Changing Fonterra's ownership model?
The purpose of this thesis is to examine the reasons behind the recent capital restructure proposal in Fonterra as well as the members' rejection of this proposal. This thesis gives background information on Fonterra and a brief description of the New Zealand dairy industry and its development. Duri...
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| Formato: | Otro |
| Lenguaje: | sueco Inglés |
| Publicado: |
2009
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| Materias: | |
| Acceso en línea: | https://stud.epsilon.slu.se/10951/ |
| _version_ | 1855571781203525632 |
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| author | Rydberg, Charlotta |
| author_browse | Rydberg, Charlotta |
| author_facet | Rydberg, Charlotta |
| author_sort | Rydberg, Charlotta |
| collection | Epsilon Archive for Student Projects |
| description | The purpose of this thesis is to examine the reasons behind the recent capital restructure proposal in Fonterra as well as the members' rejection of this proposal. This thesis gives background information on Fonterra and a brief description of the New Zealand dairy industry and its development. During the last decade or so, a number of studies have been conducted concerning the problems of traditional co-operatives, which have become large and which have got complex business operations. The core of these studies is the notion that collective ownership creates so-called property rights problems. However, the specific attributes of Fonterra may imply that these theoretical studies do not apply to Fonterra or only limitedly so.
The theoretical part is based on a number of articles about co-operatives. These studies have a few common denominators. They all treat large co-operatives with complex business activities, working in very intense competition. In order to survive they have to grow persistently, and the increasingly large size as well as the complex nature result in heterogeneous memberships with low member involvement. As a result of this the members lose trust in management and the Board. Members become hindered in their control of the company and this leads to dissatisfaction and low involvement.
The specific attributes in Fonterra are the fair value share, the Shareholders Council, no existing congruent isomorphism and that there is still a need for a co-operative in New Zealand to keep transaction costs down. This study consists of an empirical study, the aim of which is to investigate whether these specificities of Fonterra may be the cause of the members' opposition to the Board's proposal. The main part of the empirical material was collected during a trip to New Zealand during January 2009. Interviews were carried out with representatives from the Board, the Shareholders' Council and dairy farmers from Fonterra. Two persons with co-operative insight were also interviewed.
The empirical study shows a clear distinction between the wants and needs of the members and the Board. Members are afraid of losing control over their co-operative and the Board feels that it needs to change the capital structure in order to secure the future for Fonterra's members. In this process the Shareholders' Council played an important role and members are in general very happy with its work. The fair value share causes some issues within Fonterra, members do not understand the valuation method and the high value is now starting to cause redemption. In the past decade Fonterra has been the only option for many farmers and hence there has been a need for a co-operative to lower transaction costs. New options are now emerging in New Zealand and are weakening Fonterra's position.
From the Board's side Fonterra is a typical co-operative with typical co-operative problems. However, members are not alienated and very much feel that Fonterra is their co-operative. The question whether a pure co-operative can survive in today's society remains but attributes like the Shareholders' Council to a great extent help members remain in control. |
| format | Otro |
| id | RepoSLU10951 |
| institution | Swedish University of Agricultural Sciences |
| language | Swedish Inglés |
| publishDate | 2009 |
| publishDateSort | 2009 |
| record_format | eprints |
| spelling | RepoSLU109512017-09-20T08:29:17Z https://stud.epsilon.slu.se/10951/ Changing Fonterra's ownership model? Rydberg, Charlotta Economics and management The purpose of this thesis is to examine the reasons behind the recent capital restructure proposal in Fonterra as well as the members' rejection of this proposal. This thesis gives background information on Fonterra and a brief description of the New Zealand dairy industry and its development. During the last decade or so, a number of studies have been conducted concerning the problems of traditional co-operatives, which have become large and which have got complex business operations. The core of these studies is the notion that collective ownership creates so-called property rights problems. However, the specific attributes of Fonterra may imply that these theoretical studies do not apply to Fonterra or only limitedly so. The theoretical part is based on a number of articles about co-operatives. These studies have a few common denominators. They all treat large co-operatives with complex business activities, working in very intense competition. In order to survive they have to grow persistently, and the increasingly large size as well as the complex nature result in heterogeneous memberships with low member involvement. As a result of this the members lose trust in management and the Board. Members become hindered in their control of the company and this leads to dissatisfaction and low involvement. The specific attributes in Fonterra are the fair value share, the Shareholders Council, no existing congruent isomorphism and that there is still a need for a co-operative in New Zealand to keep transaction costs down. This study consists of an empirical study, the aim of which is to investigate whether these specificities of Fonterra may be the cause of the members' opposition to the Board's proposal. The main part of the empirical material was collected during a trip to New Zealand during January 2009. Interviews were carried out with representatives from the Board, the Shareholders' Council and dairy farmers from Fonterra. Two persons with co-operative insight were also interviewed. The empirical study shows a clear distinction between the wants and needs of the members and the Board. Members are afraid of losing control over their co-operative and the Board feels that it needs to change the capital structure in order to secure the future for Fonterra's members. In this process the Shareholders' Council played an important role and members are in general very happy with its work. The fair value share causes some issues within Fonterra, members do not understand the valuation method and the high value is now starting to cause redemption. In the past decade Fonterra has been the only option for many farmers and hence there has been a need for a co-operative to lower transaction costs. New options are now emerging in New Zealand and are weakening Fonterra's position. From the Board's side Fonterra is a typical co-operative with typical co-operative problems. However, members are not alienated and very much feel that Fonterra is their co-operative. The question whether a pure co-operative can survive in today's society remains but attributes like the Shareholders' Council to a great extent help members remain in control. Syftet med detta examensarbete är att undersöka orsakerna till den föreslagna förändringen av Fonterras ägarstruktur. Vidare är syftet att undersöka varför medlemmarna motsade sig detta förslag. Arbetet ger bakgrundsinformation om Fonterra samt en kortfattad beskrivning av den nyzeeländska mejeriindustrin och dess utveckling. Under de senaste åren har ett antal studier gjorts om de problem som kan uppstå i traditionella kooperativa företag som växt sig stora och numera karakteriseras av komplexa affärstransaktioner. Grunden i dessa studier är att kollektivt ägande skapar så kallade äganderättsproblem. I Fonterra fall kan vissa speciella attribut leda till att dessa studier endast stämmer in till en viss grad. Teorikapitlet är grundat på ett antal artiklar som berör kooperativt företagande. Artiklarna har ett antal gemensamma punkter, nämligen att de behandlar kooperativa företag, som har stort medlemsantal, komplex affärsverksamhet och intensiv konkurrensexponering. För att överleva krävs ständig tillväxt, vilket leder till ett stort och komplext kooperativt företag. Detta för med sig en heterogen ägarkår med oengagerade medlemmar. Som en följd av detta förlorar medlemmarna tilltron till styrelsen och ledningen. Medlemmarna hindras från att kontrollera sitt kooperativa företag, vilket leder till missnöje och lågt engagemang. De speciella attributen i Fonterra är, ”the fair value share”, ”the Shareholders’ Council” (en skuggstyrelse), att ingen kongruent isomorfism existerar samt att det fortfarande finns ett behov av ett kooperativt företag för att hålla transaktionskostnaderna nere i Nya Zeeland. Den här studien innehåller ett empiriskt kapitel vars syfte är att undersöka om dessa speciella attribut kan vara anledningen till att medlemmarna motsade sig styrelsens förslag till ändrad ägarstruktur. Huvuddelen of det empiriska materialet samlades in under en resa till Nya Zeeland i januari 2009. Intervjuerna genomfördes med representanter från styrelsen, skuggstyrelsen, medlemmar i Fonterra samt två personer med allmän kunskap om kooperativa företag. Den empiriska studien visar på en tydlig skillnad mellan vad medlemmarna och styrelsen anser vara viktigt. Medlemmarna är rädda för att förlora kontrollen medan styrelsen anser att förändring är nödvändig för att säkra medlemmarnas framtid. I denna process har skuggstyrelsen spelat en mycket viktig roll och medlemmarna verkar generellt vara väldigt nöjda med skuggstyrelsens arbete. ”Fair value share” skapar vissa problem i Fonterra då vissa medlemmar inte förstår hur värderingen går till. Vidare så skapar det höga värdet en inlösningsrisk. Under det senaste årtiondet har Fonterra varit det enda geografiska alternativt för många medlemmar och därför har det funnits ett behov av ett kooperativ för att sänka transaktionskostnaderna. På marknaden dyker upp nya alternativ, som försvagar Fonterras position. Sett från styrelsens håll är Fonterra ett typiskt kooperativ med typiska problem som uppstår. Sett från medlemmarnas sida kan man ana att de inte är alienerade och fortfarande känner att Fonterra är deras kooperativa företag. Frågan om ett renodlat kooperativt företag kan överleva i dagens samhälle kvarstår, men attribut som en skuggstyrelse hjälper medlemmarna att behålla kontrollen. 2009-09-14 Other NonPeerReviewed application/pdf sv https://stud.epsilon.slu.se/10951/1/rydberg_c_170920.pdf Rydberg, Charlotta, 2009. Changing Fonterra's ownership model?. UNSPECIFIED, Uppsala. Uppsala: (NL, NJ) > Dept. of Economics <https://stud.epsilon.slu.se/view/divisions/OID-510.html> urn:nbn:se:slu:epsilon-s-7002 eng |
| spellingShingle | Economics and management Rydberg, Charlotta Changing Fonterra's ownership model? |
| title | Changing Fonterra's ownership model? |
| title_full | Changing Fonterra's ownership model? |
| title_fullStr | Changing Fonterra's ownership model? |
| title_full_unstemmed | Changing Fonterra's ownership model? |
| title_short | Changing Fonterra's ownership model? |
| title_sort | changing fonterra's ownership model? |
| topic | Economics and management |
| url | https://stud.epsilon.slu.se/10951/ https://stud.epsilon.slu.se/10951/ |