materials. For example, in the contemporary dairy industry it is seen that the business competition has increased in a substantial manner and thus the number of options which are available to the farmers for the sale of their products is very high (Grandori, 2015). The net result of this is the fact that although the organization under discussion here has a stable supplier yet at times the organization faces various issues related to the procurement of raw materials which are necessary for the manufacture of products offered by them to the customers (Ludlow, 2015). Another important operational challenge that the organization is facing currently is related to the cost of the products offered by it to the customers. For example, it is seen that the organization under discussion here takes the help of different kinds of modern machineries for the manufacture of products offered to it to the customers (Prajapat, 2014). This inadvertently increases the price of the products offered by it to the customers. However, in the contemporary diary industry it is seen that because of the rise of different diary companies the options which are available to the customers has increased in a substantial manner and they try to opt for the products which are cost effective (Aitken & Paton, 2016). Thus, it can be said that the cost of production incurred by the company which in turn increases the cost of products offered by it is a major challenge that the organization currently.
The major challenge that is faced by the concerned organization refers to the issues in the procurement section of the company. There has been observed an increase in the number of the dairy farms within the given country. Semuel, Siagian and Arnius (2018) opine that the increase in the number of the dairy producers have led to the conditions wherein the company faces a huge dearth of the suppliers. This might lead to the conditions wherein the farmers who have been the suppliers of the company might drift away to the other companies who have been offering them with better prices (He, Huang & Yuan, 2016). The higher bargaining power of the suppliers would lead to the conditions wherein the farmers might lead to the loss of suppliers of the company in discussion, Fonterra.
This issue might be resolved through the implementation of the factors that are related to the lowering down of the rates of procurement that are offered by the concerned company. The concerned management of the company is advised to implement the proper bidding that is necessary in order to attract the attention of the suppliers to the given company. the company might be advised to conduct a survey of the suppliers and the rates of the raw materials that have been implemented within the given organization. This might help the company to gain more information about the current market trends and thus help them in putting forth a proper bid amount.
There are various measures that the organization under discussion here can use for the resolution of the challenges or the threats faced by them in the business market. Some of the most important measures that the organization can follow for the process of their business are listed below-
In lieu of the above discussion, it might be pointed out that the concerned company in discussion has been facing certain issues in the matters of procurement of the raw materials that are required for the proper functioning of the concerned company. The given company, Fonterra is known to have been working in collaboration with the several farm stores that are associated with the company in order to deal with the lowering of the costs if the farm supplies that are a major requirement of the company. The company is advised to follow the recommended measures in order to implement the proper measures that would help in the improvement of the competitive advantage of the company in the given market.
Aitken, A., & Paton, R. A. (2016). Professional buyers and the value proposition. European Management Journal, 34(3), 223-231.
Fonterra.com. (2018). Retrieved 18 November 2018 from https://www.fonterra.com/nz/en.html
Grandori, A. (2015). Improving organization forms in the agri-food industry. British Food Journal, 117(10), 2418-2434.
He, B., Huang, H., & Yuan, K. (2016). Managing supply disruption through procurement strategy and price competition. International Journal of Production Research, 54(7), 1980-1999.
Knutsson, H., & Thomasson, A. (2014). Innovation in the Public Procurement Process: A study of the creation of innovation-friendly public procurement. Public Management Review, 16(2), 242-255.
Li, G., Kang, Y., & Liu, M. (2017). Dual-source procurement strategies for manufacturers with supply disruption risks. Journal of Intelligent & Fuzzy Systems, 33(5), 2637-2645.
Ludlow, A. (2015). Privatising public prisons: Labour law and the public procurement process. Bloomsbury Publishing.
Nie, X., Boyacı, T., Gümüş, M., Ray, S., & Zhang, D. (2017). Joint procurement and demand-side bidding strategies under price volatility. Annals of Operations Research, 257(1-2), 121-165.
Prajapat, R. (2014). Pasteurization process energy optimization for a milk dairy plant by energy audit approach. International Journal of Scientific & Technology Research, 3(6), 181-188.
Rowe, P., Eksioglu, B., & Eksioglu, S. (2017). Recycling procurement strategies with variable yield suppliers. Annals of Operations Research, 249(1-2), 215-234.
Semuel, H., Siagian, H., & Arnius, R. (2018). The Effects of Strategic Purchasing on Organization Performance Through Negotiation Strategy and Buyer-Supplier Relationship. International Journal of Business & Society, 19(2).
Singh, J., & Singh, P. (2015). Assessment of Procurement-Demand of Milk Plant Using Quality Control Tools: A Case Study. World Academy of Science, Engineering and Technology, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 9(10), 3350-3355.
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