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Critical Analysis Of Spca Case

2666 words - 11 pages

SPC Ardmona (SPCA) is one of Australia’s time-honored food companies, dedicated to supplying packaged fruit and vegetables. The Victoria state government recently made a decision of assisting struggling SPCA with $22 million to bail it out of the dilemma. It has been controversy over the rationality of this decision since the date on which the decision was released. This report critically evaluates the SPCA’s bail out case by using triple bottom line model, and delivers an opinion that SPCA was worthy of the investment from government. A detailed case study is summarized in subsequent section, followed by evaluation from perspectives of economic, social and environmental, ...view middle of the document...

Same with SPCA, almost the entire cannery industry was shocked. With the recent partial closure of Heinz and Windsor Farm, SPCA is the only Australian fruit processing company left (Hendrischke 2014).

To survive its predicament, SPCA decided to seek financial help from government in late 2013. The initial funding plan raised by SPCA was a combination of $25 million investment from federal as well as state government and $150 million from its parent company Coca-Cola Amatil (Caruana 2014). However, the request was rejected by federal government on 30th of January 2014, which not only conveyed a negative message to the whole industry in Goulburn Valley, but also made a marker for Victoria government regarding to the industry policy (Cullen 2014).

Fortunately, the state government did not fail SPCA again. In early February, an agreement of co-investment was reached by state government and Coca-Cola Amatil. Victoria government decided to contribute $22 million over three years to the total $100 million funding package, with the rest invested by Coca-Cola Amatil. Certain conditions also attached to the agreement, such as at least 500 full-time employments staying in Goulburn Valley within three years and a full refund required incase SPCA ceases its business in Shepparton in five years (Ferguson 2014). Victoria government stated that the money was raised from current operating project and would not have influence on state’s budget delivery (Willingham 2014).

Evaluation with triple bottom line

After Victoria’s announcement being made, although the mayor of Shepparton claimed that where would be a loss $650 million with the shut down of SPCA, there were still quite a few voices against the rescue decision (Ferguson 2014). It is doubtful whether taxpayers’ money was used in the right place to generate reasonable financial return.

• Industry rivalry
By analyzing with Porter’s Five Forces Model, the most crucial concern of SPCA is the industry rivalry, which largely from imported products from countries with low labor costs and low quality standards (Porter 1979). China is one of the largest packaged fruit exporters of Australia and takes large amount of market share away from SPCA with price advantage. In 2012, Australia imported 27,000 tones of preserved fruit from China, while SPCA had sales volume of 36,000 tones in that year (Baker 2014). Thus it is considered in such challenging competitive environment, SPCA is bearing immensely high market risk. Moreover, expensive Australian dollar and ineffective anti-dumping regime make the situation even worse for SPCA (ABC News 2014).

On the other hand, these opinions may be over pessimistic. There has been an increasing trend towards locally grown and produced food in Australia due to severe food safety issue in Asia recently. In the past few years, a bunch of food safety scandals, such as the baby formula scandal, melamine mixed in diary products and contaminated fruit and vegetables in...

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