Analysis of the Global Food Industry

Introduction:

Food industry in one of the fastest growing globalised industries that contributes to high growth in the world economy. In modern era, due to changing lifestyles of people, changing food habits, rising disposal income, innovation in technologies and changing consumer perception, food industry faces huge challenges in meeting ever-changing customer demand. In this context, PESTEL analysis is one of the major solutions to these issues which will assist higher officials and marketers associated with this industry to evaluate and analyse the macro environmental factors on global context in terms of understating how these external market factors pose important impact on overall operation of food industry. This study is going to make PESTEL analysis of global food industry in terms of analysing that how political, legal, socio-cultural, technological, environmental and economic factors of external market pose potential impact on overall decision-making and business operation of this industry.

PESTEL of Food industry:

Explanation:

PESTEL analysis of food industry will assist food companies to analyse impact of different macro environmental factors on decision-making, busines strategies and operation of this industry in global platform. Through conducting PESTEL analysis it is possible for marketers of food companies to evaluate the impact of political, economic, socio-cultural, technological, environmental and legal factors on food industry, which assists the marketers to take right market strategies to enhance economic growth and improve overall competitive position of this industry in the international market.

While discussing impact of political factors of host county on business operation of food industry, it needs to be mentioned the overall governmental framework, regulation and policies regarding food industry in that country. As mentioned by Mialon and Mialon (2018), food industry is most tightly regulated industry that is obliged to follow the regulatory standard and policies that are set by government of host country in which it operates its business. Stable and fair political framework is advantageous for food industry as it assists companies operated in this industry to grab fair and bias-free opportunities from government. in addition to this different regulation such as regulations on nutrition and safety standard of foods, Free Trade Agreement, regulation of export and import of food products and global policies on maintaining cleanliness of commercial kitchen, pose potential impact on the overall business operation and decision-making process of food industry. On the contrary Swinnen (2016) argued that, in most of the times global policies on food standard, nutrition, packaging and labelling of food products interfere with the uniqueness of food manufacturing process and organisational policies of different food companies that enhance their overall expenses. Despite these issues, there is also positive aspects that global governmental policies are now focus mainly on developing and expansion of food industry that is going to bring about new opportunities for food companies.

Economic factors have potential impact on overall busines profit, financial stability and economic growth of food industry. As mentioned by Alava et al. (2018), of host country have good economic growth, high GDP rate and rising disposable income of countrymen, then it is highly advantageous for food industry as marketers can sell more food products at reasonable price to customers thereby grabbing high profit. On the contrary critics have mentioned that, in modern business era, global supply cost and market price of raw materials of food products are higher than early period, that automatically enhances the selling price of each food item that makes it almost difficult for lower and middle-class people to buy high quality foods (Gupta et al. 2017). On the other hand, income disparity and unequal distribution of wealth is an important global issue that poses adverse impact on selling price of food products. as stated by Arfa and Daniel (2016), ever-increasing labour cost in developed and developing country also enhances overall expense of food companies that raise the selling price of each food item.

Socio-cultural factors that pose potential impact on busines operation of food industry are social perception regarding food choice, customer buying behaviour, changing trends of food choice and current perception of people toward food selection. As mentioned by Masama. and Bruwer (2018), today’s people are health conscious who instead of selecting junk and fat enriched foods have shifted their selection choice toward protein-enriched and healthy foods. In global food industry there is a new trend of organic foods that people are more likely to buy than other inorganic and preserved foods. Therefore, the changing perception of consumers regarding their decision of food selection poses strict obligation on food industry to make effective modification in food manufacturing and food processing technique, that will assist marketers to meet the current demand of consumers.

Technology plays important roles in improving overall manufacturing, processing and packaging procedures used in food industry., technology assists food companies to use modern and innovated food processing and manufacturing process, highly advanced automated machines and online trackers that reduce dependence of food marketers on manual procedures. As mentioned by Alharbi and Al-Ashaab (2020), today’s food industry uses highly advanced software and hardware that enhances the yields in terms of meeting ever-increasing demand of high-quality foods in community. technology also assists food industry to conduct highly modernised research and development process to make consistent evaluation of food manufacturing techniques to make betterment of the quality of foods.

Environment is important factors that determines the overall success and profit of food industry. Despite using modern technologies, food marketers still face huge issues due to unpredictable climate and weather. Production of seasonal corps depends on favourable climate condition (Silva et al. 2018). on the other hand, governments across the world are now highly active in maintaining environmental sustainability that makes them to pose several legal obligations on global food companies for implement these regulations in their operation and management process. In developed and developing nations food industry is obliged to use recycling packaging materials and eco-friendly raw products, which enhance the overall company expense thereby increasing market price of each food item.

Legal facts are the legislations and regulations that governments across the world pose on food industry such as trade regulation, regulation on maintaining food standard and safety, legislation on product packaging and labelling (Gupta et al. 2017). In most the times these legislations interfere with management and operational process of food companies that not only hampers the overall organisational profit but also poses adverse impact on competitive position of this company in international market.

Conclusion:

From the overall discussion, it can be concluded that, PESTEL analysis is most proffered approach in modern era that assists companies to analyse the impact of overall macro-environmental factors on business decision and operation of entre business. PESTEL analysis of food industry represents that how the global political, economic, social, technological, environment and legal factors can impact on decision making, operation and management process of food companies. By evaluating these impacts, marketers of food companies can set relevant strategies and tactics that can assist them to overcome all challenges in new market and grab good market position.

Reference list:

Alava, R.P., MuMurillo, J.M., Zambrano, R.B., ZambranoZa, M.I. and Vélez, M.L.V., 2018. PEST Analysis Basedased onon Neutrosophic Cognitiveognitive Maps: A CaseCase StudyStudy forfor Food Industry. Neutrosophic Sets and Systems: An International Book Series in Information Science and Engineering, vol. 21, 2018, p.201884.

Alharbi, B.F. and Al-Ashaab, A., 2020. The influential factors of business development among SMEs in the Food Industry of the GCC Region. Journal of Business and Retail Management Research, 14(02).

Arfa, N.B. and Daniel, K., 2016. Main factors affecting food industry clustering in France. In Food Security and Industrial Clustering in Northeast Asia (pp. 241-253). Springer, Tokyo.

Blažková, I., Dvouletý, O. and Machek, O., 2020. What drives total factor productivity and its growth in post-communist countries? The case of the Czech food industry. Journal of Agribusiness in Developing and Emerging Economies.

Gupta, R.S., Taylor, S.L., Baumert, J.L., Kao, L.M., Schuster, E. and Smith, B.M., 2017. Economic factors impacting food allergen management: Perspectives from the food industry. Journal of food protection, 80(10), pp.1719-1725.

Masama, B. and Bruwer, J.P., 2018. Revisiting the economic factors which influence fast food South African Small, Medium and Micro Enterprise sustainability. Expert Journal of Business and Management, 6(1).

Mialon, M. and Mialon, J., 2018. Analysis of corporate political activity strategies of the food industry: evidence from France. Public health nutrition, 21(18), pp.3407-3421.

Santeramo, F.G., Carlucci, D., De Devitiis, B., Seccia, A., Stasi, A., Viscecchia, R. and Nardone, G., 2018. Emerging trends in European food, diets and food industry. Food Research International, 104, pp.39-47.

Silva, V.L., Sereno, A.M. and do Amaral Sobral, P.J., 2018. Food industry and processing technology: on time to harmonize technology and social drivers. Food Engineering Reviews, 10(1), pp.1-13.

Swinnen, J., 2016. Economics and politics of food standards, trade, and development#. Agricultural Economics, 47(S1), pp.7-19.

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