Organizational Structure Of The A2 Milk Company: A Case Study

Background of The a2 Milk Company

Discuss about the Customer Knowledge Gaps on Corporate Performance.

Organizational structure plays vital role in accomplishing the tasks and operations in an effective manner. In order to perform the organizational tasks in a systematic manner, organizational structure plays vital role and following the structure helps the organization to determine the areas which require improvements so that the productivity of the organization could be enhanced. Apart from this, organization could be able to develop an effective workplace environment. a2 Milk Company produces and distributes dairy milk products. Their milk contains A2 type of beta casein protein. Apart from this, their milk is full of cream, yoghurt, and milk powders. Majorly a2 Milk Company distributes its milk by supermarkets in Australia. Company was founded in 2007 and headquartered in North Sydney, Australia. Due to large number of activities, a2 Milk Company is requires an effective organizational structure. It is a combination of several methods and strategies which ensures the company to sustain for a longer period of time. The a2 Milk Company (Australia) Pty Ltd is a subsidiary company of The a2 Milk Company Limited. Since 2000, company is expanding its business in different parts of the globe ad currently operates in Australia, China, New Zealand, USA, and UK. With an effective organizational culture, organization has managed its operations and expanded its business in international market in short period of time (The a2 Milk Company, 2018).

Information technology also plays vital role in managing organizational structure in an effective manner. Apart from this, IT leads to enhance organizational performance and attain competitive advantage. Information technology leads the organization to move towards automation and through this, chances for enhancing productivity increases (Nouri Koupaei, Mohammadi & Naderi, 2016). This assessment will discuss requirement of accounting software will be discussed along with determining its significance in the market. Further, assessment will focus over structure of organization in relevance with The a2 Milk Company. In addition to this assessment, strategic management policy will be evaluated in relevance with the feasibility as per organizational operations.

The a2 Milk Company was founded in 2000 in New Zealand by Dr. Corran McLachlan. He was studying at Cambridge University at that time and found that proteins in milk affect people differently. During his study period, he learned that cow produces milk with beta-casein proteins which are known as A1 and A2. Later on, he discovered the easiest way through which those cows could be identified which produces milk which was A1 protein free. Then The a2 Milk Company was formed with the motive of distributing protein milk. Today, company operates in New Zealand, Australia, Hong Kong, Singapore, China, USA and UK.

Organizational Efficiency and Significance of Multinational Organizational Structure

As per Anzures-García, et. al., (2016), by distributing protein milk in Australian market, organization has acquired an effective and distinctive position. Company is operating at small level and it has approximately 110 employees. Company operates in Australian market with a market share of 10% in overall milk industry in Australia. The a2 Milk Company is now being a multinational corporation as it has expanded its operations in various countries across the globe. The a2 Milk Company is not only selling milk and other products in foreign markets but they are also distributing its products in urban as well as rural areas with the objective of development effective brand image. Performing in foreign markets is not an easy task because there are various complexities in performing operations in non-domestic market. This requires a company to undertake technological, sociocultural, political, legal and economic systems. Multinational organizational structure has been adopted by The a2 Milk Company with the objective of enhancing its distributing range along with adaptation of certain methods to manage all the functionalities of the organization from the headquarters. In this organizational structure, a setup is required which could organise work and personnel in relevance with three functions i.e. functional, geographical and other activities such as marketing.

Certain challenges have been overcome by The a2 Milk Company with the help of adaptation of multinational organizational structure such as managing operations of all subsidiaries located in different parts of the globe, gaining expected outcomes, fulfilling demand of target audience, etc. Common organizational structure is also of no use for The a2 Milk Company because it has various operations. Multinational organizational structure has helped the organization attain its desired goals and objectives along with the fulfilment of target audience’s demand. Multinational organizational structure is also useful for meeting with the future business environmental needs. The a2 Milk Company has attained their desired goals until now in an effective manner and this organizational structure will also help them to expand their business in further countries across the globe along with enhancing their market share in the Australian market (Galliers & Leidner, 2014).

Organizational efficiency, performance, productivity as well as acquired position in the global market is being affected by various external environmental factors. Milk industry in Australia is huge because number of supermarkets, hypermarkets and retail stores is huge and every supermarket has its own dairy product and milk product’s brand. This has made the Australian milk industry bit complex and intense. Half of the milk brands in Australia are majorly owned by overseas companies. Primary competitors of The a2 Milk Company are Farmer’s Own milk, Farmhouse Gold, Dairy Farmers, Dairy Choice, etc. All the companies are adopting unique measures to make their products different from others but in perception of consumers, competitive business environment is providing them higher quality of milk at low rates. Price pays dominant role in terms of selection of daily required products and in order to attain competitive advantage in the market, every organization is focusing towards attainment of competitive advantage (Alston, Clarke & Whittenbury, 2017).

Challenges in Milk Industry in Australia and Competitors Analysis

As per Christie, et. al., (2018), in order to determine the efficiency of organizational culture adopted by The a2 Milk Company, authors have described sundry negative as well as positive impacts. The a2 Milk Company has adopted several strategies with the motive of attaining competitive advantage in the Australian market but due to weak accounting methods, absence of innovative practices after inventing protein milk, organization is not able to stand aside from other milk brands in the market. These issues and challenges are leading the organization backwards. Apart from this, organization is still performing with traditional methods through which they are unable to meet with the latest technological developments. It could also be reviewed that competitors’ are continuously adopting new policies and measures to enhance their performance and in order to compete with them along with development of an effective position in the competitive business environment, it is necessary to adopt advanced measures so that desired goals and objectives could be attained.

Information technology is rising rapidly and it is useful in every field. Most of the industries have adopted information technological factors so that the desired goals and objectives could easily be accomplished. In order to enhance the performance of The a2 milk company, they should adopt software technology and other advanced mediums so that improvements could be made in the organizational practices and the desired goals could be accomplished. Founder of the organization has adopted software technology in business environment in order to gain the leading position in the target market (Rosen, Sarracanie & Armstrong, 2017). These measures have been adopted so that mission of the organization could remain same in order to determine significance of protein type A2 so that large number of people could be served with nutritional goodness and that too in real and natural milk.

This image showcases the production and processing of milk so that it could be distributed amongst the target audience. The activities of this procedure will be discussed below:

• According to Ferzli & Ferzli (2015), before selling milk in the market, it is necessary to extract milk from cows and to feed them. Further, a cow is sent for extraction of milk procedure twice a day to the milking machines which is then stored in refrigerators. Then, it is sent to the dairy through tanker where further processing of milk is done in order to make it nutritious real and natural milk.
• After processing, it is packed in bottles and then these bottles are sent to the supermarkets so that it could get reached to the consumers for consumption purpose. Apart from packing milk in bottles, other dairy products are also being made such as cheese, butter, cream, etc. After making finished products, these are also sent to the supermarkets with the objective of making it available for consumers.

Lot of issues, challenges and problems arises within the workplace due to lack of adequate control measures. In this scenario, it has been analysed that The a2 Milk Company does not have sufficient accounting measures through which organization is not able to perform it in appropriate manner. Adequate accounting measures are required in order to maintain the accounting books in systematic manner along with maintaining transparency between the investors and organization. Until and unless, organization will not be able to record its transactions in systematic manner, measuring performance will be bit difficult task (Walker, 2018).

Impact of Organizational Culture and Importance of Advanced Measures

Following are certain crucial scenarios discussed which shows that due to lack of control measures, certain types of issues could be occurred within the workplace:

• Major issue which commonly arises in the workplace is maintaining quality of the products and services. The a2 Milk Company is engaged in the production of protein based milk from cows in order to provide qualitative and healthy milk to the target audience. In relevance to the maintaining demand of their milk in the Australian market, it is necessary for them to maintain the quality of their milk along with adaptation of advanced measures so that continuous improvements could be made in the quality of their milk. Thus, it is necessary for the process managers who are responsible for procuring the milk after extracting from cows so that the quality of the milk could be maintained along with maintaining the A1 protein. Lack of control over storing the milk in safe and secure places will affect the quality of milk and ultimately it will affect demand of the product as well as organizational performance (Asrar-ul-Haq & Anwar, 2016).
• In relevance with maintaining accounting books in systematic manner, it is necessary to impose certain type of controls so that unauthorised person could not access the books of organization. Financial statements plays crucial role in terms of attracting investors as well as it is also showcases organizational performance. Comparison could also be made in an effective manner with the financial statements with the organizational past performance or with the competitors. Thus, it is necessary for the organizational management to impose certain effective control measures so that the accounts could be maintained in an appropriate manner.
• Recently, The a2 Milk Company has moved towards automation and along with automation, several challenges and issues comes such as data leakage, data theft, unauthorised access, etc. In order to keep the books of accounts in safe and secure manner, organization is required to adopt certain security measures through which the chances of data leakage, data theft, etc. could be reduced. This is necessary because organizational information could easily be used for manipulating the target audience. It will affect organizational performance as well as the acquired position in the target market (Kang & Rowe, 2015)

Accounting software will help the organization to record its transactions easily. Further, financial statements, ledgers and other books of accounts are created automatically. This reduces men efforts and the chances of errors also get reduced. Manual accounting technique consumes more time in comparison with the software accounting technique. Apart from this, there are certain major benefits linked with the accounting software through which organization could easily enhance its image in the target market. It helps organization to portray clear and transparent picture in front of consumers, investors and competitors. Company could post their financial statements of the year on their website so that it could be accessible by the stakeholders of the organization. Clear and transparent books of accounts help the organization to show its current position and performance in the target market. Apart from this, it has also been reviewed that gaining competitive advantage, developing reliability amongst target audience becomes easy tasks with the help of accounting software (Wickramasinghe, Cooray & Dissanayake, 2017). 

Dairy industry plays vital role in Australia’s agricultural economy. In terms of farmgate value, it stands on third position after beef and wheat market at $4.3 billion for the 2016/17 financial year. Australia is a big player in international market in terms of exporting dairy products and stands on fourth position behind New Zealand, European Union and United States. But in the same year, national milk production has been decreased at 6.09% from the last year. These figures showcase the overall performance of dairy industry in Australia. Thus, it could be noticed that The a2 Milk Company have also faced low production which has affected the revenues as well as profitability of the organization (Morioka & de Carvalho, 2016). Apart from this, it has been reviewed that the number of dairy companies has increased in recent years which has affected organizational performance in terms of revenues and profitability. New companies adopt fair pricing strategies in order to develop effective position in the market which becomes challenge for existing companies. In order to compete in the market along with maintaining the acquired position in the target market, it is necessary to adopt and develop appropriate pricing strategies along with marketing techniques so that the desired goals and objectives could be attained (Sheng, et. al., 2015).

Significance of Accounting Software in The a2 Milk Company

The a2 Milk Company must be doing something right as it’s totally and udderly smashing its competitors (BizClik Media Ltd., 2017). The a2 Milk Company is not growing in Australian market only, it is also growing at rapid rate in other parts of the globe such as China. Sales of the company have been increased by 62% in Australia and by 348% in China which is showing organizational growth and success. Industry rivalry in Australian dairy industry is intense (Shortt & O’Brien, 2016). Where all companies’ are struggling to regain its position in the market and new companies are trying to set up their position, there The a2 Milk Company is leading the market due to its qualitative and healthy milk (The a2 Milk Company, 2018).

Prior to the adaptation and implementation of ERP framework within the workplace, it is required for the organization to identify the current gaps and challenges faced by the organization while using traditional methods of accounting. This is necessary in order to build an effective ERP framework as per organizational requirements (Tseng, 2016). ERP framework will help the organization to remove all the issues and challenge faced by the organization before implementing ERP framework within workplace (Prajogo, 2016). Major challenges and issues related to traditional methods of accounting are errors in recording transactions, calculation errors, inappropriate financial statements, etc. Considering these factors, an effective ERP framework could be adopted by The a2 Milk Company with the objective of enhancing organizational performance along with showcasing clear picture of organization in front of the stakeholders (Kulkarni, et. al., 2015).

It can be concluded that ERP framework is required as per latest trends of market. With the effect of introduction of information technology in business environment, lot of changes have been recognised. IT has helped the manufacturing industry to enhance their productivity, it has helped the service industry to manage and render services in more appropriate manner, etc. Thus, it could be concluded that there are huge benefits of information technology whereas it also has several threats such as data theft, leakage of data, etc. ERP framework is also a part of information technology and it plays vital role in recording daily basis transactions within organization along with enhancing efficiency in an effective manner.

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