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Essay on the impact of economic slowdown on Fonterra, A Newzealand based organization

Number of Words : 1705

Number of References : 11

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A cooperative which helps the farmers their products reach the market, a leading dairy product exporter is Fonterra. Complete associations of dairy farmers who cannot get connected with the market or the end users directly; ideally approach one firm, which is reliable and big. Fonterra is a combination of 11000 such farmers. The company has around 20 billion New Zealand dollar as annual turnover with sales revenue of close to 3 million metric tones of dairy products. It today has around 16000 employees and around 11000 shareholders. It is considered third largest in international dairy trade, milk procurement and milk product processing. Fonterra exports to around 140 countries of the world (Fonterra, 2009)<br />New Zealand is one of the developed economies of the world and ranks very highly both in human capital development, standard of living, rate of literacy, and external affairs. Globally New Zealand is acclaimed and considered one of the renowned. Agriculture has been one of the main livelihoods for New Zealand. Dairy products are accounted for the largest contributor to the country’s economy. Milk and milk related products are accounted for not only internal consumption or internal consumers but also for the export purposes, which gives the largest revenue to the nation. New Zealand is an island country with not a huge population count, therefore the consumption of dairy products are not very high as compared to the production. 11000 farmers produce high volume of milk and milk products and therefore one of the large push to the economic growth for the nation became diary product export (Turnbull, 2005). <br />Markets institutions and infrastructures, formed to trade goods and services forming part of the economic activity of a country and they vary in demographics and types of goods and services traded in them. On the basis of number and size of the buyers and sellers of a product, type of product bought and sold, degree of mobility and the degree of knowledge the economic agents contribute, segregates markets as Perfect competition, Pure monopoly, Monopolistic competition and Oligopoly (Dominick, 2005). The economic model or theory says, demand for a commodity will be more elastic if it has many close substitutes, whereas demand for a commodity will be less elastic if it has few substitutes. New Zealand is a perfect competition market, wherein there are more firms, more innovation (Giffen, 1902) (Chamberlin, 1933) (Milton, 2002). So we know why New Zealand is heavily into exporting the dairy products. Now we could evaluate this business model for New Zealand in the world forum. <br />

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