Economic Efficiency Essay Example

significantly lower the company's expenses. Energy accounts for 46% of controllable costs and is crucial for the company's future competitiveness. This year, whey production managers have negotiated a 4.6% reduction in energy consumption, as whey processing alone accounts for 48% of glanbia's energy usage.

A variety of measures have been implemented to decrease energy utilization. Specifically, the management of the energy system prioritizes energy-efficient design for all new projects and equipment. Previously, equipment selection solely relied on financial considerations, whereas now the energy consumption of devices and machines is thoroughly examined. Additionally, the IT department adopted the "night watchman initiative", which automatically shuts down all glanbia computers outside regular operating hours.

The computers are turned back on gradually in the morning to control the peak electrical load, improving efficiency and reducing costs. [pic] 2) Arla Foods Amba is a Swedish dairy group that was established in the late 18th century. It became a significant player in the Scandinavian countries and by 1978, it had surpassed 1 billion kg of milk production. In 1999, Arla had a 65% market share in Swedish milk production and 90% in Danish milk production.

In 2003, Glanbia faced significant competition as the group merged with Express Dairies plc to become Arla Foods UK, the leading dairy producer in the UK. Arla Foods UK plc continued to grow and established itself as a technology leader with the opening of Stourto Dairy, one of Europe's most advanced dairies. However, Glanbia had concerns about its whey protein production and focused on expanding its presence in Northern Europe, France, and South America.

Arla Foods is aiming at North America as a potential threat to Glanbia. Arla Foods

Ingredients intends to establish local production in the United States by 2013, not as a significant move into the American market, but rather as a means to secure a foothold for future expansion. Arla Foods believes there is still room for growth in their European market, particularly in countries like France, Norway, and Germany.

On the contrary, Kerry Group is a leading supplier of food ingredients and flavors to the food and beverage industry. They also provide added value brands and customer branded foods to Irish and UK markets. Since opening its first dairy and ingredients plants in Listowel in 1972, Kerry Group has continuously grown through organic methods and strategic acquisitions. Presently, they have annualized sales of about ˆ4.8 billion.

Kerry group, a multinational company with over 20,000 employees, operates manufacturing, sales, technology and application centres in Europe, North America, South America, Australia, New Zealand and Asian markets. This company provides customers in more than 140 countries with over 15,000 food, food ingredients and flavour products.

With manufacturing facilities in 23 countries and international sales offices in 20 other countries, Kerry group poses strong competition to glanbia in the global dairy market.

Kerry Group and Glanbia are both major competitors in the Irish cheese and butter market. Kerry Group markets brands like Dawn, Cheese Strings, Charleville, Mitchelstown, Low-Low, and Dairy Gold. One area where Kerry Group is not involved is whey production, which is one of Glanbia's highest earning sectors. This reduces the competition on an international level, but there is still strong competition within Ireland.

Key Figures:

- 2008: Revenue - 4,790,770; Cost of sales - 3,128,842; Trading profit - 409,234; Operating profit - 318,032.

- 2007: Revenue

- 4,787,766; Cost of sales - 3,089,082; Trading profit - 401,126; Operating profit - 377,344.

In 2009, due to a downturn in global dairy markets, Glanbia's food ingredients Ireland division experienced a loss. Earnings per share were at 30-32 cent, which was lower than the market's expectation of 36-37 cent.

Glanbia stated that the company suffered because milk prices remained higher than market returns and above the break-even point for the business. In order to achieve a break-even point for its food ingredients unit, Glanbia determined that it would need to pay no more than 18 cent per litre. However, teagasc estimated that the cost of production among farmers was 27 cent per litre. Despite the low cheese prices in the US, Glanbia's global nutritionals sector had strong performance. This was attributed to good organic growth and new product development. The company's net debt increased by 250.2 million to a total of 546.5 million, largely due to the optimum acquisition in 2008. Glanbia's food ingredients and nutritionals sector serves the company internationally.

Results for the international division of Glanbia were negatively impacted by the performance of food ingredients Ireland. This was due to a decline in global dairy commodity prices, which resulted in lower margins for Glanbia. The reduction in the price paid for milk did not keep up with the decline in global dairy prices. However, the international division also saw strong performance from food ingredients USA, with record revenues and positive margin expansion. In Ireland, consumer foods had a satisfactory year compared to the challenging year of 2007.

Arigbusiness performed well in the feed and fertilizer segments, with a strong focus on cost reduction. Glanbia's joint ventures

also showed significant improvement in 2008, particularly south west cheese which had an excellent year. However, nutricima had a difficult year despite volume growth and increased brand awareness.

Due to significant increases in raw material commodity prices, nutricima's profits and margins in 2007 were not as high as desired. In contrast, glanbia had a successful year in 2007, achieving double digit earning growth and maintaining a sustainable margin position. Glanbia's international operations, including food ingredients and nutritionals, performed well. Specifically, food ingredients USA and the joint venture with south west cheese had strong performances. The nutritionals business also saw success with important new product development projects, like CFM nitro, a sports nutrition product.

Additionally, in 2007 Nutritionals acquired Pizzey's Milling, a leading provider of flax seed solutions. The company's financial performance from 2007 to 2009 is outlined in the following table:

	2007	2008	2009(half year)
Revenue	2.2 billion	2.2 billion	944.9 million

Glanbia, the leading Irish dairy processes company, has acquired Optimum Nutrition, a US-based manufacturer of nutritional supplements in the sports sector. This strategic move allows Glanbia to establish a dominant position in the rapidly growing sports nutrition market. Despite lower US cheese prices, Glanbia's consumer products division is expected to benefit from significant cost reductions resulting from the acquisition of Optimum Nutrition in 2009. Globally operating in the sports nutrition business and also a major supplier of fruit yogurts and pizza cheese in Europe, Glanbia is well-known for their American-style cheddar

cheese and worldwide supply of whey protein. They also produce fresh soup, brand block cheddar cheese, consumer packaged dairy powders in Nigeria, and are a European producer of flax seed. Additionally, they manufacture fresh milk and cream.

The food and drink manufacturing industry plays a crucial role in Ireland's economy with an estimated output of nearly ˆ20 million. It directly employs approximately 50,000 individuals while indirectly supporting another 60,000 jobs nationwide. Furthermore, this industry utilizes 90% of the output from Ireland's 120,000 farmers. In terms of purchases made on Irish goods and services, the manufacturing industry accounts for about ˆ8 billion or half of all purchases. Within just two years since 2006, the sector's output in terms of gross value added (GVA) has grown by almost 22%.

Ireland's food and drink sector is highly important, with higher GVA per employed and turnover per capita than most other EU countries. In 2008, food and drink exports reached a value of ˆ8.16 billion. These exports are distributed as follows: the UK receives 43%, the rest of the European Union receives 33%, and the remaining balance is sent to the rest of the world.

[pic] Ryanair, a popular global airline, operates in 26 countries with 37 bases and over 950 low-cost routes that connect to 150 destinations. The company has a fleet of 210 new Boeing 737-800 aircraft, with an additional order for 102 new aircraft to be delivered within the next two and a half years. With a workforce exceeding 7,000 employees, Ryanair expects to transport approximately66 million passengers in the current fiscal year.

Ryanair, founded in 1985 by the Ryan family, saw a significant increase in passenger numbers from 5000

to 5,358,000 by 2006. In that same year, they transported a total of 42.5 million passengers and operated with a fleet of 100 Boeing 737-800 aircraft.

In response to the economic downturn and fluctuating oil prices affecting the airline industry, Ryanair has implemented measures to improve operational efficiency. The company recognizes that efficiency is vital for its profitability and long-term viability.

One of the measures taken by Ryanair is hedging oil prices and bulk purchasing for the year. When they believe that the price is at its lowest, they buy in bulk. However, they made a mistake in 2007, leading to higher costs compared to other airlines. In 2009, they managed to buy at the right time, gaining a competitive advantage by reducing one of their major production costs. Another measure Ryanair is implementing involves removing check-in desks, which could save the company up to ˆ30 million annually. As part of this action, they are also introducing an additional ˆ5 charge for online check-ins, further increasing their revenue. Being a no-frills airline, Ryanair does not provide free meals, newspapers, or magazines, effectively reducing costs.

Ryanair's aircrafts are designed with non-reclining seats, no back seat pockets, and safety cards attached to the back of each seat. These features facilitate the installation of more seats, allowing for increased passenger capacity. Moreover, this design enables efficient cleaning and safety checks within short turnaround times. From an environmental perspective, Ryanair is a leading company in reducing CO2 emissions. They have made substantial investments in acquiring new and more efficient Boeing 737-800 planes to replace their older Boeing 737-200 models. The 737-800 represents the latest generation aircraft and boasts Europe's youngest and most

fuel-efficient fleet. Compared to the 737-200 model, the Boeing 737-800 demonstrates significantly improved fuel efficiency per passenger kilometer ratio. Consequently, Ryanair has successfully reduced its fuel consumption and CO2 emissions by an impressive 45% per passenger.

2008, 2007, 2006, and 2005, EasyJet had a high number of passengers flown. Their turnover and profit/loss before tax also increased during this time period. The net profit/loss and basic earnings per share (EPS) varied each year but generally showed positive results.

The growth and expansion of easy jet from 2000 to 2009 is worth noting. In 2000, they had 5,600,000 passengers, which increased to 29,557,640 by 2005 and soared to a massive 45,164,279 in 2009, a number not far from Ryanair's. This increase in passenger numbers is causing concern for Ryanair, as easy jet is rapidly gaining a larger share of the market. Easy jet's strong marketing strategy promotes low-cost flights with slogans like "making flying as affordable as a pair of jeans" and "come on, let's fly." Additionally, their phone number is printed on the side of their Boeing 737-200 planes.
Aer arann, on the other hand, started its operations in 1970 with the goal of providing reliable and affordable air service to 1,000 Islanders in Inishmore. They expanded in the 1980s with routes from Galway to Dublin and eventually created air links between major cities in Ireland. Currently, Aer arann operates over 600 flights per week across 40 routes in the UK and Europe. Passenger numbers have grown from 12,000 in their first year to 1.1 million in 2006. As a company that is gaining momentum, Ryanair will closely monitor Aer arann, especially since they have recently signed an

agreement valued at ˆ180 million for the delivery of 10 new AT2 72-500 aircrafts.They have also introduced more routes between Ireland, the UK, and France with this decision.

Aer Arann is a company that is expected to grow and expand beyond France to the rest of Europe, posing a potential threat to Ryanair's market share. However, Ryanair is not currently concerned about Aer Arann's impact. In 2009, Ryanair faced challenges due to the global economic downturn but still managed to achieve an adjusted net profit after tax of ˆ105 million. This was a significant accomplishment considering the record high oil prices that increased their fuel bill by ˆ466 million. Despite this, Ryanair saw a 15% increase in passengers from 50.9 million in 2008 to 58 million in 2009 and an increase in revenue from ˆ2,713.8 million to ˆ2,941. Achieving a profit in such unfavorable conditions is commendable. In 2008, Ryanair experienced a 20% growth in adjusted net profit after tax, reaching a record ˆ481 million.

Despite facing higher fuel prices than the previous year, Ryanair managed to achieve an increase in passengers by 20% to 51 million, resulting in a revenue of ˆ2,713.8 million, which was 21% higher than 2007. This success was further highlighted by the fact that the airline dropped its fare to ˆ44, while other airlines charged significantly higher amounts for fuel surcharges. The company also incurred a large increase of around ˆ400 million in fuel costs and faced higher airport charges, particularly at its major bases in Stansted and Dublin. Despite these challenges, Ryanair recorded a profit of ˆ480,933, showcasing its strong performance in 2008. It is worth mentioning that Ryanair has experienced

continuous growth since its establishment in the 1980s and is currently facing the challenge of maintaining growth with approximately 60 million passengers in 2009. To address this, Ryanair is consistently enhancing its efficiency and reducing production costs for its controllable expenses.

Ryanair's introduction of no check-ins for its flights is expected to result in savings of up to 30 million. Additionally, the company has placed an order to replace its Boeing 737-200 with a more fuel-efficient aircraft, the 737-800. Ryanair's growth is heavily reliant on fuel costs, which rose by 400 million in 2009. Furthermore, Ryanair holds a significant share of Aer lingus and has been pursuing a takeover and expansion into long-haul flights, in addition to their low-cost short-haul flights in recent years. As the global economy is expected to improve in 2010 and recover from the downturn, air travel is also anticipated to witness an increase in the number of passengers. [pic]