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Case Studies

The Economic Contribution of Kiwifruit Industry

This report estimates the economic contribution of the kiwifruit industry to two regions within New Zealand and projects the impact of industry expansion associated with new varieties. The results suggest that the production of new varieties of kiwifruit is likely to expand the industry and its economic impact. Over the fourteen years from 2015/16 to 2029/30 New Zealand kiwifruit revenues are predicted to grow from $5.5b to approaching $13b. The contribution to GDP is expected to grow from $2.6b to just over $6b. Net household income is also expected to increase significantly. Over the 14 years this is the equivalent of revenue growing by $531m per year, household income growing by $110m per year and GDP growing by $252m per year.

Read more from the report here.

Driving firm performance

When the Road Transport Forum NZ wanted hard evidence on the impact of rising costs on trucking companies across the country, it turned to Waikato Management School’s Management Research Centre for a benchmarking survey. MRC analysts surveyed more than 200 member firms, looking at operator performance by business activity, fleet size and geographic area, and found that many small trucking firms were on a financial knife-edge. That gave the RTFNZ the information it needed to justify its members raising charge-out rates across the industry, ensuring the smaller trucking companies didn’t go to the wall. The organisation is now about to repeat the exercise in conjunction with accounting firm Grant Thornton. It’s a great example of how the MRC can add value, says the School’s Professor of Professional Accounting Howard Davey. “If you don’t benchmark you don’t know what you’re achieving,” he says. “It’s particularly a problem for small businesses. Typically small firms operate in isolation, and that’s why accountants turn to the MRC for generating industry KPIs.” The MRC’s clients include major banks, associations and industry groups, as well as companies such as Mitre 10, PricewaterhouseCoopers and Norris Ward McKinnon.

“Clean and green” under threat?

A sustainability divide is emerging among New Zealand businesses, and small firms are the most likely to abandon efforts to be “clean and green” when the economy takes a dive. However, the survey on business sustainability practices, conducted by Waikato Management School researchers, also shows a small but significant group of firms have actually increased practices such as recycling, reducing energy and water use, and environmental awareness.

The report covering more than 700 firms was sponsored by the UK-based Chartered Institute of Management Accountants and co-authored by Dr Eva Collins, Professor Stewart Lawrence, Professor Juliet Roper and Associate Professor Jarrod Haar. It’s the third in a series of reports, making it one of the first studies in the world to track the impact of recession on sustainability practices with longitudinal data. The study is supported by long-term partner the Sustainable Business Network and a new partner, the New Zealand Business Council for Sustainable Development (NZBCSD).

Dr Collins and Professor Roper are also working on a major research initiative backed by the Marsden Fund to identify threats to New Zealand’s “clean, green” image. The project is looking at innovative approaches to environmental management around Lake Taupo, and also at how sustainability issues are communicated in New Zealand’s wine industry and at local government level.

“Business Sustainability Practices During the Recession: The Growing Sustainability Divide” is available at www.management.ac.nz/sustainabilitydivide

Respect brings better performance

With one-quarter of New Zealand’s population now born overseas, the country’s labour force is more diverse than ever. That raises challenges and opportunities for employers seeking to raise productivity and firm performance. New Marsden-funded research out of Waikato Management School indicates that employers who support cultural diversity in the workplace are winners all round. Associate Professor Jarrod Haar has found that support for an employee’s culture makes workers more productive – and less likely to leave the organisation. Dr Haar surveyed 550 skilled Maori employees in the public, private and not-for-profit sector in the first empirical study in New Zealand of perceived organisational support and cultural support. Overall, his findings show that support for cultural values and beliefs in the New Zealand workplace is likely to have positive indirect effect on outcomes of Maori employees, by working through their perceptions of organisational support. Further research into the experiences of Asian and Pasifika workers mirrors these findings. “There’s little or no cost to a firm to support an employee’s culture,” says Dr Haar. “It might involve respecting a request for tangi leave or rearranging meetings to avoid clashes with prayer times for Muslim employees. And the pay-off can be very worthwhile in terms of improved firm performance.”

Company health check tool proves hit with business

Dr Paul Childerhouse

An effective supply chain can save you money, increase your profits and delight your customers. But it doesn’t happen often. Dr Paul Childerhouse of Waikato Management School has looked at the reality of supply chain interaction in the work place and found most companies still struggle with internal integration, never mind external suppliers and customers. Based on his 30-company, seven-year study, he’s led the development of a diagnostic tool, Quick Scan, which can be used to give companies a thorough ‘health check’ on their supply chain systems. Dr Childerhouse has firsthand industrial experience of the automotive, construction and aerospace industries in the UK, and has used Quick Scan in New Zealand in sectors ranging from mining to manufacturing to healthcare. The uptake of the tool has begun to gain traction thanks to positive feedback from Heinz-Watties, CarterHoltHarvey and the Waikato District Health Board among others. “Quick Scan is not a one-size-fits-all solution,” says Dr Childerhouse. “You have to look at the size of the company, its needs and what it can afford.”

Getting wired up for e-health

New Zealand has joined countries across the world in the move towards a single nationwide format for patient records. Several District Health Boards are seeking tenders for computerised patient record systems, and the government plans to consolidate ‘back office’ functions across all the DHBs and Primary Health Organisations to cut costs and increase efficiency. Currently, many GPs are wired up to bespoke practice management systems but when it comes to referring patients to hospital, in many cases the different systems can’t talk to each other, resulting in errors and delays. A survey of more than 100 GPs by Waikato Management School’s Dr Jenny Gibb, commissioned by the Waikato DHB, found that doctors believed more accurate communication with the DHBs through better ICT integration would lead to the greatest improvements in the quality of practice outputs and efficient use of public funds. But Professor Ted Zorn says many community health organisations face multiple obstacles in taking advantage of ICTs. His surveys tracking changes in ICT uses among not-for-profit organisations found that even though more organisations today are using sophisticated ICTs, most perceive an ever greater need for technical support to make the most of the tools available.

Doing business the Halal way

Most people have heard of Halal meat but it’s less well known that for Muslims all financial products also need to be Halal. Halal means conforming to Islamic religious law. Most people have to take on debt at some point in their lives, such as a mortgage, and this is acceptable under Islamic law. A problem arises when the debt has interest associated with it. The adding of interest to repayments of a loan, known as riba, is banned.

IBR researchers Professor Stuart Locke and Dr Sazali Abidin, who spent 16 years in corporate finance in Malaysia, have been researching these matters so they can help New Zealand companies develop appropriate products for Muslim clients. Muslims are the most rapidly growing religious group in New Zealand with the population increasing six-fold between 1991 and 2006.

The issue of Halal has implications for a whole range of consumer finance products, including investments, loans and mortgages, says Dr Locke. “More than 36,000 people identified as Muslims in the last census,” he says. “In our recent work with financial planners it’s become very apparent that a whole range of wealth-creation and risk-management tools are just not applicable in a Halal context.

“Superannuation, for example Kiwisaver, becomes problematic when part of the portfolio is invested in fixed interest securities. We would be hard pushed in New Zealand to find any PIE that does not have a cash component, which will include interest. That presents a real challenge to mainstream financial institutions in New Zealand given the growing numbers of Muslim New Zealanders.”

Kai from the geothermal greenhouse

Geothermal Greenhouse

Geothermally-heated greenhouses and hangi pies with a rugby theme are some of the ideas being explored in a feasibility study for NZTech in Rotorua. The Institute for Business Research is currently evaluating these and other proposals to create a new legacy of sustainable opportunities for a local Māori village community. The idea is to add value through improved technology investment. The study will determine whether the village’s geothermal assets can be used to grow organic vegetables sustainably in glass houses, and fuel further processing of traditional kai to feed the community and generate an ongoing surplus of commercial scale. The hangi pies concept builds on an existing pilot scheme, and it’s expected the 2011 Rugby World Cup will provide a unique opportunity to attract premium prices for suitable products, while the geothermal asset can be used to leverage a brand identity. The full study necessarily draws on a range of disciplines. Management issues include finance, marketing, strategy, systems and others. The technology issues require inputs from engineering, horticultural, nutritional and food science specialists. The IBR’s role is to assemble the team and manage the project evaluation through to completion of the feasibility study.

Monitor aids kiwifruit industry

Threats to biosecurity in the kiwifruit industry have raised concerns about the economic impact on one of New Zealand’s top agribusiness success stories. The input-output model developed by IBR researchers is being used to monitor the economic impact of disease and other issues on production levels in the industry. IBR researchers are also key contributors to the Agribusiness Research and Education Network. AREN has produced a series of reports on the key elements of success and failure in New Zealand’s dairy, kiwifruit, sheep meat and venison industries, funded by AGMARDT, the Agricultural Marketing and Development Trust. The report on the kiwifruit industry, authored by Professor Frank Scrimgeour and Dr Mark Kilgour of Waikato Management School and Eva Zellman of Lincoln University, identified key success factors in the industry. These included innovation, economies of scale and market power and value chain developments. With the emergence of China as a major player in the global kiwifruit industry, key challenges identified by industry participants in the report are: developing future leadership capabilities, continually updating marketing strategies, sustaining government support, and ensuring effective business and scientific research and development activity. The IBR is currently preparing a scoping study for NZTech on a privately developed training initiative for workers in the kiwifruit industry, focusing on grafting and propagation.

http://www.aren.org.nz/docs/kiwifruit-technical-report.pdf

IBR Director

Professor Frank ScrimgeourProfessor Frank Scrimgeour
IBR Director