Success of Co-operatives: Thoughts on German Wine Co-operatives. Jon H. Hanf, Taras Gagalyuk, Erik Schweickert

Transcription

1 Success of Co-operatives: Thoughts on German Co-operatives Jon H. Hanf, Taras Gagalyuk, Erik Schweickert

2 Introduction Cooperatives have a long Tradition - traditional form of networking / collaboration - Producers are the owners and beneficiary - Influence on management decision -> producer orientation Changing Market Environment - for a long time the food and beverage market was growing - since many years it is a now a saturated maket -> customer orientation 2

3 Aim of the Study Research Design - Work out the conflict between member orientation and customer orientation - Present some basic ideas for the conflict solution based on a framework of goal alignment in networks 3

4 Destillation 99 Cooperative non-vinificating (Dry Cooperatives) 2 Central Cooperative 64,000 Members 31,342 ha 147 WGV Cooperative with own vinification (Wet Cooperatives) Free ry 4,395 Bulk-wine producer German Market 33 Million Hectoliters (including stocks) Production 9.9 Million HL 48% German 52% Imported Commission Agent 9,981 Bulk-wine producer Estates Imports Million HL German Business customer orientation 19% 30% 40% 5% 6% Direct Sale from the producers Retail Discount specialised Retail ( Stores) other i.e. Cash & Carry, mail-order business Consumption in Germany Per-Capita-Consumption of (including Sparkling ): 19.7 l (23.9 l) Share of -Type: 39% White s / 8% Rosé s / 53% Red s Average Price for German s: 3.48 /l Average Price for Imported s: 2.97 /l 4

5 German Coops 99 Cooperative non-vinificating (Dry Cooperatives) 2 Central Cooperative 64,000 Members 31,342 ha 147 WGV Cooperative with own vinification (Wet Cooperatives) Free 4,395 Bulk-wine producer Commission Agent 9,981 Bulk-wine producer Estates Destillation ry German Market 33 Million Hectoliters (including stocks) Production 9.9 Million HL 48% German 52% Imported Imports Million HL 19% 30% 40% 5% 6% Direct Sale from the producers Retail Discount specialised Retail ( Stores) other i.e. Cash & Carry, mail-order business Consumption in Germany Per-Capita-Consumption of (including Sparkling ): 19.7 l (23.9 l) Share of -Type: 39% White s / 8% Rosé s / 53% Red s Average Price for German s: 3.48 /l Average Price for Imported s: 2.97 /l 5

6 Cooperatives Cooperatives Cooperatives are based on the cooperative values of "self-help, self-responsibility, democracy and equality, equity and solidarity" and the seven cooperative principles: 1.Voluntary and Open Membership 2.Democratic Member Control 3.Member Economic Participation 4.Autonomy and Independence 5.Education, Training and Information 6.Cooperation among Cooperatives 7.Concern for Community Member orientation -> Production orientation 6

7 Cooperatives Cooperatives Cooperatives are based on the cooperative values of "self-help, self-responsibility, democracy and equality, equity and solidarity" and the seven cooperative principles: 1.Voluntary and Open Membership 2.Democratic Member Control 3.Member Economic Participation 4.Autonomy and Independence 5.Education, Training and Information 6.Cooperation among Cooperatives 7.Concern for Community Horizontal and vertical collaboration Traditional form of cooperation -> Supply Chain Network approach Member orientation -> Production orientation 7

8 Supply Chain networks Framework of goal alignment Pyramidal Hierarchical collaboration -> focal company Focal company -> chain management Chain Management Collective Strategy Partnering strategies Supply chain management strategies Key questions of cooperation Complexity Transparency Free riding Rivalries / coalitions Network level Key questions of coordination Complexity Interdependency Heterogeneity Bullwhip effect Opportunism Specific investments Fit or stretch of core capabilities Allocation of profits, power Dyadic level Uncertainty about: Information asymmetries Decisions Behavior General cooperativeness Limited resources Cooperation rents and potentials External pressure of environment Hanf / Dautzenberg 2006 Firm level Cooperation resources Managerial skills Infrastructure Resources (labor, capital, time, etc.) 8

9 Supply Chain networks Collective Strategy Framework of goal alignment Pyramidal Hierarchical collaboration -> focal company Focal company -> chain management Chain Management Framework of goals Partnering strategies Supply chain management strategies Key questions of cooperation Complexity Transparency Free riding Rivalries / coalitions Network level Key questions of coordination Complexity Interdependency Heterogeneity Bullwhip effect Opportunism Specific investments Fit or stretch of core capabilities Allocation of profits, power Dyadic level Uncertainty about: Information asymmetries Decisions Behavior General cooperativeness Limited resources Cooperation rents and potentials External pressure of environment Hanf / Dautzenberg 2006 Firm level Cooperation resources Managerial skills Infrastructure Resources (labor, capital, time, etc.) 9

10 Framework of goal alignment Unclear definition of common goals and lack of agreement upon them are the main reasons why 50 per cent of all interorganizational projects in supply chains fail. Brinkhoff and Thonemann (2007) 10

11 Goals of Networks / collaborations Framework of goal alignment Different Goals > both firm-level as well as network-level Focal company -> has to work out mechanisms to solve conflicting goals Chain transperancy Interdependency Complementarities Alignement of Interests Network-level Goals Capabilities Use of Power Alignement of Actions Firm-level Goals Trustful Relationships Gagalyuk / Hanf

12 Goals of cooperatives Framework of goal alignment Different Goals > both member-level as well as on the level of the Coop (as a firm) Chain transperancy Interdependency Alignement of Interests Network-level Goals Coop as a network -> common network goal Complementarities Capabilities Use of Power Trustful Relationships Alignement of Actions Firm-level Goals Different members -> different goals -> Coop as a firm itself Gagalyuk / Hanf

13 Goal alignment Goals of cooperatives first results Interviews with coop managers common goal often seen as the goal of the coop firm -> profits, etc -> retailers dictate conduct of business -> investments in intangible assets for marketing members (all) -> the higher the patronage the better members (full time) -> profit of their own firm -> growth of their production (vineyards), etc members (part-time grape growers) -> staying a grape producer -> goal of staying in production -> without too high investments (time, money) 13

14 Goal alignment Goals of cooperatives first results Ways to solve the conflicting goals playing the retail card -> strengthening of common goal acceptable situation for customer orientation, forced investments into intangible assets, countervailing power of branding, playing the knowledge card -> helping the members to achieve their own goals using reward system instead of harsh sanction, consulting by accepted experts, growing schemes, different marketing strategies, 14

15 Cooperatives - high importance in the German wine business - traditional form of collaborations / networks Summary Networks First results - different goals - framework of goal achievement - problem exists - different ways to solve them - framework can help to understand them - framework can help to generate solutions 15