Saputo Inc.: A Successful Canadian Dairy Producer

Running Head: MGMT 261
Research Project
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INTEGRATED MANAGEMENT PRACTICE 1
Table of Contents
Research Report..........................................................................................................................................2
Introduction.............................................................................................................................................2
Brief Description of the Company............................................................................................................2
Discussion of the Company's Resources, Capabilities, and Competitive Advantage................................2
Analysis of the Major Factors in the Company’s External Environment..................................................3
Discussion of the Company’s Strategic Approach....................................................................................6
Conclusion...............................................................................................................................................7
References...............................................................................................................................................8
Annotated Bibliography.............................................................................................................................10
References.................................................................................................................................................12

INTEGRATED MANAGEMENT PRACTICE 2
Research Report
Introduction
Saputo Inc. is a Canadian producer of products with a successful story. A family business which
began in Montreal in the early 1950s has developed over the last decades into a publicly-traded
multinational company. It has remained as one of the most successful producers of dairy
products all over the world. The report will provide a brief description of the company and
discuss its resources, capabilities and competitive advantage. It will also analyze the major
factors in the external environment of the company. It will also evaluate the strategic approach of
the company and conclude with the effectiveness of the company’s strategic approach.
Brief Description of the Company
Saputo Inc. is a dairy firm of Canada based in Montreal and was established by Saputo family in
the year 1954. The firm produces, sells and distributes a wide range of dairy products which
consists of cheese, milk, shelf-life milk and goods made from cream. It is one of the leading ten
dairy processors of the world and the largest Canadian dairy processor (Barkema et al., 2015). It
ranks third as a producer of cheese in the world. The firm currently uses more than 8 billion liters
of milk each year to produce various dairy products and sells in more than 40 nations. More than
50 plants are operated by the company. At present 15,000 employees work in the dairy firm.
Discussion of the Company's Resources, Capabilities, and Competitive Advantage
Resources and Capabilities - The success of Saputo over the years has been influenced by the
strong business practices as well as its clear vision to rapidly develop with the help of mergers
and acquisitions. The firm currently uses more than 8 billion liters of milk each year to produce
various dairy products and sells in more than 40 nations. More than 50 plants are operated by the
company in Canada, USA, and Argentina (Bauman, Barkema, Dubuc, Keefe & Kelton, 2016).
The dairy firm has strong production capabilities. The company operates mainly in three
segments, Canada, USA, and other international segments. Under its segment of USA, the dairy
firm has 24 production plants; all are owned by Saputo owned except two plants. The production
plants situated in the USA have 6% excess capacity (Faysse & Simon, 2015). Under the segment
of Canada, the dairy firm has 23 production plants are owned by Saputo except for one
production plant. All the production plants in Canada have 30% excess capacity.

INTEGRATED MANAGEMENT PRACTICE 3
Under the international segment of Saputo, the dairy firm has production plants in Australia and
Argentina. Two production plants situated in Argentina are owned by Saputo with 23% excess
capacity. Two production plants situated in Australia are owned by Saputo with 28% excess
capacity (Forney & Häberli, 2016). Most of the production plants owned by Saputo flexibility to
the dairy firm for quick reaction to the market changes. It also allows Saputo to decrease the
risks connected with the outsourcing of products and loss of control over the resources.
Competitive Advantage - The dairy firm has a sustainable competitive advantage. They have
sold its products in several nations under renowned brand names, which provides them the
product loyalty and recognition which is required to stay in the competition. But in order to
sustain and develop its competitive advantage, the company have to stick to its strategic position
and continue to acquire companies all over the world. The market of Asia, particularly China,
can be a massive win for the dairy firm if they make an investment in the Chinese market. China
has a vastly growing population, who do not like their local products. Saputo could access the
Chinese market and provide them its dairy products to the Chinese people (Kariuki & Ochiri,
2017). The acquisition of a dairy company in Australia allows the company to move closer to the
market of Asia and Oceania. It has also moved Saputo closer to Groupe Lactalis, the giant of the
dairy industry.
The dairy firm does not have a monopoly of its dairy products, and so it is to imitate its products.
It has several competitors and imitators. But the organizational aspect of Saputo has given the
dairy firm a sustainable competitive advantage through its capability to maintain its position in
several markets with strong brand reputation and continued investments in research and
development to improve its overall effectiveness.
Analysis of the Major Factors in the Company’s External Environment
PESTEL Analysis
Political Factors - Saputo had always received the benefits of low taxation policies all through
the western nations. It has led the dairy firm to gain high profits and high investment in research
and development. Unlike in other nations, local governments have a significant role in making
policies and rules in Canada. Saputo follows the laws of the state the dairy firm has its presence
rather than formulating nation-wide laws in Canada (Lahrichi, Gabriel Crainic, Gendreau, Rei &
Rousseau, 2015). The present trends seem that the government in Canada might change in the