Corporations Comparison - PepsiCo and Murray Goulburn - Essay Example

Name Course Institution Lecturer Date Corporations Comparison Summary Introduction The food sector is a multifaceted, global collection of diverse corporations, which supply a big percentage of food energy which the world population consumes. PepsiCo is a multinational corporation whose headquarters are in New York. It deals mainly in production, marketing and supply of beverages and grain-oriented snack foods (MarketWatch). Murray Goulburn is an Australian cooperative which processes and exports milk and milk products like milk powder, protein concentrates and cheese products (Murray Goulburn). This paper will give analytical summaries of PepsiCo and Murray Goulburn as well as summaries of vital issues which prevail in the sectors or countries where the two companies are based. Analytical summary of corporations PepsiCo The company manufactures and retails several brands but Pepsi forms its top brand, which is recognized worldwide. Other brands include Diet Pepsi, Thirst Quencher, Gatorade Mountain Dew, Lay’s Potato Chips and Lipton Teas among others. The corporation’s main strength is a strong brand name which has seen its business expansion to more than 200 countries. It is a market leader with 39 and 25 percent market share in the beverage and snacks markets respectively. It contacts its distribution through retail stores and third party supply services. On the contrary, despite PepsiCo’s global presence, a bigger share of its income comes from the U.S market. This makes the corporation to be vulnerable to economic changes in the country. Moreover, the unit value of each employee to the company is lower compared to its competitors, which is an indication of low productivity (MarketWatch). Penzkofer asserts that, PepsiCo has acquisition, merger and partnership plans with companies like Lebedyansky, Unilever and V Wwater. This is a good move because it will help the company to broaden its products’ base. The company also has expansion plans in countries like Brazil, China, Mexico and India, which will lessen its dependence on the US market. PepsiCo is facing stiff competition from companies like Coca-Cola, Kraft Foods and Nestle which may impact its advertising and pricing initiatives. Murray Goulburn Murray Goulburn says that, Murray Goulburn Cooperative is one of the largest food processing corporations in Australia. It is a major participant in the international dairy market. Its main brand is Devondale, which is a leader in the Australian consumer market. Moreover, the cooperative has a good reputation for food safety and quality which makes it the most preferred dairy products’ supplier across the globe. Murray Goulburn has been able to meet new market demands through constant improvement programs and thorough quality control systems. A strong brand and high quality products has helped the company to get a large market share in the dairy market both locally and internationally. In addition, the corporation keeps on monitoring every section of its supply chain in order to identify emerging and new food safety and quality risks. This helps in ensuring its products are amid the world’s safest products. Murray Goulburn provides a wide range of food service, retail, bulk ingredients as well as specialized dietary products that perfectly match the needs of customers. This facilitates high profitability through increased sales and customer retention. The corporation has a good rapport with dairy farmers, who are the owners and main suppliers of the cooperative. This has made the cooperative to succeed through adequate and timely supply of milk which is its main raw material (Murray Goulburn). Key issues American food sector Xun maintains that, the food industry in United States faces three key issues which are increasing commodity prices, food safety and energy costs. An increase in prices has affected the sector, which uses materials like vegetable oils and grains as inputs in the manufacture of its commodities. The impacts are more pronounced in small producers who are being forced to raise the prices of their finished goods. Moreover, there are increased concerns over the safety of food stuff which has led to recalls. The industry has issues over the quality of raw materials from foreign countries’ suppliers. This has led to introduction of new quality regulations which have lessened production. Furthermore, high energy costs in the American food sector is making manufacturers in the sector to start looking for methods of conserving energy in production processes to lessen costs. The manufacturers are also concerned about using energy sources which have less adverse effects on the environment following imposition of new environmental laws. All these are making operation in the industry very difficult. Australian food sector According to Delforce, Dickson, & Hogan (p.385), the food sector is an important constituent of the Australian economy, and makes substantial contribution to the country through service and business opportunities and employment. One of the key issues facing the sector is a decline in natural resources like water and land. The sector highly depends on these two resources for the provision of raw materials. Thus their decline is leading to shortage in supply of raw materials like milk, wheat, maize and beef, which in turn results in low production levels. Another issue is food protectionism through the application of tariffs and custom duties by other countries. This brings about trade barriers which hinder food products from Australia from reaching the international market. It also prevents market mechanisms from giving the right signals to corporations operating in the sector. Moreover, food research and development is on the decline which has led to a decline in the quality of products. This has also made farmers to have difficulties in controlling pests and diseases. Conclusion PepsiCo has a strong brand name which has made it a market leader in the US market. However, its overreliance on the US market is making it vulnerable to economic changes. The corporation’s expansion plans include acquisition, mergers and partnerships with other companies. PepsiCo is facing stiff competition. Murray Goulburn’s strong brand name and reputation for food safety and quality has made it a favorite supplier globally. The cooperative aims at producing products which meet the needs of customers. The American food sector’s key issues include increasing commodity prices, food safety and energy costs. Key issues in Australia’s food sector are, a decline in natural resources, food protectionism and low food research and development. Work Cited Delforce, Robert, Andrew Dickson and John Hogan. "Australia’s Food Industry." Australian Commodities 12.2 (2005): 379-390. MarketWatch. "PepsiCo, Inc." MarketWatch August 2010: 45-52. Murray Goulburn. "Quality, safety, efficiency and innovation." 2012. . Penzkofer, Andreas. The Market of Pepsi / PepsiCo. Munich: München GRIN Verlag, 2007. Xun, Lei. The determinants of US outgoing FDI in the food-processing sector. Delaware: University of Delaware, 2006. Read More