Discuss About The Strategies Construction Management Economics.
The report aims to state the nature and the history of the firms thereby considering the present strategic priorities of a2 Milk Company. Secondly, it has provided the firm’s overview using the Porter’s Five Forces Model. The next important aspect is depicted with strategy recommend for the firm’s using Porter’s generic strategy. In addition to this, the report has been also able to provide the relevant recommendation along with taking the reference from the product lines and the geographic segments. Fourthly, the possible financial and the non-financial measures are seen to be suggested with linking the various types of the strategy recommendations (Solomon et al., 2014).
The a2Milk company is recognised to be listed in ASX 200 which is a public listed company relating to the infant formula. The corporation is seen to be a successor of the A2 Corporation Limited. The initial functions of the company were seen to be based on the findings of the breeding program for and developing the herds which will produce only a2 milk. The leverage seeking aspect is based on the access to the farmers and patent rights. The A2 Corporation was able to obtain the agreement for the A2 milk in New Zealand by the end of 2003. A2 Corporation was also seen to be focused on recovering for the deaths of the founders which relied on the licensees of the New Zealand market (Thea2milkcompany.com, 2018).
The a2Milk company was founded in New Zealand during the study at Cambridge University in New Zealand by Dr. Corran McLachlan for learning related to how proteins affect the people in a different way. The company recognises that the ordinary cows are seen to be producing milk as per the various features which are seen to be present beta-casein proteins type known as A1 and A2. In the discovery it was further found that the most safe and simple procedure for the people who were having digestive discomfort during the feeding process of the ordinary cows. This is due to the fact that a2Milk consists of only A2 protein instead of A1. In the present scenario the a2 Milk company is depicted to remain the pioneer in terms of understanding the various types of the features which are seen to be directyy related to the nutritional goodness which comes only from the natural and real milk. The various types of the trading activities in the a2Milk company is seen to be depicted to be based on the Australia, New Zealand, China, USA and UK (Thea2milkcompany.com, 2018).
The important nature of the strategy of the company is based on making improvement for the digestive discomfort brought while drinking the ordinary milk of the cows. This is mainly because of the reason of the A2 protein and no A1 (Thea2milkcompany.com, 2018).
The Porter Five Forces is depicted as a holistic concept for the strategic decision which is away from analysing the resent competition. In addition to this, this strategy is able to focus on the various type of the concepts which are related to take the strategic directions for gaining advantage in a competitive market among Food, Beverage and Tobacco industry. Moreover, the managers in “A2 Milk Company Limited” can not only implement the strategic position in Food, Beverage & Tobacco trade but also lucrative prospects across other sectors (Tansey, Spillane & Meng, 2014). The five-force analysis of A2 Milk Company Limited is stated below as follows:
New Entrants associated to food, Beverage and Tobacco brings innovation is seen to bring innovation in performing the new strategies and putting pressure on A2 Milk Company Limited via pricing approach and also providing the new value suggestions to the customers. The company is further responsible for managing the challenges and building effective barriers for protecting the competitive edge. The A2 Milk Company Limited is seen to innovate new services and products and these can not only bring new customers but also give the new customers the reason for buying A2 Milk Company Limited’s products. The A2 Milk is responsible for building the economies of scale for lowering the fixed cost per unit. It is further depicted to build the capacities and spend the money on development and research. Moreover, the new firms are less expected to enter dynamic industry in which the well-known players like A2 Milk Company has been defining the standards on a regular basis. It also reduces scope of the extraordinary profits for the new enterprises and also discourage new players in the industry (Fern Fort University, 2018).
The businesses associated to “Food, Drink and Tobacco industry (FBT)” industry buys their raw material from numerous suppliers. The suppliers consisting in the dominant position will be able to reduce the margins the company may earn (Bertozzi, Ali & Gul, 2017). The powerful suppliers in the Food, Tobacco and the Beverage sector has been able to extract increased prices in terms of the firms in the field of Beverage & Tobacco. The consideration of the higher impact of the supplier bargaining power has further lowered the overall profitability of the Food, beverage and Tobacco.
The company is having significant scope of tackling bargaining power of the suppliers by building the SC across multiple suppliers. In addition to this, the experimentation with the design of the product using the various materials may go up as per the changes in the raw material. The development of the dedicated supplier will depend on the business of the firm. The main lesson as per this may include developing the third-party manufacturers where the business is dependent on the scenario in which third party manufacturers are having less bargaining power compared to Nike and Walmart.
In several cases the buyers are seen to be demanding in excess. The best offerings available are seen with paying the minimum possible price. There is considerable pressure on the company in terms of profitability in the long run. A strong customer base of A2 Milk Company Limited is seen with higher bargaining power of the customer and ability of seeking increased offers and discounts. The A2 Milk Company Limited is built on large base of customers. This is considered to increase the buyer’s bargaining power and the opportunity for streamlining the production and sales process. The rapid innovation as per the new products the customers often seek for the discounts and offerings of the established products, therefore in case A2 Milk Company Limited keeps continuing with the new products which is seen to limit the bargaining power of the buyers. The new products will also reduce the defection brought by the existing customer of the company (Moon et al., 2014).
In situation where the new products meet the similar needs of the customers, the profitability of the industry is seen to suffer in many ways. For instance, the services like Google Drive and Dropbox are the substitutes of the storage hardware drives. In case of A2 Milk Company Limited the company is able to tackle the threat of substitute products by being customer oriented rather than following product orientation. The understanding of the Treat of Substitute Products and Services for A2 Milk Company is depicted with the company’s service orientation rather product orientation. The increasing switching cost pertaining to the customer’s needs to be also taken into account.
In case the rivalry among the present companies is intense then it will reduce the process and also reduce the overall success of the business. The company limited is also depicted to operate in the competitive industry of Food, Beverage and Tobacco. The competition aspect has taken the toll on the overall long-term profitability of the company. The powerful rivalry in the company is brought by construction of sustainable differentiation, building on a scale to compete better and collaborate with the competitors.
The application of the product differentiation strategy under the Porter’s generic strategies will directly link to factors by which A2 Milk company can gain in terms of FBT industry in the long-term. The main focus of the differentiation strategy will be aimed at rapid innovation of the new line of dairy products such as Chocolate mint milk, flavour offerings, low sugar milk and lactose free milk products. This strategy used by the firm will be conducive in evaluating the game shifting trends in the early stages and quickly responding to the emerging opportunity. A large part of the success of the company needs to be focused with the growing distribution network based on the major e-commerce platforms which will help to increase the sales of the differentiated products. The evidence taken from the scientific evidence of the A1 protein is based on reasons of the digestion problems and scientists are sceptical for the same. This technology should be also incorporated within the new product line set by the company. In addition to this, the various types of the infant formula need to be improved by conducting research at public health and nutrition research centre at Curtin University supported with the differentiation strategy.
The potential non-financial measures are depicted in terms of the using quality ratings, customer satisfaction scores and input to output efficiency scores. This will allow the company for facilitating a proactive behaviour, forward looking nature of the research and explanatory research. The non-financial measure can be also used with the application of the balanced scorecard. This will be able to identify the various types of the financial perspectives, customer perspectives, process and organizational capacity (Akkermans & Van Oorschot, 2018). The qualitative information will focus on the comparison of the quality ratings of the industry and the company in general. Moreover, the customer satisfaction scores will highlight ratings of the customer based on the present review of the services. The balanced scorecard will further consider the changing trends in terms of financial perspective. The process of the balanced scorecard will be conducive in tracking the relevant strategies which are followed by the company at present. The process should also focus on the scientific evidence of the A1 protein which is based on reasons of the digestion problems (Theriou, 2015).
The different categories of the financial information which the firm can use relates to evaluation of the project success with capital budgeting techniques. This will be conducive for the company in evaluating the long- term success of the project. In addition to this, the short term and the mid-term financial analysis is depicted in terms of the cash flow analysis, ratio analysis and sensitivity analysis which will be beneficial for the company in conducting various types of the situational analysis (Saeidi et al., 2015). The growth in terms of the financial aspect of the company can be traced with growing distribution network and the investment required for the improvement of the same. The financial tools will be also useful in terms of determining the various types of the cost required for the scientific evidence of the A1 protein (Nourayi & Canarella, 2018).
Conclusion
The different perspectives on the strategy recommendation is based on the main focus on A2 Milk company can gain during the success assessment of the organization in terms of FBT industry. The important strategy formulation is also inferred in terms of evaluating the game changing trends in the early stages and swiftly responding to the emerging opportunity. Moreover, it is further discerned that a considerable amount of the success of the company needs to be focused with the growing distribution network based on the major e-commerce platforms. The use of the financial tools to address the present issues are seen with the use of the capital budgeting tools and the different types of the other tools which includes the depiction of the growth in terms of the financial aspect of the company which can be traced with growing distribution network and the investment required. The qualitative consideration of the corrective strategy will be able to state on the various types of the factors which will focus on the comparison of the quality ratings of the industry and the company in genera.
References
Akkermans, H. A., & Van Oorschot, K. E. (2018). Relevance assumed: a case study of balanced scorecard development using system dynamics. In System Dynamics (pp. 107-132). Palgrave Macmillan, London.
Bertozzi, F., Ali, C. M., & Gul, F. A. (2017). Porter’s five generic strategies; A case study from the hospitality industry. International Journal For Research In Mechanical & Civil Engineering (ISSN: 2208-2727), 3(2), 09-23.
Moon, H. C., Hur, Y. K., Yin, W., & Helm, C. (2014). Extending Porter’s generic strategies: from three to eight. European Journal of International Management, 8(2), 205-225.
Nourayi, M. M., & Canarella, G. (2018). Non-Financial Measures, Aggregation and Performance Evaluation. The Journal of Business Inquiry, 8(1), 1-11.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of business research, 68(2), 341-350.
Solomon, M. R., Dahl, D. W., White, K., Zaichkowsky, J. L., & Polegato, R. (2014). Consumer behavior: Buying, having, and being (Vol. 10). London: Pearson.
Tansey, P., Spillane, J. P., & Meng, X. (2014). Linking response strategies adopted by construction firms during the 2007 economic recession to Porter’s generic strategies. Construction management and economics, 32(7-8), 705-724.
The A2 Milk Company Limited Porter Five (5) Forces & Industry Analysis [Strategy]. (2018). Fern Fort University. Retrieved 25 July 2018, from https://fernfortuniversity.com/term-papers/porter5/asx/672-the-a2-milk-company-limited.php
The a2 Milk Company. About us (2018). The a2 Milk Company. Retrieved 25 July 2018, from https://thea2milkcompany.com/about-us/
Thea2milkcompany.com. (2018). Retrieved 25 July 2018, from https://thea2milkcompany.com/wp-content/uploads/The-a2-Milk-2016-2017-Annual-Report.pdf
Thea2milkcompany.com. (2018). Retrieved 25 July 2018, from https://thea2milkcompany.com/wp-content/uploads/ATM-Preliminary-results-242057.pdf
Thea2milkcompany.com. (2018). Retrieved 25 July 2018, from https://thea2milkcompany.com/wp-content/uploads/The-a2-Milk-2016-2017-Annual-Report.pdf
Theriou, N. G. (2015). Strategic Management Process and the Importance of Structured Formality, Financial and Non-Financial Information. European Research Studies, 18(2),
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