Background
Nut industry in California is huge supplying large number of nuts to the United States and all over the world. The industry has experienced a continuous growth in the demand for nuts which has pushed its price and as a result the acres of land used for growing nuts has increased leading to huge profitability and increase in export. Production of Almond and Walnut has been growing rapidly and it has been increasing for almost two decades. However, the booming nut industry of California has been targeted for theft where truckloads of nuts are being carried out of the industry. This has lead to an increase in tension of all the nut growers in California (Fierro 2017). The report discusses about the theft problem faced by theindustry in California recently with special focus in its supply chain. For this purpose a Pestle and Five forces analysis is carried out to judge the business environment and industry condition. Further, some organization with strong resources for preventing supply chain theft has been identified with special mention for the resources and capabilities.
California has recently realized a huge problem in the supply chain process of Nut Industry. This is because nuts has always appeared to be the most appealing and healthy product for the world. This has increased its chance of theft in this industry. It became difficult for controlling the theft because nuts are products that are difficult to track. This means the industry found it difficult to track the millions of nuts being stolen away from the cargo. These stealing have been done by thefts of big hi-tech organization that can easily track the loads of truck carrying nuts and pose themselves as truckers in the nut industry (Inboundlogistics 2017). These incidents increased in this industry day by day in which nuts like almonds, walnuts and others were being stolen. It was evident that 4200 pound of walnuts got stolen in 2015. The theft is more for nuts than any other items because it is difficult to give a serial number to these nuts. Thus, it becomes easier for them to steal it. Cargo theft was estimated to be more than $15 billion (Purtill 2017).
Pestle analysis will help in analyzing the situation of the business landscape in which the nut industry is operating in California. It will help to analyze the opportunity that the nut industry offers in the market of USA (Zalengera et al. 2014).
Pestle Analysis
Political
United States in which California exists has a federal republic in which the national government is the center of power. The country is politically a well-stabled economy with less number of wars and political issues in the past years. The federal government also regulates the power to allow working in the country as a legal citizen. All business are subjected to some or the other local and state laws for running their business. This gives a more or less healthy environment to run a business (FocusEconomics 2017).
Economic
The economy of United States ishighly developed economy in the world with a GDP as high as $18 trillion. It is known that theeconomy have the second largest GDP in the world and it is theseventh highest per capital GDP. This shows that the purchasing power of people in this country is very high. This gives a healthy environment to the businesses foroperating in USA (FocusEconomics 2017).
Social
Socially as well, United States is very modern and the people of the country maintain a very good healthy life. They love to maintain a high standard life for themselves and love consuming branded and good quality goods. it is a highly modern society. Moreover, the country also experiences huge number of immigrants into the country from all over the world. This serves a healthy demand for goods produced in the region by different businesses.
Technological
Technologically the country is very advanced experiencing a fast growth in its technology sector. It has always encouraged advancement and invention in technology by flow of new ideas and knowledge. The country has witnessed fast growth in information technology and is known as the most high-tech economy of the world. This has put some beneficial as well as negative impact on the businesses that operates in the country (SA TODAY 2017).
Legal
There are various kinds of legal laws that the country maintains for the citizen and the businesses operating in the country. The corporate law of the country is at 39 percent, which makes the country stand at third largest corporate tax economy in the world. Corporate tax is the amount that corporate needs to pay to the government for operating in the country. This shows that that the businesses needs to pay huge tax for its operations (Taxsummaries 2017).
Environmental
Lastly, the country is not healthy environmentally due to large number of industriesand impact of globalization in United States. This makes it necessary for the businesses to operate sustainably and maintain an environmental control body in their organization to keep a check in its operations.
Porter’s Five Forces
Porter’s five forces analysis helps in analyzing the industry environment of nut industry in which the companies facing the threat operates. The analysis shows the threat that the industry offers to the company operating under it:
Threat of substitutes
The nut industry offers a very low threat of substitutes to the companies operating under them. This is because the nut industry has very less substitutes that the consumers can buy other than these nuts. Thus, the chance of nut industry to lose its business to other industry due to various factors is very low (Rothaermel 2015).
Threat of new entry
The industry also show a moderate threat of new entrant in the industry from new companies because of the amount of investment and capital required to set the business. The new company has to invest a lot on the land to set the business and machinery required to roast and peel the nuts. Moreover, the new company has very less money initially to invest in such as bi business. Thus, the threat is very low and the old company takes up most of the operations (Grant 2016).
Bargaining power of suppliers
Bargaining power of suppliers of nut industry are farmers and cultivators growing nuts. They supply their products to these big companies in exchange of money. Thus, these farmers do not want to lose business from these big companies and this puts their bargaining power low. Moreover, the nut companies have large number of suppliers and can switch from one to another without any cost (Blackwell and Eppler 2014).
Bargaining power of buyers
Buyers have a huge bargaining power in a nut industry because of existence of large number of firms selling similar products to them. Moreover, the customers do not incur any switching cost while moving from one company to another for buying the nuts. The buyers own a huge power in the industry and can change the price with their collective demand.
Threat from competition
Huge number of companies operates in the nut industry selling similar goods at more or less similar prices. This shows that the companies suffer huge competition from one another and thus it cannot change the price of nuts according to its own wish. Competition also has some beneficial effects as every company try to be the best from each other.
The increasing amount of threat in the supply chain department of the nut industry is leaving a bad effect on its growth and development. It is necessary to recognize organization that has strong resources and capabilities in this industry in its supply chain to prevent theft. This will help and encourage other to take up good quality high technology to track the nut thieves and track the trucks carrying nuts. Moreover, these companies will also allow them to protect the industry from losing its products and to maintain a high tech information system as well. Top five organizations that have good resources and capabilities in preventing theft are Paramount Farming, Farmland Management Services, South Valley Farms, Premiere Entities and Agriland Farming. All the five companies are the highest grower of nuts in California and maintain a highly secured supply chain system. The resources through which it operates a safe supply chain system are a strong audit committee, whistleblower hotline, a strong internal anti-fraud policy and others. All these systems incorporated in the operations of these five companies helps them to prevent the theft that is taking place in the nut industry. Moreover, it allows the company to carry out regular audit committee and a strong anti fraud policy through which it can catch and indentify the people involved in it and stops it within time. These committee and system helps the five organizations to catch any person falling in their doubt section and track the fraud truck being moved out of the company.
The increasing crime in the nut industry in California is raising an alarm in the companies operating in this industry. This is because due to the theft the company is losing most of its supply, lower revenues and finally leading to their downfall. Thus, the industry requires good and high quality resources to prevent these theft activities. The resources can be in the form of a information system, a technology or human resource to control the whole theft activity. In case of information system, the industry needs to maintain a high quality secured information system in which only few people should have the right to see that information (Alpizar–Castro and Rodríguez–Monroy 2016). Confidentiality should be maintained and the availability of the information should be minimized to some people. The next best alternative is to install software that would detect the driver of the truck entering in the company. The software should be able t detect a body part of the driver such as fingerprint or eye detector before allowing the truck to enter the premises. This would improve the security system of the company and prevent fraud drivers from entering the premises of the company. For checking purpose the companies should employee more workers and staff that would allow the trucks to enter the company only after proper check and identification (the Guardian 2017). GPS system in the truck will also help the industry to track the trucks moving outside the premises of the company. These are some of the resources and capabilities the companies in the nut industry can maintain in order to save themselves from further theft and loss of products and revenue.
Conclusion and Recommendations
Some of the recommendations for the nut industry to take required step to avoid theft in business are:
- Avoid unnecessary recruitments in the organization and hire workers only after proper background check in order to allow them to enter the premises of the company
- The company should implement proper training program to train its employee about using the advance technology truck detector near the gate to ensure proper check in the gate
- To carry out regular audit to ensure the performance and improvement of the company after the implementation of mentioned technology
- To investigate the real route of this increasing threat in the nut industry of California in the recent years
From the above analysis, it can be concluded that California is suffering a lot from the increasing amount of theft in the nut industry. It has witnessed more than thirty incidents in the stealing of nuts. The pestle analysis showed that the country that California exists exhibits a strong and healthy business ground for the industries to operate successfully and the industry also faces a lot of threat from its competitors and buyers. Thus, every company needs to employee resources that might reduce the theft rate and take advantage of the growing economy of United States. Reduction in theft also helps the nut companies to fight competitors and improve their bargaining power in front of the buyers. This is because the better the company will be in quality and name the more the buyers will prefer that company.
References
Alpizar–Castro, I. and Rodríguez–Monroy, C., 2016. Review of Mexico? s energy reform in 2013: Background, analysis of the reform and reactions. Renewable and Sustainable Energy Reviews, 58, pp.725-736.
Blackwell, R. and Eppler, D., 2014. An Approach to Strategic Situation Analysis: Using Models as Analytical Tools. Journal of Global Business Management, 10(1), p.80.
Fierro, D. 2017. Cargo theft is a tough nut to crack in California. [online] Truckinsurancenitic.com. Available at: https://www.truckinsurancenitic.com/company-news/530-cargo-theft-is-a-tough-nut-to-crack-in-california.html [Accessed 11 Oct. 2017].
FocusEconomics | Economic Forecasts from the World’s Leading Economists. 2017. United States Economy – GDP, Inflation, CPI and Interest Rate. [online] Available at: https://www.focus-economics.com/countries/united-states [Accessed 11 Oct. 2017].
Grant, R.M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.
Inboundlogistics.com. (2017). Cargo Security: Protecting the Supply Chain – Inbound Logistics. [online] Available at: https://www.inboundlogistics.com/cms/article/cargo-security-protecting-the-supply-chain/ [Accessed 11 Oct. 2017].
Purtill, C. 2017. A $10 million nut heist is a window into the shady, lucrative world of large-scale food theft. [online] Quartz. Available at: https://qz.com/663152/a-10-million-nut-heist-is-a-window-into-the-shady-lucrative-world-of-large-scale-food-theft/ [Accessed 11 Oct. 2017].
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
SA TODAY. 2017. Technology and Electronics Reviews – USATODAY.com. [online] Available at: https://www.usatoday.com/tech/ [Accessed 11 Oct. 2017].
Taxsummaries.pwc.com. 2017. United States – Taxes on corporate income. [online] Available at: https://taxsummaries.pwc.com/ID/United-States-Corporate-Taxes-on-corporate-income [Accessed 11 Oct. 2017].
the Guardian. 2017. California cracking down as crime rings steal truckloads of nuts worth millions. [online] Available at: https://www.theguardian.com/us-news/2016/apr/14/california-nut-thefts-agriculture-shipments-almonds [Accessed 11 Oct. 2017].
Zalengera, C., Blanchard, R.E., Eames, P.C., Juma, A.M., Chitawo, M.L. and Gondwe, K.T., 2014. Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38, pp.335-347.
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