Bananas and pineapples are common fruits, on average 10 kg of bananas are consumed by each of the 350 million EU citizens; therefore it is not really possible for companies to differentiate fruit products. Because of that it would be complicated for Fyffes to follow a strategy of differentiation. Furthermore the market growth is slow, and it does not change all that much, the main transnational companies between 1995 and 2007 stayed unchanged; they are Chiquita, Dole, Del Monte, Fyffes and Noboa.
These transnational companies (TNCs) control over 75 percent of the world trade (Chiquita 26%, Dole 25%, Del Monte 16%, and 8% for Fyffes and Noboa). But Fyffes is the market leader in UK, Ireland, the Netherlands, Spain and Denmark. The difference between each exporter will be in terms of the prevailing production systems and costs of production. Shipping and fuel are the most important costs for Fyffes, but also these costs are not specific to Fyffes, and their increasing is a risk for all competitors.
Thus Fyffes requires its direct banana and pineapple suppliers to have low costs in so much as are possible. It also expects the suppliers to comply with policies which are designed to reduce the impact of agricultural production on the environment and to ensure safe working conditions and fair treatment for workers in compliance with internationally accepted labour standards. Fyffes had near monopoly status in the UK and has significant subsidiaries, join venture and associates incorporated in many countries such as Ireland, UK, Netherland, Germany, US, Jersey, Costa Rica. Methods
Based on the BCG matrix and DPM matrix analysis, there are several ways of adding the value to Fyffes as well as one way of removing value. Parents rationale * EU Ireland Other UK Fyffes plc Parental development The top managers of Fyffes take a strategic approach to cost management in order to remain competitive (Geoff Percival, 2012) Fyffes operates through its subsidiaries, joint ventures and acquisition from a total of 66 retail and wholesale distribution facilities and five2 ancillary offices throughout Europe with facilities in Ireland, the United Kingdom and the other countries.
The company said that the strategic objective of the board is to enhance shareholder value through a combination of organic growth and by continuing to pursue acquisitions of companies in the General Produce and Distribution Sector. In order to achieve the objective, the four market business (UK, Ireland, EU and Other) should follow up the low cost strategy through the methods which have been decided by the parent. Parental development can create extra value and reduce the management cost.
For the UK and Ireland markets, they have a high market share and low market growth (show on the BCG map), and Fyffes thinks they should use the method of organic method. The EU and Other markets have low market share and high market growth (show on the BCG map); they can through the acquisition, joint venture and using organic methods to reach the aims. What the four SBUs need do is follow the parent’s strategy and methods to help Fyffes create the extra value. * Fyffes plc
Synergy management Other UK Ireland EU Fyffes have already built four market businesses: UK, Ireland, EU and others. Total Produce is primarily involved in the marketing and distribution of a broad range of branded fresh produce to pan European and National retailers and wholesalers. Fyffes procures its products worldwide and is one of the leading distributors of southern hemisphere fresh produce in Europe, in particular fresh produce sourced from South Africa and South America.
The most common themes arising from the top managers so far involved the need to foster relationships among the SBUs and work with each other to reduce costs (Geoff Percival, 2012). It is critical for the relationship between the suppliers (Other region markets) and the distributors (UK, Ireland and EU).
The four SBUs work together for the fresh fruits supplying and selling, the company launched its worldoffruit. om web site and subsidiary, offering Internet-based business-to-business fruits and vegetables sourcing and information supporting the company’s operations are its network of 100 storage, distribution, ripening, and other facilities, a fleet of 17 company-owned or leased temperature-controlled ships, and its own land-based transportation fleet, it can share and reduce the transport cost. The synergy management of the four SBUs also helps Fyffes add more value to the supply chain and make the delivery more efficient. Organic (UK and Ireland, EU and Other) The current situation for Fyffes is that it finds it difficult to grow market share.
It has two large cash cows in its UK and Ireland businesses and they are more likely to create diseconomies of scale. On the other hand, Fyffes will find it difficult to gain in any mature markets, finding it will take a long time to get investment back. And as for cash cows, they provide funds for other SBUs. For the status of the enterprise, through the Internal management level classification, matching the relevant responsibilities, rights and interests and the appropriate management methods and means, in order to establish the ability to ensure that the strategy to achieve.
Moreover, choosing the right talent for key strategic positions in the organizational structure of enterprises is vital so as to ensure a strong strategic implementation of their goals: make a good job of the adjustment of the Group’s organizational structure; adhere to the principle of innovation on enterprise management system; establish the management mechanisms to adapt to the market environment; prominent regulatory agencies so that the staff management are competent and efficient; reducing administrative levels and dispute over trifles; create clear job responsibility goals; solve the problem of overlapping management; implementation of departmental reforms. This is not simply to streamline organizations and cut down on overstaffing, but rather to make the group business management and project management is more streamlined and efficient. * Make a good job of the organization of production structure adjustment.
Adhere to the premise of institutional innovation, mechanism innovation, and then timely adjustment of business ideas; implement to cultivate Backbone Company, Optimize the professional company and expand the strategy of the AG. Highlight solves the problem of uneven development of subsidiary. To establish the survival of the fittest mechanism, solve the problem of decentralized capital, and the low quality of subsidiaries. Increase the degree of concentration of the Group’s management. * Personnel selection of organizational strategy adjustment. First, the ability of key figure should meet the requirements of strategy. Second, use incumbent managers to implement the new strategy.
Third, through introduce talents to implement the new strategy. Last, implement incentive to key figures. In order to save time and make the delivery more efficiently, Fyffes took a step to solve one of the largest difficulties in transporting bananas and preventing them from ripening during the voyage itself. A breakthrough in the banana industry came when it was discovered that maintaining bananas below a certain temperature inhibited the ripening process. * According to research published today by the cost, purchase and supplier management company, organisations should focus on improving relationships with suppliers, look to encourage a cost conscious culture amongst SBUs and benchmark performance to ensure competitiveness. Acquisitions (EU and Other) * As the BCG map shows, EU and Other market business have a fast growth rate, but market share is lower. They can use acquisition to solve this problem.
Acquisition is the fastest form of growing a market share; it also can gain the resources or competence from the initial company, such as the equipment, market share and distributors. Growth through acquisition is quicker, cheaper, and far less risky. Furthermore, acquisition offers easier financing and instant economies of scale. The competitive advantages too are formidable, ranging from catching one’s competition off guard, to instant market penetration even in areas where you may currently be weak; to the elimination of a competitor(s) through acquisition. But it has big risks, namely the capital involved and integration into the organisation.