Strategic Management for Fonterra

Strategic Management 0
Fonterra
Strategic Management

Strategic Management 1
Executive summary
The strategic management offers overall direction to the enterprise and comprises the
developing policies, specifying establishment’s objectives and plans to attain these
objectives. This report includes the overview of Australian agriculture sector. It further
defines Fonterra which produces dairy products and the international opportunities available
for the company. The suitable international strategies are suggested for the Fonterra.
Appropriate entry methods along with the inappropriate methods are suggested for the
international market. At last the recommendations are given for the future strategic direction.
At the end, it can be concluded that Fonterra can successfully establish itself in the
international market by making use of appropriate entry methods.

Strategic Management 2
Contents
Overview of Australian Agribusiness sector..............................................................................2
About company..........................................................................................................................2
Identification of international opportunities for Fonterra..........................................................2
Suitable international strategies.................................................................................................3
Appropriate entry to the international market............................................................................4
Strategic alliance....................................................................................................................4
Joint venture...........................................................................................................................5
Inappropriate entry to the international market..........................................................................5
Acquisition.............................................................................................................................5
Greenfield investment............................................................................................................6
Recommendations for the future strategic direction..................................................................6
References..................................................................................................................................8

Strategic Management 3
Overview of Australian Agribusiness sector
The agribusiness in Australia has always been one of the country’s industry pillars. It has a
great role in attracting international investment. Australia enjoys several advantages such as
widespread free trade agreements and counter seasonal production. At present, the political,
media and business negotiation are focused on the agriculture sector with the belief that there
will be a constant staple for the country’s affluence. It has gained attention from the local and
global market forces. The growth prospective of the agribusiness industry is creating
community assurance to open new markets, create jobs and invent new technologies. It is
going to create new opportunities and enhance the agriculture business and its participants.
The Australian development and agriculture sector has been divided into two parts,
agribusiness and food products. The agribusiness comprises the agricultural activities which
are directly related to the food production. The food sproducts comprise beverage
manufacturing and food processing activities. The agribusiness in Australia is constantly
financed and developed. It has maintained an average agricultural productivity gain of 2%
over the past 50 years. The competitiveness has derived in the industry from the locally-
developed production methods, technologies and research and development associations
(Mudambi, Piscitello and Rabbiosi, 2014).
About company
Fonterra was established in October 2001 after the union of New Zealand dairy board, daily
group and Kiwi co-operatives dairies. Fonterra is well-known as one of the top 6 dairy
companies in the world in the terms of turnover and the leading exporter of dairy products
(Pavlovich, Sinha and Rodrigues, 2016). Fonterra is possessed by more than 11,000 dairy
farmers who supplies more than 14 billion litres of milk each year. The global supply chain
stretches from the farms of New Zealand to customers and consumers over 140 countries.
Fonterra is a basically cooperative dairy retained by more than 11,000 New Zealand dairy
farmers. The dairy is responsible for 30% of the world’s dairy exports.
Identification of international opportunities for Fonterra
At present 27% of Fonterra’s milk is obtained from overseas. Australia, Chile and China are
the biggest supply sources. Fonterra is earning from the exports about 20 to 33%. It is
somewhere between $2500 and $4000 for every person in the New Zealand. The export