History and Growth of Bega Cheese

This report discusses the history and growth of Bega Cheese, including its internal strengths and weaknesses, the nature of the external environment, and strategic recommendations for the company.

Running head: BEGA CHEESE
BEGA CHEESE
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Table of Contents
Case summary and analysis.......................................................................................................2
History and growth of the company...........................................................................................2
Internal strengths and weaknesses of Bega Cheese...................................................................3
Nature of the external environment............................................................................................4
SWOT analysis of Bega Cheese Limited...................................................................................5
Corporate and business level strategies......................................................................................7
Company’s structure and control systems..................................................................................8
Strategic recommendations........................................................................................................9

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Executive summary
Case summary and analysis
The aim of this report is to discuss the history and growth of the company over time
firstly. By detailing the internal strengths and weaknesses of the company and the nature of
the external environment surrounding the company, it will be understood that how these
factors have impacted on their strategy. This paper has conducted a SWOT analysis and
identify, differentiate among the corporate and business level strategy it is pursuing. Through
these analysis, the company’s structure and control systems can match its strategy can be
identified. Finally the report will be recommending some steps for the better future of the
company (Begacheese.com.au 2019).
History and growth of the company
The company started to operate in the year 1899 when the Bega Dairy farmers created
a cooperative then established the factory in 1900. Then in 1985, the company started to
expand by contracting Bonlac which was a Victoria based dairy company. This company
helped Bega to market their products properly out of the previous territory of service of the
com any in New South Wales and the ACT. In 1994, the company started to expand itself by
the means of joint venture with Capitol Chilled Foods that was the one and only dairy
producing company in the ACT along with Canberra Milk and Gold Brands. After six years,
the company signed contract with Fonterra as the later had acquired Bonlac. This led the
company to gain reputation and popularity more along with scope for further expansion
(Begacheese.com.au 2019). This is due to the fact that Fonterra was a large dairy product in
both Australia as well as New Zealand. Moreover, this company had a suite of retail brands
therefore, had a completely own market. This company helped Bega Cheese to distribute the

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brand in all over Australia. Based on this deal, Vega also helped Fonterra to take packaging
operation of Bonlac in Melbourne.
In 2007, the company also bought 70% of share of Tatura milk based in Tatura,
Melbourne. The reason of purchasing the share of this company is to acquire the infant milk
powder formula along with its other nutritional products. Tatura Milk was going through
financial problems hence Bega had no problem to acquire this share and within four years,
the company bought all the share of Tatura Milk. In 2008 and 2009, Bega bought Coburg
cheese processing brand which mad the company to handle the dairy products of Australia
more exclusively (Ansoff et al. 2018). However, according to the constitution of the
company, this brand cannot be bought or managed by only one person therefore, it has been
operating in the market by the cooperative of the dairy farmers till now (Begacheese.com.au
2019).
Internal strengths and weaknesses of Bega Cheese
The company has several domestic and international industry chaos which has led
Bega to have internal strengths and weaknesses. These however balanced the growth of the
company making it to find out the opportunities present in the market.
The first and foremost strength of this company is its strong financial position in the
market of Australia which is gained through consecutive years of profit in the market in every
sector of dairy products. In addition to this, the company has a large asset base that create no
problem of solvency (David and David 2013). Secondly the company has a large market
coverage in Australia as retail and processed cheese is only sold under this brand in the
country. This has led the company to expand its business in some Asian countries, Chinese
market, in some parts of Europe and complete New Zealand. Thirdly the company serves the
customers with its huge range of products starting from nutritional foods, cheese, infant

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powders and other dairy products. Fourthly, Vega has a very strong work ethics which
includes the ownership and price of the products that it sells (Hill, Jones and Schilling 2014).
This leads the company to maintain a low cost structure which enable the customers to buy
products of this company at low price in this high priced structure of world’s dairy industry.
Finally, the relation of the company with the stakeholders are highly appreciable as the
company has a good organisational culture and working ethics. This has led the company to
create an accredited and diversified workforce which has effectively contributed its skills for
the growth of the company (Eden and Ackermann 2013). In addition to this, the relation with
the dealers are highly compatible that has led the company to have dependable supply chain
and mainly the farmers making the product quality higher than other competitors.
Among the weaknesses, the company has marked its incapability to maintain balance
in the problematic period of crisis in the Australian dairy industry. Secondly, despite of the
fact that the company has provided a huge number of the product variation but the investment
in the research and development sector, is comparatively less by the company. Bega Cheese
limited invests averagely in this aspect which limits its product variation independently but
make it dependant on the other brands to acquire and use their product recipes to bring
product variation (Noe et al. 2017). Thirdly, the company does not invest more in the market
research process which limits its ability to understand the actual trend of the markets or the
expectation of the customers around the world. This is also the result of low product variation
of the brand. Finally, the company has an internal operational problem that leads Bega
Cheese to face high employee turnover in comparison to this competitors (Rothaermel 2013).
Lack of legal experience has also led the company to face the problems of the leaving
employee conflict with the organization (Begacheese.com.au 2019).

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Nature of the external environment
The external situation of Bega Cheese Limited can be understood through the Porter’s
five force analysis. This model has five factors to look upon which include threats of new
entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes and
industry rivalry. The threats of new entrants is quite important for the food and dairy industry
as this increases need for innovation of the products or cater the needs of the customers in the
market. This leads the existing companies to lower the pricing strategies for reducing costs
and proving value propositions to the customers. The bargaining power of buyers in the
Australian dairy industry is highly problematic because the customers are provided with
choices therefore they demand a lot (Lasserre 2017). This put pressure on the Bega Cheese
for continuing profitability in the long run. The customer base is small but powerful hence
seek increasing discounts. The bargaining power of suppliers in the dairy industry of the
country is constantly increasing, the farmers, suppliers of the raw materials for production of
Bega Cheese are in the dominant position to decrease the profitability margin of the
company. The company however has catered a position for negotiation to extract higher
prices from the market. The threat of substitutes is increasing for this industry because the
more innovative use of dairy products is increasing in all over the world and more companies
are investing in this type of innovation or to increase preservation of the dairy products
(Gupta 2013). This has led the customers to have variation in the products hence the offering
of Bega Cheese can be easily substituted by new and more effective products. The industry
rivalry is also important factors that show the actual situation of the company to assess the
situation of the external envelopment. With time, the dairy industry of the country has
increased competition (Dälken 2014). However, the company has acquired many of its
competitors but this pressure of high competition has led the company to face threats in near
future (Begacheese.com.au 2019).

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SWOT analysis of Bega Cheese Limited
Strength Weaknesses
 Successful track records and
reputation in the market
 Good return on the capital
expenditure
 Highly successful marketing
strategies
 Strong network for product
distribution
 Highly talented workforce
 Knowledgeable rand portfolio
 Automation process in production
 Great connection with the farmers
and other suppliers.
 Healthy work culture
 Low cost leading to lower
profitability level
 Gaps in the production range
 Inventory is higher in comparison to
the competitors
 Low marketing investment
 Poor product demand forecasting
 More investment in the research and
development process
Opportunities Threats
 increasing scope in the foreign
countries to expand
 Growing economic uptick that has
increased buying capacity of the
customers
 New environment policy and
government’s green drive that
 Higher level of competition in the
dairy market
 Increasing need for product
differentiation and offering
 Increasing price of dairy raw
materials
 Increasing strength of the local

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support farming (Ingaldi, M. and
Škůrková 2014).
 Increasing use of new technology in
the production and packaging
system
 Increasing leadership capabilities to
manage the company’s internal
situation
 Growth of customers through online
channels from all over the world
(Begacheese.com.au 2019).
distributers through increasing new
entrants
 Demand of newly innovated
products and their supply
 Herat of loss due to the products’
low shelf life span (Ingaldi and
Škůrková 2014).
 Shortage of skilled workforce
 The company’s inability to manage
problems of exposed fluctuation of
currency and political problems.
Corporate and business level strategies
The mission of Bega cheese Limited is to become an icon in the Australian dairy
industry which can value the people, heritage, customers and the community associated with
it. The company aims to drive changes, embrace challenge and build for the future. The
company is a single business company that makes its business level strategy to be identical as
the generic strategy of the company. The company flows the method of setting clear
difference which can provide the edge against the rivals for its survival. The company highly
depends upon the unique selling propositions of the products which include differentiation
leadership and differentiation focus (Bryson 2018). This leads the company for cost based
competitive advantage to the company in one hand and reduce the cost below the level of
industry average. In addition to this, the company had developed most effective most

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effective distribution channel and access to the latest technological practices for assisting the
production process. The company has stayed in the strong bargaining position that enables it
to negotiate with the farmers and suppliers for setting competitive advantage (Navarro-
García, Arenas-Gaitán and Rondán-Cataluña 2014).
Bega Cheese Limited has focussed on the development of the brand loyalty through
offering the premium products hence can find out different ways of developing differentiation
leadership. This has focussed mainly on the development of the strong brand recognition and
increased expenditure on the marketing effect. The company has invested in the adaptation of
products, quality, service, people, and image of the brand and innovation differentiation
(Grant 2016).
Company’s structure and control systems
The company’s structure and control systems match its strategy as it has mainly
focussed on catering the needs of the customers. It aims to serve the customers at its best and
valuing the supplier. Thus the company gets the full support from the internal and external
stakeholders who play important role in the production and purchasing of the company
leading to profitability. Secondly, the company also aims to be agile which cam enable it to
being changes whenever and wherever needed. As the company has got a highly efficient and
understanding workforce it can easily change the policies whenever needed (Purce 2014).
The organisational culture of supporting one another in the positive and negative time has
enabled the company to face any challenge in the dairy industry of the world as well as in the
country itself. Finally the strategy of taking ownership is another factor that the company has
utilised properly to manage corporate and business strategy and gain effective competitive
advantage. This has led the company to keep all the power accumulated to its leaders and
maintain an in depth knowledge for effective decision making.

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However, the changes in the dairy industry of Australia has aimed to arête positive
effect on the positive growth of the company (Hahn 2et al. 2015). This is the reason why the
company needs to make effective decisions which will in one hand enable it to gain
competitive advantage and overcome all the threats in the market.
Strategic recommendations
One of the most important problems of the world dairy industry is related with the
increasing price of the dairy products for reducing farms gradually and lower supply
arrangements but Bega has mitigated this problem but it needs to increase cooperation with
the farmers and maintain own profitability.
Secondly, the company needs to invest more innovation of products. In the dairy
industry there is need for innovation of the products so that the companies can cater the needs
of the customers in the market. Hence it avoid the flow of the competitors, the company
needs to invest more in the research and innovation development (Hesping and Schiele 2015).
Thirdly, building large and loyal customer base is essentials. The company does not
spend time and money in the market exploration so that the needs and trends of the custi9mer
needs can be understood. One the other had other companies operating in the same country
focus on this type of things (Begacheese.com.au 2019). Hence the company needs to reduce
the bargain capacity of the customers and stream line the sales and production process.
Finally, by building sustainable differentiation and build scale for compete better to
avoid the rivalry among the competitors can help the company to perform better in the dairy
business of Australian market as well as the markets of the world.
Therefore, it can be concluded that Bega Cheese Limited has been working for more
than centuries in the Australian market which has enabled them to develop strong brand value

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and reputation, there are threats and weaknesses of the company which need to be overcome
by following some steps mentioned.
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