Agro-Food and Automobile Industries
The Agro-Food Industry
There has been a colossal transformation of the agro-food industries over the last few decades mainly characterized by the dominance of large transnational companies. Few large brands control all the stages of the Agro-Food industry, that is, from seeds to growing or planting, processing and selling. Previously, the industry was highly fragmented even though particular parts evinced more concentration than others. Currently, few large firms or brands control the type of food produced, the process of production, the producers, marketers, and distributors. This increased concentration and control of the agro-food industries by few transnational companies result from mergers and acquisitions. For instance, Philip Morris, the U.S. tobacco firm attained its massive influence by acquiring various companies such as General Foods, Kraft Foods, and Nabisco Holdings, among others. The outcome of these mergers and acquisitions is the control of different sectors of the agro-food industry, that is, pesticides, seeds, food retailing, and food and beverage by leading ten companies (Dicken, 2015).
4 (b)-Agro-Food and Automobile Industries
The main transformation of big food international is the growing symbiotic relationship with the big supermarket chains and the big food producers. The assertion implies that “Big Retail” and “Big Food” are equivalent to two sides of the same coin. In other words, sizeable global food producers required the help of supermarkets to sell their products, and the big supermarkets in various towns need big food manufacturers to earn from the sales of the food. Based on this understanding, the transformation of big food has been the standardization of food processing and mechanization of food supply or distribution. Consumers in the agro-food industries need their foods and other products to be standardized and distributed to respective locations to make them easy to access (Hamzaoui-Essoussi and Zahaf, 2012). These prerequisites of production, standardization, and distribution are met when large food-producing companies work hand in hand with large food retailers, such as supermarkets. Despite the existence of the symbiotic relationship, more influence seems to lie with the large retailers.
Large food retailing companies have transformed the trajectory of big food by commercializing it on a massive level. These companies achieve such immense success by transnationalizing whereby they operate on a large scale both locally and internationally. For instance, retail food companies such as Wal-Mart, Carrefour, and Tesco have many supermarket chains in their countries of origin, as well as in other nations. While such kind of operation is crucial to increasing their revenue and that of large food producers, they face problems such as competition and misunderstanding in their overseas branches. In the overseas offices, there are no local partners who can solve issues of operation and distribution. The outcome of this challenge is large food retail companies depending more on the profitability of their home market to the point whereby they can close some branches overseas. Competition is also a significant problem that big food faces. Due to the immense competition presented by local firms, the supermarkets or hypermarkets selling food tend to lack an identity (Dicken, 2015).
Solving the problems faced by big food, particularly the big food retailing companies requires specific strategies. For instance, to solve the problem of local competition, the supermarket chains and hypermarkets can a significant portion of their food products from the local producers of their countries of operation. This strategy will ensure that they maintain a local appeal with the consumers and the authorities. They can also solve the problem of misunderstandings in their overseas branches by altering their operations from a per store procurement system to a distribution center system that accommodates the specific needs of their host nation’s market (Dicken, 2015). An incredibly important problem that large food retailers need to solve is their bad treatment of suppliers. Creating amicable relationships with their suppliers will go a long way in building lasting relationships and improving their profitability in the agro-food industries.
The Automobile Industry-Agro-Food and Automobile Industries
One of the fundamental transformations is the automobile industry is the production of greener and cleaner vehicles using advanced technology. There are particular factors that facilitated the change in production to a greener and more sustainable approach. First, the lack of efficient production processes has been a challenge for many automobile manufacturers for a long time. However, the subject of climate change and the regulations demanding companies to adopt greener and more efficient production processes have propelled the automobile industry to adopt this approach. Following the various deliberations in climate change summits, countries and large firms are facing increased pressure to conserve the environment by reducing their emission of greenhouse gases and usage of non-renewable fuels. Based on this understanding, more and more companies in the automobile industry are adopting green production and advanced technology to the fulfill these regulations and meet the specific demand for green products in the market such as plug-in, hybrid, and hydrogen fuel cell cars (Dicken, 2015).
Currently, electric cars are costlier than cars using fuel to run. Moreover, future models of electric cars yet to be produced promise to cost more than cars running on fuel. This trend sends the message that companies are driven by money when it comes to employing advanced technology in making new vehicle models. While this statement is true to an extent, companies are also driven by other reasons in their development and implementation of advanced technology in the automobile industry. A good example is automobile companies committed to developing cheap-to-make, small, and cheap-to-run cars using the latest technology to serve various markets in developing countries. For example, the Nano car produced in India is the cheapest in the world (Dicken, 2015). The economies of developing countries are not quite advanced as those of developed nations. This assertion implies that the former does not have the spending power of the latter. Thus, the production of cheap cars that are easy to run and maintain is a good motive for the use of advanced technology by automobile companies.
1 (c)-Agro-Food and Automobile Industries
I believe that the states should be the only authority with the mandate to stipulate the standards for the automobile industry when it comes to clean energy and the production of more efficient cars. While some companies may have the financial power to effect positive changes in terms of clean energy. For example, Tesla; a private company, manufactures electric cars and is keen on minimizing the carbon emissions from its products (Wade, 2016). Other private companies are also at the forefront of creating and using clean energy. Nonetheless, these companies may have hidden agendas that may end up being detrimental to the people once they are established as monopolies in the market. In such a situation, the government normally intervenes by enacting regulations to limit the operations of the companies to ensure they do not cause harm to people and the environment. Moreover, it is only the state that can monitor the activities of companies in the automobile industry effectively.
The main difference between European and Japanese automobile producers is their approach to transnationality. While Japanese car manufacturers have a significant portion of their production taking place in other nations, particularly the United States, European automobile producers focus their efforts on producing vehicles within Europe. It is imperative to note that some European automobile companies had production facilities in the U.S. Nonetheless, they soon withdrew from the country to focus on home production. Japanese car and cycle manufacturers took the opposite trajectory by shifting most of their production overseas, especially in the United States. Sixty-one percent of Nissan’s vehicle production occurs outside Japan, with Toyota having more than forty-five percent of its car production in other nations (Dicken, 2015). Thus, even though both Japanese and European automobile producers have international markets, the former produces a significant portion of its cars and cycles in other nations while the former’s production is European-oriented.
2 (b)-Agro-Food and Automobile Industries
Automobile companies can completely move a whole segment or segments of their home operations to another region or country. Various factors can cause such a decision. For example, is a significant portion of the company’s market base is in another country, or a supplier of its important material is in another nation, the automobile producer can shift operations to that country. Moreover, increased competition and high costs of production can make an automobile company to undertake a segment of its production in another country (Committee on Fuel Economy of Automobiles and Light Trucks, 1992). Such a choice is often consistent with the interests of the ultimate shareholders, which is profit and wealth maximization. However, companies that make this move risk losing their identity when they conduct a substantial portion of their production in foreign countries. Thus, even though shareholder wealth maximization is crucial, automobile companies should not risk their identities to achieve this objective.
Committee on Fuel Economy of Automobiles and Light Trucks. (1992). Automotive fuel economy: How far can we go.
Dicken, P. (2015). Global shift: Mapping the changing contours of the world economy. Los Angeles, CA: SAGE.
Hamzaoui-Essoussi, L., & Zahaf, M. (2012). Production and distribution of organic foods: Assessing the added values. Organic Farming and Food Production. doi: 10.5772/52445
Wade, L. (2016, January 10). Tesla’s electric cars aren’t as green as you might think. Retrieved from https://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/