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1、INDUSTRY ANALYSIS FRAMEWORK - A Global PerspectiveFood Processing Industry - March 1995(Source: Joseph E. Decilveo, Jr., Food Processing Segment Director)PURPOSEThe purpose of the Industry Analysis Framework is to describe the fundamental forces driving an industry. It presents our auditors with a g
2、ood framework with which to evaluate global industry risks and issues and, in turn, determine the applicability of these risks to specific clients. The Industry Analysis Framework accomplishes these objectives by: Presenting a brief description of the industry from a global perspective Discussing th
3、e critical elements of the Business Analysis Framework affecting the industry Presenting available global resourcesDESCRIPTION OF THE INDUSTRYFood processing incorporates the chain of bringing food from the farmers fields to the consumers plates. End products range from simple grains to complicated
4、products such as low-fat sodium free sugar free foods. Food products used by the consumer are delivered in a range of formats, fresh, frozen, canned, boxed, bagged or jarred. The major food categories are: Meat products (beef, pork, poultry) Fruits and vegetables Grain and grain based products (cere
5、als, rice, noodles, baked goods) Dairy products (milk, cheese, ice cream etc.)The food industry is mature in the developed countries. Growth is limited to population expansion. It is difficult to make people consume more. Rather, food marketers attempt to attract consumers to new products, ideally v
6、alue-added ones where a higher price point is warranted. The industry is becoming increasingly more consolidated as the larger companies swallow smaller or weaker players in the marketplace. The more market share a company has, the better its leverage with retailers is for shelf space and for new pr
7、oduct introductions. Products are marketed directly to customers, food retailers and food establishments, by food manufacturers own sales forces, or by middlemen, called brokers or wholesale distributors. Usually larger companies have their own sales force, and smaller operations use brokers to reac
8、h customers.INTRODUCTION TO THE FRAMEWORKThe Industry Analysis Framework for the Food Processing Industry is intended to assist us in thinking more strategically and operationally about a client. It has been developed to contribute to: (1) gaining an in-depth understanding of the clients business as
9、 a whole and (2) identifying and evaluating critical business issues and changes affecting the company and industry. The framework is intended to focus on the external and internal influences that affect a clients opportunity for success, and thus, to deal with the matters of concern to the Chief Ex
10、ecutive Officer, the owners, the community and the employees.The Industry Analysis Framework for the Food Processing Industry is illustrated below:The elements of the framework are intended to be applicable to food processors worldwide as they deal with the fundamentals of the industry. While these
11、business elements are common, the specific environment within each of these elements will obviously vary significantly from country to country. Depending on the manufacturers product line, its geographic location and other factors, the specific environment will vary due to differences in factors suc
12、h as the regulatory environment, the status of the overall economy, the relative strength in the positions of suppliers and customers, and the availability of qualified personnel.OVERVIEW OF BUSINESS ELEMENTSThe purpose of this section is to identify and describe the basic business elements that are
13、 fundamental to the industry, using the graphic introduced on the previous page.A. Environment1. Economic TrendsFood is probably the worlds most essential product. During an economic downturn the general population does not eat less. Nor does the populace eat much more during a period of prosperity.
14、 However, what they eat may change. When times are good people may eat more expensive foods at home and eat out in restaurants more. In leaner economic times, private label or store brands have demonstrated an increase in popularity. The operating health of a food company is driven more by agricultu
15、ral commodity costs and consumer taste buds than the current level of unemployment or changes in interest rates.2. Political and Regulatory FactorsPolitics are an issue at the early stage of the food chain. Governments, including the United States, have instituted price support programs and other fi
16、nancial programs for selected crops. At times this may result in an unfavorable situation for food processors who may have to pay more for raw material in the local market than they would have if imported supplies were used. In some countries, package labeling of nutritional content is also subject to regulation.3. Social/Cultural FactorsCon
