Cargill is a fortune 500 company and a global leader in food and agriculture related industries. Their reach covers agriculture services, risk management, food ingredients and processing. This is just a brief description of what the corporation is about but its tentacles have been spread to many areas of the world.
As a matter of fact, Cargill operates in 66 countries and employs way over 140,000 thousand people across the globe in their various branches dotted around the world. Cargill enjoys substantial financial muscle and power and this makes it easy for them to push any new entrant out of the picture. They also have long and well-established connection to suppliers of raw materials that mainly comprise of agricultural produce.
Like any other multinational, Cargill is faced by numerous threats and risks that are likely to undermine its profitability and global influence. Some of those risks come in the form of economic, political, social, competition. Political risks have been arguably the greatest challenge to Cargill especially in Venezuela since the socialist Chavez took over power and nationalized most of privately owned companies including a Cargill Inc., rice and pasta factory on the pretext that the company had not complied with the laws of the land (Washington Times, 2009). The financial melt crisis of 2008 was a also a great challenge to the corporation because it lost out on most of its customers who were unable to make purchases due to tough economic times.
Cargill might need to adapt to the rules that have imposed by the socialist government of Venezuela if they still think that market is viable and profitable in the long run. Because the government has threatened to seize and nationalize all international companies that are not abiding by the laws of the land. Global financial challenges are within the control of Cargill but the company can have some risk management measures such as diversification (which they have already done). Investing in various industries means that the company is pretty much shielded should there be a financial crisis affecting one of their industries.
Cargill has some stiff competition for the Venezuelan market in the form of Pioneer and Himeca, two multinationals that also deal in supplying farmers with seeds and other farming inputs. Pioneer was in Venezuela long before Cargill ventured into the market and as you might expect they have well established roots. To counter this surge of competitors Cargill has invested substantial amounts of money into technology to produce superior seeds that are disease-resistant and fast maturing. Cargill has also secured the loyalty of farmers with more 50 hectares of land to supply seeds to them and this means that they have a commanding control because the well-to-do farmers are their customers.
- Chavez seizes Cargill factory. (2009, May 16). Washington Times. Retrieved from http://www.washingtontimes.com/news
