Strategic Management Analysis of A2 Milk Company

This report analyzes the internal and external environment of A2 Milk Company and provides recommendations for long-term strategies. It includes a SWOT analysis, Porter's Five Forces Model analysis, and steps for implementation. The report aims to help the company improve its overall growth and competitiveness.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has thrown light on analysing the internal and external environment analysis of the
A2 Milk Company. From the SWOT and Porter’s Five Forces Model Analysis, it can be
identified that there are different threats and weaknesses of the company which can be
improved with the implementation of the long-term strategies as it will be beneficial for the
overall growth of the company.

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Table of Contents
Introduction................................................................................................................................3
SWOT analysis...........................................................................................................................3
Porter five forces model analysis...............................................................................................5
Long-term strategy with smart objectives for A2 Milk Company.............................................7
Steps of Implementation............................................................................................................8
References..................................................................................................................................9

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Introduction
The report throws light on analyzing the internal and external environment of the A2
Milk Company which will be providing insight to understand different opportunities and
threats which can be distressing the growth of the entire companynegatively. Proper creation
of long term strategy along with recommendations are required to be provided which will be
appropriate for A2 Milk Company to cope with the different difficulties. And solve them
appropriately.
SWOT analysis
Strengths
The different strengths are defined as the capabilities and resources of the firms which
can be utilized to design sustain the competitive advantage in the entire market.
Firstly,A2 milk company used to sell the different products which contained A2 beta-
casein protein as the elimination of the A1 protein was the most significant decision made by
them as many people did not have the capacity to digest the A1 protein(Zhao et al., 2017).
The brand strength along with capabilities of the A2 Milk Company is one of the
major strengths wherein Fonterra did not produce the A1 free products and with the help of
the partnership with A2 Milk Company, it has been helpful for Fonterra for fast track market
growth appropriately (Taha, 2018).
The increase in the price of the stock was the other strength of the A2 Milk Company
which was 27% that was the major advantage of the A2 Milk Company in order to sustain
their growth in the market through introducing the A2 beta-casein protein (Steiss, 2019).

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Weaknesses
There is limited rate of success outside the core business of A2 Milk Company and
the company is facing different challenges while moving in the different segments of
products with the present culture (Noe et al., 2017).
Due to the introduction of Nestle in the market with the A1 beta-casein, it has affected
the growth of A2 Milk Company and due to low diversification aspect, that reduced the
overall profitability aspect of the company.
Market Research- There are various issues relating to the issues faced by the
company as they did not do any kind of market research within the entire market in which it
serves and it can affect the loyalty among customers negatively (Kibria, Al Amin & Rifat,
2017).
Opportunities
The notable flexibility along with scalable supply chain has been able to grow and
generate the attractive returns for the different investors through capitalizing on the market
opportunities (Jarzabkowski & Kaplan, 2015).
The development of the market can lead to dilution of the advantage to the
competitors and it will enable A2 Milk Company to increase their competitiveness in
comparison to Nestle present in the market as well (Eriksson et al., 2015).
The major opportunity which can be gained by A2 Milk Company includes the fact
that the differentiation strategy applied by them in order to compete with other competitors.
In China, the market for infant formula is attractive due to the distribution agreement and the
knowledge regarding the regulatory system of China as well (Daspit et al., 2017).

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Threats
Technological advancements by Competitors- It will be threat for the different
competitors within the industry as the customers attracted to the new technology can be a
huge loss for the different competitors present in the market. Nestle is the major competitor
of A2 Milk Company who launched the A1 free infant formula in China and it affected the
growth and brand image of the A2 Milk Company(Chang, 2016).
The other threat is that there is no steady supply of the products which are innovative
as over the few years, the company has tried to develop numerous products, however those
are often response to the overall development by other competitive players in the market. The
supply of the new products is not regular in nature and this caused low and high swings in
sales number over the span of time (Chang, 2016).
Increase in Competition-There is increase in competition within industry which will
be putting downward pressure on prices. It could lead to reduction in the revenue for A2 milk
company as there can be loss in the share in market. Due to the competition from Nestle, A2
Milk company’s stock price fell 10% within few days and affected their growth in medium to
long term future growth.
Porter five forces model analysis
Threat of New Entrants
The A2 Milk Company is one and only organization which engages themselves in
sourcing, processing along with marketing of the solely A1 protein free nutritional and dairy
products in the global market and therefore, it is the weak force for new entrants to enter the
market and produce similar products in the market as well. The economies of scale
areproblematicin order to attain in the industry in which A2 Milk Company functions. It

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makes the threat of new entrants’ weaker force and it affects the overall effectiveness of the
new entrants negatively as it will be costly for them to imitate. The differentiation within
industry is strong wherein A2 Milk Company sells differentiated products rather than
standardized products which will be the weak force for new entrants in the market to compete
in the respective industry (Baxter, 2019).
Bargaining Power of Suppliers
The number of suppliers in the respective industry is high in comparison to the buyers
and it means that there is less control of suppliers over the prices and it makes the power
weak in nature. The different suppliers in the market may not be able to provide threat for the
forward kind of integration in the market which means that the number of substitutes is
limited in market and it makes the bargaining power of suppliers strong in nature as well
(Arshed & Pancholi, 2016). The products which are sold by A2 Milk Company is
differentiated in nature as they do not offer standardized products to the customers and it can
make the bargaining power of the substitutes the weak force in comparison to the other
companies in the market.
Bargaining Power of Buyers
The differentiation in the products sold by A2 Milk Company is high and it means
that the different buyers are not able to search for the alternative firms producing similar
products. Nestle is the other major competitor of A2 Milk Company which introduced the A1
beta-casein milk products which can affect the profitability of the company negatively. The
difficulty in switching the costs can make the bargaining power of buyers low and weak in
the industry.
Threat of Substitutes

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There are very less substitutes present in the market in which the A2 Milk Company
operates and it means there is no maximum ceiling on profits which can be earned by the
firm. It makes the threat of substitutes a weaker force in the market (Binder, 2016). The
different few substitutes which are available in the market are less and they provide
expensive products. However, in case of the A2 Milk Company, the other companies such as
Nestle produces the similar products, however at a high price which are operating in the
respective field provides the extensive quality of products and therefore it can be analyzed
that the threat of substitutes is weak in nature as the buyers will be less likely to switch to
substitute products (Adi, 2015).
Rivalry Among existing Firms
The different competitors which are present in the market are less andit makes the
rivalry among the firms is less in comparison to the other competitors. There are very few
competitors that have high share in market and it can be seen that it will involve in the
competitive movementsto increase the competitive position and become the leaders in the
market (Adi, 2015). The respective industry in which A2 Milk Company is operating is rising
in each and every year and growth of the industry which is positive means that the different
the other companies which are main competitors which are less likely in nature to engage
themselves in the completive actions and the rivalry among them is weak in nature (Adi,
2015).
Long-term strategy with smart objectives for A2 Milk Company
In order to remain competitive in nature in comparison to the other competitors
present in the market, it can be identified that there are long term strategies which can be
adopted by A2 Milk Company to become competitive in nature.

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 Firstly, the respective company needs to understand the needs of local market along
with development of collaborative approach through which the company can gain and
leverage knowledge to make global plans and campaigns a success
 The second objective is to focus on providing value to the customers by providing the
high-quality services which will be helpful in growing the business appropriately. In
the different markets, the A2 Milk Company needs to understand the behavior of the
competitors such as Nestle which will be helpful for delivering top-notch quality
products and services
 The company A2 Milk Company can focus on the diversification and cost leadership
strategy in the future as it will help them in improving their market share. A2 Milk
Company needs to provide the milk for infants at a low price in comparison to Nestle
and improve their brand image
Steps of Implementation
Activity
1-8th
March
10-15th
March
16-18th
March
19-22nd
March
23-26th
March
27th March- 04th
April
Proper conduct of research
Analyzing the Objectives
Increase in Innovation
Aspects
Collection of data
Analyzing the data
Interpretation of collected
data sets

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Concluding the Study
From the action plan, it can be identified that the long-term objectives will be
beneficial for the company to improve their sales percentage in comparison to the other
competitors present in the market in an appropriate manner. the analysis of the opportunities
through conducting research is the other aspect which should be adopted by the company as it
will be beneficial in managing the overall efficiency appropriately.

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References
Adi, B. (2015). An evaluation of the Nigerian telecommunication industry competitiveness:
application of porter’s five forces model. World, 5(3), 15-36.
Arshed, N., & Pancholi, J. (2016). Porters Five Forces and Generic Strategies.
Baxter, G. (2019). A Strategic Analysis of Cargolux Airlines International Position in the
Global Air Cargo Supply Chain Using Porter’s Five Forces
Model. Infrastructures, 4(1), 6.
Chang, J. F. (2016). Business process management systems: strategy and implementation.
Auerbach Publications.
Daspit, J. J., Chrisman, J. J., Sharma, P., Pearson, A. W., & Long, R. G. (2017). A Strategic
Management Perspective of the Family Firm: Past Trends, New Insights, and Future
Directions. Journal of Managerial Issues, 29(1).
Eriksson, K., Johanson, J., Majkgård, A., & Sharma, D. D. (2015). Experiential knowledge
and cost in the internationalization process. In Knowledge, Networks and Power (pp.
41-63). Palgrave Macmillan, London.
Jarzabkowski, P., & Kaplan, S. (2015). Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic Management Journal, 36(4), 537-
558.
Kibria, M. G., Al Amin, M., & Rifat, U. A. (2017, September). Application of Porter’s Five
Forces Model in Battery Manufacturing Industries of Bangladesh. In International
Conference on Mechanical, Industrial and Energy Engineering. Retrieved (Vol. 25).

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Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill
Education.
Steiss, A. W. (2019). Strategic management for public and nonprofit organizations.
Routledge.
Taha, T. M. A. M. (2018). Competitive Analysis of the Global Oil and Gas Industry using
Porters Five Forces Model.
Zhao, Z. Y., Zuo, J., Wu, P. H., Yan, H., & Zillante, G. (2016). Competitiveness assessment
of the biomass power generation industry in China: A five forces model
study. Renewable Energy, 89, 144-153.