France Food and Beverage Industry: The of Charrefour - Case Study Example

2055 Business Scenario in France: The Case of Charrefour Executive Summary Environmental protection is one of the factors that business organizations have to emphasize in their production processes. Today, many business organizations are not taking enough measures during their business activities to protect the natural and human resources. This report will include the business organization scenario in 2055 in France. It will formulate a strategy for sustainable innovation that Charrefour can use in 2055 to create value and competitive advantage. It will also present the likely future trends in the food and beverage industry that are likely to affect organizations in that industry in relation to environmental protection. The report will adopt the case of Charrefour in France. Table of Contents Title Page………………………………………………………………………………….……………….1 Executive Summary……………………………………………………………………….……………….2 Table of Contents…………………………………………………………………………….……….……3 Introduction ………………………………………………………………………………………………..4 2055 Scenario……………………………………………………………………………………………….4 Likely future trends…………………………………………………………………………………...…….5 Food and Beverage environmental sustainability in France…………………………….………………….6 France in 2055………………………………………………………………………………………………6 France Food and Beverage Industry………………………………………………………………….…….6 Case Study: Carrefour…………………………………………………………………………………...….7 Consumer Trend……………………………………………………………………………………...……..7 Increases Regulatory Environment …………………………………………………………….…………..8 Closed Loop System………………………………………………………………………………………..9 Conclusion and Recommendation…………………………………………………………………….……9 References………………………………………………………………………………………………....10 Introduction Business organizations have been protecting their organizations, and they have accepted this as a business principle. However, many business organizations have failed to extend this notion to the protection of natural and human resources. Business organizations have to integrate environmental sustainability in their enterprises. For the business enterprise, sustainability means adoption of business strategies that meet the enterprise’s needs while protecting, enhancing, and sustaining the human and natural resources that may be needed in the future. This study will employ a Food and Beverage Organizations Scenario in 2055. This scenario is not a prediction of what will happen in 2055 neither is it a suggestion of a preferred future. Rather, it is a study that offers various possible and extreme outcomes. This scenario is aimed at stimulating thoughts, and highlights some opportunities and threats that Food and Beverage organizations might face in the future. It will also inform today’s decisions. The F&B scenario can be used to judge the opportunities and risks of policy relating to the future sustainability of F&B organizations. The F&B scenario is set along two axes of uncertainty, and these are encapsulation of future uncertainties and the possible outcomes. At one extreme on this axis, continuous dependence on bio-fuel and carbon emissions both contribute to high environmental impact. At the other end of the axis, there is usage of clean-fuel technologies by F&B organizations, which have reduced carbon emissions. In addition, due to resource constraints, manufacturers are emphasizing product longevity. 2055 Scenario The 2055 F&B scenario may be considered beyond the horizon of known science. 2055 F&B scenario focuses on a capability that F&B organizations know what they will need in order for them to deliver a vision, and what they feel that might be possible if their future efforts are focused. It will entail the exploration of unknown territory. Food manufacturing business will have a very different look in 2055, and it will be virtually unrecognizable from that of 40 years ago. Success for food-manufacturing businesses will be determined by a firm’s capability to adapt its physical and intellectual infrastructures to exploit changes in technology because manufacturing will be faster and more responsive to changing global markets. Products and processes will be more sustainable. Closed loop systems will be developed, and they will help in the elimination of energy and water waste and recycling of physical waste. The current food consumption is 25 percent over what the world can manage to regenerate resources to support the global population (Stoner and Wankel 2013, p. 22). Weidinger, Fischer and Schimeidpeter (2013, p. 182) estimate that the world demography will be over nine billion by the year 2050. This means that by 2055, the pressure on finite resources will increase exponentially. Agricultural area, upon which the Food and Beverage industry heavily relies, already occupies more than half the habitable areas of the globe. Water scarcity continues to be experienced owing to multiple factors such as climate change and poor land use. Stoner and Wankel (2013, p. 22) estimate that agriculture consumes approximately 70 percent of the available water resources. Food service businesses are increasing rapidly in the Europe and the United States with other emerging economies following closely. Substantial changes in dietary habits are being witnessed as some economies such as China are moving from vegetarian to meat-based diet. Currently, it is estimated that meat production organizations produce 20 percent of the world’s greenhouse gas emissions. The demographic is growing at a high rate such that by 2055, the current rate of meat consumption will have doubled. According to Weidinger, Fischler and Schmidpeter (2013, p. 182), most people are getting richer, and they are switching to animal protein-based diets. Increasing populations will highly increase pressure on water and other resources by 2055. To compound this problem, biofuel production is increasingly commanding cereals that were until now utilized for other food purposes. This has led to shortfalls in the global marketplace, food price increases, and even food riots in some developing countries, with considerable ramifications for sustainable development. Likely future trends The global urban population is expected to increase. According to Foresight (2013, p. 28), 70 percent of the total world population will be living in urban areas in 2050. Therefore, there will be increased demand for materials, water, energy, and land. As a result, the population will compete for the available resources, and there will be a potential disruption in their supply. Firms that will learn to manufacture their products with less of these inputs will be more resilient to these effects. The Connexion (2015) projects the population of France to overtake the one of Germany by 2055. There will be increased vulnerability of global supply chains due to rapid climate change. Climate change will impact on rising sea level and extreme weather. Food manufacturers will be affected by the disruption in international supply chains. In 2055, there will be increased regulation with a special focus being on promoting resource productivity. In 2055, regulations are likely to include tougher environmental standards for products and new ways to price natural resources and ecosystem services (Foresight 2013, p. 28). In 2055, the central governments developed a complex set of regulations to encourage Food and Beverage producers to invest seriously in the development of new and sustainable means of production. Food and Beverage producers respond to these regulations by investing heavily in technologies that reduce environmental impact of their production processes. Food and Beverage environmental sustainability in France France has the second largest food and beverage industry in Europe and fifth in the world. Some of the popular F&B organizations in France include Danone, PernodRicard, Leclerc, and Carrefour. French government is very strict in terms of labeling of food products. Legislations also require organizations to include the country of origin for food raw materials, fish, vegetables, as well as other types of food. France is also considering implementing environmental labeling in order to enable customers to factor in environmental considerations when they are purchasing food products and to push organizations to improve their environmental performances. France legislation goes beyond carbon emissions to include other environmental impacts such as the impact on water and biodiversity for the F&B industry. Possible compulsory implementation is expected in 2055. France food businesses should move towards local food culture. Local food culture can offer good alternatives to businesses in terms of environmental sustainability (Walker 2013, p. 49). France in 2055 It is 2055, and Total population of France is 72 million against Germany’s 71 million. 40 years ago, in 2015, the population of France stood at 65 million. The population growth is 10.8 percent. The population increase is attributed to high fertility rate of French citizens. The life expectancy has reached 86.5 years. 90 years ago, France experienced a ‘baby boom’ and this made the population of France increase at a rate of 1 per cent per year. France is at the heart of the European economy. The Food and Beverage consumer market stands at 71 million. The transportation network is well developed with over 15, 000 km of the motorway network, over 200 airports and the widest high-speed railway network in Europe with over 35,000km of tracks. France has risen to become the biggest food exporter in the world. Therefore, there is a rapid increase in food and beverage producers making the government establish strict regulations in order to ensure that the production activities do not cause a harmful effect to the environment. France Food and Beverage Industry It is 2055, and the French agri-food industry has recorded €210 billion in revenue. This is a 50 percent growth from 2010, and this makes F&B industry one of the most dynamic in France. The industry has generated an added value of €50 billion and provided employment for over 500,000 people (excluding small retail businesses). This has made most of the population to be concentrated in the urban areas. The large population has continued to have negative impact on the environment and this has prompted the government to tighten the regulations. Case Study: Carrefour This study develops a consistent set of assumptions to analyze the sustainability of Carrefour in the year 2055. This study will use France population forecast to project the demand for Food and Beverage products and to estimate the total food and beverage demand. It will also project how Carrefour will operate within a resource-constrained economy yet offer a solution that is plausible and innovative to the difficult environmental and social challenges. Carrefour has its operation in all cities around France. Customers increase with ready to eat meals and groceries needed on a daily basis. The stores are open 24 hours. There is an improvement in customer service hours. 40 years ago (2015), the stores used to operate from 8am to 10pm (Carrefour 2010). This move has been made to ensure that the company meets the expectations of busy urban customers. The stores are classified into four according to their locations. The Carrefour City is located in the major cities aimed at meeting the expectations of busy urban customers. Carrefour Contact is located in small cities and villages with an aim of meeting the daily demand in terms of fresh products. The Carrefour Express offers essential products. Finally, the Carrefour Montage was created 46 years ago (2009) and is exclusively found in ski areas (Carrefour 2010). Consumer Trend The current consumer trends offer new revenue and profit opportunities for Carrefour. While consumer spending has remained soft, an increase in demand for home-cooking products and budget friendly products offers a revenue opportunity for Carrefour. Carrefour can move towards healthy, organic, natural and green products in order to maintain its leading status in the food and beverage industry. Food and beverage customers have changed their attitudes towards healthy eating, and they support companies that stress on environmental sustainability. Carrefour can capitalize on these trends. Most firms in the F&B sector are focusing on cost reduction and improved operational efficiency. Carrefour can differentiate its brand and operations by diverting from the common trend and instead focus on sustainable business operations. This will enable it to capture most of the customers from its competitors. Carrefour can capitalize on four consumer trends. These trends are: i. Health and wellbeing ii. In-home cooking iii. More environmentally conscious consumers iv. Green and local consumption Carrefour can respond to these trends and work on strategies to introduce more healthy eating products, diversify product ranges, and establish new retail/customer outlets. Towards this end, Carrefour can source its food products from the local farmers who grow their food organically without using synthetic fertilizers. It can minimize importing non-organic agribusiness products. Food products produced locally is greener than the one imported from other countries. Its movement towards localized foods will determine Carrefour’s success. To achieve this success effectively, Carrefour can establish agreements with local farmers. Carrefour can set up warehouses and new logistics that will help the firm to gather all commodities so that it can buy them locally and store them locally. Carrefour has to push strongly towards localization. This will reduce the usage of much fuel during transportation, therefore, protecting the environment against bio-fuel emissions. Though private labeling of products is less profitable than the sale of branded goods, Carrefour can move towards private labeling. Due to hard economic times, food and beverage consumers are foregoing higher priced food products and shifting to more in-home consumption. These consumers are saving money by buying private label foods instead of the advertized brands. Increases Regulatory Environment Most food and beverage companies are having a difficult time due to increased regulatory environment by the French government. The most prominent regulatory is the additional service tax. This is likely to impact negatively on the food service industry. This regulatory change is likely to influence a large number of food and beverage producers and retailers. However, due to its large volume operation, Carrefour can take advantage of not increasing the prices for its food products. Rising prices for food products are being driven by increased food demand in China and severe weather conditions around the world. Carrefour can expand its market to China in order to increase its area of operational and increase its profits. In France, Carrefour has continued to exert price pressures on its competitors. Carrefour has continued to dominate the consumer food market since 1990s (Carrefour 2010). Carrefour can continue its dominance, which has pushed many food retailers out of the market. Closed Loop System Closed loop system offers Carrefour a new recycling program for plastic storage materials. The aim of this system is to improve the environmental and financial performance of Carrefour. Their system is aimed at supplying sustainable food and beverage packaging. The packaging will be recovered under the Closed Loop System. The benefits of this system: i. Reduction in waste to landfill ii. Guaranteed use of France material in the manufacturing process iii. Carbon emission reduction and reduced waste bills iv. Waste will be sorted internally to ensure consistency, safety, and accuracy. This initiative will also involve using reusable packaging bags in all its outlets in the world. Conclusion and Recommendation Despite the difficult business environmental and other challenges in 2055, Carrefour can still manage to remain competitive. Carrefour can respond to these trends and work on strategies to introduce more healthy eating products, diversify product ranges, and establish new retail/customer outlets. References Carrefour. 2010. 2010 Expert Report: Sustainable Development at Carrefour. Available https://www.unglobalcompact.org/system/attachments/12356/original/Rapport_EXPERT_DD_Carrefour_2010_ENG_BD.pdf?1318723433 Foresight. 2013. The Future of Manufacturing: A new era of opportunity and challenge for the UK Summary Report. The Government Office for Science, London. Stoner, J. and Wankel, C. 2013. Global Sustainability as a Business Imperative. New Delhi: Palgrave Macmillan. The Connexion. 2015. French Population to beat Germany. Available http://www.connexionfrance.com/France-population-Germany-2055-fertile-13585-view-article.html Weidinger, C., Fischler, F. and Schmidpeter, R. 2013. Sustainable Entrepreneurship: Business Success through Sustainability. Springer Science & Business Media Walker, L. 2013. Choosing a Sustainable Future: Ideas and Inspiration from Ithaca, NY. New York: New Society Publishers. Read More