Strategic Management of Australian Diary Farmers

This report analyzes and understands the strategic management of Australian Diary Farmers, including its operations, business units, external environment, and internal organization. It discusses the threats and opportunities faced by the company, as well as provides recommendations for its future strategic direction.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Student’s Name
University Name
Author note

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Executive summary
The purpose of this report is to analyze and understand the strategic management
imputes. The selected company for the report is Australian Diary Farmers. The report provides
analysis of the operations of the company in Australia, the business units and its products and
service lines of the customers. It identifies the business revenue units and its importance.
Moreover, the report analyzes the external environment of Australian Diary Farmers along with
its internal organization. It discussed the treats including excessive competition, new
technologies faced by the organization from its external environment. The report identifies
various opportunities from the external environment such as changing trend of consumer
behavior has been analyzed.
It discusses the political, social, technological, environmental and legal factors that affect
the operations of the business. Lastly, the report provides recommendations for its future
strategic direction and to take advantage of the opportunities and enhancing its present
infrastructure, expanding its operations. And concludes the effectiveness and appreciates the
strategic management of Australian Diary Farmers.

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Table of Contents
Introduction............................................................................................................................................3
Business units, products and service lines of Australian Diary Farmers...............................................3
Business revenue units and importance of business revenue units........................................................4
Analysis of the external business environment of Australian Diary Farmers.......................................5
PESTEL analysis of Australian Diary Farmers.....................................................................................6
Analysis of internal organization in Australian Diary Farmers.............................................................7
Resources, capabilities, core competencies and competitive advantage...............................................8
Recommendations for future strategic direction of Australian Diary Farmers.....................................9
Conclusion...........................................................................................................................................10
References............................................................................................................................................11

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Introduction
The chosen agribusiness for the report is Australian Diary Farmers, the company situated
in Australia was formed in the year 1942 the mission of the company is to improve the
sustainability and profitability of the dairy farmers in Australia. The company is a dairy
processor representative body (Beggs et al. 2015). The company plans to focus on premium
quality dairy products, inclusive of organic milk and milk products. The company offers high
competitive products and premium quality milk products and special dairy items. The production
of high quality organic milk and its special value added products are backed by distribution
through the country’s largest retail supermarkets and other retail stores. The company’s annual
profitability report, reflects the company as the biggest producer of organic milk and dairy
products in Australia (Cameron 2015). The purpose of this report is to identify the company’s
operations in the Australia, identify its business units and service line, the business revenue and
its importance of the revenue units. Further, it analyzes the external environment of the business,
the internal organization. It discusses the core competencies of the organization, the future
strategies of the business.
Business units, products and service lines of Australian Diary Farmers
The Australian Diary Farmers the product line of company includes dairy products such
as kid’s milk, fresh milk, milk shakes, milk cheese, Greek style Yogurt, Thick and Creamy
yogurt, Buttermilk, Fresh cream, Custard, Cottage cheese and Lactose free. the company offers
satisfactory service to its customers by offering fresh quality products through its sustainable
distribution channel. The company performs various research and development programs,

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extension and education programs which helps the company to focus on improving the
sustainability and profitability of the business, which is their mission. The organization has
various teams that focus on the issues of animal feed, animal performance, business
management, environmental resources and the people. The products offered by the company are
organic milk and dairy products (Jago et al. 2013). Moreover, it initiates various programs such
as dairy situation, developing the international market and trade reform programs. The business
group has an objective to transfer and circulate information, data, knowledge and technologies
which enable the company to create opportunity off the farm and ensures that the company
manufactures innovative and competitive dairy value chain. The service line of the company
includes performing effective business practices with optimum capability, and delivers the best
service to its stakeholders (Johnson 2016). By ensuring effective performance of the business, it
ensures competitive advantage of the company and delivers best quality product and service to
the customers and the stakeholders.
Business revenue units and importance of business revenue units
Due to the ongoing challenges of the dairy farms, the Australian Diary Farmers had a
reduction in its annual revenue by $ 4.1 million in its previous financial year. It is equivalent to
21% reduction in its profit (Ingram et al. 2013). The net loss of Australian Diary Farmers in the
year 2017-18 financial years had been increased by $4.2 million compared to its previous
financial year. There has been significant reduction in the business revenue units. Moreover, its
milk production has been severely impacted; it has been reduced to 9.1 million liters’ as
compared to its previous years. The business revenue units are important as it helps to analyze
the current financial situation of the organization. by analyzing the revenue units, the Australian

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Diary Farmers has been compelled to review its financial position and incorporate necessary
changes (Johnson 2016). The company has been forced to reduce its expenditure to 7.2% thereby
adjusting its funding allocation. Several tactics and policies are to be implemented by the
Australian Diary Farmers considering the business revenue units, which will be helping the
business to manage the uncertainty of the current situation faced in the markets, the price of the
milk and milk products to help overcome the financial crisis currently faced by the company.
Therefore, the business revenue units are important for the business organization (Jago et al.
2013).
Analysis of the external business environment of Australian Diary Farmers
Being the leading dairy industry in the market, the Australian Diary Farmers faces
various opportunities and threats from its external environment which directly or indirectly
influence the activities of the organization.
There are various threats faced by Australian Diary Farmers some of them are, changing
consumer behavior, the consumers prefer online service and online medium for making a
purchase, this threats the existing supermarkets. There is an increase competition in the market
therefore the profitability of the company is threatened. New technologies adapted by the
competitors of the company pose a serious threat to the company in the long term. The political
climate of the country is fluctuating and since the company operates in other countries, the
currency keeps fluctuating. There is a rise in the raw material which negatively impacts the
profitability of Australian Diary Farmers (Luhmann, Schaper and Theuvsen 2016).

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However, there are opportunities as well, the changing trend of the consumer behavior
provides opportunity to the company to open new revenue streams and diversify its products.
The increase in consumer spending helps to capture new customers and increase the market
share. There is an increased opportunity for the company to enter into a new emerging market.
Advancement in technology provides opportunity to the company to increase its market share by
emerging new and diversified products. The advancement in technology represents an
opportunity for the company to implement a differentiated pricing strategy into the new
emerging market (Jago et al. 2013).
PESTEL analysis of Australian Diary Farmers
The PESTEL analysis of Australian Diary Farmers identifies the political factors,
economic factors, social factors, technological factors environment factors and legal factors that
impact the activities and operations of the company.
Political factors
The Australian Diary Farmers requires analyzing the government priorities in order to
predict the trends (Beggs et al. 2015). There are price caps set by the government; hence the
company has to regulate its pricing policy. There is a strong protection by the government for
energy consumer, therefore company has to take measures and identify the unacceptable
outcome. The government keeps changes the rules to protect the consumers; hence, by analyzing
these government priorities, the company has to determine the trends (Beggs et al. 2015). .
Economic factors

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The economic performance of Australia is considered to be stable in the future years. The
expenditure of the government, the demand factor in the market is considered to be stable due to
increasing investment in the new emerging industries and the disposable income of the
consumers (Johnson 2016). The demand for the products offered by the organization would be
stable over the future years, as the targeted consumer’s purchasing behavior is considered to be
stable in the next few years. However, the growing inequality of income in the society can
negatively impact the sentiment of the consumers. Due to inequality of income, the buying
pattern of the consumers is differentiated (Oraman 2014).
Social factors
There is an increasing trend of income inequality in Australia. Australia is a growing
country therefore Australian Diary Farmers can utilize its trend to focus on the demographics and
crater to the various needs and demands of the people and consumers (Beggs et al. 2015). Due to
the increasing inequality of income, the organization has to focus mainly on the target customers
and increase the sales thereby(Jago et al. 2013). However, due to excessive migration, the ability
of the company to manage its operations could be a difficulty.
Technological factors
New innovations in the technology can enable the company to gain its market share, by
enhancing its productivity and efficiency in performance (Jago et al. 2013). However, due to
enhancement in technology, the customer expectations have increased. Due to increased
customer expectation, the organization has a pressure to enhance its performance and ensure
customer satisfaction to maintain its competitiveness (Oraman 2014).

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Environment factors
Renewable technology has been an increasing trend in Australia. There is greater
awareness among the consumers about the environmental impacts; therefore, the company
requires considering these factors. Due to increased awareness of the organization has to measure
its activites and limit its wastage and environmental impact. Waste management is an increasing
importance (Oraman 2014).
Legal factor
The government has implemented laws and strict norms for waste management. Moreover, the
environmental agencies regulate scrutiny and add to the cost of operations of the company. There
are various laws in Australia that the business needs to strictly follow (Ingram et al. 2013). Due
to the strict laws and norms of the government the organization has to follow them strictly, to
maintain its activities and performance in a legal way (Ingram et al. 2013).
Analysis of internal organization in Australian Diary Farmers
The Australian Diary Farmers is highly successful at executing the new projects and has
good returns on the investment. The company generates good returns on the capital expenditure
by building new revenue sources. The company is able to develop new and innovative products
in the market. The company has highly successful marketing strategies. The company has a
strong brand portfolio. They have a strong distribution network that has the potential to reach its
products in the market (Jago et al. 2013). The company has built its expertise in entering the new
markets and achieving success in the markets.

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However, the company has to handle various challenges and difficulties in handling its
day to day activities. The company has limited expansion capability in its adjacent product
segments. The demand forecasting of the company is lagging. The company is at financial crisis,
it has been analyzed the company’s financial planning is inefficient. Moreover, there are gaps in
the product range offered by the company (Luhmann, Schaper and Theuvsen 2016). The
profitability of the company and the net contribution is far below the industry average.
Resources, capabilities, core competencies and competitive advantage
The profitability of the organization is highly related to the peak production from the
cows and the productivity of the farm animals. Healthy and productive cows help to add to the
productivity of the organization. The core competencies of Australian Diary Farmers focus
highly on the nutrition of the cows and health utilizing dietary components in order to ensure
optimum production. The core competency of the Australian Diary Farmers is skeleton health
improvement of the cows. The second core competencies of Australian Diary Farmers is
oxidative health, it focuses on the protection of animals from the extremes of weather condition
and its effects on cows. The third core competencies is raising the cows without antibiotics and
managing the environment in order to meet the consumer demands and requirements. The
company ensures that that the cows are raised with immunity and are well maintained (Mcauley
et al. 2014).
The capabilities of Australian Diary Farmers include its excellent performance in the new
emerging markets. The company has been successful in building new revenue sources and
creating new customers. The company has a strong and reliable distribution channel which
enables the company to reach to its target audience in the potential market. The competitive

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analysis of the company is lower cost structure than competitors. Due to its well maintained
healthy cows the company is at its competitive advantage to offer premium quality milk products
(Macdonald and Rowarth 2013). Its management performance using creativity and innovation
provides competitive advantage to the company.
Recommendations for future strategic direction of Australian Diary Farmers
The company is recommended to build an internal feedback mechanism from the sales
team in order to counter the various challenges and hurdles faced by Australian Diary Farmers.
The product range offered by the company is limited; therefore it needs to diversify its product
range. The company required having a strong financial strategy in order to overcome the
challenges further; implementing a strong financial strategy will give the company a future
strategic direction. The resources of the company must be utilized efficiently (Moshin 2015).
The company needs to take initiatives to develop the products faster than the competitors of the
company. To develop the products faster the company has to implement new and advanced
technology and replace the old and incompetent machinery, this will help the organization to
produce products faster and reach them to the markets; this will further help the company to have
a strong competitive advantage.
The company needs to analyze the currents trends of the government’s priorities. There is
an availability of the infrastructure in Australia. In order to increase its competitive advantage
the company needs to access the present infrastructure in order to influence the growth in the
market of Australia. As the country is growing, the company can utilize this trend to crater to the

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needs and requirements of the consumers (Macdonald and Rowarth 2013). The company can
leverage to the expansion of its presence in the country.
Conclusion
Therefore from the above analysis it can be concluded that Australian Diary Farmers has
a strong strategic management inputs which helps the organization to ensure its competitive
advantage and its sustainability of the company. The report has analyzed the company’s
operations all across the company. The company has been able to implement its marketing
strategies which help to overcome the various challenges and difficulties of the organization. The
report has analyzed the business units, its products and service lines of the consumers. The report
has identified the business revenue units and discusses the importance of the business units.
According to the research, the company’s financial position has degraded as compared to the
previous years. Therefore it has been recommended that the company must take initiatives to
develop a strong financial plan for its future strategic direction. The report has analyzed the
external environment and its impact on the business. The report has discussed the political,
social, economic, technological, environmental and legal factors that affect the business
environment. Further the report has analyzed the company’s internal organization and has
discussed on the capabilities, core competencies and the competitive advantage of the company.
It has provided recommendations for the future strategic direction of the company.
References
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Australian dairy farmers to investigate animal welfare risks associated with increasing scale
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Cameron, B., 2015. Agribusiness outlook. Australian Insolvency Journal, 27(4), p.16.
HASSANZOY, A.P.N., 2013. Financial Management for a Small Agribusiness.
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