Thomas Foods -- Hedging Strategies
If Thomas Foods expects to protect itself against suddenly rising prices that farmers charge for their produce -- due to crop failures, inclement weather, or other unexpected events -- then Thomas Foods needs to engage in some form of a hedging strategy. There are a number of ways to do this, and this paper will point to several strategies and models that might work for Thomas Foods. At a minimum, the comptroller at Thomas Foods should be knowledgeable about ways to protect his company from suddenly skyrocketing produce prices
What are "futures"? The available literature on ways to protect a company like Thomas Foods from suddenly being stuck with prices from farmers that are well above what was understood at the outset of the contract -- is to buy futures. A future is a financial deal signed as a contract that obligates the "…buyer to purchase an asset (or the seller to sell an asset)" such as produce from farmers at a "predetermined future date and price," according to investopedia.com. For example, say a farmer is producing corn; that farmer could use futures to "lock in a certain price" for his corn, and hence reduce the risk, or hedge the risk against falling...
Leagility with regard to the supply chain is simply a combination of techniques designed both to exploit a volatile marketplace but also to take advantage of a lean one where profit margins are relatively low but demand is relatively high. In the article analyzed, food markets in particularly are examined with regard to supply chain design. There are according to the authors, a number of food products that "can be
Figure 1 shows the Porter Five Forces Model graphically, drawn from the original mention of this model by Dr. Micheal Porter of Harvard University. Each of these areas is now discussed in bullet form in the following series of sections. Assessing Whole Foods Industry Competitors (Rivalry) Whole Foods faces significant competition both at the local level in served U.S. markets and globally from Carrefour, Tesco and Wal-Mart. In addition the mergers
The success rates of this venture are increased as investors are willing to risk their money in the hope of increased gains. Otherwise put, shareholders "can accept downside risks because they fully share the upside as well" (Dynamic Equity, 2002). Regardless of the sources used in contracting the necessary money, the organization would still have to retrieve a minimum of $40 million revenues during the first year in order
This allows for greater levels of planning and cooperation, and fills in the information gap that currently exists between the factory floor and the rest of the supply chain. Lexmark provides an example of waste. Recently, the company found itself with more than $1 million in scrap from one lot. Engineers had insufficient information to isolate and fix the problem, so were instead relegated to crisis control. With more accurate
And this money is required to be raised from the market as the company does not generate this amount of revenue either from profits or from internal accruals. (DeHayes, 2003) 5. What should Tim do now? After taking into account all the known and understood pros and cons, there are some points on which Tim has to take action. These are (i) the manner in which to raise capital needed either
To evaluate weak areas of the current strategy and propose solutions for improvement. 2.0 LITERATURE REVIEW 2.1 Introduction According to Zou and Cavusgil (1995), the subject of global strategy has attracted a lot of attention in the recent past. Zou and Cavisgil (1995) calim that a major reason behind this has been the increasing progress in the telecommunications and other technological areas that has brought the world closer and transnational existence of organizations Eastcompeace
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