Sustainable Business Practices for Dairy Industry

This assignment analyzes key sustainability aspects within the dairy industry. It highlights the importance of engaging customers through communication, feedback, and involvement in nutrition-related activities. The document also stresses minimizing the environmental footprint of business operations for commercial success. Finally, it emphasizes improving animal welfare standards to enhance the well-being of dairy cows.

Running Head: Strategic Management 1
Diary Product Producers

Strategic Management 2
Contents
Environmental Analysis...................................................................................................................3
SWOT analysis............................................................................................................................3
Porter five forces..........................................................................................................................4
Threats of new entrants............................................................................................................4
Threats of substitutes................................................................................................................4
Competitive rivalry...................................................................................................................4
Bargaining power of buyers.....................................................................................................5
Bargaining power of suppliers.................................................................................................5
Identified gaps.................................................................................................................................6
Business objectives..........................................................................................................................9
Appropriate Strategy........................................................................................................................9
Corporate......................................................................................................................................9
Business.......................................................................................................................................9
Functional...................................................................................................................................10
Discussion......................................................................................................................................11
Action plan and recommendations................................................................................................11
Recommendations......................................................................................................................12
References......................................................................................................................................14
List of figures
Figure 1: Porter five forces..............................................................................................................5
Figure 2: Quality of products...........................................................................................................7
Figure 3: Sales of products..............................................................................................................8
Figure 4: Business performance......................................................................................................9

Strategic Management 3
Environmental Analysis
Diary Product Producers is the new company in the dairy industry and it is improving its
business gradually. The company is basically operating in the country Australia and the
environmental factors of the Australian market affect the business operations of the company. it
is important for the company to analyze the environmental factors effectively for the growth of
the business. By the environmental analysis, Diary Product Producers will be able to understand
the needs of the customers along with the existing competition in the market (Palmer, 2012).
SWOT analysis
First analysis for the company is SWOT analysis that includes strength, weakness,
opportunities and threats of the company in the business operations. SWOT analysis for the
company Diary Product Producers is as follows:
Strength-
The company is helpful directly in improving the crop production level by providing cash
income and drought power on daily basis. The company is providing employment to the
population in rural areas especially women. By the production of dairy products, there is the
regular income for the farmers. Core strength of the company is the continuous inspection,
laboratory testing and monitoring along with the upgraded staff. The company is engaged
continuously in –house research and development. The company provides best quality of milk
and dairy products to the customers that are the key strength of the company.
Weakness-
Apart from the success, there are some weaknesses also in the company. Sometimes
Diary Product Producers has to face the problem of the supply of raw material. Along with this,
the feed availability for the cattle is not proper throughout the year. Further, there are no proper
animal healthcare activities in the company. There is poor infrastructure in some areas to
transport rurally-produced milk to the major processing centers.
Opportunities-

Strategic Management 4
There is high demand of nutritious food in the society which is the big opportunity to
expand its business. Government is also encouraging people to use dairy products in their daily
lives. The increasing knowledge among the people about getting healthy food is also an
opportunity for the company to grow in the market (Brodie, Brookes, & Little, 2009).
Threats-
Natural climates such as drought, flood, and disease can affect to cattle and this can be a
big threat for the company. Further, like all the industries, there is also strong competition in the
dairy industry. Diary Product Producers is the new setup so it is going to be very difficult for the
company to establish itself in the market. Further, seasonal fluctuations in milk products can also
affect the business of company (Mullins, 2010).
Porter five forces
Threats of new entrants
In the dairy industry, there are various restrictions and barriers imposed by the
government to get entry in the industry. But for the company Diary Product Producers, the
barriers to entry in the industry are relatively high. In the market, it is very difficult due to
economies of scale in the manufacturing and distribution costs. For the mass production of the
dairy products, there is the need of high capital so, for the small company it is going to be quite
difficult at the national level.
Threats of substitutes
In the dairy industry, there are good substitutes available and many new products are
developed by various companies. The availability of substitute products is increasing strong
competition and pressure for the new companies in the industry. In the milk and dairy industry,
the customers or end users always switch towards the low cost products so they give preference
to the substitute products. So, the competitive pressure from the substitute products is stronger in
the industry (Johnson, Whittington & Scholes, 2011).
Competitive rivalry
In the dairy industry, the demands and requirements of the customers are growing
continuously so, the competitive rivalry in the company weak in the industry. In the dairy

Strategic Management 5
industry, the buyer cost to the switching brands is relatively low. So, these affect the company
strongly in the dairy industry.
Bargaining power of buyers
The switching cost of the buyers on the substitute products and brands is comparatively
low so, the bargaining power of the buyers in the industry is high. Customers in the dairy
industry are strongly affected by the disposable income and economy. When the disposable
income of the customers declines, they start to purchase cheaper products. On the other hand, if
the disposable income of the customers is increasing, they start buying more expensive products
(Taylor et al, 2012).
Along with this, customers in Australia are now becoming more concerned with the
health issues due to the food consumption. The health awareness of the customers affects the
companies and their sales. So they have to follow the rules and regulations imposed by
government (Halbert & Ingulli, 2011).
Bargaining power of suppliers
There are many suppliers of the milk product who are ready to supply the products in the
market. So the bargaining power of suppliers is weak in this industry. In the dairy industry, the
seller switching cost to the alternative suppliers is relatively low. So, the bargaining power of
suppliers is weak in the industry and it directly affects the company. In the industry, the inputs of
the suppliers are available easily so the suppliers’ bargaining power is relatively low in the
industry (Cannon & Homburg, 2008).

Strategic Management 6
Figure 1: Porter five forces
Identified gaps
Diary Product Producers is basically dealing with the three dairy products i.e. Full cream
milk, Lite milk and Chocolate flavored milk. By analyzing the give financial, marketing and
sales reports, it is analyzed that there are some gaps which are needed to be filled by the effective
strategies. The gaps in the business are based on the sales, products and performance of the
company.
Quality of products-
It is stated above that Diary Product Producers produces three main products i.e. full
cream milk, Lite milk and Chocolate flavored milk. To get success in any business, it is
important for the company to provide quality products and the success of any products depends
upon the ratings given by the customers in the market. if any product is performing low, then
there is the need of effective strategy to improve the performance. The product Chocolate
flavored milk has got 50% rating from the family segment. On the other hand, full cream milk,
Lite milk have 60% ratings.

Strategic Management 7
Figure 2: Quality of products
Sales-
In case sales of the three products, it is analyzed that as compared to full cream milk, Lite
milk, the sales of Chocolate flavored milk is quite. In the segment sales, families prefer full
cream milk for the consumption. In this segment, sales of Chocolate flavored milk are very low.
In the segment of wholesalers and distributors, there is no sale of Chocolate flavored milk. It
means, this product of the company is not so much preferred by the customers. There is the need
of improvement and strategy to analyze the actual problem with this product.

Strategic Management 8
Figure 3: Sales of products
Business performance-
By analyzing the business performance of the plant 1 in Diary Product Producers, it is
observed that the company is operating basically in three products i.e. Full cream milk, Lite milk
and Chocolate flavored milk. The gross profit of the company is $338,722.36 in which the
product Lite Milk is performing well with the $1, 60,000. The product Chocolate flavored Milk
has less profit as compared to other tow products. So, there is the need to improve its
performance by adopting some strategy so that some innovations can be done (Sørensen, 2012).

Strategic Management 9
Figure 4: Business performance
Business objectives
The objective of Diary Product Producers in the dairy industry is to carry out the business
activities for the economic development of the company by producing dairy and milk products
efficiently within the processed form in the market. The strategic objective can be achieved by
the centralized marketing, centralized purchasing and pooling the milk effectively. The aim of
the company is to provide quality milk, milk products to the customers at the affordable price
(Rothaermel, 2013).
Appropriate Strategy
Corporate
In this strategy, Diary Product Producers should focus on the sakes of Chocolate flavored
milk as it can be seen that customers do not prefer this product. So the proper support would be
required tom improve the sale for particular product. Company should make aware the customers
for that product whose sale is low as compared to other products. New suppliers and new places
are needed to distribute Chocolate flavored milk to more customers. The positive sales can be
achieved by developing new offers for the customers (Carpenter & Fairhurst, 2009).
Business
In the business level strategy, Diary Product Producers should identify the strategic
priorities for the business operations. Company should set qualitative and quantitative KPTs to
measure the business. Company should analyze the business process to deal with various issues.
For the business development, the company has to focus on the collaboration with various
countries. The company will has to consider various issues such as local supply chain, country of
operation, reviewing policy and programs and environmental rules and regulations (Ghobadian,
2008).

Strategic Management 10
Functional
In the functional level strategy of Diary Product Producers, the company should adopt
proper marketing mix for the products which are to be offered to the customers. For the company
Diary Product Producers, the long term marketing strategy can be implemented by the proper
planning and effective marketing mix.
Product-
Diary Product Producers is the brand offering milk, milk based products and food items
in Australia. The products of the company are categorized in the different favor of milk i.e. Full
cream milk, Lite milk and Chocolate flavored milk. These brands of the milk cover the product
strategy in the marketing mix of the company. The company should bring more dairy products
for the customers.
Price-
The prices of the milk products are affordable so that anyone can afford easily. The
company should use penetrative pricing strategy to attract the customers. Along with this,
company should maintain the differential pricing strategy to deal with the competitors. The
company has high price of Chocolate flavored milk as compared to other products and this
product is not so much preferred by the customers. This can be due to high price of Chocolate
flavored milk. So, company should drop down the price to improve the sales (Gebauer, 2008).
Place-
In the dairy firm, distribution is the important part of the business so company should
focus on the various regions of the country. To save the middle men costs, the main suppliers of
the company should be farmers and cooperatives. The company should try that the customers can
find the milk products very close to their homes to build customers loyalty and preferences.
Promotion-
For the effective promotion, company should use TV commercials and radio
advertisements. Company should also tie up with the cashless payment companies like Paytm
and UPI to cover the entire marketing mix (Alvarez & Casielles, 2008).

Strategic Management 11
Discussion
The aim of then discussed strategy for the Diary Product Producers is increase the market
share by providing best quality of milk products to its customers and to build the trust for long
term. Core objective of the company by strategy implementation is to maximize the profit. The
strategy for the company includes paying best prices to the farmers for their work rather than
making profit. So, some strategies adopted by the company are focused approach, common
branding, product differentiation, smart marketing and product development and assured quality.
Action plan and recommendations
For the success of Diary Product Producers, the action plan for next five years is
described below. The objective of this action plan is to focus on the high returns, achieve goals,
and set the timeframe for the business activities. To achieve greatest possibility of success and
greatest return, this action plan should be very effective e for the Diary Product Producers
(Wheelen & Hunger, 2011). The action plan for the company Diary Product Producers are as
follows:
Category Activity Month
Cattle nutrition and feed Identify various feed
concentrate manufactures
with which the company
should improve the nutritional
value and cost effectiveness.
May- September 2018
Milk quality  Engaging producers in
the hygiene and milk
preservation process
to improve milk
quality.
 Improving support
services such as
testing laboratory, and
veterinary service
October- December 2018
January 2019

Strategic Management 12
provides.
Finance and investment  Encouraging proper
financing to produce
high quality products
and improving milk
production in terms of
quantity and quality
 Supporting farmers to
get crops and focusing
on transportation and
processing equipments
February-May 2019
June – December 2019
Association development Promoting the development
of dairy production in the
country by working with
various collaborations
(Munksgaard et al,2012)
January- May 2020
Recommendations
To get positive growth and success, there are some recommendations for Diary Product
Producers which must be adopted by the company along with implementing the action plan in
the business activities.
 Company should look outward by monitoring and evaluating the performance of the
products at the local and global level.
 Company should actively innovate and invest in the technologies to deliver nutrition and
improve long-term economic value.
 Company should cooperate transparently and actively in the supply chain to add value
and build trust.
 Company should focus on building skills and talent to make a culture of continuous
learning and improvements.

Strategic Management 13
 Company should focus on the engaging the customers to communicate effectively, listen
to them and to involve them in the business related activities especially on nutrition.
 Further, company should also focus on minimizing the negative environmental impact for
the commercial success.
 At last, company should on improve animal welfare to improve the standard and welfare
of the dairy cow.

Strategic Management 14
References
Alvarez, B. A., & Casielles, R. V. (2008), Consumer evaluations of sales promotion: The effect
on brand choice: European Journal of Marketing, 39 (1), 54-70
Brodie, R. .J, Brookes R .W., & Little, V., (2009),Towards a paradigm shift in marketing; an
examination of current marketing practices: Journal of Marketing Management, 13(5), 383-406
Cannon, J. P. & Homburg, C., (2008), Buyer-supplier relationships and customer firm costs:
Journal of Marketing, 65(1), 29–43
Carpenter, J. M., & Fairhurst, A., (2009), Consumer shopping value, satisfaction and loyalty for
retail apparel brands: Journal of Fashion Marketing and Management, 9 (3), 256-269
Gebauer, H., (2008), identifying service strategies in product manufacturing companies by
exploring environmental strategy configurations: Industrial Marketing Management, 37(3), 278-
291
Ghobadian, A., (2008), Formal strategic planning, operating environment, size, sector and
performance: Journal of General Management, 34(2): 1-20
Halbert, T., & Ingulli, E., (2011), Law and Ethics in the Business Environment, (7th), Cengage
Learning
Johnson, G., Whittington, R., & Scholes, K. (2011), Exploring Strategy, (9th), Prentice Hall
Mullins, J., (2010), Marketing Management. The McGraw-Hill Companies
Munksgaard, K., Clarke, A., Storvang, P., & Erichsen, P., (2012), Product development with
multiple partners: Strategies and conflicts in networks: Industrial Marketing Management,
41(3), 438-44
Palmer, A., (2012), Introduction to Marketing: Theory and Practice, Page 501, (3rd), Oxford:
Oxford University Press
Rothaermel, F. T., (2013), Strategic Management: Concepts, McGraw-Hill Irwin
Sørensen, H.E., (2012), Business Development: a market-oriented perspective, John Wiley &
Sons Ltd.
Taylor, W. C., Franzini, L., Olvera, N., Poston, W. S. C. & Lin, G. (2012), Environmental audits
of friendliness toward physical activity in three income levels: Journal of Urban Health. 89(2).
Pp. 296-307