New Zealand Dairy Industry Commerce Essay

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Fonterra is a co-operative firm which leads the world in exporting dairy products and accountable for more than one third of international dairy trade. Fonterra has significant importantce in New Zealand's national economy. Fonterra is co-operatively owned by 11,000 New Zealand dairy farmers. The company's annual turnover itself will come around $19.5 billion with a sale volume of 2.6 million tonnes. Fonterra has 15,900 employees. Fonterra board of directors has up to 13 members in which nine members are elected from shareholders and four members are appointed by the board and approved by shareholders at the Annual Meeting. Fonterra has 35 shareholder's councilors throughout New Zealand and each councilor is elected to represent a geographical ward.

Fonterra has more than 30 manufacturing sites across the New Zealand and process about 16 billion liters of milk each year. Fonterra Exports about 90% of their local dairy products to more than 100 countries across Australia, Europe, Asia, Latin America, Middle East, Africa and China. Fonterra operate 10 manufacturing sites across Australia and annually achieve 1.7 billion liters of Australian milk. In China, Fonterra has a team of 400 people work across local dairy farming, consumer brands, food service and dairy ingredients. Asia is considered keystone of Fonterra's global market and more than 2500 employees are working in 13 offices. Fonterra has four manufacturing sites and distribution partners across Asian region. In USA, Fonterra operates 10 joint venture manufacturing sites and produce varieties of cheese and other functional dairy ingredients. Fonterra Research Centre in New Zealand works closely with Fonterra European Customer Technical Centre in Amsterdam. Fonterra has been operating in the Middle East and North Africa for more than 30 years. They have headquarters in Dubai and operate in 28 countries across the region. In Dammam, Fonterra has five processing lines, is one of the largest multiproduct dairy processing sites in Saudi Arabia [1]

Fonterra formed an alliance with Nestle in 2003 to create Dairy Partners Americas (DPA) which produces ingredients and consumer products, with strong brands in the liquid and chilled dairy market throughout Latin America. In 2000, Fonterra and Dairy Farmers of America joined forces in 2000 to form Dair I Concepts to develop, manufacture and distribute innovative application-specific cheese and dairy ingredients for the global food industry. In 2005, Fonterra partnered with Clover, South Africa's largest dairy company, to form Clover Fonterra Ingredients (CFI). This partnership helped Fonterra to market dairy ingredients and supply foodservice products throughout the Sub-Saharan region in Africa with Clover's strong regional platform [2].


Key Brands: Anchor (Milk), Tip Top (Ice-cream), Anlene, Anmum, Mainland (Cheese).

Brands in New Zealand: Anchor (Milk), Anchor Calcium, Tip Top (Ice Cream), Kapiti (Ice Cream), Primo (flavored milk), Slimmers Choice (yoghurt), Mammoth Supply Co. (yoghurt), Fresh and Fruity (yoghurt), Mainland (cheese).


Dairy Cattle and Milk Production, Fluid Milk Manufacturing, Creamery Butter Manufacturing, Cheese Manufacturing, Dry, Condensed, and Evaporated Dairy Product Manufacturing.

Part A

Being competitive

Staying competitive in today's world is a tough job. In order to stay competitive, a reliable business concern must apply sounds business management and have a plan for long term marketing strategies. Being environmentally responsible and meeting quality standards is also extremely beneficial.

International competitiveness helps business firms and industries to be progressively more successful.

A firm's competitiveness is the ability to perform well compared to others, which includes resources, cost and productivity [3].

Internalization of firms

Internationalization is now considered as a growth option due to international competition. It has been expressed as a cause of growing association of business in international markets. Entrepreneurs need to posses the capability to undertake universally and hold the ability to recognize international cultures in order to internationalize their business organization. While adjusting to diverse countries and cultures entrepreneurs must have a progressing responsibility for innovation, keeping a high level of quality and promote the finest business tactics [4]. 

Internationalization proposes current opportunities to business firms. It involves in many issues and also helps in improving the production system as well as communication channels in a firm [5].

Advantages of Internalitionalization

Internationalizing is an activity in which firms go through different phases, beginning from transporting operations and advancing to different manners of international interest. Firms usually develop their business operations in other countries for attaining higher demand for their products [6].

There are different factors that could bring out needs for internalization:

Resource associated factors

The accessibility of affordable resources such as manpower strength, natural resources and managerial and technical skills and surety of supply sources can be strong motivating factors which push firms to invest abroad.

With internationalizing, firms can employ cheaper employees. Companies can easily come across resources that are too demanding to include in their home markets [7].

Market associated factors

Internalization gives firms an Opportunity to utilize a competitive advantage in new markets. In order to be more competitive firms have to enter new markets, for that It is necessary to understand the business environment in a country by studying the current political system, government policies, and economic and social factors that deals with the country's economy. By entering new markets firms will experience how to understand their customers and suppliers overseas to keep up the business concern.

Strategy associated factors

Strategic resources deal with the engineering and core capability of the firm. The international operations may increase the overall knowingness of products and build up a global brand. A strategic factor develops firm's long term strategic objectives .Being in the international market helps firms to create great brand value and authority to the company which in turn boost sales. By developing strategic resources firms either maintain or build up the competitive position [8].


There are many differences between marketing in the home market and marketing in other countries. When marketing abroad the marketing team should have a clear cut idea about new set of strategic issues and unique problems like attracting and maintaining customer. They also should consider making changes in policies of the firm as well as planning methods.

While going international, firms face challenges in making numerous important and complex choices such as selecting markets.


The well-recognized and easiest means of entering foreign markets is through exporting. Exporting deals with the promotion and direct trade of locally-formed goods in a different country. Exporting is all about finding trustworthy and capable distributors at the same time the coordination of the exporter, importer, transport provider and government is very important in exporting. One of the main advantages of exporting is that firms will be able to reach their customers very quickly and firms also can gain experience of exporting to other countries in their future expansion.

The best way in which the firm can know more about market conditions is through experimenting. So when a firm takes the decision to start exporting first they should start exporting to physically close countries so that the firm will get an idea about their export capabilities before entering distant countries and relatively reduce uncertainties on new export markets, market conditions differ depending on countries [9].

Managing Risks related with exporting:

A firm planning to enter the export market definitely needs to understand the various risks involved while exporting to different territories. The various types of export risks faced by international firms are:

Risk related credit:

Firms operating export business find difficulties in verifying the credit worthiness and status of the buyer due to large distance. Credit risk is directly related to nonpayment, late payment or even fraud by foreign buyers. So before involving in an exporting agreement firms need to have a proper idea about the buyer's creditworthiness.

Risk Related with Poor Quality:

Firms have to check properly the goods before exporting to other countries because the chance of goods being rejected due to poor quality is very high. There are also times when buyers just put pressure on firms considering the quality issue just to try bargain a lesser price. It is always better if the firm can send some samples to the buyers, so that the buyers themselves can inspect the quality of the product [10].

Risks related with Cultural and language differences:

Firms need to understand clearly the cultural and language differences when exporting to a new market. Different countries have different cultural and language backgrounds it influences a lot on the business. A deeper understanding of oversees culture, language and various ways of doing business will improve the chance of success [11].

Political risks:

Political risks are all about changes in the government policies or unsteadiness in the government sector. Firms need to vary their marketing strategies according to the changes in foreign policies so they can take essential steps to avoid loss of business [12].

Off shoring:

Off shoring describes the firm's decision to relocate its business practice from one country to another. Firms associated with off shoring persuade businesses to make use of the off shore recourses such as the capability to spread work to different locations, lower costs, higher labor productivity and more efficient production for their growth [13].


Cost benefits:

The greatest advantage of off shoring is the cost benefits which affect the firm in a way to reduce the operating costs. Maintaining the cost will help firms to sustain and grow through innovation even during recession times. Lower operating cost help firms to save more money to invest in innovation and this will result in a balanced workforce

Global customers:

Off shoring bring firms closer to its global customers by providing faster services and resolving any issues related with the product. Off shoring facilities need to respond quickly to the changes in customer taste and preferences, thus helping the firm to meet the needs of the customers and work towards their satisfaction [15].

Skilled workers:

Firms need to engage the best and brightest talent available in order to be successful in their business. Off shoring helps firms to maintain and improve their market tactics by employing skilled workers with low salaries compared to workers in western countries.

Managing off shoring risks

Cultural differences:

Different cultures have different styles and attitudes towards the work environment, so a firm needs to take initiative to provide proper training to their employees to understand and work according to the cultural differences. Cultural differences sometimes can effect in variations in the growth and communication processes of the firm [16]. 

Loose of control:

When firms out source to different locations chance of losing control of their business process is very high. so firms should make sure that they have complete control over their business. Firm's needs to collect clearly all the primary information and data records about the entire business factors related with companies that perform operational tasks .

Part B

Global mindset

Global mindset can be defined as one that combines an openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity (Anil K Gupta, 2002) [17].

In other words global mindset is all about influencing employees to adopt or accept methods to improve firm's growth. In order to improve its global existence firms need to properly manage the global workforce [18].

Global managers need to focus when it is favorably to generate reliable global standard. Global mindset requires individual managers to display a global state of mind. Global managers should think globally and locally at the same time so they can easily recognize both global and local demands in order to be truly global, managers need a systematic understanding of local and cultural differences.

Shaping global mindset:

In order to shape global mindset, firms need to start focusing from the topmost level. The senior management team and the board of directors should have a proper idea about the market which they need to compete and this information should be passed on to the lower and middle level management team. They should also provide a wide perspective and exact facts about new developments and changes in the business environment [19].

Global organizations and their leaders

Global organizations find inventive ways to create competitive benefits through the presence of local enterprise. a need for global reliability would allow to emphasize policies on formalization, promptness and global orders, whereas need for local awareness would support elasticity and allocation. A global mindset can bring competitive improvement in the market place. Thus a global firm requires high supply of global mindset.

A company's image and principles must show global reliability. However, in workplace it translate policy guidelines into day-to-day procedures, and should be locally determined. A need for global reliability would favor policies that emphasize formalization, promptness and global orders, whereas a need for local awareness would support elasticity, and delegation. A global mindset can be the new competitive improvement in the marketplace, so a global firm needs a high stock of global mindset.

Global leaders understands their skill the same way like other employees, but what makes them different from others is that they will me more responsible and works towards their development. A global leader should try to improve others effectiveness on global stage [20].

Understanding global mindset

A firm's mindset should have awareness about nature of risks and, needs of customers, competitors and technologies. A firm's mindset is formed by the positive approaches of individual employees. An organization with a global mindset will have sufficient information about different aspects or assumptions regarding reality.

A global outlook involves an eagerness to build the most excellent use of customers, capital, technology and human resources throughout the world. In general managers should posses the skill to get along with different people from different cultures. They should have an ability to look problems in different perspective and solve these problems using different organizational structures. There is also a need for understanding the company's important values and the ability to communicate clearly to the global employees [21].

Benefits of using global mindset in a firm

The global mind set allows firms to mix the speed with precise reactions. Through global mindset an organization can become more aware about changes in the market thus forces the firm to reinvent products to stay in the market. Global mindset allows firms to use local market requirements in a way to experiment with company's global capabilities and experiences. The global mindset facilitates organizations to be more positive about innovation of products and compares it with other countries. In addition global mind set allow the firm to be more attentive on issues in view of foreign competitors access in to local markets.

The global mindset brings out an optimistic impact of internationalizing to an organization. It makes it possible for the organization to take decisions that make sure the assurance of utilizing more resources to the foreign markets and moreover sets internationalization to top levels. Organizations which focus on global mindset take its profits from international markets and profitably operate in on local markets. The managers with global mindset will be familiar with all the advantages that move toward their company from assessing and supporting the people's cultural diversity.

Global mindset allows organizations to look at their business operations from another point of view. Which includes competitions in the world market, improving negotiating techniques, producing creativity through improved cultural diversity management and attracting new international customer's .it also pushes the firm to increase their market share and find ways to improve their success [22].

Driving forces behind the global mindset

Top leaders:

The senior management has an important significant authority on the corporate mindset. Creative leaders can make changes in geographic and competitive limitations. Good leaders play a dominant role in boosting firm's global leadership rather than just focusing on the home markets

Administrative heritage:

Administrative heritage is all about a firm's ability to adapt to the tangible and intangible assets. Tangible assets deal with the assets the company has gained through the years, whereas intangible assets deal with business strategies, main abilities and business cultures.

Structural solutions:

Organizational structure of the firm is strongly influenced by global mindset. In an organization where there is strong product oriented structure management aims towards collecting and processing product data on international basis. At the same time organization who focus on countries or regions be liable to be more local. In an environment where there is equal importance for both product and geographic dimensions the mindset tries to imitate both global and local point of views [23].

Recommendations to improve employee's global mindset

Training & Orientation:

Providing proper training plays a vital role in generating the right orientation among employees. Employees usually have a tendency to believe going to another country will have a negative effect on their carrier due to differences in culture and customs. Training programs can make them aware of various customs and values associated with a foreign country and teach them to deal with it. Prior to an international assignment employees should be thoroughly briefed about firms expectations and how to adjust with problems [24].

Employee Rewards and Compensation:

In order to develop global mindset among employees Firms need to provide extra financial compensation to the employees for their efforts. Providing good accommodation, health care facilities and family benefits can also motivate the employees. Rewards and bonuses strengthen companies global objectives, employees whose compensation is linked regarding territorial performance are uncertain to build up a global outlook. Firms need to locate a way to reward employees beyond geographic performance [25].

Long-Term People Exchange:

Firms need to combine employees all across their global organization so that they can meet new people and learn more about different culture .Firms should encourage employees to blend global efficiency by working together.