Study Document
Pages:7 (2052 words)
Sources:7
Subject:Countries
Topic:Costa Rica
Document Type:Term Paper
Document:#77920713
Costa Rica & Co.
Strategic analysis of the global agricultural economy
Competitive Financial Landscape
Dole Food Co. & Competitors
"Costa Rica used to be known principally as a producer of bananas and coffee, but pineapples have surpassed coffee as the number two agricultural export. Manufacturing and industry's contribution to GDP overtook agriculture in the 1990s, led by foreign investment in Costa Rica's free trade zone. Well over half of that investment has come from the United States. Del Monte, Dole, and Chiquita have a large presence in the banana and pineapple industries" (U.S. Department of State, 2010).
In consideration of Costa Rica's booming agricultural industry, and its role in global supply of bananas and other tropical fruits as a target site for investors, strategic growth models should be designed to promote the expansion and sustainability of the nation's natural resource-based economy of scale. Selection of Costa Rica was based on the following priority infrastructural support factors in future prospectus of the countries capacity to advance in the international agricultural market shown in Table 1.
Table 1
Proximity to raw materials and/or markets
Availability of land, labor, or other resources
Quality of the local infrastructure
Availability and quality of suppliers
Availability and quality of third party service providers
Tax holidays or other incentives
Quality of life for employees
Table 1. Costa Rica's agricultural infrastructure
Costa Rica developed a National Biosafety Framework to agricultural activities and commerce in accordance with the UNEP-GEF and the Comision Tecnica Nacional de Bioseguridad in 2005 (UNEP, 2005). Where Costa Rica also shows strong consistency in its national agricultural growth strategy is adherence to labor laws, and repatriation strategies that combine local worker interests in land use and ownership, and seasonal travel schedules will have impact. Agricultural workers are likely to participate with global corporations, as well as serve as suppliers. How compatible Dole, Chiquita and Del Monte corporate human resource strategies are with local expectations about employee compensatory benefits, recruitment and training will obviously affect the overall scope of supplier to market relations. Due to the long-term presence of the three leaders in the national labor market of Costa Rica, and the nation's developed infrastructure, a high level of synergy exists where local employment contract standards are concerned. Planting to market performance is certain to follow.
Competitive performance analysis of Costa Rica's agricultural export industry is illustrated in comparative advantages reported in the three (3) financial statements of Dole Food Company, Chiquita Brands International, Inc. And the Del Monte Fresh Foods and Del Monte Produce Corporations, as shown in the Competitive Financial Landscape in Table 2.
Table 2
Key Numbers
Dole Food
Chiquita Brands
Del Monte Foods
Fresh Del Monte Produce
Annual Sales ($ mil.)
6,778.5
3,470.4
3,739.8
3,496.4
Employees
75,600
21,000
14,700
44,000
Market Cap ($ mil.)
3,347.3
1,308.2
Profitability
Dole Food
Chiquita Brands
Del Monte Foods
Fresh Del Monte Produce
Industry2
Market3
Gross Profit Margin
10.52%
14.69%
33.13%
8.31%
28.98%
28.77%
Pre-Tax Profit Margin
0.37%
1.54%
10.27%
2.89%
10.68%
8.48%
Net Profit Margin
0.23%
1.51%
6.57%
2.77%
2.36%
5.53%
Return on Equity
2.2%
7.2%
14.2%
6.1%
7.2%
10.1%
Return on Assets
0.4%
2.4%
5.6%
4.0%
2.4%
1.5%
Return on Invested Capital
0.6%
3.7%
7.7%
5.3%
3.7%
4.4%
Valuation
Dole Food
Chiquita Brands
Del Monte Foods
Fresh Del Monte Produce
Industry2
Market3
Price/Sales Ratio
0.11
0.17
0.94
0.38
1.38
3.67
Price/Earnings Ratio
43.67
10.26
14.49
13.79
18.21
26.95
Price/Book Ratio
1.00
0.75
1.88
0.80
4.04
7.12
Price/Cash Flow Ratio
4.64
9.49
9.23
5.68
11.24
22.78
Operations
Dole Food
Chiquita Brands
Del Monte Foods
Fresh Del Monte Produce
Industry2
Market3
Days of Sales Outstanding
43.27
32.02
18.12
34.18
31.19
34.66
Inventory Turnover
8.6
13.9
2.9
7.9
7.0
8.1
Days Cost of Goods Sold in Inventory
42
26
46
52
45
Asset Turnover
1.6
1.6
0.8
1.4
1.0
0.3
Net Receivables Turnover Flow
8.4
11.4
20.1
10.7
11.7
10.5
Effective Tax Rate
70.2%
36.6%
5.5%
37.9%
Financial
Dole Food
Chiquita Brands
Del Monte Foods
Fresh Del Monte Produce
Industry2
Market3
Current Ratio
1.81
1.75
2.17
2.52
1.22
1.33
Quick Ratio
0.9
1.2
0.5
1.1
0.7
1.2
Leverage Ratio
4.90
3.10
2.35
1.55
2.83
7.13
Total Debt/Equity
1.90
0.99
0.71
0.81
1.37
Interest Coverage
1.13
1.89
4.43
9.98
6.76
17.33
Per Share Data ($)
Dole Food
Chiquita Brands
Del Monte Foods
Fresh Del Monte Produce
Industry2
Market3
Revenue Per Share
88.91
73.14
18.29
57.68
24.35
7.60
Table 2. Competitive Financial Landscape, global fruit industry, 2009 (Hoovers, 2010).
From performance reporting in the competitive financial landscape, analysis of the 'total' market picture for each of the three competitors may be evaluated for competitive advantages. A number of competitive advantages are seen in both internal and external operations control and management. Marketing (i.e. advertising media) analysis does not figure into the foregoing assessment of the three competitor's channel of operations and value chain composites, yet acknowledgement of the force of building "consumer equity" into the asset basis of the larger scope of strategic planning and long-term forecasting is certainly relevant both in terms of brand proliferation and sales performance at the end of the pipeline.
Logistics and supply chain management is a critical driver in the global export in Costa Rica's agricultural trade. How lean and agile local to global systems management of company channel operations is designed and managed has much to do with the capacity of each of the competitors to meet demand with "zero" losses sustained to perishable inventory levels. Product life cycle in this segment is short lived, and even accelerated by conditions once the fruit and other agricultural products hit the retail, distribution to consumer decoupling point.
In the last 2-3 decades, the advancement of technological innovation in logistics management systems through IT infrastructural integration of internal and external (i.e. supplier and distributor) control and database reporting activities has streamlined Costa Rica's agricultural market and its dominance in the international fruit market. From national regulatory compliance and tracking of production to distribution product down the market chain to the various subsidiaries, the three major fruit and produce conglomerates have benefitted from new industry standardized SAP interfaced logistics platforms; enabling monitoring and data reporting performance capabilities.
The speed by which agricultural exportation now takes place is largely in response to the implementation of these new IT network systems to operations management. Frequency and speed in inbound and outbound transportation is the other half of this story, and the facilitation of this relationship from the export site warehouses of the various distributor companies in Costa Rica would not be made possible without the highly systematized inventory management strategies of those distribution centers. Forecasting based on market demand and current output is made possible through the connectivity of database analysis derived from the activities of the corporation's Costa Rica based, enhanced high level logistics, and careful attention to supply chain metrics.
The front end investment in systems integration in the operations in Central American supplier locations has certainly assisted the U.S. fruit and produce companies to increase sales. Costa Rica has faired, of course, well in this circumstance, as the comparative economic and political stability of the country in the Central American region stands to reinforce its leadership in the market. In sum, sourcing and procurement strategies attendant to planning and forecasting market impact are more reliable where Costa Rica is concerned, as even outsourced supplier relationships are likely to go more smoothly where there is less corruption and a higher level of technical capacity to track and facilitate operations.
Investigation into how and to what extent the three competitor corporations, Dole Food Company, Inc., Chiquita Brands International, Inc. And the Del Monte Fresh Foods and Del Monte Produce Corporation have chosen to participate in Costa Rica's agricultural economy of scale as plantation investors, supplier, and also buyers for export to the global food market constitutes the remainder of the study.
DOLE FOOD COMPANY, INC. & Competitors
Founded in Hawaii in 1851, by James Dole, the Dole Food Company began as a pineapple growing and canning company. Today, some two hundred products are sourced, grown, processed, marketed, and distributed to more than ninety countries, and the brand is found worldwide in supermarkets, mass merchandisers, wholesalers, and foodservice operators (Hoovers, 2010). With an established lead market position, Dole focuses primarily on retention of its position through dominance of major rivals through exploitation of its channel of operations capabilities to deliver produce at lower cost. Company Financial performance is detailed in Table 3.
Table 3
Dole Company: Financial Overview, 2009
Company Type (www.hoovers.com)
Public - NYSE: DOLE
Headquarters
Fiscal Year-End
December
Financial Filings
SEC
2009 Sales (mil.)
$6,778.5
1-Year Sales Growth
(11.0%)
2009 Net Income (mil.)
$88.0
1-Year Net Income Growth
(28.3%)
Annual Income Statement
All amounts in millions of U.S. Dollars unless otherwise noted.
Dec 09
Dec 08
Dec 07
Revenue
6,778.5
7,620.0
6,931.0
Cost of Goods Sold
6,008.8
6,862.9
6,307.9
Gross Profit
Gross Profit Margin
11.4%
9.9%
9.0%
SG&A Expense
Depreciation & Amortization
Operating Income
Operating Margin
5.2%
3.6%
1.9%
Nonoperating Income
(55.3)
(14.1)
1.8
Nonoperating Expenses
(198.8)…
References
Background Note: Costa Rica (2010). U.S. Department of State. Retrieved from: http://www.state.gov/r/pa/ei/bgn/2019.htm
Chiquita Brands International, Inc. (2010). Hoovers. Retrieved from: http://www.hoovers.com
Chiquita Brands International, Inc. (2010). Retrieved from: http://www.chiquita.com/
Del Monte Foods (2010). Retrieved from: http://www.delmonte.com/
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