The Decreasing Profitability of the Israeli Food Industry

A grounded theory research is of significant value when examining in depth the key factors impacting profitability in the food industry. Five Israeli food companies, which are different in age, size and their business models, were selected to optimally serve the purposes of the study. The selected methodology included a grounded theory approach, a purposeful sampling involving 15 executives from the five above-mentioned companies and two interview formats: An open-ended interview for the five CEOs and a structured interview adopted from Preziosi's (1980) Organizational Diagnosis Questionnaire for the remaining managers. This study revealed additional and well-grounded insights into the decreasing profitability of the food companies under investigation from 2010 to 2013. The findings are on the whole in agreement with the reviewed literature. However, a number of significant inconsistencies were also identified. On the theoretical level, the researcher recommends further investigation of additional Israeli and global food companies in order to increase the external validity of the results. On the practical level, the researcher recommends for government and industrial institutions to increase the viability of companies within the food industry by addressing the high level of concentration and diminishing its effect, especially concerning the SME. This research has enriched the current body of knowledge regarding the struggle for profitability of food companies by outlining nine key categories perceived to be the predominant causes of the decreasing profitability issue. This study is therefore of significant value to the current theoretical literature regarding both the Israeli and the global food industry.