Business Environment and McCain Foods Company

TABLE OF CONTENTS

1.0 INTRODUCTION.............................................................................................................1

1.1 HISTORY OF MCCAIN FOOD.....................................................................................................2

1.2 NATURE OF BUSINESS...............................................................................................................2

2.0 THE ENVIRONMENTAL FORCES.............................................................................3

2.1 THE INTERNAL FORCES........................................................................................3

2.1.1 STATEMENT OF PURPOSE.......................................................................................................3

2.1.2 ORGANISATION STRUCTURE..................................................................................................4

2.1.3 MANAGEMENT OF MCCAIN FOOD.........................................................................................6

2.2 THE EXTERNAL FORCES........................................................................................7

2.2.1 POLITICAL ENVIRONMENT.....................................................................................................7

2.2.2 LEGAL ENVIRONMENT...........................................................................................................8

2.2.3 SOCIO-CULTURE ENVIRONMENT............................................................................................9

2.2.4 ECONOMICAL ENVIRONMENT..............................................................................................10

2.2.5 TECHNOLOGICAL ENVIRONMENT.........................................................................................11

2.2.6 ECOLOGICAL ENVIRONMENT...............................................................................................12

3.0 CONCLUSION................................................................................................................13

4.0 APPENDIX.......................................................................................................................14

5.0 REFERENCE...................................................................................................................16

Introduction To Business Group Assignment

1.0 INTRODUCTION

McCain Food Company is a multinational company that supplies its products such as; Frozen

Chips and vegetables, juices, pizzas, entrees and desserts to 110 counties on six continents. It is

in fact, the number the world’s largest producer of frozen chips (French Fries). In the industry of

frozen foods, McCain is a clear leader selling around 45% of frozen potatoes in the UK alone.

A business ability to achieve success depends on two main groups of factors; the first being the

internal strength of the organisation and the second is the ability to identify and act accordingly

to the external influences in the business environment. This document will highlight all the

business environments and their effect towards McCain Food Company.

McCain Food is built on the cutting edge agronomy1, superior technology and a global

workforce to enable the brand to deliver both variety and quality and live up to their slogan;

Good Food, Better Life.

1 Agronomy – The application of soil and plant sciences to land management and crop production.

UCFF0810: Foundation Page | 1


1.1 HISTORY OF McCain FOOD

The History of McCain treads back in the past 52 years since its establishment in the year 1956

and has been expanding its empire steadily since then. It was founded by the McCain brothers

(Robert, Andrew, Harrison and Wallace McCain) in their hometown of Florenceville, New

Brunswick in Canada.

In the early 1900s, Andrew McCain saw an opportunity to expand beyond faming and selling

potatoes locally and together with his brothers, the company was developed and established and

has a total of 57 factories worldwide.

The key dates that mark their accomplishments are illustrated in the appendix (Table 1) on page

14.

1.2 NATURE OF BUSINESS

McCain is a private incorporated company (Public Limited Company) that operates under the Frozen Foods industry. It is owned by a group of people, but is operated and managed by a team of staff in their branches across the world.

Being a public limited company, McCain Food has some critical characteristics such as;

1. It enjoys limited liability.2. It can have a maximum of 7 shareholders but many investors as preferred.3. It can trade stocks to the public via the stock exchange.4. It enjoys the free will to practice trade.5. It can maximize resources easily at a larger scale.

Allison McCain is the chairman and Dale Morrison is the President and CEO of the company. McCain Food has 20,000 employees in total to make up for its human resources and enjoys total revenue of around $6.2 billion as of 2008. It is basically the world’s largest frozen food company that operates on a global level.



2.0 THE ENVIRONMENTAL FORCES

2.1 THE INTERNAL FORCES

The internal forces are the attribute of the business environment that can be controlled by any

organisation. They are referred to as internal forces because their influence is within the business

organisation including; the organisation goals, culture, structure and control, human capital and

additional resources (Tangible and Intangible assets) which can all be implemented by the

organisation.

2.1.1 STATEMENT OF PURPOSE

The statement of purpose is a total result of the company’s Vision, Mission, Aims and Objective

statements of which every company must possess in order to serve as a measure of success and a

compass to every employee to focus in achieving a common enterprise goal. Likewise, McCain

has a statement of purpose that includes all the necessary statement in need of achieving:

VISION

To create good food and better life for our consumers, customers, employees and the community

we work in world wide.

MISSION

To constantly win the customers and consumers by making them smile with wide range of

innovative products that are better and fun to eat.

AIMS

1. To produce healthy food products in the preference of different people around the world.

2. Provide Critical priority to the stakeholders2 by conducting the business with good

ethics, honesty, integrity and fair dealings.

3. To reduce costs and preserve the environment by using alternative energy sources to

produce the end products.

OBJECTIVES

2Stakeholders – Individuals or groups with an interest with the decisions made by an organisation.



1. To maintain a constant supply of raw materials (Potatoes, Flour and spices) to match the

demands of the customer throughout the year.

2. To instill a consistent code of conduct to all the employees as their values and moral

compass in dealing with customers.

3. To retain competitive advantage3 by producing diverse number of products with unique

characteristics like shapes, sizes, ingredients and different seasonings; thus keeping the

current customers and add new ones.

4. Implementing the power system by switching to a more saving and environmental-

friendly energy sources such as the wind turbine system and the wastewater system.

2.1.2 ORGANISATION STRUCTURE

Organisation structure is a diagram representation or a totality of an organisation’s different jobs

and departments and their relationship with each other by responsibility, accountability and

authority. It is more of a blueprint as to how an organisation embarks itself to achieving a goal.

The design of the structure, either tall or wide, is attributed by many factors of which an

organisation must implement as they keep progressing, depending on their capacity. Such

attributes includes; Span of Control4, Hierarchical levels5, Chain of command6,

Departmentalization7 and Specification of the jobs8.

3 Competitive Advantage – A position occupied by a company against other competing companies by possessing an advantage over them.4 Span of Control – The total number of subordinates under a sole superior.5 Hierarchical levels – The levels of authority from top management to the employees at the base of the organisation chart.6 Chain of command – The action of an employee to report to just one superior.7 Departmentalization – The breakdown of jobs by their task and common characteristics and grouping them in departments or segments.8 Specification of Job – Defining the job by its tasks, responsibility and relevant requirements of performing it.



As a large multinational company, McCain has a geographical organisation structure by which

organisation structures are broken down into different units that are located around the world but

have a sole headquarter. McCain has a tall organisation structure, and therefore has;

1. A narrow span of control.

2. More Hierarchical levels.

3. Precise and distinct chain of commands.

4. High degree of departmentalization.

5. Low degree of Specification of jobs.

Different companies have different goals in need of achieving and therefore the need to have

different organisation structures; it affects the decision making of the respective company since it

is an approach as to how the company’s goals are achieved therefore must be considered before

any plans are made.

Please refer at Figure 1 on Appendix (Page 14) for the organisation chart of McCain Food

Company.



2.1.3 MANAGEMENT OF McCain FOOD

Every organisation is made up of different departments so as to ease the managing of the

business. Each department aids in achieving the organisation’s objectives by performing a

functional role. McCain has different departments with respective roles which are;

1. Administration

It is essential to keep the business going. It deals with the operational issues occurring on daily

basis like documenting staff attendance and performance, customers’ and employees’ complaints

and relevant data logging.

2. Marketing

This department is responsible for making decisions about marketing strategies (Price,

distribution, promotion and products) and ensures communication of their brand name is

consistent in the market.

3. Finance

This department is responsible for financial measurement, implementation and record keeping

and constructing and continuous development of the company’s budget for other departments.

4. Packaging

This department is responsible for packaging of the products. They create and design packages to

attract as many consumers in the market.

5. Research and Development

This department is responsible for creating new products in the market and suggests new ideas to

improve the existing products. This department is important in retaining the competitive

advantage.

6. Human resource

This department is responsible for acquiring, deploying and developing the employees to

enhance effectiveness by giving priority to the human capital (employees). It is also responsible

for providing motivation and performance appraisals to reduce the staff turnover9.

Please refer to the Organisation chart (departments) in the Appendix (Figure 1) on page 14.

9 Staff turnover – The rate at which employees leave the company compared to how many employees are recruited.



2.2 THE EXTERNAL FORCES

The external forces are the attribute of the business environment that cannot be controlled by any

organisation. They are referred to as external forces because they are influence is exerted outside

the business organisation including; Political, Legal, Economical, Socio-Culture, Technological,

Competitive and Ecological Environments.

These External Forces poses different influences that result into different effect towards the

Business organisation respectively. The success of any business depends how best they analyse

each environment and make necessary amendments accordingly in order to use and/or counter

act the effects of their influence. McCain Food, like any other Organisation, is affected by these

business environments, thus affecting their business operations and activities.

2.2.1 POLITICAL ENVIRONMENT

Political business environment refers to government interventions towards business practices by

business organisation. The government of any country assures the protection of their citizens and

therefore administers Rules and regulations, policies, Tax legislations and laws in need of

organisations to abide. McCain Food takes note into abiding with regulation from the

government. Operating on a global level, it ensures that all the other branches follow up into

meeting up with the requests from the respective Government of a respective country.

The UK government for example has publicizes and support healthy eating by creating initiatives

such as ‘Healthy Schools’ in order to avoid obesity by the pupils; in turn of such actions, McCain

Food was forced to re-strategies on ways to reduce the fat content in their products.

In addition, McCain products comply with a range of laws, including;

1. The Food Safety Act, covering the way the food is prepared and served.

2. The Trades Description Act, which states that goods and services must be exactly as

described.

3. The Weight and Measure Act, governing such aspects as giving the right weight on

packs.



This environment affects the decision making of McCain in a way that, all their business

activities (Marketing, advertising, operational activities, promotions, packaging) must abide to

the rules and regulation enforced by the government. The government itself as an influential

body has the power and right to support or restrict the business activities, by means of tax

imposed on the products, the company and its shareholders10, so as to protect their interests and

specifications throughout the entire nation.

2.2.2 LEGAL ENVIRONMENT

Legal environment is an extension of the political environment because it is sourced from the

government but it differs in a way that lawful bodies created by authorized individuals take part

in protecting the rights of an individual or group. In the attempt of violating such rights, legal

actions can be taken against the party concerned so as to maintain law and order.

McCain Food is a trademark11 therefore products posses a copyright12 that ensures a protection

from other competitors to produce the same products. McCain Food has the right to sue anyone

who violates the copyright, thus maintain originality among the market.

In UK, the government has several agencies that are concerned with maintaining a standard to

the legal factors in need of achieving. The government’s Food Standards Agency has

recommended that firms put ‘traffic light’ labels to help people understand what they are buying

and make choices about their food intake.

- Red represents High level of Ingredients (Fats and Salts).

- Green represents a low level of Ingredients.

Advertising of products is supervised by a voluntary body, Advertising Standards Authority

(ASA), within the advertising industry. McCain makes sure that all its advertising sticks within

the requirements of ASA, which is all advertisements, must be Legal, Decent, Honest and

Truthful.

10 Shareholders – An individual who is registered in the stock exchange and owns share(s) of stock in a company.11 Trademark – A formally registered symbol identifying the manufacturer or distributor of a product, also known as a brand.12 Copyright – A document granting exclusive right to publish and sell.



2.2.3 SOCIO-CULTURE ENVIRONMENT

Socio-Culture environment is another force that posses a potential effect to the business. This environment, in an overwhelming way, dictates the outcome of McCain Food’s success. It refers to customer behavior and factors that affect customer behavior. Among the environment’s components are; culture, religion, race and nationality, behaviors and personalities patterns, beliefs, characters and preference.

Customer buying patterns are determined by trends. Just as the demand for some popular clothes are determined by fashion, demand for food is likewise determined by eating patterns. Due to such patterns, McCain takes a close note on their customers’ biggest concern (Obesity13 issues and response to junk foods14) and execute relevant actions to minimize such concerns so as to maintain their customers.

Currently in the UK, potatoes are largely consumed as chips. As people become more time conscious, they prefer to consume ready meals that can be prepared quickly by heating in an oven or microwave as an outcome of being too busy in their respective work environments. This in tells that McCain, as the largest supplier of chips, must ensure a diversity among their products therefore producing them in different varieties of shapes, sizes, fat and salt content, other seasoning ingredients and packaging to suit the different customers in the market. McCain will continually develop their products in a way to satisfy their Market Share15 around the world because of the close relationship it maintains with their customers.

Decision making of the company is greatly affected by this environment and yet it serves as an influential factor that determines the demand of customers for McCain Food Company. Nothing

13Obesity – A medical condition in which the body is accumulated with an excessive amount of body fat.14 Junk food – Are the Foods that tastes good and are more convenient and easy to obtain in a ready-to-eat form but having high calorie content with little or nil nutritional value.15 Market Share – The percentage or proportion of the total available market or market segment that is being serviced (Providing Goods and/or Services, by a company.


http://en.wikipedia.org/wiki/Market_segment

http://en.wikipedia.org/wiki/Market


2.2.4 ECONOMICAL ENVIRONMENT

“Economics16 is the social science that studies the production, distribution, and consumption of goods and services.” This environment simply answers questions about the goods and services as to, how they are produced, where and to whom they are being produced to. The type of Economy depends on the Economic system17 practiced by a respective Government in a nation and in an overwhelming way, affects the decision making of the company.

This environment is a result into fluctuating costs and prices of commodities as the level of demand and supply changes in the market, thus affecting the customers buying patterns and purchasing power. Every aspect along the same line of money, like exchange rates, inflation and deflation rates in the country and trade is determined by the economical environment.

As income go up people prefer to buy what they see as superior varieties of a product type. McCain has determined the levels of income among their customers and has managed to produce products that fit the purchasing powers of all customers by differentiating the products’ selling price by their weight and content.

In addition to that, McCain takes note on the economical situation (like the current economical crisis) and finds ways to maintain a constant price of products by maintaining a constant production cost18. The achievement of producing quality products at a constant production can be clarified by McCain’s effective Organisation Structure (Legible employees) and advanced technology.

As far as Economy is concerned, McCain must ensure a safety plan and strategy as a result of the agreed decision in nullifying the effects of fluctuating levels of demand and supply in the market.

16 Economy – Definition is Sourced from: http://en.wikipedia.org/wiki/Economics 17 Economic System – Is a system that defines the involvement of production, distribution and consumption of goods and services and it includes; Capitalist, Socialist and Mixed economic systems.18 Production cost – The fixed cost that is incurred in producing a specific product in the company.


http://en.wikipedia.org/wiki/Service_(economics)

http://en.wikipedia.org/wiki/Good_(economics_and_accounting)

http://en.wikipedia.org/wiki/Consumption_(economics)

http://en.wikipedia.org/wiki/Distribution_(economics)

http://en.wikipedia.org/wiki/Production_theory_basics

http://en.wikipedia.org/wiki/Social_sciences

http://en.wikipedia.org/wiki/Economics


2.2.5 TECHNOLOGICAL ENVIRONMENT

Technology is the discipline dealing with science of applying scientific knowledge in solving practical problems. Technological environment refers to the application of technology into an industry in the market to bring about change and innovation thus enhancing production of goods and services to the end users.

Food technology is one of the most dramatic technologies in today’s world since it involves researching and developing new techniques for producing a large number of diverse products and ensuring their respective shell life 19and quality. McCain is continually being faced with such challenges and by applying technology to their production sector; they have manage to provide solutions to problems such as;

1. Freezing products while retaining flavours.2. Maximizing natural nutritional characteristics.3. Turn frozen products into an Oven Heated product.

In addition to that, McCain has manage to reduce the fat and salt content as a measure of counter acting obesity by the use of technology, which was by using sunflower oil by carefully extracted from their seeds. Potatoes possess a strong nutritional pedigree and along its preparation using sunflower oil, it was possible to cut down saturated fats by 70% across the whole product range.

Furthermore, McCain is planning to reduce their total cost20 via technology by investing into new ways of supplying power to the industries (Discussed in Ecological Environment on Page 12.

Decision making by McCain is largely affected by this environment because it may be in favour of either party, McCain Food or McCain Competitors, depending on who advances further with the extensive and effective use of technology. Technology changes at a dramatic pace and as far as technological environment is concerned, McCain is and will put as much efforts into enhancing their production using technology to keep up with the increasing demands from the consumers.

19 Shell life – Life span of a certain product (Measure of how long a product can last before expiring). 20 Total cost – The addition cost of the fixed and variable cost that the company has incurred in the course of producing the products.



2.2.6 ECOLOGICAL ENVIRONMENT

Everything surrounding us is our environment and the interaction and influence we pose onto each it is referred to as the Ecology. This environment basically discusses the effects of the business activities (Production of different products) and conducts to the environment that we live in.

In today’s business world, maintaining a cooperate social responsibility, as being ethical21 in your way of action can serve as a competitive advantage over other competing companies and one of the responsibility is to be environmental friendly. McCain is the leading chip producer due to the same reason and one of the attributes in their concern is the environment. As a major energy user, it is seeking to reduce its carbon footprint22 by investing in two major projects to set up renewable sources of energy, wind turbine system and wastewater system, to its company.

The wind turbine system will eliminate 10,300 tonnes of carbon dioxide emission each year and generate enough power to provide 60% of the plant’s electricity requirements, thus protecting McCain from increasing energy prices in the years ahead.

The wastewater system will generate enough power through the capture of methane gas. This will produce nearly 6,000 megawatt-hours resulting in an annual saving of around 10% in energy costs.

Not only will the energy sources be environmental friendly, but it will also serve as a cost saver in the production line of the company. Ecological environment affects the decision making of the company by forcing them to reduce their carbon footprint as the growing concern of Global warming, pollution and recycling increases. However, McCain will continually serve the community at large by proving their harmless ways of producing products in a much greener way thus in turn being accepted in the belief that their business activities are ethical as far as the environment is concerned.

21 Ethical – Of relating to the principles of right and wrong that are accepted by an individual or a social group. 22 Carbon Footprint – The quantity of Carbon dioxide created by individuals, businesses or countries as a result of their activities.



3.0 CONCLUSION

Change in the business environment is an inevitable factor since it has a vast number of sources. Businesses of today including McCain Food must keep up with the change, become flexible and dynamic, so as to anticipate the consumers’ demands henceforth decide on effective strategies and plans.

As seen from the previous chapters, different environments posses a different threat and opportunity respectively to McCain Food and it is for a fact that decision making and way of operation in the company is greatly affected by these business environments.

Consumers are increasingly becoming aware of food content and food issues to achieve a healthier lifestyle and therefore the challenge for McCain has been, and will continue to be, to prepare their products in the healthiest way possible; as far change is concerned, McCain has market researchers and technologists who enable the company to keep in tune with the changing business environment.



4.0 APPENDIX

FIGURE 1: ORGANISATION CHART

YEAR DECRIPTION

1956 McCain Food is incorporated (Changes its business ownership).

1965 McCain enters the British market.

1968 Company begins Marketing in Australia.

1969 Company opens U.K facility in Scarborough.

1971 Company enters U.S Market.

1976 McCain purchases Ore-Ida Food Service business (Business takeover).

2000 McCain Foods builds $7.2 million Potato processing technology center.

2002 McCain acquires Wong Wing Foods (Business acquisition).

2005 McCain builds a $18 million processing plant in India (Business expansion).

2008 McCain builds a $65 million plant in Florenceville, Canada.

TABLE 1: KEY EVENTS


HEAD OFFICE

Administration Department

BRANCH OFFICE

Marketing Department

Finance Department

BRANCH OFFICE

BRANCH OFFICE

Research and Development

Human Resource

Department

Packaging Department


PRODUCTS OF McCain FOOD COMPANY


FIGURE 2: PODUCTS OF MCCAIN FOOD


5.0 REFERENCES

‘Principles of by Lawrence by C.W Hill & S.L McShane, 2008 Edition, pg. 38-44,

Information on Environment, Book

‘Business Essentials’ by Ronald J.E & Ricky W.G, 5th Edition, Information On business

environments, Book

Information on McCain Food Company, Accessed May 16th,2009 from

http://www.mccain.com, Web

More Information on McCain Food Company, Accessed May 16th,2009 from

http://www.answers.com/topic/mccain-foods-limited, Web

Case study of McCain Food Company, Accessed May 18th,2009 from

http://www.thetimes100.co.uk/case-study--how-mccain-responds-to-changes-external-

environment--101-272-1.php, Web


http://www.thetimes100.co.uk/case-study--how-mccain-responds-to-changes-external-environment--101-272-1.php

http://www.thetimes100.co.uk/case-study--how-mccain-responds-to-changes-external-environment--101-272-1.php

http://www.answers.com/topic/mccain-foods-limited

http://www.mccain.com/


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Business Environment and McCain Foods Company