California Nut Industry Analysis

This assignment delves into the multifaceted California nut industry, examining its economic significance through market analysis and import/export patterns. It analyzes production trends in almond, pistachio, and walnut crops, considering factors like greenhouse gas emissions and water usage. The assignment also explores the social impact of the industry, including labor practices and the role of international gangs in theft.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

1
STRATEGIC MANAGEMENT
Table of Contents
Introduction:....................................................................................................................................2
Background:.....................................................................................................................................2
PESTLE analysis:............................................................................................................................3
Five Forces Analysis:......................................................................................................................6
Identification of five organizations:.................................................................................................8
The business level resources and capabilities:.................................................................................8
Recommendations and conclusion:.................................................................................................8
Reference list.................................................................................................................................10

2
STRATEGIC MANAGEMENT
Introduction:
California has accounted for around sixty five percent of the nut and non-citrus fruit
production in the United States. This industry also occupies around seventy three percent of the
national value. According to Lawrence, Travadon and Baumgartner (2015) California has
continued being in the first position of the agricultural commodities exporters since 2012. The
nuts and fruits have accounted over around fifty percent of the agricultural exports value in the
United States. The most popular amongst the exported fruits are almonds, pecans, and walnuts. It
should also be noted that the per capita consumption of these tree nuts and fruits is the third
largest after dairy products being the first and vegetables being second. The value of nut
production in the United States has been emerging gradually with the walnuts, almonds, pecans
and pistachios. The industry is growing more on a global scale and it is important to save this
industry from the elaborate and large scale theft. Therefore, this report will discuss the internal
and external environment of this industry an the possible capabilities and resources of the
organization.
Background:
The Agricultural network of California states that California has accounted for around
forty five percent of the nut and fruit production in the country. The most popular nuts in the
industry are almonds, pistachios, macadamias, walnuts etc. The production of almonds is a pride
for the state as nearly all the almonds that the produced in US, are grown in California. This
product is the third leading product in the state as well. Aradhya, Preece and Kluepfel (2014)
indicate that around eighty percent of the produced almonds come from California. In addition to
that, for the last thirty years, production of pistachios has also developed commercially. The

3
STRATEGIC MANAGEMENT
pistachio orchards tend to flourish specifically in the central Californian weather. Therefore,
there are few leading global brands that exports pistachios to all around the world. The
cultivation of walnuts has first started in 1700s. As stated by Barrows and Frost (2014), the
walnuts production of California accounts for around 100 percent production of the United
States. The macadamias production is also booming in California, even though Hawaii is one of
the leading states in the production. There are several small macadamias orchards in Southern
California. However, in recent times a crime ring seemed to have developed who are taking off
huge amounts of nuts in California, where some of them costs more than half million by hacking
the websites. Therefore the agricultural processors are taking effective steps that can stop the
theft.
PESTLE analysis:
Political
The political situation in USA is quite stable for the businesses to lead in the country. The
political procedures of the country are a little different than other democracies, but the political
system enhances the global business scenario within the country. The Californian nut industry is
flourishing due to this reason. The government encourages the companies as the production of
fruit and nut is related with a sense of pride for the country. The government of the state has also
declared pecan, almond, pistachio and walnut as the official state nut of California by signing the
declaration into the legislation (Harris et al. 2016). With the recent theft issue, the government
and the local authorizes are taking adequate actions. The processors of nuts and the law
enforcement officers are also jointly taking initiatives for preventing the theft.
Economic

4
STRATEGIC MANAGEMENT
As stated by Smith (2016), California is accountable for around sixty five percent of the
nut and non-citrus fruit production for U.S. which is also around seventy three percent of the
national value of the country. The entire value of the nuts and fruit industry was $18.7 billion in
the year 2012, which has always shown a steady growth in each financial year since then. In
addition to that, the researchers state that, California has maintained the first position amongst
the exporters of the agricultural commodities in America. It should also be noted that the tree
nuts are the primary agricultural commodity for California as well. The pistachios of California
are also responsible for around 98% of the supply to the nation. Harris et al. (2016) also shows
that the walnuts of Australia roughly make up three fourth of the entire world inventory of nuts.
Social
Nuts are mostly sold as either mixes or single varieties. The fruit and nut industry of
California is growing its demand for nearly a decade. With the rising process, the organizations
in this industry are devoting more lands to the productions which eventually are leading to more
products and the processors, developers and exporters are now earning in billions. However the
recent issue of theft by the international crime rings has led to a great loss of more than millions
of dollars.
Technological
With the rising demands for the nuts, the technological innovations have also taken place
to make the processing timing shorter. The technological advancements for the past few decades
have immensely helped the industry to boost the nut industry to its existing position (Robbins
2014). The technological advancements also contributed to lessen the requirements for manual
labor and table pickers. In today’s time, there are multiple x-ray machines, electronic sorters,

5
STRATEGIC MANAGEMENT
laser technology and metal detectors for the processing phase. The technology of water-thrifty
also helped the industry to boost its average yields.
Legal
The primary legal issue of the industry is the recent theft of billions dollars of nuts by the
international crime ring. In the previous times, the petty thefts were quite common in this
industry, but recently the larger amount of thefts has increased to a great extent. Therefore the
state has also banned the nut selling before completing the harvesting for the purpose of
discouraging the black market sales (Bada et al. 2015). However, the international crime ring
that is responsible for the theft had hacked the website for planning the incident. One of the state
lawmakers has also introduced a bill for funding the taskforce for all over the state that that
prevent these cargo thefts.
Environmental
A major issue with the production of almonds and other nuts is that the production
procedure sucks a huge amount of water on an annual basis. Marvinney, Kendall and Brodt
(2014) have also indicated that the amount of water California uses in one year is almost similar
to the water usage of Los Angeles in three years. Therefore this issue has hampered the
production to some extent.

6
STRATEGIC MANAGEMENT
Figure 1: Usage of water per year
Source: Harris et al. (2016)
Five Forces Analysis:
Threats of new entrants
The new entrances in the nut industry in California mostly includes purchasing of the
appropriate lands which is very much necessary for growing the crops and trees, provision of the
working capital for sustaining the operations etc. The obstructions to the new entries are not
actually high for this industry as there are huge requirements for the business such as
technologically advanced machineries, harvesters etc, which are comparatively expensive than
any other agricultural industry (Smith 2016).
Power of suppliers
In this industry, the fertilizer products are mostly produced and supplied by bigger
chemical companies. There are higher demands of these products which lets the chemical

7
STRATEGIC MANAGEMENT
companies to control its prices that are mostly dependent on the price of the inputs in the
production process. However, the international shortage of the phosphate has led to an increased
price. However there are several alternatives for these chemicals which are used by the
companies in place of the chemical fertilizers.
Power of buyers
The buyers in the nut industry are mostly divided in three different groups, the food
processing organizations, grocery retailers and the wholesalers. The grocery retailers are mostly
the large companies that buy the packaged and market ready nuts. The wholesalers tend to resell
the products to different small retailers who cannot buy nuts directly from the companies due to
less finance (Lawrence, Travadon and Baumgartner 2015). The food processing organizations
also buy larger quantities of products for making other food products such as chocolates.
Availability of substitutes
The companies in the nut industry do not really have substitutes for the nuts that are used
as a special ingredient for few food products. However, as an independent food product, fruits
can be considered as an alternative for nuts. Fruit is also available at a cheaper rate, however
fresh fruits can get spoiled easily. Therefore the overall there are fewer substitutes in the market.
Competitive rivalry
Even though there are large companies in the industry, but this industry is full of small
organizations. There is a constant lack of diversity, therefore the degree of rivalry can be
considered as a moderate one.

8
STRATEGIC MANAGEMENT
Identification of five organizations:
There are several large companies in the nut industry in California, such as Blue
Diamond Growers, Waterford Nut Company, Chico Nut Company, Mariani Nut Company and
Pearl Crop. These companies have sufficient resources and financial capabilities for preventing
theft within the industry. These companies should take effective steps so that the local authorities
and the government of California can take adequate measures for prevention.
The business level resources and capabilities:
For the prevention of large scale theft, the companies should strengthen their protection
and security system. Most of the protection and security systems tend to focus on basic hazards.
For instance, in a retail store the security system will be focused more on finding whether
somebody is shoplifting or any employee is being dishonest. However, for preventing a large
scale theft like it happened in the Californian nut industry in the past time, the security system
needs to be more protected and ensure that no data can be hacked from the database. Other than
that, not only the online security, the companies should also make sure that there is enough
physical security for protecting the products. Therefore the companies should have sufficient
human resources along with a strong online security.
Recommendations and conclusion:
For preventing the large scale thefts in the companies, they may take few effective steps,
such as:

9
STRATEGIC MANAGEMENT
 The companies should observe and listen to the employees so that the management can
identify the potential risks. The management should be involved with the employees so
that they can know if there is any change of attitude.
 All the employees in the organization should know the fraud risk policy. The policies
may involve the kinds of potential fraud and its consequences, so that the employees
know how to prevent the fraud along with what outcomes can be if someone is not loyal
to the company.
 The online security system should be strengthened. Therefore the crime gangs do not get
the necessary information for the supply and distribution chain.
 More physical human resources should be included in the workforce.

10
STRATEGIC MANAGEMENT
Reference list
Aradhya, M.K., Preece, J. and Kluepfel, D.A., 2014, April. Genetic Conservation,
Characterization and Utilization of Wild Relatives of Fruit and Nut Crops at the USDA
Germplasm Repository in Davis, California. In II International Symposium on Wild Relatives of
Subtropical and Temperate Fruit and Nut Crops 1074 (pp. 95-104).
Bada, S.O., Falcon, R.M.S., Falcon, L.M. and Makhula, M.J., 2015. Thermogravimetric
investigation of macadamia nut shell, coal, and anthracite in different combustion
atmospheres. Journal of the Southern African Institute of Mining and Metallurgy, 115(8),
pp.741-746.
Barrows, F.T. and Frost, J.B., 2014. Evaluation of the nutritional quality of co-products from the
nut industry, algae and an invertebrate meal for rainbow trout, Oncorhynchus
mykiss. Aquaculture, 434, pp.315-324.
Beck, J.J. and Higbee, B.S., 2013. Volatile natural products for monitoring the California tree nut
insect pest Amyelois transitella. In Pest Management with Natural Products (pp. 59-72).
American Chemical Society.
Danielle Garcia, C. (2017). Nuts, by the truckload, make appetizing targets for thieves. CNN.
Retrieved 14 October 2017, from
http://edition.cnn.com/2016/07/31/us/nut-thefts-california/index.html
Davidson, G.R., Frelka, J.C., Yang, M., Jones, T.M. and Harris, L.J., 2015. Prevalence of
Escherichia coli O157: H7 and Salmonella on inshell California walnuts. Journal of food
protection, 78(8), pp.1547-1553.

11
STRATEGIC MANAGEMENT
Frelka, J.C. and Harris, L.J., 2014. Nuts and nut pastes. In The microbiological safety of low
water activity foods and spices (pp. 213-244). Springer New York.
Harris, L.J., Lieberman, V., Mashiana, R.P., Atwill, E., Yang, M., Chandler, J.C., Bisha, B. and
Jones, T., 2016. Prevalence and amounts of Salmonella found on raw California inshell
pistachios. Journal of food protection, 79(8), pp.1304-1315.
Hess, E.D., Hess, E.D., Glinska, G., Glinska, G., Hess, E.D. and Hess, E.D., 2017. Mellace
Family Brands, Inc.: Building a Socially Responsible Enterprise. Darden Business Publishing
Cases, pp.1-10.
How international gangs pose as truckers to steal nuts worth millions. (2017). Mail Online.
Retrieved 14 October 2017, from http://www.dailymail.co.uk/news/article-3539168/Thieves-
targeting-California-almonds-walnuts.html
L. McNeil, D., 2014. Market chain insights created by empirical modelling of inputs to the UK
nut market. British Food Journal, 116(12), pp.1960-1975.
Lawrence, D.P., Travadon, R. and Baumgartner, K., 2015. Diversity of Diaporthe species
associated with wood cankers of fruit and nut crops in northern California. Mycologia, 107(5),
pp.926-940.
Marvinney, E., Kendall, A. and Brodt, S., 2014, October. A comparative assessment of
greenhouse gas emissions in California almond, pistachio, and walnut production.
In Proceedings of the 9th International Conference LCA of Food San Francisco, San Francisco,
CA, USA (pp. 8-10).

12
STRATEGIC MANAGEMENT
McNeil, D.L. and Felgate, M.K., 2014. Analysis of UK walnut market import purchase
behaviour. British Food Journal, 116(3), pp.405-418.
Nishikawa, K., 2016. The End of an Era: California's First Attempt to Manage Its Groundwater
Resources Through Its Sustainable Groundwater Management Act and Its Impact on Almond
Farmers. Environmental Claims Journal, 28(3), pp.206-222.
Robbins, W.G., 2014. Jared Farmer. Trees in Paradise: A California History.
Smith, S., 2016. The EU almond industry. Agricultural Commodities, 6(3), p.112.
Venkitasamy, C., Brandl, M.T., Wang, B., McHugh, T.H., Zhang, R. and Pan, Z., 2017. Drying
and decontamination of raw pistachios with sequential infrared drying, tempering and hot air
drying. International Journal of Food Microbiology, 246, pp.85-91.