Strategic Management for a2 Milk Company

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
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1STRATEGIC MANAGEMENT
Table of Contents
1.0 Introduction................................................................................................................................3
1.1 Background/Context..............................................................................................................3
1.2 Problem/Purpose....................................................................................................................4
1.3 Scope......................................................................................................................................4
2.0 Methodology..............................................................................................................................4
3.0 Results/Findings and Discussion...............................................................................................4
3.1 Porter’s Five Forces model....................................................................................................5
4.0 Recommendations on product lines and geographic segments.................................................8
4.1 Porter's generic strategies for the firm...................................................................................8
4.1 Five potential financial and non-financial measures and usefulness for success evaluation
...................................................................................................................................................10
5.0 Conclusion...............................................................................................................................11
References......................................................................................................................................13

2STRATEGIC MANAGEMENT
Executive summary
The a2 Milk Company is a leading milk producer and supplier operating in the markets of
Australia, New Zealand, USA, UK and China. Since, its establishment in 2000 by Dr. Corran
McLachlan, the company has been able to create a successful position in the market by providing
a unique product, that is, milk containing only a2 protein. The company sources the milk from
cows that naturally produce this milk. Although, the company has seen increase in its
profitability in the recent years, it also faces tough competition from companies offering close
substitutes. This report analyzed the competitive environment of the company in the Australian
market by applying Porter’s five forces model and it is found that the company should focus on
increasing its switching cost and produce innovative products with the a2 milk. It should adopt
differentiation leadership strategy to further increase its profitability.

3STRATEGIC MANAGEMENT
1.0 Introduction
1.1 Background/Context
The a2 Milk Company is one of the major milk companies established in New Zealand.
Dr. Corran McLachlan founded the company in 2000 after a significant discovery that the
different milk proteins have different effect on the people. He discovered that cow milk contains
two different types of beta-casein protein, a1 and a2, which have different impact on the
digestion system of the consumers of cow milk. It has been found that a2 protein is easier to
digest (Jianqin et al., 2015). With this principle, the a2 Milk Company was established. It is a
publicly listed company in both New Zealand and Australia. Since its establishment in 2000, the
company has expanded its business in Australia, China, UK and in the USA. The mission of the
company was to explore more to know the scientific benefits of a2 protein type in order to spread
the nutritional goodness of the natural and real milk to more and more people
(Thea2milkcompany.com., 2018). Over the years the company has emphasized on the fact that
the cow milk contains two different beta-casein proteins and those have different effects on the
people, especially in terms of digestion and delivering the most nutritional value. The company
uses specially selected cows that produce a2 protein milk naturally and advertises it as a
marketing strategy. It has been able to create awareness among the people about the goodness of
a2 protein and a2 milk, which is high in nutritional value. The customers admit that they feel the
difference in their digestive system and overall health, which brings business to the a2 Milk
Company.