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The company has a vertical supply chain, however with the global trends it becomes more horizontal and Joints with famous brands to be down-to-market and answer consumer tastes and preferences. With increasing publicity as a result of globalization, Cargill is more transparent, yet still retains privacy in areas important for its competitive advantage. The company presents the largest private company in USA operating globally since the early 20th century; It has an established distribution channels around the world after the American post-War influence in Asia (Browser,2005;Cargill,2014) .
The many produces and distributes grain, meat, flavors and owns ocean transportation. Most of the company’s activity like distribution and production channels is vertically integrated. The report will first consider Caracal’s supply chain, with its target markets and strategies of marketing channels and markets. Finally it will move onto issues of supply chain provenance and give main recommendations based on problems presented in the report. Caracal’s supply chain approach reflects on the nature of a private company. It keeps a very private image of an unrevealed, yet integrated, tightly knit supply chain.
The company operates globally. To supply its operations, its supply chain is highly integrated and dependent on inner processes. Cargill both ships, supplies and sources from its own sister companies like Cargill Grains or Meat solutions, flavoring and aluminum to Cargill Ocean transportation (Cargill,2013). An integrated supply chain of the company helps it create and satisfy its own demand based on global commodity demands: Cargill Ocean Shipping will have ceaseless demand from Cargill Grains in USA, which in their turn are bought by Cargill poultry farmers in Thailand. As noted by Knee Browser in his Invisible
Giants, “Cargill literally makes up on volume what it loses on every chick because it makes a profit producing the eggВ??(by selling grains to farmers) (Browser,2005). A crucial point to be made is with such volumes of interconnectedness company creates its independent and monopolized production channels. They are highly secured since vertically integrated and independent from a third party. They give the company economies of scale and established production channels. A clear process of shipping and distribution is described in Caracal’s CEO talk in 2001 adapted to the diagram below.
Figure. Adapted from speech of CEO Proponent, 2001 (Hansen and Richard,2013) It is questionable whether this model of producing (Fig. L) around the globe to sell at home is more efficient, than producing at home e. G Monsanto, Caracal’s competitor, producing meat in Brazil for home and exports. Addressing the question is in company’s ocean shipping similar to Shell or Haunted (Bishop ,201 1), which delivers Caracal’s load worldwide. Yet while Shell and Handy secure and ensure safety and timely delivery of their production, Cargill has more reasons to own the fleet.
Let alone its insight into economical situation in different rots around the globe, Cargill provides shipping service to other producers what means having trading feedback from wide range of industries. According to Marketing, Cargill could see decreasing iron-ore stocks in China by its ships stopping in Chinese ports (Marketing,2013) thus the company was able to predict signs of economic depression of 2008 (Economic Times ,2013) From an operational perspective Cargill is a commodity company, however due sizes and efficiency it is able to create and “commoditized” a new product in retail.
With strong R&D centers, the company designed a lessened sugar chocolate Trivia” (Marketing, 2013), which it sold intensively in retail chains of the USA, discussed in the next section of the report. Cargill targets commodity markets in Asia, yet it prefers the Western markets for experimental and marketing oriented commerce. As a commodity company, Cargill targets resource markets, however its marketing activities tend to concentrate in the West because in USA or Europe Cargill has a better foothold.
Instead its commodity and mass produced goods are spread in the rest of the world with an exception of Sir Lankan, where the company holds a retail chain (Seas of Change, 2010). Marketing activities in the West are more horizontally integrated: in a Joint with Coca- Cola, Cargill devised sugar-free sweetener for sugar conscious market in USA (Cargill, 2013). Efficient work can be seen behind Caracal’s R&D team which correctly identified American market accounting for nearly 80% of reduced fats/sugars market (Confectionery,2011) .
Another value-added products were cholesterol reduced milks and environmentally friendly foam making ingredients for lower petroleum use (Marketing,2013). The reason for such a marketing approach of Cargill is quite understandable: the more plopped Western markets require more marketing insight due to higher competition than in majority of Asian markets, where a company can take a more monopolistic approach. In fact transnational markets of Cargill are more commodities oriented. For instance Cargill India has factories of olive oil-refineries and animal nutrition requiring little customization.
They are not located close to main markets near New Delhi in water- problematic Punjab (Browser,2005) , but in water-rich areas near Calcutta or Iambi thus bearing a more commodity oriented nature aimed at distribution to China as well (Cargill,2014; see Figure 2) Figure 2. Caracal’s factory distribution in India (Cargill,2014) Instead, however Cargill does not seem to hesitate to consume mature brands which gained popularity in the Indian market e. G Leonardo olive oils or re-launching Swear brand (Cargill,2014).
Similar actions of Cargill are observed in the Latin American markets, where company acquired leading Milliner tomato brands of Brazil (Cargill,2014). Thus as new player in foreign markets Cargill prefers to trust marketing success of local or popular matured brands than engage into market research. This approach is characteristic of a big company with sufficient funds to buy local brands like Adagio (WAS,2014), however in case of Cargill this rather is a market entry strategy to secure demand before entering markets with core product, than stop on Milliner’s Abnormal.
In Western markets Cargill has to monitor changing trends as well. In 2012, Cargill implemented a marketing software to for price competition which takes into account current meat and competitor prices thus giving a more accurate price for a certain cut of e. G beef (Secure,2012). Targeting price conscious customers is especially important in countries with strong competition and strong post-recession effects like USA, consumers are very sensitive to prices (Monetary,2009 ).
The changing trends in their turn are very important for Cargill: natural meat and poultry prices may eventually rise due to artificial trends in products ignited by artificial eggs produced by Hog company from Silicon Valley and sponsored by Bill Gates. The eggs not differ from real ones by taste or nutrition, yet cost less and do not involve animal element usually treated unethically (Motherboard,2013). Cargill can be observed to have a set of customs when entering it’s target markets .
In fact Cargill pursues a number of invisible strategies by co-operating with fast-food brands which play a lighthouse for the company. Additionally, despite the size and resources company is very careful in its transnational entries and marketing channel management. Caracal’s activities in Sir-Lankan well demonstrate the strategy it approaches when targeting markets. Cargill opened meat-processing plants for its future retail store of 1996. Yet Caracal’s entry was first of all conditioned by its franchise with KEF. Today Caracal’s KEF is the leading fast food chain in Sir-Lankan (Serologically,2012).
Similarly, Cargill has entered Russia in early sass (Cargill,2014), yet in real terms it opened its factories in 2012, after it secured contract with McDonald’s Russia for beef supplies . In this way McDonald’s in Russia or KEF in Sir Lankan played a role of demand securing anchor in foreign markets. Thus using a franchise for a huge company like Cargill is not costly compared to costs it could have if entered these foreign markets without knowledge through KEF. Such strategy is similar to brands in other industries.
Ezra locates its stores close to high street Airman or Boss brands thus both ensuring demand and building high tree image (Atlantic, 2012). Burger King in its turn locates near McDonald’s instead of doing research on locations itself (Automated,2007) thus ensuring demand. This helps brands secure their position in foreign markets by using demand from famous brands. Notably not in all markets where Cargill tried a mass production approach it was successful. For instance Japanese market requires continual, yet small amounts of delivery to its retail chains, which Cargill missed to realize and left the market (Browser,2005).
In contrast, Nippon Meat rather secured contracts directly with saturates, retail chains and delivered its produce in 24 hours after the order (Hansen and Richard, 2005). To evaluate, it is questionable if Cargill agreed on Japanese market if it knew of trading patterns, since in difference to Nippon, it owns the fleet and may not afford such ocean transportation patterns resulting both in fuel and management costs. In fact in terms of marketing channels, Cargill does not ship to distributors, but chooses to sell and distribute on its own. This approach is observed in Sir-Lankan market, mentioned above, where Cargill owns its retail chain.
This lets Cargill see the accurate down-to-consumer picture through electronic POS giving demand figures and enabling planning. However as seen in natural-sweetener production above, Cargill distributes to retail chains in Western markets(Marketing,2013). Based on success of Caracal’s products like zero-sugar chocolate and the company’s nature, advantages of this approach are: Being advertised near wide assortment other low-calorie brands thus increasing chances of being noted by a customer. Promoting the product with keeping company privacy in difference to e. TV advertisement Observing the consumer wants and nominative environment in the market from sales feedback. In contrast, Caracal’s competitor, the Noble Group, choose to differentiate itself by vertical integration of both marketing and sourcing channels (Tier and Ruth,2007). Yet to evaluate, Noble Group, mainly operates in coal, finance and mining: it lacks direct to consumer products unlike Cargill. Cargill, therefore, can receive feedback from its direct-sold products from consumers thus having a better picture of what happens in the competitive market. Cargill is influenced by its American origin as a transnational company, however its
GEM production plays a major role for its supply chain provenance. For this reason Cargill is observed to become more transparent in latter years. Not until recently Cargill along with its competitor Monsanto, have invested to avoid GEM labeling (Satisfactoriness,2012). This also translates onto global image – Brazil has a limited import of Cargill production and generally European markets are in opposition to such producers(INFO,2014; Acrophobic, 2013). For this reason, Cargill cannot go global or advertise its brand, staying a silent producer of GEM crops and production.
Yet GEM image of Cargill has not been its only problem. In Japan, the company met a strong opposition both from public and local producers, called Subtask, a temporary cartel of Japanese production houses in case of new entrant (Hansen and Richard, 2005), especially an American giant entrant which has already “colonized” Taiwanese and South Asian markets . Indians, possibly having viewed Cargill as a post-British colonizer have also formed farmer-based opposition by not buying Caracal’s fertilizers or produce (Hansen and Richard, 2005) thus condoning Caracal’s entry into local wheat market.
Thus the size and origin of the company plays an important role and increases efforts of local producers to oppose its entry to market. However in the latter years Cargill ceased in being a global private company to a more open and transparent conglomerate. This could be seen from Caracal’s opening of its slaughterhouses for Journalists (Commonly,2011). The company also started labeling its products with the unwanted artificial ingredient in meat, sometimes referred to as pink slime(Reuters,2013). The reformation of Cargill may be an inertia driven by a trend of food- conscious customer.
Awareness of consumers for where and how their food is produced is important for producers like McDonald’s, which have to secure their image by traceability and quality of their suppliers. Therefore as a worldwide supplier of eggs and meat (Russia) to McDonald’s, Cargill need to correspond to its standards, what explains Caracal’s modification as well. In fact in early 2000, Cargill already made steps forward to selling its continental GEM wheat to Monsanto (IMAM, 2003) thus moving away from an image of a GEM producer.
Conclusion Having targeted various targets of the world, Cargill, starts to become more irrationally integrated to monitor local markets and more transparent in view of changing trends. As environment becomes more global and interconnected importance of observing customer behavior for such huge companies also increases. The recommendation for a company is to continue engaging into more transparent activities to secure image of its food activities in increasingly food-conscious West.