This report is about the milk product company, Fonterra, and details the various facets of the organization including how it operates, what are the structure of the company, and the stakeholders of the company along with the theory behind the stakeholders.
What Is the Organisation
Fonterra is a New Zealand-based organization that is the world leader in marketing dairy products to over 140 countries worldwide (Fonterra.com, 2009, 2). The consumer products division makes and markets dairy ingredients and ready-to-use products all over the world. The company follows a strategy of “farm to the market” in its operations (Dairy Foods, 2007, 12). Fonterra has avoided the baby food contamination scandals that plagued the Chinese milk product makers because of its superior processes (Anon, 2008, 7). The company operates out of New Zealand and has farms in the country as well as in Australia. Fonterra is operated as a co-operative union and hence it cannot be classified as an organization in the normal sense of the word.
What Is the Structure
Fonterra is operated as a cooperative organization and hence there are four levels of external groups that form the structure of the company (Fonterra.com, 2009, 2). The four groups are New Zealand Dairy Farmers, Fonterra Board of Directors, Shareholders Council, and Milk Commissioner. These groups interact with each other and intersect with each other in ensuring that Fonterra is at the forefront and a market leader for exporting dairy products (Fonterra.com, 2009, 7).
Fonterra is owned by 11,000 New Zealand farmers who supply the company with more than 14 Billion liters of Milk every year. The board of directors is made up of 13 members out of whom nine are elected by shareholders and the others are appointed by the board. Further, the Shareholders council appoints the Milk Commissioner who looks after any disputes that arise between Fonterra and its shareholders (Fonterra.com, 2009, 4).
What Do They Do
Fonterra makes and markets ready-to-use dairy products. The company is an exporter of milk products and operates in both the wholesale and retail segments. The main brands of the company are Anchor, Anlene, Anmum, Mainland, and Tiptop. These brands have good brand equity as well. The company is a combination of exporter and seller of products as well. The company has been quite successful in marketing its products and can be considered as a benchmark organization for other dairy product makers to follow.
Fonterra is in the business of dairy products and the four main brands are milk-based products that find the extensive following in the markets that the company operates in. The company has partnerships with other dairy product majors around the world and the main partnerships are in the Scandinavian countries where Fonterra has tied up with leading dairy makers to market its products.
Stakeholder Theory
Stakeholder theory concerns itself with identifying legitimate stakeholders of an organization and addresses the issues of Legitimacy, Power, and Urgency (Mitchell et al, 2008, 1-2). These issues are relevant for any discussion on stakeholder management and creating value for the stakeholders as well as the consumers. There has been much movement away from the traditional conception of stakeholders and the current theory emphasizes anyone who has a viable stake in the success of the organization (Kaler, 2006, 2-3).
The theory also emphasizes the fact that the company operates because of its stakeholders and through them. Further, the company has to actively engage with the stakeholders in a process called stakeholder engagement (GRI, 2007, 1). Hence, the model of stakeholders that we get from the theory indicates that the issue of identifying stakeholders and engaging with them has undergone profound transformations from the early days of stakeholder theory.
Identify Stakeholders
As outlined above, the stakeholders are the four external groups that dictate the working of the company. In turn, the executive management ensures that these stakeholders are apprised of the progress of the company by publishing annual reports and conducting Shareholders’ meetings or what is known as Annual General Meetings (AGM’s). The final group of stakeholders is the employees of the company who work for Fonterra. The stakeholders have different modes of communication and advertising by which they further their interests. They depend on external ad agencies and the employees are provided transport by the company.
Conclusion
As this report has detailed, Fonterra has been quite successful in its endeavor to become the world’s leading exporter of dairy products. The success of Fonterra’s model is due to its stakeholders, most notably the 11,000 farmers in New Zealand who are part of the company and supply the company with milk for its dairy products. The company does a very good job of transforming the raw materials into extremely saleable products that are marketed all over the world. It is noteworthy that the company is planning forays into other markets around the world in addition to the existing engagements. In conclusion, the company can build on its current business model and expect to beat the current economic downturn as well.
Reference List
Anonymous, Fonterra’s tainted milk crisis may stunt its growth. (2008). Media.
Anonymous. (2007). Fonterra Finds what it Seeks. Dairy Foods, pg. 84.
Anonymous. (2008) Fonterra’s tainted milk crisis may stunt its growth. Media. Hong Kong.
Fonterra Co-operative Group Ltd: (2006). Company profile edition 2: Prospects.
Fonterra Cooperative Group. (2008). Euroweek.
Fonterra Website. Fonterra.com. Web.
Kaler, J. (2007). Evaluating Stakeholder Theory. Journal of Business Ethics, 69:249–268.
Kennedy, C. (2001). Riding out the storm. Director; 55, 2.
Leahy, J & Tucker, S. (2009). Asia-Pacific companies rush to cash in on bond demand. Financial Times, 17.
Magness, V. (2008). Who are the Stakeholders now? Journal of Business Ethics. 83:177–192.
Melinda L. (2008). Saving Face Goes Sour. Newsweek, 152(14).
O’Riordan, L & Fairbrass, J. (2008). Corporate Social Responsibility (CSR): Models and Theories in Stakeholder Dialogue. Journal of Business Ethics. 83:745–758.
Sachitanand, R. (2009). Britannia’s new recipe: With Nusli Wadia in complete control of Britannia, the premier biscuit maker is better placed to beat back a host of competitors and regain lost ground, writes Rahul Sachitanand… Business Today.
Tucker, S & Waldmeir, P. (2008). KKR nears $100m deal on Chinese dairy stake. Financial Times, 17.
Richards, T & Dickson, D. (2007). Guidelines for Stakeholders, by Stakeholders.
The Journal of Corporate Citizenship.
Waldmeir, P. (2008). ‘The lesson is, don’t trust, verify’. Financial Times, pg. 19.