TNC's IN FOOD INDUSTRY

TNC's in Food Industry

TNC's in Food Industry

Introduction

The main purpose of this statement is to understand the role of transnational companies in food industry. A transnational, or multinational, corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in one or more other countries. The subsidiaries report to the central headquarters(Starkey, 2001). The growth in the number and size of transnational corporations since the 1950s has generated controversy because of their economic and political power and the mobility and complexity of their operations (Zadek, 2001). Some critics argue that transnational corporations exhibit no loyalty to the countries in which they are incorporated but act solely in their own best interests(Starkey, 2001).

This paper explain the structure and operation of TNC's in global food industry. It also explain the basic structure of the global food industry, the nature of the production circuits in it, how and why there have been changes in demand and technology in it, and how the industry is regulated by governments and the TNC strategies involved(Sklair, 2001).

Discussion

The structure of the TNCs in global food industry is continually changing and evolving as food suppliers, manufacturers, and retailers adjust to meet the needs of consumers, who are increasingly demanding a wider variety of higher quality products. Having first hand knowledge of consumer preferences and purchase habits, food retailers are positioned to transmit this information upstream to other segments of the supply chain(McIntosh, 2003). In the quest to meet consumer demands for variety, affordability, safety, and quality, the food retail sector is constantly evolving and generating innovative sale formats. In addition to the popular supermarket format, hypermarkets, discounters, convenience stores, and combined gasoline and grocery outlets have emerged in numerous countries in recent years(McIntosh, 2003).

Production Circuit in food Industry

Information technology is in a phase of rapid development, and communication needs in the food industry and elsewhere are growing. Many operators in food production plants have little or no experience of computer operation; computer systems designed for use in this environment must therefore be so user-friendly that computer novices can operate them.

Changes in Demand & technology in food industry

Global food retail sales of TNCs are about $4 trillion annually, with supermarkets/hypermarkets accounting for the largest share of sales (Zadek, 2001). Most of the leading global retailers are U.S. and European firms, as large multinational retailers expand their presence in developing countries and small retail firms increasingly account for a smaller share of total food sales. The top 15 global supermarket companies account for more than 30 percent of world supermarket sales(Klein, 2000). With improved technologies and economies of size, these retailers enjoy operating cost advantages over smaller local retailers.

Similar to retailers, food manufacturers are reorienting their business strategies in response to consumer signals transmitted via retailers(Hill, 2008). Two common strategies are geographic expansion in developing countries and a greater emphasis on product category management(McIntosh, 2003). Although multinational manufacturers are rapidly expanding their operations, firm concentration in food manufacturing is not visible at the global ...