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Experience With International Membership

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Revenue Canada rulings - Canadian Securities Commission issues ... Pleased with Revenue Canada rulings - May have kept some things separate (patronage pools, etc. ... – PowerPoint PPT presentation

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Title: Experience With International Membership


1
Experience With International Membership
  • Bill Davisson
  • GROWMARK, Inc. CEO

2
Point of Reference
  • GROWMARK is
  • Regional farm supply grain marketing
    cooperative
  • Based in Bloomington, Illinois
  • 2.8 billion in sales (2005)
  • Nearly 1 billion in assets
  • Ranks among the largest agricultural cooperatives
    in North America

3
Point of Reference
  • GROWMARK
  • Began as Illinois Farm Supply Co. in 27
  • Expanded to Iowa/Wisconsin in 60s
  • Consolidated with Ill. Grain Corp. in 80 to form
    GROWMARK
  • Purchased assets of UCO in 95
  • (35 member cooperatives in Ontario)

4
Point of Reference
  • GROWMARK
  • Expanded marketing territory in 90s
  • Investment in Mexican feed company in 96
  • Purchase of AgWay agronomy assets in 02
  • Today, business in 21 states, Ontario, and Mexico

5
Point of Reference
  • GROWMARK Strategic Direction
  • Maintain strong member system
  • Grow expand from core products
  • More involvement with value added
  • Expand marketing territory
  • Mergers/acquisitions supporting business
    strategies

6
Point of Reference
  • GROWMARK Ventures/Investments
  • Benefit to core membership
  • Related to core business competencies
  • ROI (15)
  • Further strategic direction

7
Canadian Member Business
  • Acquisition of UCO assets (1995)
  • Factors in the decision
  • UCO structure similar to GROWMARK
  • Federated
  • Loyal members
  • Farmer focused
  • A system approach to business
  • Common agriculture
  • Corn
  • Soybeans
  • Livestock

8
Canadian Member Business
  • Factors in the decision continued
  • Core businesses
  • Agronomy
  • Energy
  • Feed
  • Grain
  • Consumers
  • Economic opportunity/growth

9
Canadian Member Business
Where is Ontario agriculture?
10
Canadian Member Business
  • Why approach as member business?

11
Canadian Member Business
  • Why approach as member business?
  • Ownership options
  • - Canadian General Business Corp
  • - Canadian Cooperative Subsidiary
  • - Operate in Canada as GROWMARK
  • (member basis)

12
Canadian Member Business
  • Why operate on member basis?
  • Largely a philosophical decision
  • - UCO members wanted to buy a regional co-op
  • - UCO members willing to invest in GROWMARK up
    front over time
  • - UCO members desired to be equal with U.S.
    members
  • (Note All but 2 of the former UCO members
    became members of GROWMARK)

13
Canadian Member Business
  • Challenges Legal and tax issues
  • - Revenue Canada rulings
  • - Canadian Securities Commission issues
  • - Anti-Trust laws in both countries
  • - Bankruptcy issues (UCO)
  • - Pension/benefit laws/programs
  • - Doing business with Cuba

14
Canadian Member Business
  • Other challenges
  • - Expatriate management Customs
  • - Governance (GROWMARK Board)
  • - Acceptance of U.S. company in Canada
  • - Acceptance of decision by U.S. members
  • - How would ownership investment by members be
    equalized?

15
Canadian Member Business
  • Other challenges
  • - Cultural issues
  • - French Canadian issues
  • - Acceptance of U.S. company in Canada
  • - Acceptance of decision by U.S. members
  • How would ownership investment be equalized?
  • - Currency issues

16
Canadian Member Business
  • Process of assimilation
  • - Its about the people!
  • - Joint meeting of member co-op managers/ board
    presidents
  • - Teaming of co-op leaders (US/Canadian) for
    facility tours
  • - Employee meetings
  • - We discovered our similarities were great

17
Canadian Member Business
  • Process of assimilation
  • - Staffing started as combination of former UCO
    and a few key, long-term U.S. employees
  • - Today, the Ontario region staff is all
    Canadian

18
Canadian Member Business
  • Given 20/20 hindsight,
  • would we change anything?
  • Not much
  • - Pleased with Revenue Canada rulings
  • - May have kept some things separate (patronage
    pools, etc.)

19
Canadian Member Business
No more one size fits all Tension Unity vs.
Uniqueness
20
Canadian Member Business
  • Keys to success
  • In this instance, having Ontario member
    cooperatives as full, equal members was
    essential
  • Recognize differences, but blend the family

21
International Non-Member Business Example
  • maltaCleyton
  • 2nd largest animal feed company in Mexico
  • Diversifying into pet food/ aquaculture
  • 44 management ownership
  • 44 GROWMARK ownership
  • 12 private investor ownership

22
Non-Member Business
maltaCleyton
  • Why make the investment?
  • Supports strategic direction
  • - Core business
  • - Geographic expansion
  • - Solid ROI
  • - Growing market
  • - Market for grain

23
Non-Member Business
maltaCleyton
  • Why non-member investment?
  • - Not a cooperative to begin with
  • Different risks/challenges
  • Countrys economy/government
  • Security
  • Language
  • Culture

24
Determining the Appropriate Strategy
  • Let principles guide
  • Think globally
  • Calculate risks
  • Monitor results
  • Nurture relationships
  • Be aware of issues/attitudes in each country

25
Questions?
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