Case Study: A2 Milk Company's International Strategic Management

This case study examines the international strategic management of A2 Milk Company, an Australian company known for its A2-based dairy products. The analysis covers the company's micro and macro environments, highlighting factors such as suppliers, customers, competitors, political and economic influences, social trends, and technological advancements. A2 Milk's competitive advantage, derived from its differentiation strategy and focus on a niche market, is discussed. The company's growth strategies, particularly market development through international expansion into markets like China, are explored. Strategic recommendations are provided, including investing in new technologies to improve production efficiency and expanding e-commerce operations to enhance accessibility and competitive edge. The case study concludes by emphasizing the potential for A2 Milk to introduce new organic product lines to further capitalize on health-conscious consumer trends. Desklib provides access to similar case studies and solved assignments for students.

INTERNATIONAL
STRATEGIC
MANAGEMENT

Introduction
■ In Australia, more than 6000 dairy farmers are responsible
for producing nearly 10 billion litres of milk annually.
■ In 2000, the A2 Milk Company was founded known for
creating infant formula and also publicly listed in ASX 200.
The company headquarter is situated in Sydney, Australia.
■ The company earned net revenue of A$337.3 million in the
year 2016.

Introduction
■ It produces dairy products supplied both locally and
internationally and majority of its activities are conducted
in countries like US, UK, China and Australia.
■ The company already gained exceptional growth and now
planning to move with launching new product line
consisting of nutritional and organic products.
■ In response with the growth plan, the company will
continue to tap various international markets to ensure its
sustainability in long term.

Micro environment
■ In relation with A2 Milk microenvironment, the first
environment factor is supplier. There are 28 qualified milk
dairy farms produces natural and pure a2 milk from
specifically selected cows right throughout Australia.
■ In 2011, the a2 Milk Company also develops a joint
venture with a major British milk supplier i.e. Muller
Wiseman Dairies to process market and sell its A1 protein
free products in Ireland and Britain.

Micro environment
■ In relation to the customers, the company are serving to
the people of Australia, China, New Zealand, Malaysia,
Hong Kong, Singapore, USA and UK.
■ Other than this, the increasing presence of intermediaries
and milk brokers in raw milk acquisition markets also has
the potential to promote competition. In relation to
competitor, it includes Fonterra, Dairy Farmers, Fonterra
and Pura.

Macro environment
■ Political Factors – In Australia, the dairy organizations were
permitted to set their own farm gate prices hence allowing adequate
supply of milk. In addition, the government policies were in favour of
A2 Milk business such as rivalry policy as it will reduce unrealistic
competition
■ Economic Factors – Purchasing power is one of the factors that is
highly influencing the dairy industry. As intake of dairy products is high
in Australia, purchasing power will also be high. Moreover, A2 Milk
Company can still get huge success in the market due to rise in
demand for milk from China. It was also identified that A2 Milk share
went up to 190% when it noted in ASX.

Macro environment
■ Social Factors – When it comes to food consumption, Australian
consumers are more intended towards consumption of healthy products.
In 2017-18, it was founded that two third of Australian adults (67%) were
obese or overweight. In extent with new development, this health
perception force producers to sell low fat dairy products
■ Technical Factors – In dairy industry, one of the technological
advancement can be seen in fat testing introduction which allow various
organizations to test the fat levels in the dairy industry. However, A2 Milk
organisation sustains on 100% natural milk taken out from particular
cows that do not include genetic engineering and technological process.

A2 milk Competitive advantage
■ The company gained competitive advantage with the help
of differentiation strategy as the producers of premium
A2-based milk are very few. In addition, the A2 milk is
serving to niche market where the company targeting
particularly middle-upper class customers.
■ In comparison with the competitors, the company also
providing e-commerce platform that allows the customers
to reach their product in an effective way

A2 Milk Growth Strategies
■ According to the growth strategy matrix presented below,
alternative strategies for the company are based on two key
factors that are products and services that the company is
offering to the market and the target market.
■ A2 Milk Company adopts market development. The company is
expanding in the international market with high rate. This can be
reflected in the past strategy decision of the company. For
instance, the company is serving the Asia Pacific region and the
company has entered into the Chinese market with the objective
to increase the sale of the company

A2 Milk Growth Strategies
■ Considering the product strategy of the company includes
providing best quality milk in its purest form and key
major objective of the company while expanding in the
Chinese market was to make available best quality cow
milk to the residents and children of the international
market

Strategic Recommendations
■ The first strategic recommendation is to invest in new
technologies to raise efficiency in production. With the aid of
digital technologies, data gap in dairy farming can be bridged.
For instance, using wearable sensors to monitor individual cow
health.
■ In addition, the company needs to expand its business
operations more on e-commerce platform other than its own
website as it will give them accessibility competitive
advantage.
■ A2 Milk can also introduce new organic product portfolio

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