population in 2014, and Spain has also challenged the growing level of child and adolescent poverty, that figure climbed to 32.6 per cent of its overall population in 2014 (Drager, 2014).
In addition, Frieden (2009) highlighted global macroeconomic imbalances that they have significantly stimulated the boom and the burst of the bubble which has constantly led to the financial crisis now because some countries, such as United States and Spain, have enormous presence of debts, this involving the amount of borrowed money with higher interest rate payments. Furthermore, “How Governments can” (2014) reflected global imbalances relating to labors that politics, especially governments, face difficulty for changing the policies in order to rise minimum wages concerning society’s values because higher minimum wages affects firms to increasingly demand dehumanized machines instead of hiring workers. However, low-wage jobs may dissuade labors from seeking for works. Thus, Fonterra inevitably use CSA because it is contemporary and relevant tool for considering global imbalance risk in economic, social and political areas, which are wholly external factors in connection with to the business situation. Moreover, Fonterra should set its own scoring system in order to rate country risk by considering relevant factors, which are presented in the business journals, the World Economic Forum and the World Bank. For instance, American Can Company based in the U.S.A. measures significant factors, such as political conditions for stabilization and freedom, overall infrastructure quality, and economic strength with regarding inflation and balance of international payments, in order to improve its own country risk ratings (Neelankavil, 2015). Opportunity and risk for Fonterra in Germany This part will analyze market growth, labor costs, political risk and degree of rivalry in order to demonstrate the opportunity and risk to generate revenue the German dairy markets. …show more content…
Firstly, huge Germany’s market size is one of significant factors for Fonterra to expand its sales internationally. Germany Trade and Invest (2014) reported that the overall capacity of 31 million tons in milk production shifted Germany into largest dairy manufacturer in Europe with the overall production value of approximately 21 million euros in 2013. Consuming milk, cheese, and fresh dairy products always are important part of a healthy lifestyle for German people (Germany Trade and Invest, 2014). However, the total volume sales of the dairy product categories were estimated to have little movement in German market in 2016. Passport (2016a) considers that the less appetite for drinking milk products reflects a 7% decrease in sales volume, which is estimate to be worth 2,449 million euros in 2016. However, yoghurt and sour milk products rise by 1% in current value terms to reach 2,663 million euros in 2016 (Passport, 2016a). Additionally, the value sales of infant formula products are predicted to be worth 367 million euros, with current value rising by 3% in 2016 (Passport, 2016a). Thus, Germany’s market growth is assessed as moderate because Fonterra probably create new income from meeting consumer demand for yoghurt and infant formula products. Secondly, IMF (2016) reports that rapid ageing of German population is expected to cause a dramatic drop in working age persons by 2020. This projection will turn into a problem for Fonterra to invest manufacturing sector in Germany because this company tend to face reduction in labor supply. However, Germany Trade and Invest (2014) argued that high level of workforce
In addition, Frieden (2009) highlighted global macroeconomic imbalances that they have significantly stimulated the boom and the burst of the bubble which has constantly led to the financial crisis now because some countries, such as United States and Spain, have enormous presence of debts, this involving the amount of borrowed money with higher interest rate payments. Furthermore, “How Governments can” (2014) reflected global imbalances relating to labors that politics, especially governments, face difficulty for changing the policies in order to rise minimum wages concerning society’s values because higher minimum wages affects firms to increasingly demand dehumanized machines instead of hiring workers. However, low-wage jobs may dissuade labors from seeking for works. Thus, Fonterra inevitably use CSA because it is contemporary and relevant tool for considering global imbalance risk in economic, social and political areas, which are wholly external factors in connection with to the business situation. Moreover, Fonterra should set its own scoring system in order to rate country risk by considering relevant factors, which are presented in the business journals, the World Economic Forum and the World Bank. For instance, American Can Company based in the U.S.A. measures significant factors, such as political conditions for stabilization and freedom, overall infrastructure quality, and economic strength with regarding inflation and balance of international payments, in order to improve its own country risk ratings (Neelankavil, 2015). Opportunity and risk for Fonterra in Germany This part will analyze market growth, labor costs, political risk and degree of rivalry in order to demonstrate the opportunity and risk to generate revenue the German dairy markets. …show more content…
Firstly, huge Germany’s market size is one of significant factors for Fonterra to expand its sales internationally. Germany Trade and Invest (2014) reported that the overall capacity of 31 million tons in milk production shifted Germany into largest dairy manufacturer in Europe with the overall production value of approximately 21 million euros in 2013. Consuming milk, cheese, and fresh dairy products always are important part of a healthy lifestyle for German people (Germany Trade and Invest, 2014). However, the total volume sales of the dairy product categories were estimated to have little movement in German market in 2016. Passport (2016a) considers that the less appetite for drinking milk products reflects a 7% decrease in sales volume, which is estimate to be worth 2,449 million euros in 2016. However, yoghurt and sour milk products rise by 1% in current value terms to reach 2,663 million euros in 2016 (Passport, 2016a). Additionally, the value sales of infant formula products are predicted to be worth 367 million euros, with current value rising by 3% in 2016 (Passport, 2016a). Thus, Germany’s market growth is assessed as moderate because Fonterra probably create new income from meeting consumer demand for yoghurt and infant formula products. Secondly, IMF (2016) reports that rapid ageing of German population is expected to cause a dramatic drop in working age persons by 2020. This projection will turn into a problem for Fonterra to invest manufacturing sector in Germany because this company tend to face reduction in labor supply. However, Germany Trade and Invest (2014) argued that high level of workforce