Strategic Management of Fonterra: Analysis and Recommendations

Running Head: STRATEGIC MANAGEMENT 0
RESEARCH PORTFOLIO

STRATEGIC MANAGEMENT 1
Contents
Overview...................................................................................................................................2
Fonterra product lines and business units.............................................................................3
Analysis of Fonterra internal environment...........................................................................5
Recommendations....................................................................................................................7
Conclusion.................................................................................................................................7
References.................................................................................................................................8

STRATEGIC MANAGEMENT 2
Overview
Agribusiness in Australia has and will always be one of this nation industry pillars. There are
many local and global forces getting increasing attention and where retailers, traders and
processors have all seen changes in their markets (Purves, Niblock and Sloan, 2015).
Agribusiness Australia’s inclusive industry approach enables the industry to be a coherent
association and support rural communities and contribute significantly to the national
economy.
The competition is continuously increasing in the agribusiness of Australia and to survive in
this competitive market, an organisation needs to adopt strategic management practises. With
proper strategic planning, an organisation can recognise their ability and competitiveness in
extent with both long and short term goals and then identify the necessary decisions and
actions that need to be taken to attain those goals.
Considering a global organisation, Fonterra cooperative company is selected for this
assignment which is owned by 10000 farmers and united by a fundamental belief in power of
dairy to make a difference (newsie.co, 2018). The headquarter of the organisation is situated
in New Zealand. The company was founded in 2001 and currently employs more than 21000
employees to lead as a massive dairy exporter. In 2018 the company generated total revenue
of $18,934,257,000 including sales and other revenue (Ibisworld.com, 2018). Moreover, they
have various strategic alliance at international level that helps the company to become an
international exporter of dairy products. Fonterra also has various subsidiaries including
Mainland Cheese, Anchor and Soprole. The company summarise their philosophy to produce
great dairy products and build a long-lasting commitment with the consumers.
This work extends towards external business environment of Fonterra which build up the
internal competitiveness of the company and help in identifying and executing their
competitive advantage in the whole industry. In last, necessary recommendation is being
made in relation to management and operations of Fonterra in Australia and at global level.

STRATEGIC MANAGEMENT 3
Fonterra product lines and business units
In Australian agriculture market, Fonterra comprises of various numbers of businesses in
respect with serving both consumer and industrial needs. Their portfolio of well-known
brands includes Anchor, Anmum, Anlene, NZMP and Farm Source inclusive of supplies of
dairy ingredients. All are made using trusted processes with highest quality natural dairy and
are loved by consumers in Australia and around the world. Hence, the company provide
many sorts of offerings to its diverse customer segment. For instance, the consumer good
section and product portfolio include Western Star butter, Perfect Italiano ready to make
meals, Bega cheese and Anchor milk. Fonterra also supplies dairy ingredients to many food
manufacturers globally and in Australia and in this way industrial needs is also being
fulfilled.
Fonterra earns major portion of their revenue from the customer division and it also heavily
determined the brand value of Fonterra (Walker, 2017). The company also have a food
service division by which Fonterra provides various range of branded dairy products to Café,
restaurants, fast food outlets and other identical businesses. In addition, this division works
strictly with caterers and Chefs to produce more tailored products.
Analysis of Fonterra external environment
For analysing the company external environment, PESTLE strategic tool will be used to
identify various factors that significantly impact the firm macro environment. Changes in
business macro environment impact the firm in shaping strategy and competitive landscape
(Bouhali et al, 2015).
1. Political aspects - The present governance system in Australia has served its purpose
for a long time and play a critical role in policy making and regulations in Australia.
Fonterra gains many benefits from the Australia government (Friel et al, 2016).
Livestock sector is being promoted by Australian government to meet the increasing
demand for dairy and meat. In addition, Fonterra can effectively export their business
products to other countries due to positive association of Australian country with
other nations all around the economy. Though in future, if the government make