risk assesment of a food company

8/12/2019 Risk assesment of a food company

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Introduction

The food and beverages industry is all companies involved in processing raw food materials,

packaging, and distributing them. This includes fresh, prepared foods as well as packaged foods,

and alcoholic and nonalcoholic beverages. Any product meant for human consumption, aside

from pharmaceuticals, passes through this industry. The food industry is a complex, global

collective of diversebusinesses that supply much of the food energy consumed by theworld

population.Only subsistence, those who survive on what they grow, can be considered outside of

the scope of the modernfoodindustry.

The food industry includes:

Regulation:local, regional, national and international rules and regulations for food

production and sale, includingfood quality andfood safety, and industry

lobbying activities

Education:academic,vocational,consultancy.

Research and development:food technology.

Financial services:insurance,credit.

Agriculture:Raising of crops and livestock,seafood.

Food processing:preparation of fresh products for market, manufacture of prepared

food products

Marketing: promotion of generic products (e.g. milk board), new products, public

opinion, throughadvertising,packaging,public relations,etc.

Wholesale anddistribution:warehousing,transportation,logistics.

Overview

In this assignment we focus in the major risk areas of foreign countries. If we try to set up a plant

what types of problems may arise, in this assignment we try to figure it out. To set up a plant

many types of problems may rise like, political risk, environmental challenges, cultural pattern of

that country, currency conversion rate, interest rate risk, nature of government, economic

stability of that country, transportation facility of that country etc. Based on these problems we

give some recommendations to overcome the risks & set up new plants.
http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Food_energyhttp://en.wikipedia.org/wiki/World_populationhttp://en.wikipedia.org/wiki/World_populationhttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Food_qualityhttp://en.wikipedia.org/wiki/Food_safetyhttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/Academichttp://en.wikipedia.org/wiki/Vocationalhttp://en.wikipedia.org/wiki/Consultancyhttp://en.wikipedia.org/wiki/Research_and_developmenthttp://en.wikipedia.org/wiki/Research_and_developmenthttp://en.wikipedia.org/wiki/Food_technologyhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Credit_(finance)http://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Seafoodhttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Wholesalehttp://en.wikipedia.org/wiki/Food_distributionhttp://en.wikipedia.org/wiki/Transportationhttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Transportationhttp://en.wikipedia.org/wiki/Food_distributionhttp://en.wikipedia.org/wiki/Wholesalehttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Seafoodhttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Credit_(finance)http://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Food_technologyhttp://en.wikipedia.org/wiki/Research_and_developmenthttp://en.wikipedia.org/wiki/Consultancyhttp://en.wikipedia.org/wiki/Vocationalhttp://en.wikipedia.org/wiki/Academichttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/Food_safetyhttp://en.wikipedia.org/wiki/Food_qualityhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/World_populationhttp://en.wikipedia.org/wiki/World_populationhttp://en.wikipedia.org/wiki/Food_energyhttp://en.wikipedia.org/wiki/Business


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The food and beverage company have decided that they want to expand their operations to other

parts of the world. In this situation the company may face some risks, and the risks are may

include:

Economic risk:This risk refers to a country's ability to pay back its debts. A country with stable

finances and a stronger economy should provide more reliable investments than a country with

weaker finances or an unsound economy. In this situation the food and beverage company easily

expand their business of that country.

Political risk:This risk refers to the political decisions made within a country that might result

in an unanticipated loss to investors. While economic risk is often referred to as a

country's ability to pay back its debts, political risk is sometimes referred to as the willingnessof

a country to pay debts or maintain a hospitable climate for outside investment. Even if a

country's economy is strong, if the political climate is unfriendly to outside investors, the country

may not be a good candidate for them.

Laws and regulations risk:Laws and regulations in international trade can be complex, and

they may have an impact on various aspects of their operations. Make sure that any contract they

sign stipulates that it is governed by the countrys legislation. They will also need to investigate

how their target market deals withintellectual property , health and environmental standards,

taxations, customs and duties, language, consumer protection and payment conditions.
http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/Homehttp://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/Home


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Water pollution: Water is the main ingredient in substantially all their products and water

resources in many parts of the world are facing unprecedented challenges from population

pressures, pollution, poor management and the impact of climate change. As demand for water

resources increases around the world, the company that depend on abundant water resources,

including, may face increased production costs or capacity constraints which could adversely

affect their profitability or growth strategy over the long term.

Weather condition: Sales of certain of their products are significantly influenced by weather

conditions. They ordinarily record their highest sales levels during hotter weather in the spring

and summer months, but unseasonably cool weather conditions could depress demand and

negatively impact our results of operations.

Currency exchange rate risk:Foreign companies often generate sales and income in their local

currency - such as eurosor Swiss francs. As a result, the food and beverage company from the

U.S. must convert these currencies intoeuros at some point. Unfortunately, the exchange ratebetween currencies fluctuates over time, and can lead to unexpected gains or losses.

Fluctuations in interest rates could affect our financial results: They finance a portion of

their operations through interest-bearing loans and in the future they may conduct additional debt

financing through loans, the issuance of corporate bonds or other means. In addition, they may

finance future acquisitions in whole or in part through additional borrowings. Although they use

fixed-interest transactions and derivative instruments to manage their interest rate exposure, large

increases in interest rates could have an adverse effect on our financial condition and results of

operations.


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If they are unable to hire or retain key employees or a highly skilled and diverse

workforce, it could have a negative impact on their business.

Recommendations

1. Find a political stable country, political unstable country is very risky for business.

2. Create low pollution, otherwise environmental organizations may protest new business.

3. Set business in environmentally friendly countries.

4. Set business in that type of countries where interest rate is minimal.

5. Examine countrys law and regulations.

6. Labour cost should be minimal.


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Reference or sources

www.suntory.com

globaledge.msu.edu

en.wikipedia.org
http://www.suntory.com/http://www.suntory.com/

risk assesment of a food company

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