Suitability of Strategic Initiative for a2 Milk Company

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

1STRATEGIC MANAGEMENT
Response to question 4: Suitability of Strategic initiative
The evaluation of business strategies includes three phases, suitability, feasibility and
acceptability. For the test of suitability, a question needs to be answered, which is the
alignment of the strategy with external environment. The alignment could be understood by
the results of external analysis in which the business is operating and internal analysis for the
balance with the organization requirements. In the case of a2 Milk Company, the suitability
of the strategy initiative will be assessed in regards with the findings from the external
analysis. The new strategy, which is being recommended for the a2 Milk Company, is new
product development and market expansion strategy. The strategic initiative recommendation
of a2 Milk Company will be analysed by using the SAFE framework.
S- Suitability-
Industry life cycle portrays few stages indicating the position of the business. It
depicts where the business functions, grow and collapse in the industry. The stages are
introduction, growth, shakeout, maturity and decline. The business can be considered in the
shakeout stage as a2 Milk Company is the leader in the segment of products of a2 milk.
According to the industry analysis, it can be deduced that the entry barriers in the industry is
moderate as the one of the most important determinants, cost of initial investment is low in
the case of dairy companies. However, the presence of legal and environmental obligations as
well as the standards of food securities contributes to the complexity for the entrants
(Steyerberg and Harrell 2016). Buyer power in this industry is higher because of the
increasing competition in the Australian market (Banerjee 2018). The supplier power is low
because of the presence of large numbers of suppliers in the dairy industry. A2 Milk
Company have a strong base of supply chain, which facilitates the efficient distribution of the
milk, and milk products (Esty and Fisher 2019). The threat for substitutes is high as with the

2STRATEGIC MANAGEMENT
increasing technological advancement in Australia, big brands as Nestle, Lion Dairy &
Drinks and Bellamy’s Organic can easily introduced the products with a2 milk nutrients.
Moreover, the availability of options in the dairy industry is endless which marks the need for
the a2 Milk Company for incorporating continuous improvement process. The company is
the first mover for identifying and introducing the benefits of the a2 milk products but the
company needs to utilize its product technology into the extension of their product portfolio.
The strategic recommendation is to implement market development strategies by expanding
its business geographically and through introduction of new product. The new target segment
for the product can be concentrated to the infants (age- demographic segmentation) with
deficiency of nutritional consumption or suffers from conditions, which marks the need for
the benefits of a2 milk (Bodnár et al. 2018). The company can expand its business globally
by setting the well-planned supply chain in each state of the neighbouring counties. The
company can utilize the benefits from its financial backing in facilitating the expansion plan.
With the product development and market extension strategy the company will be able to
respond to the increasing competition in the market (Nystrom and Winston 2016). The need
for the new strategic implication can be reflected by the presence of highly competitive
market in the dairy industry and the presence of local brands. Low cost investment
requirement is also a threatening factor for the company as it allows new brands in the market
with different offerings as well as unique marketing communication strategies. According to
the PESTEL analysis of the Australian macro environment, it can be observed that Australia
depicts a moderate rate of employment (Mallawaarachchi et al. 2017). This can be used as an
opportunity for bringing positive change in the employment rate and to facilitate the
implementation of product development and market expansion strategy. The expanded work
force can help with improvement of production efficiency. The external analysis reflected the
positive effect of social environment on the business opportunities of a2 Milk Company.
With the increasing rate of migrants and diversity in the Australian population, the