MBA Business Economics Assignment solution on Industry analysis of Kiwi Fruits industry in New Zealand - Market structure of the Kiwifruit Industry in New Zealand, INTERNATIONAL MARKET STRUCTURE of KIWI Fruit , Impact of national Policies on kiwifruit industry of New Zealand, Global economic trends of Kiwi Fruits, Factors affecting demand and supply of Kiwi fruits

 

TABLE OF CONTENTS

1.   INTRODUCTION

2.   DEMAND AND SUPPLY OF KIWIFRUIT

3.   MARKET STRUCTURE OF KIWIFRUIT

4.   IMPACT OF NATIONAL POLICIES on Kiwi Fruits

5.   GLOBAL ECONOMIC TRENDS of Kiwi Fruits

6.   REFERENCES

 Analysis of New Zealand’s Kiwifruit industry

Introduction

This essay is an analysis of the Kiwifruit industry, which is a major player of the horticulture landscape of New Zealand. It is exported to 53 countries and 30% share of the global export is with this country.

This essay examines and analyses the factors effecting the demand and supply of the product, the market structure of the industry both domestic and international and the dimensions on which the firms in the sector interact with each other. The analyses also cover the impact of the national polices over the industry and how it is affected by the global economic trends. 

It may be pertinent to mention here that in New Zealand the kiwifruit Industry is a regulated Industry.  Two of the important legislations which govern it are the Kiwifruit Industry Restructuring Act, 1999 and the Kiwifruit Export Regulations, 1999.

2. FACTORS AFFECTING THE DEMAND AND SUPPLY OF KIWIFRUIT INDUSTRY

DETERMINANTS OF DEMAND

·       TASTESAND PREFERENCES - Advertisement, lifestyle, customer perception, health considerations, and memories of eating the good on previous occasions influence tastes and preferences(Sloman, Norris, & Garrett, 2013). First and foremost, in the case of kiwifruit, being its high rating as a super food. Its distinctive melon like taste is unique. A recent nutritional study showed that the kiwifruit has more fiber than bran. Its vitamin ‘C’ contents are thrice as rich as an orange. It has low-calories and is sodium-free. It contains lot of potassium and calcium.

·       INCOME - As income increases, people's demand for most commodities will increase. These goods are normal goods.  When people are wealthier, they spend less on inferior products, such as bad fruit cuts, and turn to higher quality products (Sloman et al., 2013).Within the fruit bowl the Kiwifruit is still in an underdeveloped category. But the fruit has huge further growth and demand potential. As incomes in many countries increased, imports (especially from new emerging markets) also increased, particularly in Asia. (Bano. S, Scrimgeour F, 2012).

·       THE NUMBER AND PRICE OF SUBSTITUTE GOODS – Apple and Pears are substitute for Kiwifruit. When the prices of inferior fruits (Apple and Pears) rise the demand of normal fruit (Kiwifruit which has higher nutritive value) will increase because price is sensitive and once it gets increase the people will prefer more kiwifruit. The higher the inferior product price, the higher the demand for normal goods would be as people turn from the substitutes ((Sloman et al., 2013).The price will not differentiate much between inferior goods and normal goods. People will prefer kiwifruit more than apple and pears if price increases.

·       DISTRIBUTION OF INCOME - If national income were allocated to high-income earners from those with low incomes, the demand for luxury goods would increase. Kiwifruit is the super-food with high nutritive value. The cost of kiwifruit is high and cannot be purchased by low income earners frequently. Kiwifruit has always been the preference of higher income earners. 

Impact of changes in determinants of demand on market equilibrium price and quantity

 

Impact of positive changes

There is increase in demand (shift the demand curve right/up) due to positive change in determinants of Kiwifruit. Positive changes result in an increase of both equilibrium price and quantity. This is easily visible by looking at the red dots marked 1 and 2.  Initially equilibrium point is at 1 but when there is a rightward shift in demand curve the price as well as quantity of Kiwifruit has increased.

Impact of negative changes

There is decrease in demand (shift the demand curve left/down) due to negative change in determinants of Kiwifruit. Negative changes result in a decrease of both equilibrium price and quantity. Initially equilibrium point is at P and Q but when there is leftward shift in demand curve the price as well as quantity of kiwifruit has decrease and new equilibrium has been formed at price P1 and quantity Q1.

DETERMINANTS OF SUPPLY

·       USE OF TECHNOLOGY- Technology in the form and robotics and automation helps improve efficiency in the horticulture sector including kiwifruit supply chain in New Zealand. Sensors used in the supply chain provide accurate real time information and data for analysis. Robotic harvesters which work day and night are deployed in the orchards to pick up fruits. High accuracy GPS units; Drones (UAV) used to capture aerial imagery; and, Geographic Information Systems (GIS) software to process and present the maps are being deployed to map the orchards with high value kiwifruit varieties. High accuracy results about crop estimation, biosecurity readiness, pest and disease management and more are obtained with the use of these three complementary technologies for advance planning with confidence and precision. In post harvest operations automated bin trippers , infra red camera and robotic packing and stacking technology is being deployed. The use of this advanced technology has brought in accuracy and speed in the supply chain.

·       GEOPOLITICAL UNCERTAINTIES - In this connection mention may be made of the Brexit induced negotiations for the exit deal of United Kingdom from the European Union. Due to delay in this process there have been considerable distractions as well as uncertainty since the last two years. The process of FTA with EU and New Zealand has also been hanging fire. US/China tariff war is another factor under this category. Similarly, in the name of food security and self-sufficiency protectionist policies are being espoused by some of the countries. All these factors represent a significant risk in so far as the international trade environment is concerned and have jeopardized the growth of New Zealand’s export business of Kiwifruit. Non tariff barriers have impacted the demand of the fruit internationally.

·       THE NUMEBR OF SUPPLIERS AND THE ALTERNATIVE PRODUCTS- In order to beat the competition, new varieties of kiwifruit better in taste, quality and consistency needs to be introduced and given proper branding and promotional campaigns. This is, however, a cost intensive exercise needing high spending in research and innovation. Moreover new varieties take several years to grow. It can be made available in sufficient quantity when a large number of growers cultivate the same. All these issues add up to increased cost of production. The other alternative to compete with the rivals in the market is to ensure that Zespri manage to supply the kiwifruit to the international market throughout the year. This is achieved by getting the fruit cultivated offshore in the southern hemisphere region in Italy and China as the harvesting seasons in the northern and southern hemisphere complement each other. When the harvesting season ends in northern hemisphere, it starts in southern hemisphere. (NZKGI, 2018-kiwifruit book).

·       NATURE, ‘RANDOM SHOCKS’ AND OTHER UNPREDICTABLE EVENTS -Adverse weather such as frost, cyclone, drought, etc, Biosecurity incursion, Food safety/contamination risks, labour constraints are some other factors which impact the supply of the kiwifruit. (NZKGI, 2018-kiwifruit book). PSA the bacterial disease which effected the kiwifruit in 2010 devasted the harvest and had hindered the supply ( NZ herald,2010)

IMPACT OF CHANGES IN DETERMINANTS OF SUPPLY ON MARKET EQUILIBRIUMPRICE AND QUANTITY (DEMAND CONSTANT)

 Impact of favorable changes

Supply curve shifts rightward leading to new equilibrium price and quantity. New equilibrium price is less than initial equilibrium but quantity has been increased in new equilibrium.

Impact of negative changes

There is decrease in supply (shift the demand curve left/ up) due to negative change in determinants of Kiwi. Negative changes result in a decrease of quantity and increase in price. Initially equilibrium point is at P and Q but when there is leftward shift in supply curve the price Kiwi has gone up and quantity supplied went down.

   

Price elasticity of demand of Kiwi fruits

Demand of kiwifruits are inelastic( very less elastic) in nature in short run as it is categorized as a super product among various fruits available in the market in terms of health benefits, minerals and vitamins available in Kiwi fruits. Increase in price of Kiwi fruits tends to decrease demand of Kiwi fruits in short run to a very lower extent. Generally, in long run, demand of products remain more elastic, however, looking into nutritious benefits of kiwi fruits as compared to its substitutes , it tend to remain less elastic in long run as has been observed in continuous increase in demand of kiwi fruits year over year around the importing countries.

Price elasticity of Supply

Supply elasticity of Kiwi fruits is very less elastic near to inelastic in short run due to limitation of resources required to produce Kiwi fruits however, in long run, supply elasticity is elastic in nature as production capacity can be easily increased in long run as has been seen from statistical data of increase in quantity of exports over year and year.

Q 1 & 2.Market structure of the Kiwifruit Industry in New Zealand and over what dimensions do the firms interact with each other:

(Market structure may be different domestically and internationally. Justify your conclusions about the structure. Consider also carefully the interactions. The firms may not interact only on price. They may also cooperate at some levels and not just compete with each other.)

There are 2681 kiwifruit growers in New Zealand with 2900 registered orchards spread in 12185 hectares. In 2017/18 the earnings from the export of the kiwifruit produce was $1.859 billion, up significantly 12% from 2016/17(Retrieved from http://kiwifruit-Book.pdf). In 2018 New Zealand exported 417000 tonnes of kiwifruit. (Global Trade, Nov5, 2019 issue).

 

Market Structure for EXPORT of Kiwi fruits –

For most of exports of Kiwi fruit there is monopoly market that exists in Newzealand. However, for export to Australia, there is oligopolistic market structure.

MONOPOLY – A monopoly exists when there is only one firm in the industry. Zespri is the major player in export market from Newzealand to other countries except Australia. The Kiwifruit Export Regulations, 1999 govern and regulate the export. Under the provisions of the said regulations only a single marketer, namely, Zespri Group limited has been permitted to export and market the Kiwifruits grown in New Zealand to the countries outside Australasia (Retrieved from http://kiwifruit-Book.pdf).The firm’s monopoly position by patents on the essentials(Sloman et al., 2013). Zespri has patent gold kiwi. Zespri has copyright. The various forms of licensing and tariffs and trade restrictions are applicable to keep the one firm to operate from Newzealand for exporting kiwifruit. This arrangement is what is called the Single Point of Entry (SPE). Provision for collaborative marketing arrangements between other marketers and Zespri has also been made under the Regulations and is defined as “an arrangement by which a person may export New Zealand grown kiwifruit in collaboration with Zespri Group Limited”. Collaborative marketing has “the purpose of increasing the overall wealth of New Zealand kiwifruit producers.” This arrangement makes Zespri, in effect, a monopsony buyer of kiwifruit, grown in New Zealand, for export. The New Zealand Kiwifruit Authority has the look and most of the mechanisms of a state- sanctioned marketing monopoly. It is not mandatory for the producers of the NZ kiwifruit to have share ownership in Zespri. The growers receive the payment for their produce form the packhouse and cold storage Company, or a legal entity of group of growers which negotiates the contract with the packhouse on their behalf. The Zespri and the packhouses have a direct contract called the ‘Supply agreement’. The packhouses are called the registered suppliers.

OLIGOPOLY – Oligopoly occurs when there are few firms sharing a large proportion of the industry(Sloman et al., 2013).There are few firms like SEEKA which exports to AUSTRALIA. Export of kiwifruit to Australia is governed under the New Zealand Horticulture Export Authority Act,1987. Both firms have identical product kiwifruit. Both the firms SEEKA and ZESPRI are interdependent. Each firm is affected by its rival’s action. Both the firms SEEKA and ZESPRI does not ignore the actions and reactions of each other in kiwifruit industry. The price change or product enhancement will affect the other firm and vice-versa. The companies are interdependent. If a company changes its price or product quality it will be influenced by the rival's sales(Sloman et al., 2013).

INTERNATIONAL MARKET STRUCTURE of KIWI Fruit-  

MONOPOLISTIC COMPETITION

Zespri is the largest firm to export globally the kiwifruit. ZESPRI is among the top choice for the kiwifruit because of its superior quality of kiwis. Zespri grows the best-tasting kiwifruit whichever variety to be choose either green kiwi or gold kiwi. The size of the kiwis are large as comparing it global varieties. Zespri has a brand name in the global market because of its better nutritive content. There are several other countries who are the producers of kiwifruit like Italy, Chile, Greece, Belgium, Iran and many more.

As stated by globaltrademag.com “ EXPORTS BY COUNTRIES IN 2007 TO 2018

New Zealand (417K tonnes) and Italy (289K tonnes) were the key exporters of kiwi fruit in 2018, resulting at near 29% and 20% of total exports, respectively.

By making use of the economy scale, setting for high standard quality, developing markets and spending in Research and Development, the SPE arrangement has been instrumental in improving the value of the kiwifruit industry exports. All these measures have helped Zespri to compete effectively in international markets and command a premium for its world leading brand. The kiwifruit growers of Newzealand have benefitted from the price that the Zespri pay for their fruits (Retrieved from http://kiwifruit-Book.pdf).

Impact of national Policies on kiwifruit industry of NewZealand

(Note the broadness of this. The industry may be affected by the government’s fiscal and monetary policies. There could be other areas where they are also impacted. For instance transport and environment policies may have strong impact. Try not to just list the policies that apply but focus on the most important ones for the industry.)

The National Policy of a country provides an operating environment which is fundamental to any industry for its operation. Therefore, the responsibility for success of kiwifruit industry is to be shouldered not only by the kiwifruit growers, post harvest operators and the exporter but also on the environment in which they operate. Any change in the operating environment influences the structure and performance of an industry. The major policy change for the kiwifruit industry had been the regulation the industry through legislation. In 1977 the New Zealand Kiwifruit marketing Authority was created by the Government under its power under the Primary Product Marketing Act 1953. The authority not only provided controls to the producers but also regulated and coordinated the number of exporters through issue of license. It also set high quality and enforced the standards set for the kiwifruit industry. The other interventions by the authority were through controls on packaging and marketing. It also funded R&D (Wills 1994).

Q4. How it is affected by the global economic trends.

(Note again that this is general. Many thins have the potential to affect your industry. These could range from other country’s economic performance, political stability, trends in energy prices etc. Focus on most important and analyze them.

In its annual report for the year 2019 the NZ horticulture Export Authority has identified following global trends which impacted the New Zealand exports.

1.Turbulent international trading conditions and sluggish growth (World Economic Outlook, July 2019)

New Zealand Dollar was less volatile. It remained at slightly lower levels which helped New Zealand to retain the export competitiveness across a range of international markets with a weighted trade index of 71 down by one point.

2.Freight environment

In 2019 a balancing occurred in the supply/demand of fright environment. Low performing and obsolete vessels were cut down with a view to rationalizing efficiency. Freight rates eased for the three quarters of the year. These recovered in the last quarter of the calendar year. Bunker fuel prices also fluctuated, 10 to 20% lower from previous year. Competition among carriers remained strong. Trade uncertainties combined with the January 2020 deadline for introduction of the Global Sulphur Cap (whereby the cap on sulphur content of marine fuels will be cut from 3.5% to 0.5%), will impact the supply/demand situation as shipping lines will hasten the scrapping of older vessels. This may also impact the future freight cost structure dynamics. The decarbonisation of shipping is a leading issue for the industry to address.

3.Global Market Dynamics

Following global issues are of concern to the horticulture sector of New Zealand:

·       Delayed progress in negotiations for a Free Trade Agreement with EU due to the uncertainty of a deal between UK and EU over Brexit

·       The US/China tariff war

·       Protectionist policies that are being espoused in the name of food security and self-sufficiency represent a significant risk to the international trading environment and jeopardize our growth prospects.

·       Non-tariff measures in particular are impacting on the development of our export sectors.

4.Resource Usage

·       As far as horticulture is concerned, the usage, availability and sustainability of water is a key issue in developed markets in Europe and North America.

·       In Asian and Latin American economies, investment in large infrastructure projects relating to food production continued at pace, and contingent upon access to water, horticulture crops retained prominence as a desirable land use,.

·       More products with less sugar and/or additives, plant-based products, probiotic foods, food waste reduction/management, traceability and integrity, convenient online food shopping to save time, all continued to feature as themes in the top ten consumer trends.

·       Search for plastic packaging and wrapping alternatives is a key issue for the horticulture sector.

·       The carbon footprint of food production is being debated globally with renewed vigor which, may require public reinforcement of earlier research on New Zealand’s positive credentials as regards production and transport to markets. Encouraging a more Collaborative Horticulture

REFERENCES

Sloman, J., Norris, K., & Garrett, D. (2013). Principles of economics. Pearson Higher Education AU.

Bano, S., & Scrimgeour, F. (2012). The export growth and revealed comparative advantage of the New Zealand kiwifruit industry. International Business Research, 5(2), 73.

Scrimgeour, F., & Locke, S. (2015). Review of Kiwifruit New Zealand. Available at SSRN 3286701.

Jim (2020).Monopolostic competition

http://www.investopedia.com/m/monopolisticmarket.asp

Newzealand horticulture export authority. (2012). Kiwifruit.

http://www.hea.co.nz/2012-05-11-03-05-28/kiwifruit-trade

https://www.globaltrademag.com/

http://www.hea.co.nz/2012-05-11-03-05-28/kiwifruit-trade

https://www.nzkgi.org.nz/wp-content/uploads/2018/12/2018-Kiwifruit-Book.pdf

Comparative analysis of Organisational Culture, Organisation Structure and Organisational Design of JCBPPI, Globsyn Skills, M&M and ONGC - JCB Power Products India Private Limited, Globsyn Skills Development Limited ( Training and Skills Development arm of Globsyn Group), Oil and Natural Gas Corporation Limited and Mahindra & Mahindra Limited

Organisational culture

	JCBPPI	GLOBSYN	M & M	ONGC
1.UNIQUENESS	The culture at JCBPPI is marked by unique characteristic of “Sense –Of - Urgency’ that prevails seamlessly through entire JCB Group.	Globsyn strongly believes in ‘Taking People to the Next Level’. Globsyn is a problem solver with an unwavering passion for performance.	The unique aspects of culture in the organization is philosophy of ‘Rise’. Three important pillars Of Mahindra & Mahindra’s culture is 1. Alternative thinking 2. Driving positive change, and 3. Accepting No limits.	creativity and out of box thinking is the foundation upon which culture of ONGC prevails.
2.Changes to be made	Need for a unique customer centric culture that shall be very different from JCB culture as a market leader organization as the Head Office is now.	Need for an employee centric culture in order to increase the satisfaction level of the employees and the organisation has adopted this change too.	No changes required to be made as they continuously work on bringing and adopting positive changes to increase the level of efficiency.	Need to empower, act as a global thinker and provide opportunities for initiatives creativity and innovation.
3.Organisational set up	Informal Set Ups Dominate. 90% of the work in and b/w departments is done on telephonic / direct meeting basis and mails and memos are limited to those absolutely necessary to record keeping.	Informal Set Ups Dominate. More than 70 % of the work in and b/w departments is done on telephonic / direct meeting basis and mails and memos are limited to those absolutely necessary to record keeping.	Mix of formal and informal set ups prevail. As per the requirement of the scenario, formal rules are followed and for routine work they show little endeavor to go on writing work and prefer oral communication.	Highly formalized and organized set ups. Proper written communication is followed in order to perform the tasks of the organisation. Circulars, notices, tenders, mails and memos are issued to keep the record of all the happenings in the organisation.
4.Work life balance	Strictly adhere work life balance, provide regular holidays to employees, organize family trips and entertainment events, maintains 5 days working,	As compared to other organizations’, little focus is on maintaining work life balance. However, the organisation endeavors to fulfill the casual needs of the employees with regard to their personal matters in terms of providing financial and other assistance.	Highest priority by maintaining 5 days working, regular holidays, keeps less work load on Friday in order to ensure happy weekends for their employees.	Highest priority by maintaining 5 days working, 40 days leave with pay, taking care of family members by providing insurance cover to families and many other facilities in order to secure the social and personal life of the employees.
5. Gender relationship	Despite of less no. of female employees the culture is well adopted for women to work in this organisation.	Friendly environment for women to work in this organisation. A bit of sexual discrimination prevails in the organisation.	Both male and female employees are considered equal and given equal opportunities to work, grow and prosper in the organisation. However at lower levels, a sense of discrimination prevails.	Women employees working at higher position get respect however, females at lower level face problems with respect to gender inequality.

Organisational Design

	JCBPPI	Globsyn	M & M	ONGC
1.Span of Control	Narrow for resources and wide for position power.	Narrow; it flows top-down	centralized in nature. ‘Centre of Excellence’ for each of the sub-function of HR	Wide for both resources and position power.
2. Span of Accountability	Narrow -Low standardization with tradeoffs possible.	Standardized.	At bottom level narrower. At middle and top level, wider span of accountability.	At bottom level higher. At middle and top level, standardization with tradeoffs possible.
3. Span of Influence:	Wide, Encourage cross departmental interventions , has dual reporting line relationships .	Narrow, Single reporting lines.	greater span of influence, by virtue of their role & responsibility in the organization.	Wide with multiple reporting lines.
4. Span of Support	wide for inherent need to integrate bothvertically with Corporate team and horizontally with other department heads.	Individualized rewards.	Wide span of support becomes vital since, HR plays a key role as a strategic Business Partner of the organisation.	Narrow as HR employees perform more of administrative functions.

Organisational Structure

	JCBPPI	Globsyn	M&M	ONGC
1. Size	Total no. of employees is 48. Turnover : INR 70 Cr. As in 2016 &expected to cross 100 Cr in 2017-18. HR at JCBPPI is a 02 person department with functional line relationship at JCB Corporate Head Office In India.	Total strength of the employees is 41. Revenue turnover: Rs. 9 Crores. Two person HR department with functional relationship.	The M & M Group consists of 154 subsidiaries, 8 Joint Ventures and 16 Associates. Total Revenue of M & M Group for the FY 2016 is 17.8 billion US $., i.e. Rs. 116245 Crore. This multinational group, Head Quarter based at Mumbai, Mahindra provides employment opportunities to over 200,000 people in over 100 countries.	Being the largest profit making PSU in the country, it is spread across 17 countries and has employed more than 40,000 people. Management and functioning of such a huge government owned company is divided among many functional levels that ensure its smooth functioning, continuous growth and expansion.
2. Authority relationship	HR manager reports to the Business Head at JCBPPI functionally , a clear dotted line relationship exists with the HR Department at the Corporate Head Office situated locally to ensure HR functional accuracy	HR Executive reports to HR manager who in turn directly reports to managing director of the company.	centralized HR processes in order to have standardization across function to give uniform experience across all the business units spread over different geography.	Secondary level managers are directly under the control of apex level delegates. staff levels are supervised and controlled by the supervisors.
3. Decision making	all decisions pertaining to JCBPPI can be taken internally by HR Manager, decisions involving policy change and interpretation needs corporate approval .	All decisions are taken by HR manager with consent of managing director of the company. However, HR manager has autonomy in taking decisions with regard to routine work.	functional HR heads and Business HR Heads are encouraged to participate in strategy designing, conceptualization of initiatives which enables them to contribute their thoughts and ideas also, help them facilitate business related decisions.	ONGC is headed by a Director General who is advised by an expert advisory committee in all major decisions. He holds all the power to take major decisions and is generally directly appointed by the Ministry of Petroleum and Natural Gas, Government of India. These are the highest level of positions to be acquired in the company.
4.Organisational  hierarchy	Flat hierarchy	Flat .	Tall. All five managerial levels of hierarchy prevail in M&M.	Flat. Three levels of hierarchy apex level, secondary level and staff level prevail in the organisation.
5. Work   Specialization	All works related to HR are performed by HR manager and HR executives.	Recruitment is done by HR executive. Other HR activities are performed by HR manager.	Centralized HR processes in order to have standardization across function to give uniform experience across all the business units spread over different geography.	The people at apex level perform functions like planning, controlling and supervision. They do not have any ground work functions, although they may be controlling all departments with those functions under them. Secondary level are responsible for the daily functioning of each department.staff level take care of all other menial jobs requiring manual labor.
6. Type of structure	Functional line structure.	Functional structure.	Mechanistic / functional structure’ at macro level and organic structure as per the scenario.	functional organisational structure
7. Advantages  of   type of structure	Tends to simplify and clarify authority, responsibility and accountability relationships; Promotes fast decision making and Simple to understand.	A line structure tends to simplify and clarify responsibility, authority and accountability relationships; promotes fast decision making and flexibility; managements and employees have greater closeness.	group decisions are better than individual decisions; Better interaction among members leads to better co-ordination of activities; Group discussion may lead to creative thinking.	Functional specialization leads to many advantages like best managerial decision; minimizing cost of operation and increasing efficiency and productivity of the enterprise; Facilitates growth and expansion.
8. Disadvantages of type of structure	Improved speed and flexibility may not offset the lack of specialized knowledge; There is a tendency to become overly dependent on the few key people who  perform numerous jobs.	As the firm grows larger, line organisation becomes more ineffective; Managers may have to become experts in too many fields.	delay in decisions; consume more time and hence more expensive;  Group action may lead to compromise and indecision ; ‘Buck passing’ may result.	Difficulty in Interdepartmental Coordination; creates conflict of interest; Difficulty in Fixing Responsibility; Lack of Co-ordination; High Clerical Costs; Chances for Indiscipline.