This is an outline of my doctoral research findings over the last two years. This is also the background work that will go into the development of the serious game "Galapagos"

1. Marigo Raftopoulos
Doctoral Candidate, Monash University
May 2009

2. Is the global food business sustainable?

3. “The environmental and social problems
of today’s agriculture are severe enough
to warrant immediate action. With the
steep rise in the price of food on global
markets already leading to riots and
starvation, the need for fundamental
change is tragically underscored”
UN Environment Program 2008

4. How we produce it
How we sell it
How we consume it

13. The old paradigm was created by a world
view of abundance which drove an
unsustainable use of natural resources &
fossil fuels and a business accounting
system that did not factor the real cost of
production

16. • All businesses require a
continuous renewal of their
internal capabilities,
structure&culture that align
with a changing business
environment
• Current business assumptions
and accounting systems do not
factor the full externalities of
running a food company
• Static business assumptions &
capabilities will destroy
shareholder and stakeholder
value over the long term

17. • A new sustainable paradigm has
emerged: integration of triple
bottom line responsibilities –
economic, social, environmental
• Separation of these three elements
is a fallacy – and unsustainable
• Businesses are now facing a
community push rather than a
competitive pull towards sustainable
food production
• This is the source of future
competitive advantage for food
industry

18. • The capabilities required to run a
sustainable and competitive food
business are not clearly defined
or evident in academic literature
• These business capabilities are
still new and emerging and are
very difficult to generalise
• Case studies are ‘situational’ and
are dependent on a firm’s values
and choice of strategic approach
• There is no formula for success –
sustainable businesses practices
appear to be unique to each firm

19. • Innovate on approaches to integrate
economic, social & environmental
elements of the business
• Questioning traditional internal
paradigms and assumptions (and that
of supply chain partners):
– Experiment and Take risks
– Continuously Learn and Adapt
• See the opportunity (and not just the
threat)
• Strategies must combine business
adaptationandreform initiatives

20. • Industry power is skewed to the retail
end of the value chain - food retailing is
a concentrated, competitive industry
• The retailers drive the key market
signals down the chain to manufacturers
& beyond
• Retail business model is predicated on:
– Low cost, high throughput & turnover
– Consumer choice and convenience
– Complex global supply chains designed to
minimise accounting costs and max profits
– However they have a large carbon
footprint that is not accounted for

21. • In contrast, global food manufacturing
companies are not as concentrated
– The largest 50 global companies account for
only 20% of global packaged food sales
• Excellent relationships with retailers are
essential for effective distribution
• Food manufacturing is a low margin
business that is sensitive to changes in
supply chain costs
• Farmers have the least economic power
due to a high level of fragmentation, low
levels of resources and low profitability
– And farmers are at the pointy end of climate
change, bearing the cost but not the returns

22. 1 Food companies need to 1 Food companies maintain that
revisit their business consumers say they want sustainability
but are unwilling to pay for it;
assumptions and capabilities consumers want cheap food.
2 Future competitive 2 Food companies won’t make the leap
advantage will need to be from ‘green initiatives’ to full
sustainable sustainability reporting due to the
perceived cost disadvantage.
3 Capabilities for sustainable 3 Lack of an alternative business model
competitive advantage are will continue to slow adoption of
emerging but still not clear sustainable practices. “Green-washing”
is prevalent.
4 Strategic foresight and
4 Industry structure drives firm behavior;
entrepreneurial leadership is concentrated industries that are cost &
key to survival turnover focused (retailers) dictate
terms based on price. Businesses will
comply but are reluctant to lead.