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New Zealand Farming Industry. Organization Theory and Design Case Study

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Updated: Jul 12th, 2021

Introduction & Company Overview

The fielding farm in New Zealand operated by the family members represents a profitable multimillion-dollar business. The Guy family, who owned the farm, concentrated their activities on dairy production, which, throughout the last decades, increased its export. Besides, this family farm is a part of a huge cooperative and operates within the industry that makes up about 25% of the country’s profits from export. It indicates that the business within this industry should keep up with innovation, respond to emerging trends, and, what is crucial, maintain positive internal culture. However, family business always implies emotions and not always positive ones. The farm that is operated by close relatives, each of whom becomes a shareholder, can face serious threats and dangers for the company’s image, reputation, organizational structure, and operations. The purpose of this paper is to investigate the situation within the fielding farm owned by Bryan Guy and observe possible solutions and alternatives for further successful development.

The Guy farm is a part of the cooperative Fonterra that is owned by more than 10,000 farmers involved in dairy production. Thus, the mission and vision of this fielding farm would align with the ones of Fonterra. The company focuses on producing the best quality products and focuses on innovation. The mission of Fonterra suggests that the organization is sticking to high standards and aspires to maintain leadership within the industry (“Our Ambitions and Values”). Also, the company aims to “bring the best of dairy to our customers around the world and the best returns to our business” (“Our Ambitions and Values”). One of the essential things relevant to the studied case is that Fonterra highlights the importance of its employees and their sharing of shared values and practices. Thus, one can see that the Guy family farm is a part of New Zealand’s dairy industry leader that holds favorable views on the operations and the company’s culture.

Problem Statement

The fielding farm belongs to Bryan Guy, and the business continues to expand its territories, purchases more lands to respond to the growing dairy products’ demand, and, consequently, requires more labor. Thus, the subject farm grew into becoming a family business, in which Scott Guy and Ewen Macdonald were the shareholders. The increased number of shareholders can create issues of control and power and can raise the question of who is the one in charge and who gets what. Personal jealousy and the arguments about which person will stand at the helm raise disputes and make a hostile atmosphere within the organization.

One of the most critical issues that the Guy fielding farm is facing is the organizational structure of the company. A clear organizational structure is essential because it outlines the division of responsibilities, the hierarchy of the employees, and sets the performance standards. The case discusses severe disagreements between the shareholders Scott and Ewen, which imposes a burden on the successful job performance and lays extra weight on the main shareholder of the company, Bryan. Also, the men’s wives hold the shares of the organization, even though they do not perform the activities (Prichard 572). Consequently, the issue is the lack of organizational control, which carries a potential threat for future development, fair judgment over the performance, and responsibilities, and which resulted in a dramatic murder event.

Another concern of the company is the dairy industry itself and its fast growth within the country. The case mentions the fact that Bryan wanted to reform a particular part of the land into other activities not connected to the dairy business, to broaden the company’s range of activities. The point is that New Zealand is a powerful exporter of dairy products, and it is essential for the players within the industry to keep up with new developments and to focus on innovation of the produced goods (Prichard 571). Thus, maintaining high-quality production and performing successfully in the field is the Guy farm’s concern because the industry growth rates are increasing.

Data Analysis and Assessment

The section above determines the problems the company is facing, and it is essential to identify the causes and potential effects of those issues. As mentioned above, disputes that occur due to the organizational structure of the company carry weak points for the organization. Bryan Guy has called numerous meetings aimed to divide responsibilities and obtain a more explicit structure. In particular, the case reveals the details of the 2009 session, when Scott declared that he had the intention of inheriting the farm. Scott did not agree that Macdonald’s wife held the shares of the company because she did not work on the farm. Besides, during the year following the meeting, Bryan started to introduce Scott to the finances of the firm, teaching him the accounting side of the business (Prichard 572). The gathering of 2009 and Macdonald’s fear that he will be left out, heated the things, led to the escalation of the tension among the shareholders, and weakened the organizational structure of the farm.

The next problematic issue for the farm is keeping up with high export growth rates and innovations. The primary cause of this issue was the increase in international demand for New Zealand dairy products. It meant that many new farmers had entered the market, and already existing farmers, including Bryan and his family, had to expand their lands. Consequently, under those circumstances, the farmers had to invest in their property, labor, and technological developments for a more efficient production process. Growth can create challenges for the business, and the Guy farm is no exception. Working longer hours, lack of the labor force, insufficiency of the professionals within the innovation field – all those became the effects of the emerging expansion challenge.

Next, it is crucial to identify the stakeholders of the subject company. First, all of the shareholders of the company represent the key figures who will be influenced by any strategic and organizational decision that the farm will implement. Thus, Bryan, Scott, Ewen, and their wives are the major stakeholders. Besides that, the fielding farm is a part of a large cooperative, and thus, Fonterra will also bear the consequences of the company’s operations. Another party that needs to be considered is all of the organization’s employees. The healthy growth of the farm and the processes, relations, activities, and tensions within the company have a direct impact on each worker. A decrease in the employees’ job satisfaction might become an adverse result of organizational and expansion issues.

Moreover, the New Zealand economy views all the dairy manufacturing facilities as influential players in the market. Consequently, the community and the economy of the country are also at stake. Although the Guy fielding farm represents a small portion of the overall export politics, the change in one of the network’s chain links can modify the performance on greater levels. Another essential member of the stakeholders to consider is the countries that export the farm’s production. The case mentions a boom in demand for baby milk powder in China, which facilitates the industry’s growth (Prichard 571). Events and changes in the company can influence Chinese importers as well. Thus, one can state that the fielding farm owned by Bryan Guy has numerous stakeholders, and each of them has an interest in the successful and efficient operations of the company.

The paragraphs above determine the problems, their cause and effect, and the stakeholders of the fielding farm owned by Bryan. At this point, it is important to look at some of the numbers relevant to the identified aspects. First, the value of the company was about $1,8 million, and both Scott and his wife and Ewen and his spouse held 10% of the firm (Prichard 571). Although the percentage of the shares was equal and all of the responsibilities were divided, the financial part of the business still caused disputes between the two men. Macdonald was assured that it was unfair due to the workload, while Scott did not agree with Anna’s part in the business. It is curious to note that most of the farming businesses in New Zealand are considered family-based. Thus, from the sample of 750 farms, more than 90% of them identified themselves as family businesses (Prichard 574). In other words, the country’s dairy production export highly depends on family organizations.

Another critical measure is the growth rates of the dairy industry. At the beginning of the 2000s, New Zealand’s dairy industry started to develop, and it added more than half-million hectares and more than a million cows to the dairy lands. For example, today, the average number of milking cows for a farm is 400, while back in the 1990s, this number was two times lower (Prichard 571). The Guy farm milked more than 700 cows and owned about 300 hectares of land (Prichard 571). Those volumes imply additional labor and additional job responsibilities for both part and full-time employees. Also, due to the inflation, the payouts to the farmers increased, which influenced the price of farming lands to grow by 8% (Prichard 571). Therefore, the growth rate imposes additional investments and problematic points for the business, and not everything can go according to the plan under conditions that depend on external factors.

The next essential aspect to examine is the external factors that influence the current position and the development of the organization. Within the fast-developing dairy industry, the farm has numerous opportunities. Occupying more lands and increasing the amount of production opens up the chance of collaborating with more partners and selling the products in more venues. Domestic and further international expansion present excellent possibilities for the business. Besides, higher production and vaster lands will create more job places, which will have a favorable impact on the country’s economy. Another opportunity for the farm is the investment into research related to nutrition. Increased demand for high-quality dairy products also requires careful determination of nutrition elements. Contribution to the research within this field can help to make the best product and create a better image of the company.

However, the Guy fielding farm also faces specific threats. The primary risk, which can be withdrawn from the case, is the failure to perform successfully because of the internal disputes within the organization. The unhealthy atmosphere can significantly influence all fellow employees and have an impact on objective decision-making, which has a direct connection to the position of the farm in the market. Working in a cooperative with more than 10,000 other farms is also a challenging issue because quality control and product development should be at high levels. Thus, not being able to fulfill the emerging nutrition trends and demands of the importers and consumers can create severe dangers for the business.

Reducing the Tension & Internal Analysis

The situation at the Guy farm escalated, which led to dramatic events within the family, and, consequently, within the business. Several steps can have a favorable impact on the state of things at the Guy fielding farm. One of the activities that Bryan could undertake is strengthening the division of responsibilities and assigning the managers into different departments. The best choice would be to make the organizational structure in a way, where the working operations of Scott and Ewen do not cross. With the growth of the exports of dairy products, the workload increased, and more operational areas were introduced to the manufacturing process. Thus, Scott, for instance, could have been responsible for a particular part of the land, while Ewen could be responsible for another piece. This way, each of the men would have his territory and personnel to control, which could potentially minimize the level of tension between them.

Another possible solution is also connected to the working relationship between Scott and Ewen. The case mentions that Bryan started to teach Scott how to do accounting for the farm. Instead, Bryan could have introduced both of the men to the accounting system, so that everyone was familiar. However, a good alternative would be hiring a person from the outside to do the accounting part and making a long-term contract with that person. In such a way, both conflicting shareholders would be familiar with the accounting, but the number of disputes could be minimized because there would be another individual in charge.

Those two steps aim to reduce the tension between the two men and improve their relationships, which could have positively changed the atmosphere within the organization. One more alternative for Bryan Guy to implement could be setting a clear structure for the workload and working hours for all of the subordinates. Ewen Macdonald had a feeling that he gets to spend less time with his family than Scott. Accordingly, it created extra tension and negative impressions, which could be eliminated by tightening up the rules for performance and schedule. If Scott and Bryan would have the same amount of workload, the same strict schedule, and if those aspects would be controlled, the disaster could have been prevented.

Consequently, essential steps for the farm to implement are precise control over the workload and schedules, clear division among the areas of responsibilities, and outsourcing of certain practices within the company. Besides reducing the number of disputes and escalating conflict between Scott Guy and Ewen Macdonald, those strategies can facilitate further development of the organization. It will make the organizational structure more visible and can improve the quality and timing of the products’ manufacturing. Moreover, it will have an overall impact on the image of the company, making the Guy fielding farm more reliable and an excellent example of how to handle issues in the family business.

As one can see, the tensions within the Guy farm were high, which led to the bloody event in the family business. Without any doubt, it is impossible to claim that the disputes about the farm led to Scott’s murder. Ewen Macdonald was not charged with his death, but one can imply that the problems the men faced at work contributed to the escalation of the conflict. The trial over the murder case led to the findings of the property damage that Ewen caused to Scott’s house. Macdonald burned the house and explained it with the anger caused by his feeling of unfairness. Ewen believed that he does not get to spend enough time with his family, as Scott does, and the working hours and workload are not the same (Prichard 573). Therefore, from this arson event, one can notice the conflict between Scott and Ewen caused by the fact that it was a family business, and everyone felt like they deserve a more significant chunk.

It is interesting to observe the comments of Bryan Guy, the owner, to the fact that things were escalating because of the family ownership. The man states that he understands that everything does not work according to the outline in the family businesses, and the things might turn out ugly. However, he believes that because most of the farms in New Zealand represent the family business, and it is crucial to take things as they are, learn the lessons, and move on (Prichard 574). Bryan believed that no matter what a person does to prevent problems and disputes, everything can go in a different direction and harm the company.

One more critical side of the conflict is the implied gender issue within the organization. The case mentions Scott’s attitude towards the fact that Ewen’s wife is holding the shares of the company. It is not gender discrimination, but rather the fact that the woman does not perform any activities connected to the farm’s operations. However, it makes one think that such a business as a fielding farm may require more of the potent force because most of the responsibilities imply physical work and assistance. At the same time, each of the shareholders should remember that family ownership of the business means that different family members will get the right to hold the shares. Thus, there is an implied conflict of interest that concerns the parties’ right to be a shareholder without contributing to the farm’s operations.

Based on the discussion in this section, it is possible to conduct an internal analysis of the family ownership over the business and identify its strengths and weaknesses. Firstly, when a family owns a company, it represents both a strong and weak side of the organization. Close ties among the shareholders represent one of the primary characteristics of a family farm. Tight relationships can produce an efficient environment for the manufacturing business, but at the same time, they impose additional problems and challenges. Thus, in the case of the Guy fielding farm, family ownership signifies a weak side of the business operation, due to the emerging internal conflicts. Simultaneously, one can claim that the position of Bryan Guy, the owner of the farm, is a company’s strength. Bryan holds a neutral position, does not take sides, and does his best to minimize the disputes. Strong leadership represents a significant advantage of this particular organization.

One should note that another strength of this fielding farm is the volume of the production. This factor is essential within the expanding export environment, and the fact that the Guy property has many milking cows and many lands play a favorable role in the company’s operations. With the growth of the country’s dairy products’ export, the need for more workers and more facilities has increased. Thus, the vast lands of the Guy farm create job possibilities, favorably influencing the employment rates and national economy. This particular strength opens many opportunities for business development and helps to have a competitive advantage among other players in the Fonterra cooperative.

Along with the strong aspects of the business in the fielding farm, there are weak points. As discussed above, family ownership represents a frail organizational structure, which is the primary weakness that prevents the company from enhancing the working experience of employees and fails to create a positive company culture. Moreover, the lack of effective communication and, as a result, the poor performance of teamwork between Scott and Ewen, minimize the efficiency of the company’s operations. Communication is an essential practice for every business, and delivering new ideas and integrating collaborative methods can positively influence the business. In the Guy farm case, this is the organization’s weakness, because parties involved fail to communicate efficiently and, consequently, do not produce new concepts for the company’s development.

Therefore, the analyzed farm has its strengths and weaknesses, but the emerging conflict between Scott Guy and Macdonald hinders the successful development of the business. Personal negative attitudes, external pressure because of the export’s high growth rates, and the lack of firm organizational culture represent the aspects that hurt the operations. The leaders of the Guy farm must take specific steps, introduce the change, and aim to improve the company’s performance in the future.

Recommendations

Observation of the current position of the company and the state of things and relationships among individual farm members leads to the need to introduce suggestions for improvement. One possible solution can be integrating new technologies within the farm. Technological innovations can bring many advantages to the business and will help to keep up with the emerging trends within dairy nutrition. Therefore, investing in new technologies and educating the employees on how to integrate them into the working process successfully is a useful measure. Besides facilitating daily farm activities, new tech programs can help to keep track of the workforce and work hours. It is a solution that will integrate internal control of the employees and, at the same time, will meet the production demands and new industry requirements.

One more recommendation that comes from the conducted analysis is being active when it comes to the employees’ relationships. Team building events, individual and group psychological consultations, and encouraging ethics and mutual respect are great solutions for the Guy farm. Moreover, providing training to all of the shareholders and trying to involve all of them in the company’s activities can serve as a big deal for the farm. It would be beneficial to hold special shareholders’ meetings monthly. At those gatherings, professionals can educate the members about their rights and introduce new possible responsibilities to those who are not yet involved in the operations. Thus, focusing on increasing the employees’ satisfaction with their jobs, as well as offering mentoring and eliminating the inequality issue by introducing the shareholders to specific tasks is crucial for this business.

Action and Implementation Plan

The Guy fielding farm should have a detailed action plan in mind to implement new strategies efficiently. A useful approach that will help to have a map and sequence of required activities is the balanced scorecard approach. According to Harmon, while using this approach, the management team should focus on “financial, customer, internal business (process), and innovation and learning measures” (44). Thus, the first action would be to identify the farm objectives within each of those categories. After that, careful analysis of those corporate goals should be conducted by the management team members, and it should outline their primary responsibilities in the strategy implementation process.

Consequently, the first step of the action plan would be to determine the major goals carefully within the financial area, within the customer segment, within the internal company’s processes, and the innovation and training. The Guy farm, in particular, in the financial sphere, needs to focus on finding the investments for the improvements and new technologies and techniques implementation. In terms of the care about the customers, the fielding farm wants to meet the emerging consumers’ needs and to offer the best experience of dairy products in terms of nutritional value. The internal business area should emphasize the increase of the employees’ job satisfaction and on creating a unique ethical company culture, as well as a clear organizational structure. The most important goals for the innovation and learning field are introducing new software programs and new technological innovations to the operations’ processes on the farm. Besides, implementing new workload and schedule control programs and providing additional employee training are crucial aspects of this measure.

After identifying the main goals for the Guy fielding farm, every department has to outline the steps necessary for the achievement of those objectives. It will be the next activity of the action plan for the improvement strategy integration. Also, the plan should take into consideration continuous communication among the parties involved. Actions undertaken in one of the farm’s departments can influence other departments. Therefore, it is critical to establish a separate communication platform designed specifically for the improvement process and its members. When each of the parties involved has its tasks, it is essential to encourage a collaborative way of recommendation implementation. A thorough division of responsibilities and areas of expertise, and following the action plan based on the specific measures will provide the farm with a smooth process.

The action plan described in this section implies a high level of cooperation among the shareholders and the farm’s employees. Even throughout the implementation process, the company can reach some of the objectives in terms of company culture. Finding common ground, seeking advice, and collaborative decision-making can lay out a foundation for the elimination of conflicts within the organization and bringing positive attitudes among colleagues.

In conclusion, the Guy fielding farm is facing numerous challenges, and the management must investigate the external and internal analyses of the company. Careful evaluation of the current and prospective company’s performance and the following strategic objectives determination will help the firm to focus on the development. This fielding farm has faced a dramatic event, and the tensions among the shareholders could have had an impact on the outcomes. Although the Guy farm represents the family business, there are still ways for the company to recover and pursue growth and progress.

Works Cited

Harmon, Paul. Business Process Change: A Business Process Management Guide for Managers and Process Professionals. Morgan Kaufmann, an Imprint of Elsevier, 2019.

“Our Ambition and Values.” Fonterra, Web.

Prichard, Craig. “Integrative Case 5.0: Blood on the Gatepost: Family Conflicts in the New Zealand Farming Industry.” Organization Theory and Design: An International Perspective, 3rd ed., edited by Richard L. Daft, Jonathan Murphy, et al., Cengage, 2017, pp. 571–575.

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