Case of The Australian Dairy Industry

Running Head: FONTERRA 1
Strategic Management

Running Head: FONTERRA 2
Introduction
Fonterra is the biggest dairy producing business of Australia. It is also one of the
biggest exporter of the dairy products. Due to the increasing competition and growing
presence of several new players, importance of strategic management has grown over the
time. In the recent time, organisations are required to effective formulate the strategies
despite of their size and scale. Inn Australia, agriculture business is growing at a huge scale.
Several business organisations are also able to gain huge profit and success (Baker, Gill,
Friel, Carey & Kay, 2017). In the recent time, several opportunities are also developing for
the agriculture business due to the increasing demand of these products. Fonterra is also
proved the best and leading firm of agribusiness in Australia. It also has huge market
presence in the Australian market. Fonterra has it’s headquarter in Auckland, New Zealand.
Fonterra has started its operation in 2001 in the agriculture business of Australia.
across the world, it come on the number six in dairy firms. It also has different subsidiaries
including Cheese, Anmum, Mainland, Anchor, and Saprole. In order to grow widely, it has
also done partnership with different companies. The major aim of the Fonterra is to lead in
the dairy firms and attain the competitive advantage based on this.
In the report, discussion has been done on the internal as well as external business
environment of Fonterra. At the time of carrying out discussion on this, competitive
advantage, core competencies has also been discussed. In the end of the discussion, several
recommendations are provided to the Fonterra so that it can gain more market base and
thereby increase its revenue and growth (Harris, 2016).
Business units and products lines
Fonterra has various business units in the market of Australia that includes the
consumer sector under the brand of Fonterra. It also has food service supplies under the dairy
ingredients and Anchor food. It has wide range of business units that assist it in satisfying the
different customer segment. The wide number of consumer products includes the Anchor
Milk, Bega Cheese, Mainland butter and cheese, and Perfect Italino. By undertaking the
diverse products, it tends to target the large number of customers in the dairy sector. From the
above discussed products, Bega Cheese of Fonterra has the highest demand in the market.

Running Head: FONTERRA 3
With the NZMP Australia, it is supplying the ingredients of dairy to the food manufacturers
across the globe (Collins, Gray, Reid, Shadbolt & Dooley, 2018).
Among these, the major revenue earning business unit for the Fonterra is the food
supply division, consumer division and ingredient supply division. The biggest revenue
business unit for Fonterra is the consumer good division. Fonterra also have the major market
share from the Australian market due to its high demand of products.
External environment analysis of Fonterra
Political factors: the business unit of Australia get the positive help from the government of
Australia. Besides this, it is also seen that the Australian government also promotes the
livestock sector for increasing the demand of dairy as well as meat. In terms of positive
aspect, Australia also have the positive relations from other emerging nations across the
globe. It helps the Fonterra in exporting the Australian products. it can also get negatively
affected if government started favouring the production of meat.
Economic factors: Australian economy is positively booming that increases the potential OF
Fonterra to again more customer base. By taking the provision for export, Fonterra gets the
increase in demand for the dairy products. in the recent time, several International brands are
also taking entry that tends to increase the competition for Fonterra in the market of
Australia. However, taxation is one such problem that si faced by Fonterra in Australia. this is
one such reason that put pressure on Fonterra to sell products in the higher amount.
Social factors: in the social factor, Fonterra is getting negative social impact due to the
increment in the consumption of Vegan in the Australia. It might also be possible that the
Fonterra will see the decline in the demand of its dairy product. The positive side is that the
significance of cheese in the cuisine of Australia is increasing the demand of Fonterra cheese
products. it is true that the dairy products contain several fat contents that directly affect the
potential of Fonterra. This tends to force the Fonterra to give emphasis of its healthy content
in the products.
Technological factors: it is the most significant factor that puts the higher emphasis on the
current agriculture business to invest huge amount in the technological innovation. It is seen
that the Fonterra is the biggest dairy industry by doing several technological advancements in
the manufacturing and breeding process. For the entire production process, it has done the
automation. It helps the Fonterra in gaining competitive advantage (Markus, 2014).