Strategic Analysis: Australian Dairy Industry - Case Study Assessment

This case study examines the Australian dairy industry, focusing on its value chain, competitive forces, and strategic challenges. The analysis begins with an overview of the industry's key players, including suppliers, farmers, and milk collection centers. It identifies technology development as the most lucrative part of the value chain. A Porter five forces analysis reveals barriers to entry due to established brands and distribution channels, the high bargaining power of suppliers and customers, and the impact of substitute products. The study highlights the strong rivalry among key competitors like Murray Goulburn, Lion Dairy and Drinks, and Lactalis. The conclusion emphasizes the need for technological advancements to navigate market competition and meet customer demands. The case study provides insights into the industry's dynamics, strategic positioning, and potential for growth, making it a valuable resource for students studying business development and strategy.

Running head: AUSTRALIAN DAIRY INDUSTRY
AUSTRALIAN DAIRY INDUSTRY
Name of the Student
Name of the University
Author Note

1AUSTRALIAN DAIRY INDUSTRY
Table of Contents
Discussion........................................................................................................................................2
Construction of Industry Value Chain.........................................................................................2
Identification of Lucrative Part of Value Chain..........................................................................2
Porter five forces analysis............................................................................................................3
Barriers to Entry and the threat of new entrants......................................................................3
Key supplier and their relative power......................................................................................3
Key customers and their relative power..................................................................................4
Key substitutes and its impact.................................................................................................4
The rivalry between key competitors......................................................................................4
Conclusion...................................................................................................................................5

2AUSTRALIAN DAIRY INDUSTRY
Discussion
Construction of Industry Value Chain
In the respective scenario, the key players in the value chain of the Australian Dairy
Industry include suppliers, farmers of various sizes as well as milk collection related centres
which are suitable for the growth of the firms in the competitive business environment.
Moreover, the primary and secondary activities of the value chain of the company help in
providing water for enhancing the production of milk by the different dairy cows. During the
processing of the functions, it can be seen that there are different kinds of maintenance related
aspects, which needs to be followed for managing the entire profitability of the firms
appropriately and it will be suitable for the enhancement of the different activities suitably.
Identification of Lucrative Part of Value Chain
While analysing the value chain, the most lucrative part of the same is the Technology
Development Aspects, which will be suitable for the growth of the dairy industry in Australia in
a suitable manner. It can be seen that in the value chain related aspects of Dairy Firms, the
development of the technological advancements creates a strong influence on the firms, which
enhances the overall productivity, which will be influencing the growth of the firms
appropriately, and it will be making the firms work more effectively. There are different
advancements in the technology that includes the processing of the dairy products needs proper
equipment along with software and hardware which needs to be enhanced through the proper
enhancement of the practices which will be suitable for the success of the firms in the
competitive business environment.

3AUSTRALIAN DAIRY INDUSTRY
Porter five forces analysis
Barriers to Entry and the threat of new entrants
It occurs when a new competitor enters to the same market. It depends upon new entry
and exit barriers. New entrants are not significant competitive pressure in the Australian dairy
industry because Murray Goulburn, Lion Dairy and Drinks, Fonterra and Lactalis this four
company dominate with their strong brand image and vast distribution channels. Therefore, the
dairy market in Australia is highly saturated. All of these four company has a significant brand
image and market popularity, which makes it difficult for other competitors to enter the market.
All four companies are ancient and have a global brand identity, which provides a barrier to
other new entrants.
Key supplier and their relative power
Suppliers are the major strengths hence suppliers are essential factors in any company.
Australian dairy industry believes that suppliers are significant in the production of milk. The
dairy industry needs land, pasture, water, milking equipment, fertilise cow and market access.
The major feed is pasture from the firm. Pasture rate is high in the dry seasons because it scares
at those times. Grain seeds are also very costly which is used for cow health. It is essential to
create long-term relationship with providers so that quality of raw material is optimum. Some
milk-manufacturing firms have entered into legal contact with suppliers. The suppliers
bargaining power is high for this dairy industry as the suppliers can supply their raw materials to
multiple buyers.

4AUSTRALIAN DAIRY INDUSTRY
Key customers and their relative power
The milk processing industry has subsequently high bargaining power because there is
many substitute products are available in the market. The customers have various requirements
of the milk and hence expect their providers to distribute the milk accordingly by taking care of
the quality and quantity of milk supplied. In Australia, most of the people are prefer to consume
fresh milk. Now a day’s people have been more health conscious and for that reason butter and
cheese, consumption gradually decreases day by day.
Key substitutes and its impact
The products of the Australian dairy industry faces many threats from the substitute’s
foodstuffs. There are many substitutes’ foodstuffs are available in the Australian dairy market
such as- cheese, Yoghurt, Whey, milk powder, fresh milk, butter and many more. These
substitute products of milk are getting popular rapidly and pose significant threats to the dairy
industry of Australia.
The rivalry between key competitors
The dairy industry in Australia is facing strong rivalry both at national and at the
international level. There is also hard competition among the national or regional level. The
Australian dairy industry facing hard rivalry after the entrance of Murray Goulburn. Murrary
Goulburn is now the biggest milk supplier in the Australian dairy industry. They produce around
35 per cent of total milk in Australia. Murray Golburn Company uses one other brand

5AUSTRALIAN DAIRY INDUSTRY
Devonadale, which constitute 60 per cent milk sales in the Australian market. Lion dairy and
drinks is another main competitor in Australian dairy industry. It is one of the most abundant
milks and food manufacturers in Australia. It has various range of brands and product. They
operate their business in several counties- such as Australia, New Zealand, Indonesia and
Malaysia. LDD produces 1 billion liters milk from 550 farmers across Australia. Lactalis is also
a strong competitor in Australian dairy. Now it is the world-leading cheese brand. Therefore the
rivalry in the dairy industry is very competitive.
Conclusion
Therefore, from the above, it can be concluded that from the case study, there are
different competitors present in the market that can affect the growth of the firm negatively. In
such scenarios, the companies, which are the dairy industries, need to adopt the technological
advancements processes, which will be playing a suitable role in managing the growth prospects,
and it will be beneficial in meeting the different demands of the customers in an appropriate
manner. In addition, it can be seen that there is strong rivalry among the present competitors,
which needs to be reduced through improving the different aspects through development of the
proper technologies, which can be beneficial in becoming competitive and suitable for the
enhancement of the practices for determining their position in the competitive business
environment.