Economic Efficiency

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Recent measures taken by the firm to achieve efficiency. (Distinguish carefully as between different economic notions of efficiency in your answer).

Glanbia plc is an international dairy and nutritional ingredients group headquartered in Ireland. The company has 4,500 employees in seven countries and sales offices in a further five. International operations include food ingredients and nutritionals while Irish operations incorporate consumer foods and agribusiness and property. The group has three strategic joint ventures which are based in the UK, USA and Nigeria. The company has the early 2000’s expanded its international based projects and acquired new sectors of the world market by mergers and acquisitions.

Due to the economic downturn more and more companies are facing financial difficultly. To try reduce this and combat the situation the economic market sees itself in companies are trying to become more efficient and using their resources to their full capacity where as in the “boom” years were able to over look. With glanbia now having a worldwide operation with sites all around the world the company had to look right across the board to see where it can improve on its efficiency. In Ireland labour costs are one of the highest in Europe so this amounts for a lot of glanbias cost. To try and resolve this cost glanbia cut 50 jobs in their city west facility and a further 210 jobs across their plants in Ireland as part of their cost saving plan. The job losses were part of glanbias 16 million restarting plan for 2009. Glanbia has also implemented a global senior management pay freeze and that all plc non-executive directors have taken a 10% salary cut. Also glanbia to the disappointment of farmers cut milk prices from 10 to 14 cent. The lower price means glanbias cost of their raw material is reduced greatly helping the efficiency of the company.

Electricity is also a major contributor to the cost of production in glanbia and being able to use its energy efficiency would reduce the cost to the company greatly. Energy represents 46% of controllable cost. Fuel prices and energy efficiency are crucial to the companies’ future competitiveness. This year alone a 4.6% reduction in energy consumption has been negotiated with whey production managers as the whey processing accounts for 48% of energy by glanbia. A number of actions were taken to reduce the amount of energy used e.g. the energy system management ensures that energy-efficient design is now at its forefront for all new projects and equipment. The energy consumption of a device or machine is now greatly looked into where as in the past equipment selection was based purely and capital economics. Another example is “the night watchman initiative” which was taken on board by the IT department. All glanbia computers are automatically turned off outside normal operating hours. The switching back on of the computers is staggered through the morning so that the peak morning electrical load is controlled creating greater efficiency and importantly lowering costs.


2) Nature of the competition in the sector and the profitability performance of the firm in recent years.

Arla foods amba

Is a sweedish founded dairy grroup in the late 18th century. It quickly had a major stake in the scandanvian countires. By 1978 its volume of milk exceeded 1 billion kg for the first time, in 1999 arla had 65% of the swedish milk production and 90% of the danish milk production. In 2003 which is a year most affecting glanbia’s competition as the group make a step towards glanbias home market with a merger with express dairies plc to become Arla foods uk, the uk’s leading dariy producer. Arla foods uk plc saw the company continuing to grow developing leadership in technology with the opening of stourto dairy one of europe’s most technologically advanced dairies.

One of glanbias major concrens would be its whey protein production. They already have a strong foot...
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