Discuss about the Situation Analysis for Micro Environmental Forces.
The company was established by Samuel Mardsen in the year 1814 in New Zealand. The company saw its first export in the year 1846, which consisted of a cheese consignment that was shipped to Australia. The company launched its brand known as Anchor in the year 1886. In 1935 it was seen that the government took the control for exporting the products under their wings, which helped in increasing the export earnings due to the formation of a Dairy Board. The year 2001 saw the merger of three major dairy farms and was known as the Fonterra Co-operative Group Ltd (Haggitt, 2015).
The major units of business for the company is supplying the ingredients of dairy to some of the leading companies and other dairy farms along with the consumers so that they can enjoy the best quality of dairy products that are available in the market. The company is owned by more than 10,000 shareholders who are farmers and produces nearly 18 billion of milk per season within the country for the consumers to purchase it (Baker, 2016).
The company operated under the dairy sector and is one of the highest producers of milk on a global manner. The company is present in many countries such as Australia, Chile and the European nations as well (McGiven, 2016).
The company has been performing in a well manner since its inception. This has helped the company in being recognized all around the globe and the products that are being offered by the company are of high quality as well. this has helped the company in increasing its rate of profit within the organization as well (Lattimore, 2013).
The company has a strong presence in the global market, as Anchor is exported to over 140 countries. It has helped the company in earning better rate of profits due to the demand of the product by the consumers in the market.
The research and innovation team that is present within the company enables the company in making innovations so that it can help them in gaining a competitive advantage in the market (Nilsson & Rydberg, 2015).
The company has a wide range of products that helps in supporting the various needs and demands of the consumers in the market. The stable supply of milk in the market has enabled the company in eliminating the major competitors so that the demands on a global level can be met properly.
The presence of the company in the global market has enabled the firm in reaching out to a vast number of customers that has helped the company in increasing its profitability ratio as well. The presence in the global market has helped in increasing the export of products with the help of different platforms so that the resources of the other countries can b tapped in this process (Spreer, 2017).
This has been possible for the company due to the strong research team that they have, which helps them in gaining competitive advantage over the other companies. The company has one of the largest dairy research centres that have allowed them in increasing their production unit and maintains the quality of the products as well. The unique innovation techniques have allowed the company in maintaining the sustainability of the products in the consumer markets as well (Barkema et al., 2015).
The products that are available in the market are of the best quality so that it can enable the company in building a strong portfolio of the brands. The brands such as Anchor are recognized through the global markets so that it can help in increasing the sale of the products as well. The high quality products help in meeting the demands of the customers and follow the safety protocols that are issued by the law so that the consumers are not provided by cheap products.
The suppliers of the company are the farmers who are the major shareholders as well. The farmers help in delivering the best quality of milk to the company so that the products can be of a higher quality. This allows the company in gaining a large base of customers for its products (Munir et al., 2015).
The human resources contractors are the ones that supply the entire labor to the company. These laborers are highly skilled that helps the company in producing the products of a higher quality. The machineries that are used within the company are also supplied by the contractors so that it can help in using the advanced technologies for the production of the goods. This helps the company in making sure that the products are being made on the best quality so that it can help them in attracting the customers towards the products and maintain its goodwill in the market as well (Nilsson & Rydberg, 2015).
The company has a fair share in the market due to the better quality of products that are being supplied by them. This has helped them in securing the trust of the customers so that its profit share in the market can be increased. However there are competitors in the market as well such as Tatus, Westland, Ocenia, Synlait, Miraka and Open Country Dairy (OCD) (Barkema et al., 2015).
The agreement on Trans-Pacific Partnership (TPP) has helped in providing the possibilities for a free trade setup among the Pacific nations that has led to the liberalization of investment and trade. This has resulted in having a better access to all the markets for the company so that the overseas business can be done in a successful manner (Spreer, 2017).
The rate of growth for the company has been sustainable in nature due to the increase in its use of technology. It has helped the company in decreasing its rate of production and increase the output thereby increasing its profit level as well. The structure of the economy is also well defined that has helped the company in identifying the economies of scale that has increased their rate of profit in the market as well. The economy of New Zealand is stabilized in nature that is there have been no fluctuations in the trading prices that has helped the company in providing the products at a competitive price to the customers (Silanikove, Leitner & Merin, 2015).
The company hires a young population that has resulted in working in a better condition, as they are swift in working within the organization. The young people can move around easily and carry out the operations that includes operating the heavy machineries where as the older population can guide them with their level of experiences. The company also respects the employees who are from different cultures so that it can lead to a healthy and better work place. This helps the company in making the ambience within the work place friendly in nature (Lattimore, 2013).
The use of the advanced technologies result in a huge amount that needs to be spent for developing the new areas so that the operations can be carried out in a smooth manner. The use of the advanced technologies will result in increasing the level of efficiency among the workers, which will have a direct impact on the level of output as well (Munir et al., 2015).
The government looks after the operations that are being carried out within the company so that it can provide all the help that is required within the system. The cost of developing the system and the legal activities that are done within the organization are carried out by the Board that has been formed for the company. This helps the company in carrying on with its production at a faster manner (Elakkiya & Matheswaran, 2013).
The company recycles the wastes that are being produced within the company so that the carbon footprints within the environment can be reduced. The company is affected strongly due to the adverse weather conditions that may take place. The adverse weather condition may result in the loss of live stocks, which may hamper the quality of product as well (Makoviky et al., 2015).
The company used to control almost 96 percent of the dairy output in New Zealand and the remaining was under the small cooperatives that were present within the area. Over the years, it was seen that the major shares of Fonterra reduced to 84 percent due to the rise in the competition in the dairy industry. Other companies such as Tatua, Westland, Oceania, Miraka, Synlait and Open Country Dairy (OCD) were also producing the same products and supplying the market at a cheaper price that Fonterra (Bachey, 2013).
Tatua is a cooperative organization that is owned by 113 suppliers and supplies consumer and lactoferrin products such as Crème Fraiche and Mascaparone. Westland on the other hand supplies yoghurt, butter and milk that is similar to the products offered by Fonterra. These two companies have been giving stiff competition to Fonterra, as these products are being offered in the market at a lower price (Spreer, 2017).
Fonterra needs to adopt new strategies to sell Anchor in the market so that it can help the company in gaining a better percentage of shares in the market. It will also help in increasing the profit percentage of the company so that the customers can increase the intake of the products as well.
Figure 1: Competitor Analysis of Fonterra
(Source: McGiven, 2016)
The company has a large global presence that has helped them in stabilizing the supply of milk on a global manner. The merge up of the company with two other large companies has helped them in identifying the economies of scale so that it can help in earning better profits. The company employs a large number of skilled workers who help in increasing the level of output for the firm as well by decreasing the production costs (Grant, 2016).
The relationship with the suppliers needs to b maintained so that the best quality milk can be provided to the company failing which may lead to decreasing the milk quality as well. The company relies fully on the weather conditions failing which may affect the quality of milk. The livestock have to be well protected so that it can be free from diseases, as it may affect the health of the cows (Pahnke et al., 2015).
The barriers of entry is most of the countries related to the dairy industry is very high, which can be reduced by the company by supplying best quality of products in the overseas market. This will allow the customers only to purchase the products that are being produced by Fonterra. They need to increase its supply chain so that better quality milk can be procured by the company that will enable in supplying more milk products in the market (Cuadros & Dominiguez, 2014).
The legal procedures in some of the country are very high, which has restricted the company in setting up their plants. The rate of exchanges in some of the country fluctuates on a constant manner that makes it difficult for the company in setting up the price at which the products can be sold in those markets (Hjort et al., 2013).
The company targets the customers from all the age groups, as Anchor products can be consumed by all people. The demography for the company is that they target customers of all ages from both the genders. The psychographic segmentation of the customers are that the company targets the people who wants to lead a healthy lifestyle, as Anchor is filled with nutrients that will help the customers in satisfying the nutrient content in their body. Customers who are suffering from bone-related diseases can consume the product, as it will enable them in developing stronger bones by providing the right nutrients to it (Bachey, 2013).
Conclusion
Therefore it can be concluded that the situation of the company is nicely set in the market though it has lost some of the major shares due to its competitors. The external and internal environment of the company has shown that they enjoy a strong financial presence in the market due to the best quality products that are being supplied by them to the consumers. The competitors of the company need to be dealt in a proper manner so that it can help in increasing the level of profits as well.
Reference List
Bachev, H. (2013). Risk management in the agri-food sector.
Baker, R. (2016). Implementation of the Fonterra Palm Kernel Guideline.
Barkema, H. W., Von Keyserlingk, M. A. G., Kastelic, J. P., Lam, T. J. G. M., Luby, C., Roy, J. P., … & Kelton, D. F. (2015). Invited review: Changes in the dairy industry affecting dairy cattle health and welfare. Journal of dairy science, 98(11), 7426-7445.
Cuadros, A. J., & Domínguez, V. E. (2014). Customer segmentation model based on value generation for marketing strategies formulation. Estudios Gerenciales, 30(130), 25-30.
Elakkiya, E., & Matheswaran, M. (2013). Comparison of anodic metabolisms in bioelectricity production during treatment of dairy wastewater in Microbial Fuel Cell. Bioresource technology, 136, 407-412.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Haggitt, T. (2015). Cultural and Environmental Impact Statement In relation to Fonterra Whareroa Dairy Factory and H?wera WWTP reconsenting. Prepared for: Dr. Louise Tester Te Korowai o Ng?ruahine Trust.
Hjort, K., Lantz, B., Ericsson, D., & Gattorna, J. (2013). Customer segmentation based on buying and returning behaviour. International Journal of Physical Distribution & Logistics Management, 43(10), 852-865.
Lattimore, R. (2013). The New Zealand economy: an introduction. Auckland University Press.
Makovický, P., Rimárová, K., Makovický, P., & Nagy, M. (2015). Genetic parameters for external udder traits of different dairy ewes. Indian J. Anim. Sci, 85, 89-90.
McGiven, A. (2016). The Future Opportunities and Challenges for one of the World’s Largest Dairy Export Firms: Fonterra in New Zealand. The Journal of Applied Business and Economics, 18(3), 16.
Munir, M. T., Yu, W., Young, B. R., & Wilson, D. I. (2015). The current status of process analytical technologies in the dairy industry. Trends in Food Science & Technology, 43(2), 205-218.
Nilsson, J., & Rydberg, C. (2015). Factors behind the Fonterra shareholders’ rejection of the board’s capital restructuring plan of 2007.
Pahnke, E. C., McDonald, R., Wang, D., & Hallen, B. (2015). Exposed: Venture capital, competitor ties, and entrepreneurial innovation. Academy of Management Journal, 58(5), 1334-1360.
Silanikove, N., Leitner, G., & Merin, U. (2015). The interrelationships between lactose intolerance and the modern dairy industry: global perspectives in evolutional and historical backgrounds. Nutrients, 7(9), 7312-7331.
Spreer, E. (2017). Milk and dairy product technology. Routledge.
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