Title: To assess the causes of declining market share in case of Fonterra, New Zealand.
In the current era, it is mandatory for the organization to improve their understanding about ways to improve the market share and being successful at the marketplace. Market share demonstrates total sales of industry, which could be earned by an organization. Furthermore, modification in the market share could directly impact on the company’s performance (Foote, Joy, & Death, 2015). In addition, it is evaluated market share is key indicators of an organization that demonstrates the company’s growth. From the market share, managers of an organization can determine their actual situation. Moreover, it is evaluated organization could determine the behavior of the consumer and get the opportunity for the firm. Organization can also use different approaches for increasing their market shares such as management personnel, promotions, consumer perception, and price strategy, modern technology (Marsh, et al., 2016).
In the current era, it is evaluated that Fonterra Co-operative Group Limited, NZ has declined their market share by 96% to 87% in 2017 due to certain factors. In addition, it is examined that Fonterra has got 96% of market share in 2001. Thus, this organization has been declining their market share since 2001.
The primary aim of this report is to address the causes of declining market share of Fonterra New Zealand. There are certain objectives that could be used by the researcher to meet main aim of research:
This report presents an introduction section that discusses certain elements named research aim and objectives, research questions, research background, and research statement. It discusses the literature review section which leads to getting conceptual information about the research matter. This section could facilitate to get some specific causes that decline the market share such as competition, handling consumers, and technology. It also demonstrates the research methodology and findings that could be imperative for the accomplishment of the desired goal.
According to Mawdsley Murrayn Overton Scheyvens & Banks, (2018), nowadays, the company confronted higher competition level that is difficult for maintaining their position in the marketplace. It could decline the market share of an organization. Further, it is evaluated that competition level could decline the monopoly of the firm and that could increase the switching cost of consumers. Higher switching cost could directly impact on overall demand for product and services. Furthermore, it is evaluated that the competition level directly influences the overall financial situation of a firm.
In contrast to this, Zhang & Roberts (2016) stated that consumer handling could be a major task for an organization as it influences the overall market growth and share of the firm. The consumer handling creates a challenge for an organization. It is evaluated that if the company is failed to handle the situation of consumer and do not understand their perception and feelings then it would decline the overall market share of a firm. It could create frustration among existing workforces and ultimately decline their market share. Hence, it could be compulsory for the organization to use training and development method and effectively deal with customers and make a favorable decision.
According to Jakobsen et al. (2015), in the current era, it is also a major task for the organization to implement modern technology in the marketplace and sustain their position effectively. Lack of understanding towards the application of technology could decline the opportunity to get a favorable outcome. Apart from this, it is evaluated that the technology becomes a major part of the business hence it has needed to understand new tools and technology and implement it in the business process and get a reliable result in lower cost and time.
Research methodology
Data gathering technique enables an investigator to accomplish the aim as well as objectives of an investigation by using the feasible sources for collecting information. It is assessed that secondary data gathering technique will be implemented in this research. This technique would be practiced for obtaining theortical information associated with research concerns. In addition, secondary data will be collected through literature reviews and relevant articles. This would be effective for pooling the authentic and genuine information with less time and expenses (Mawdsley, Murray, Overton, Scheyvens & Banks, 2018). These secondary sources would be gathered through several sources such as textbooks, journal articles, online and offline websites as well as academic publications.
Research design will enable a researcher to assess overview of investigation framework. There are different kinds of research design such as quantitative, qualitative and mixed research design that can be used by an investigation (Kelsey, 2015). Under this research, qualitative research design will be practiced by an investigator as this emphasizes on conceptual facts associated with research concerns. This research design would be significant to obtain the secondary data regarding the causes of declining shares in Fonterra. This would lead to attaining the objectives of Fonterra (Marsh, et. al., 2016).
Under the research methodology, analysis of data is significant as it aids to deliver the reliable and valid research result. There are several tools of data analysis like statistical data analysis and content data analysis techniques. It could be beneficial to comprehend the gathered data (Moyer & Josling 2017). In this investigation, content data assessment technique will be used by an investigator to evaluate the collected conceptual data. In addition, online articles can be used to demonstrate the collected data via figures (Foote, Joy, & Death, 2015). This tool is beneficial to capture the objectives of investigation in specified cost and time.
Article 1: Fonterra to lose more market share
(Sources:Tipa, 2017).
From the above chart, it can be stated that market share of Fonterra of milk processed in New Zealand has declined from 96% to 82% as well as number and scale of its rivalry has gained effectively. The above chart shows the change in the market share of milk collection amid 2001 and 2017. According to TDB Advisory, and financial and economic advisors, the market share of Fonterra could fall from 84% to 79% over the next 5 years. It is found that genetically modified is one of the key concerns that are dealt with by the corporation in the dairy products. These cultural differences involve a diverse range of product in order to attain the requirement of products. The company faces cultural differences concerns to maintain the wide product range (Tipa, 2017).
This finding is supported by the view of Chobtang McLaren Ledgard & Donaghy (2017), as it was evaluated that the alteration in customer’s preferences and behaviors towards buying may affect the products purchasing. It was found that demand of consumer market is increasing and labeling standard of product is improving that can favorable impact on the corporation. Moreover, it is evaluated that there is expansion in nutrition and bio markets that facilitates the benefits and profits to corporation. In contrast to this, the company faces cultural differences in different sectors with regards to awareness of milk.
Article 2: Fonterra Losing Market Share to Chinese Processors in New Zealand
It is addressed that in the year of 2001, Fonterra had a 96% of market share before New Zealand deregulated its dairy market. In contrast to this, when Fonterra milk production has expanded by more than 20% in the last five years, then its total market share was 87%. It is assessed that the decline in market share is caused primarily by penetrating of four new investor-oriented companies. These are Dairy Trust, Open Country Cheese, New Zealand Dairies, and Synlait. Furthermore, the regional Westland Dairy Co-operative has been increasing faster than Fonterra as well as now includes about 4% of the national industry. The Tatua Co-operative in Waikato has a market share of about 1%. There is an emerging small player like Kaimai Cheese (Dickrell, 2018).
It is addressed that food service markets and global dairy consumers remained good looking, however, the rivalry was intense. The ingredients business demonstrates the performance enhancements and Fonterra was getting the higher rates for some products. Along with this, the uncertain return can materially enhance as well as decline the performance. This is entailing the making alteration in a procedure that would support the consumers to return products because of different causes. It is found that Fonterra should extend their provision to customer post-delivery (Mackenzie, 2018). It is found that online technology is used to register complaints as it could be effective for both customers and company. There are four phases required in the supply chain such as schedule returns, issue returns, receive returns and authorize returns individually. It is addressed that Fonterra focuses on the target of reducing both on the farm and on-site emissions. Along with this, net-zero emission of global operation is targeted to decline 30% by 2050 from the year of 2015 (Fonterra, 2018).
It can be recommended that innovation is a key technique through which Fonterra can gain the market share. While Fonterra expands the market with new technology then it should identify the competitor’s strategy. Furthermore, consumers are wishing to buy this new technology from Fonterra even if, they had previously purchased with the rivalry. But, there are different consumers who are loyal customers that help in increasing or decreasing market share for the corporation (Sun, Huang, & Yang, 2014).
It is suggested that companies keep their current market share by avoiding existing consumers from moving towards competitors in case of offering a new topic. Corporations can expand market share by using simple strategies because satisfied consumers will frequently speak of their favorable experience to their relatives and friends who can become new consumers. Fonterra can increase the market share through word of mouth with minimum marketing costs. It can also hire talented and skilled employees to gain their market share (Lagrange, Whitsett, & Burris, 2015). It is stated that bringing the best workforces on board declines costs associated with training and turnover. It can also enable the corporations to devote more resources in order to emphasize core competencies. Moreover, offering benefits and competitive salaries could be effective for influencing the best workforces but, employees in the 21st century looking towards intangible profits such as casual working atmosphere and flexible scheduling (Holland, & Olson, 2017). This would lead them to perform better and making a good image in the mind of customers as it may gain the market share. Furthermore, one of the key technique is to gain market share is acquiring a rivalry strategy. A corporation attains two things such as taps into the newly acquired existing customer’s base and also assesses the strategies of rivalry. This may lead to increase market share of Fonterra Company (Sneddon, et. al., 2016).
Conclusion
With respect to the above table and chart, it is evaluated that there are many causes that could influence the overall market share growth of the organization. It could decline the opportunity of the firm to get a positive response. These are customer handling, technology, and competition level. It can also be summarized that the organization could use a digital marketing strategy for increasing their market share.
References
Dickrell, J. (2018). Fonterra Losing Market Share to Chinese Processors In New Zealand.Retrieved from: https://www.agweb.com/article/fonterra-losing-market-share-to-chinese-processors-in-new-zealand-naa-jim-dickrell/
Mackenzie, D. (2018). A difficult year for Fonterra indicated.Retrieved from: https://www.odt.co.nz/business/difficult-year-fonterra-indicated
Tipa, P. (2017). Fonterra to lose more market share? Retrieved from:
https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/fonterra-to-lose-more-market-share
Fonterra (2018).Fonterra partners with the government on the roadmap to low emissions future.Retrieved from: https://www.fonterra.com/nz/en/our-stories/media/fonterra-partners-with-government-on-roadmap-to-low-emissions-future.html
Sun, D., Huang, J., & Yang, J. (2014). Do China’s food safety standards affect agricultural trade? The case of dairy products. China Agricultural Economic Review, 6(1), 21-37.
Lagrange, V., Whitsett, D., & Burris, C. (2015). The global market for dairy proteins. Journal of food science, 80(S1), A16-A22.
Sneddon, N. W., Lopez-Villalobos, N., Davis, S. R., Hickson, R. E., Shalloo, L., Garrick, D. J., & Geary, U. (2016). Responses in lactose yield, lactose percentage and protein-to-protein-plus-lactose ratio from index selection in New Zealand dairy cattle. New Zealand Journal of Agricultural Research, 59(1), 90-105.
Holland, P., & Olson, S. (2017). Ledgers and landscapes: Indicators of rural landscape change in southern New Zealand, 1878–1919. New Zealand Geographer, 73(1), 45-56.
Chobtang, J., McLaren, S. J., Ledgard, S. F., & Donaghy, D. J. (2017). Consequential Life Cycle Assessment of Pasture?based Milk Production: A Case Study in the Waikato Region, New Zealand. Journal of Industrial Ecology, 21(5), 1139-1152.
Foote, K. J., Joy, M. K., & Death, R. G. (2015). New Zealand dairy farming: milking our environment for all its worth. Environmental management, 56(3), 709-720.
Marsh, L., Cameron, C., Quigg, R., Hoek, J., Doscher, C., McGee, R., & Sullivan, T. (2016). The impact of an increase in excise tax on the retail price of tobacco in New Zealand. Tobacco Control, 25(4), 458-463.
Mawdsley, E., Murray, W. E., Overton, J., Scheyvens, R., & Banks, G. (2018). Exporting stimulus and “shared prosperity”: Reinventing foreign aid for a retroliberal era. Development Policy Review, 36, O25-O43.
Kelsey, J. (2015). The New Zealand experiment: A world model for structural adjustment?.UK: Bridget Williams Books.
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Jakobsen, J., Jensen, S. K., Hymøller, L., Andersen, E. W., Kaas, P., Burild, A., & Jäpelt, R. B. (2015). Artificial ultraviolet B light exposure increases vitamin D levels in cow plasma and milk. Journal of dairy science, 98(9), 6492-6498.
Zhang, R., & Roberts, J. (2016). China’s Dairy Import Industry: An Economic Analysis of Influencing Trade Factors. J. Mgmt. & Sustainability, 6, 182.
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