Analysis of the External Environment of A2 Milk Company

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Analysis of the External Environment of A2 Milk Company
PESTEL Analysis
Political Analysis- There is high political stability which provides the friendly type of
business environment wherein there are trends in market which are predictable. In the current
scenario, the A2 Milk Company has their presence in various places and each of them are
comprising various tensions related to political environment. There are different kinds of
inefficiencies such as changes in the policies or political tensions such as trade regulations
along with tariffs which are related to food and beverage are impacting success of A2 Milk
Company Limited1. A2 Milk Company will be entering in the markets that are low-taxation
level and they try to receive advantage from the high profitability which can be invested in
the different activities related to research and development. It will be the most appropriate
approach in making the business highly profitable in nature.
Economic Analysis- A2 Milk Company will be able to perform well when they have
the economic environment stable in nature. In the year 2018, it has been noticed that the
economics of the A1 milk costs around A$1, 00 for the customers and it is consumed by the
different customers in the market. In such scenario, it has been noticed that the GDP of
Australian economy wherein the customers are willing to purchase such branded products
without any glitch. The key to success of the products of A1 Milk Company is amount of the
single-mindedness along with ambition as well agility which makes them strong and efficient
in meeting the demands of different customers strongly.
1Esty, Benjamin, and Daniel Fisher. "The a2 Milk Company." HBS Strategy Case 719-424 (2019).

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Social Analysis- In the current scenario, the different trends which are set are
different from one another and in such scenario, the demands of the customers are changing2.
The customers prefer to consume the healthier products which will be impacting their health
positively. In such scenario, A2 Milk Company has been able to make a mark on the business
of the dairy products as they have been capable in adapting to the different needs of the
customers who are present in the market.
Technological Analysis- In the current scenario, the technological advancement is the
critical element which needs to be adhered by the companies successfully. The company A2
Milk Company is highly innovative in approach of producing the infant powdered milk
which enhances their effectiveness. The quality of the products along with the supply chain
related efficiency are the two critical elements which helps them in managing the products in
a positive manner.
Environmental Analysis- In the different kinds of business, the environmental factors
are the main concern which needs to be checked3. In case of A2 Milk Company, they are
successful in adhering to the different CSR practices such as implementation of sustainability
related practices which will be effective in managing the growth of the company successfully.
In the environmental aspect, the company has been capable of following the different
environment related legislations which make them efficient.
2Montiel, Ivan, Raquel Antolin-Lopez, and Peter Jack Gallo. "Emotions and sustainability: A
literary genre-based framework for environmental sustainability management education."
Academy of Management Learning & Education 17, no. 2 (2018): 155-183.
3Bodnár, Ákos, AdélHajzsér, IstvánEgerszegi, PéterPóti, Jan Kuchtik, and Ferenc Pajor. "A2 milk and its
importance in dairy production and global market." Animal Welfare, EtológiaésTartástechnológia 14, no. 1
(2018): 1-7.

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Legal Analysis-From the case study, it has been clear that the legal regulations are
changing on a yearly basis due to which the companies need to adhere to the legislations as it
will be helpful for improving the growth of the company in such competitive environment4.
In the respective case, A2 Milk Company is capable of handling such strict regulations which
have been making them capable of attaining their position in the international market through
meeting the different needs of customers thoroughly.
Analysis of Significant Resource and Capabilities Shaping A2 Milk’s Competitive
Position
The proper utilisation of the core capabilities as well as capacities has been effective
in making the A2 Milk Company competitive in nature. The VRIN analysis of A2 Milk
Company makes the proper usage of the core capabilities for strengthening worth and
continue for delivering promise of the consistency in the quality and taste to the customers.
VRIN Analysis
Valuable
The international distribution networks help the company in making sure that the
products as well as services are widely available and easily accessible to the different
customers5.
410. Ozanne, Lucie K., Marcus Phipps, Todd Weaver, Michal Carrington, Michael Luchs, Jesse Catlin,
Shipra Gupta, Nicholas Santos, Kristin Scott, and Jerome Williams. "Managing the tensions at the intersection
of the triple bottom line: A paradox theory approach to sustainability management." Journal of Public Policy &
Marketing 35, no. 2 (2016): 249-261.
5David, Meredith E., Fred R. David, and Forest R. David. "The quantitative strategic planning matrix: a new
marketing tool." Journal of strategic Marketing 25, no. 4 (2017): 342-352.

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The marketing skills is the unique prospect of A2 Milk Company wherein they allow
to reach the different customers through different channels in creative manner. It is the
valuable resource of the organization which will be allowing company to ward off the
different potential competition.
Rare
The usage of progressive technology along with investment in new technology helps
in making the business of the A2 Milk company productive with competitive differentiation
which helps them in competing6.
The uniqueness of the product related portfolio is the other aspect which is rare as it
has allowed them in penetrating the different group of customers.
Inimitability
The development of the new products is the key aspect which is inimitable as the
company has con tenuously invested in the R&D which allows them in assessing the viability
of the different new ideas.
The innovation and the culture of the organization is the other element which is
inimitable as the employees are free to share their information freely and they have the
relation smooth. Moreover, the high leadership aspect through having first mover advantage
is the other competitive advantage which makes them stay ahead of the other competitors.
Non-Substitutable
6Osovtsev, V. A., N. V. Przhedetskaya, and M. S. Sagidullaeva. "Conceptual Model of Adaptive Management
of Strategic Marketing: A System Approach." European Research Studies 21 (2018): 666-677.

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The emotional connection and affiliation with customers are the first key element
which is non-substitutable as it is the inimitable resource that the organization has developed
for creating the strong as well as effective relationship with them.
Brand recognition is the other aspect which needs to be analyzed as the non-
substitutable aspect as it allows the brand in improving the sales and growth is mandatory in
such scenario.
Analysis of Evaluation of Overall Strategy of A2 Milk Company
From the analysis of different aspects which are followed by A2 Milk Company, the
overall strategy of company is Differentiation as the primary objective of utilising the same
will be preserving the market leadership position through the efficient as well as appropriate
value chain management7. With the implementation of the Differentiation Strategy, the
company has been able to introduce the different innovative aspects and it helped them in
creating brand loyalty among the different customers8.
The A2 Milk Company has been mainly focusing on delivering the premium quality
of the infant milk powders in comparison to other companies such as Nestle for maintaining
the loyalty among the customers. As the equivalent substitutes of A2 Milk Company are
readily available, therefore, they try to maintain their efficiency in a proper manner through
selling of the protein free milk and their sales have been boosted in a significant manner.
7Post, Jacqueline, and J. Paul Leavell. "Diligence-Based Strategy, Strategic Marketing Ambidexterity, and the
Resource-Based View: Informing the Exploitation/Exploration Mode and Valuing Capabilities." (2019).
8Zimmerman, Alan, and Jim Blythe. Business to business marketing management: A global perspective.
Routledge, 2017.

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Though, the pricing of the products sold by them are high, however, the quality which is
being provided to them have helped them in improving their brand image and market share.
Response of A2 Milk Company in Recent Entry of Nestle in the Market
After the Nestle’s entry in the competitive market, it was a bit challenging for A2
Milk Company as Nestle is one such companies who is entering the A1 free market and the
entry was managed by the expiration of a2MC’s patent on testing milk in the year 2015. In
such scenario, there are few recommendations which can be provided for improving the
position of the company in the competitive market which are as follows:
Expansion in the new regions is the first aspect which needs to be implemented by A2
Milk Company as it will be giving them in exposure to the different new group of customers.
The increase in the consumption rate along with diversifying the streams of income will be
giving company in providing expansion exposure internationally as well as regionally9.
The diversification of the product is the other alternative or recommendation which
can be adopted by A2 Milk Company through adding the new products. It will be helping the
company for making them able to explore the new customer groups along with diversify the
income streams which will be increasing overall income generation of the company.
Strengthening the value network is the other key element which needs to be
implemented by the company through adding value as well as enhancing elements at various
stages. It will be allowing the company to gain competitiveness through increasing the
barriers to the entry of the new entrants in the market.
9Vilkey, Ayeh, and Mehdi Dehbid. "Strategic Marketing Management with Japanese Management
Approach." J. Pol. & L. 9 (2016): 172.

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References
Bodnár, Ákos, AdélHajzsér, IstvánEgerszegi, PéterPóti, Jan Kuchtik, and Ferenc Pajor. "A2
milk and its importance in dairy production and global market." Animal Welfare,
EtológiaésTartástechnológia 14, no. 1 (2018): 1-7.
David, Meredith E., Fred R. David, and Forest R. David. "The quantitative strategic planning
matrix: a new marketing tool." Journal of strategic Marketing 25, no. 4 (2017): 342-352.
Esty, Benjamin, and Daniel Fisher. "The a2 Milk Company." HBS Strategy Case 719-424
(2019). (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3300350)
Montiel, Ivan, Raquel Antolin-Lopez, and Peter Jack Gallo. "Emotions and sustainability: A
literary genre-based framework for environmental sustainability management education."
Academy of Management Learning & Education 17, no. 2 (2018): 155-183.
Osovtsev, V. A., N. V. Przhedetskaya, and M. S. Sagidullaeva. "Conceptual Model of
Adaptive Management of Strategic Marketing: A System Approach." European Research
Studies 21 (2018): 666-677.
Ozanne, Lucie K., Marcus Phipps, Todd Weaver, Michal Carrington, Michael Luchs, Jesse
Catlin, Shipra Gupta, Nicholas Santos, Kristin Scott, and Jerome Williams. "Managing the
tensions at the intersection of the triple bottom line: A paradox theory approach to
sustainability management." Journal of Public Policy & Marketing 35, no. 2 (2016): 249-261.
Post, Jacqueline, and J. Paul Leavell. "Diligence-Based Strategy, Strategic Marketing
Ambidexterity, and the Resource-Based View: Informing the Exploitation/Exploration Mode
and Valuing Capabilities." (2019).

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Seele, Peter. "Predictive Sustainability Control: A review assessing the potential to transfer
big data driven ‘predictive policing’to corporate sustainability management." Journal of
Cleaner Production 153 (2017): 673-686.
Vilkey, Ayeh, and Mehdi Dehbid. "Strategic Marketing Management with Japanese
Management Approach." J. Pol. & L. 9 (2016): 172.
Zimmerman, Alan, and Jim Blythe. Business to business marketing management: A global
perspective. Routledge, 2017.