Bega Cheese: A Strategic Audit Addressing Challenges and Solutions

This case study presents a strategic analysis of Bega Cheese, an Australian dairy company, focusing on the challenges it faces and potential solutions. The analysis identifies issues such as the risk of diversification through acquisitions, increasing competition, changing economic conditions, debt management, and reliance on global milk supply. To address these challenges, the study proposes strategies including product diversification, competitive strategies like differentiation and cost leadership, and debt reduction methods. It also emphasizes the importance of innovation, effective communication, and networking to navigate economic downturns and maintain a competitive edge. The case study concludes by highlighting the need for Bega Cheese to adapt to seasonal demands and invest in research and development to ensure sustainable growth and profitability in the dynamic dairy industry.

Running Head: BEGA CHEESE 0
Management

BEGA CHEESE 1
Contents
Introduction................................................................................................................................2
Issues and problem.....................................................................................................................2
Strategies to overcome all the issues and problem.....................................................................4
Fallouts.......................................................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................9

BEGA CHEESE 2
Introduction
Bega Cheese is an Australian Cheese Company in the New South wales, town of
Bega. It was founded as the agricultural cooperative that is owned by the dairy suppliers. In
the year 2011, it became public company when it listed on the “Australian Securities
Exchange.” The main business segment includes the dairy ingredient such as Cream Cheese,
Cheese, as well as powdered milk (Lindberg, Nichols & Yam, 2017). From the report, it is
founded that Australian Dairy industry consists of the several food items. Bega Cheese put
emphasis on the different taste as well as health supplements. It has become a market leader
due to its effective distribution network and proper sales. It also has skilled and competent
staff in its firm. Bega Cheese is number one cheese manufacturing brand based in Australia.
In the case study, issue of recession has been presented. Therefore, any recession in the future
might affect the growth and profitability of Bega Cheese limited.
Due to the key player in the dairy industry on global scale, it has earned a great
reputation in the dairy industry. Its strong market presence over Australia and overseas helps
it in launching new products. It is also founded that demand of dairy product is regularly
increasing that presents several opportunities for the Bega Cheese. In the first section, the
discussion is carried on the mission statement and SWOT analysis of the Bega Cheese. It is
also founded that competition is also increasing to a great phase that is putting the threat to

BEGA CHEESE 3
Bega Cheese. Besides this, economic recession and debt is also one such issue that is being
described. The solution to these problems has also being described further.
Issues and problem
 Risk of diversification- It has been seen that Bega Cheese planning to make the
largest acquisition by meeting with Mondelez, that is one of the largest snack food company.
By taking this, the major issue arises with Bega Cheese to change its business model (Dale,
Robinson, Fallon, Cameron & Crotts, 2016). By bringing this change, the problem arises in
terms of new skills, new people, and new strategy. By undertaking all these, it is also required
to deliver strong financial result. It was also not sure how the Bega employees, suppliers as
well as investors will respond to the news of Bega regarding venturing outside of the dairy
industry.
 Increasing competition- It is one of the concerning issue with the Bega Cheese. It has
been founded that the on-going turmoil is creating the intense competition. Due to entering in
the processing business, it is becoming difficulty for the company to compete with the largest
processors of Australia. Whenever, any company enters into any new business, it is obvious
that it will face the high competition from established business operation. In addition, one of
the strong products, vegemite has faced the stiff competition in the spreading breakfast
category from its very old competitor- Marmite. In the current time, every new firm is

BEGA CHEESE 4
coming up with new idea that possesses threat for the old firms to grow their business in spite
of reputation and strong market presence. Therefore, for sustaining in market, firms are
required to cut down their prices even if they are not getting enough profit out of that
(Hutchinson, 2016).
 Changing economic condition and trade issues-it is founded that changes in economic
condition led to the dairy crisis. Due to this, the prices also falls that has affected the growth
of Bega Crisis. Due to this, farmers are also facing the low demand. It has also led to the
perfect storm. It has also resulted in tension and anger across the supply chain (Gordon,
2017).
 Issue of debt- at the time of economic recession, it is founded the company has faced
debt issue. It was sure that Bend will definitely lend up around A$500 million, but the
question arises is that how would it will repay the same debt. It was not ready with quick
solutions. The only back up is the selling of assets, issue of equity or debt, or the combination
of these. In this way, debt is then major issue that Bega Cheese is facing and becoming
essential to overcome (Esta, 2017).
 Bega Cheese has very less control on the global supply of milk as it rely more on
export for bringing business growth. It is true that stockpiling as well as oversupply of
product can lead to the collapse in the industry. It the effects are more negative, and then it
will also lead to more negative effect on the growth of industry. Investment in research
development is also not enough as compare to other growing players in same industry (Burke

BEGA CHEESE 5
& Noumair, 2015). Even though it is spending some amount on the research and development
but it is not going well as compare to its competitors. Therefore, sudden changes in the policy
of government is also one such issue that dairy industry faces (Brannen, 2017).
 It has been seen that the day’s inventory is high as compare to its competitors. Due to
this, it has to raise some amount of capital in order to invest in channel. This can affect the
long-term growth of the company. Besides this, it also has some gap in its range of products
that is being sold. This gives the chance to competitors to use the technique and grow in way
that is more effective.
 Tough times in supply of milk- Bega Cheese has also warned that the increment in
pressure on the dairy farmers due to drought as well as increasing cost of grain for feeding
their cattle will create the high competition for the milk.
Strategies to overcome all the issues and problem
 Product diversification strategy- This strategy is a part of change management that
assist the organization to strengthen the competitive edge. In order to overcome the issue of
getting new staff, skills and changing business model, this would be effective. Through this
strategy, it can extend the target customer base through the introduction of several products.
Besides this, the issue of new skills and new people can be removed by the hiring of
competent and skilled people (Bowen, Baker & Powell, 2015). It can also develop the
interpersonal relationship by the establishment of communication transparency. Therefore, it

BEGA CHEESE 6
is required by the human resource management of Bega Cheese is required to re-organize the
management process for arranging the work activities. It is also necessary to schedule the
business operation in order to implement the change. In addition to this, it can also provide
the training to the workforce who will be involved in the acquisition process (Chang, 2016).
From the history of Bega Cheese, it has been seen that it effectively help the farmers at the
time of crisis. It is also able to maintain the strong relationship with the supplier of mil that is
the main component in its strength of business (Gyan, Brahman & Bakri, 2017). Moreover,
the executive and sales team of Bega Cheese an also gather the sufficient knowledge
regarding the new products. It will prove to be fruitful for the Bega Cheese in order to
approach the target customers. The ability to grow long-term partnership in effective manner
is also one such strength of Bega Cheese. Due to this, it can also pool its resources and
develop the technology by doing joint investment (Lo & Hsu,2016).
 Competitive strategies- In order to overcome from the issue of competition, it can use
the several competitive strategies. The first strategy that can be used to overcome the
competition is differentiation strategy (Linton & Kask, 2017). This strategy put emphasis on
development of competitive advantage by way of marketing and making available a better
product as well as service. For this, it can also do the research that will lower the price
sensitivity. In addition, cost leadership strategy will also be fruitful in order to beat the
competition. It is true that two options lies with businesses in order to increase profit that is
either decrease the cost or increase the sales. Therefore, Bega Cheese can put focus on

BEGA CHEESE 7
acquiring the raw material at cheap rate (Kharub, Mor & Sharma, 2018). Addition, it is also
required to use the best labour in order to transfer the raw material into the valuable final
product. Thus, this strategy can prove to be beneficial for Bega Cheese to overcome from the
competition. In addition to the both, focus strategy can also be used. This strategy can be
applied for business tailoring the marketing services as well as endeavours to one and much
more designated market segment. In focus strategy, it can also use the segment of this focus
strategy that is cost focus strategy. By using this strategy, Bega Cheese can take the
advantage over its competitors in a particular target segment (Kurt & Zehir, 2016).
 Bega Cheese can reduce the issue of debt in number of ways. The best way to reduce
the debt is reducing the unnecessary expenses and freeing up the cash so that it can save
more. It is also feasible to find out the primary roots behind the debt that have incurred in the
organization (Davis, Shepherd & Mark, 2017). This will assist the company not to repeat the
same mistake in future. When company will recognize the problems in such areas, it should
solve this with utmost care in order to get more and more money. It can also sell the scrap
items as well as unnecessary items for clearly the debt properly. Redesigning of budget plan
will also be helpful in clearly the debt. It becomes essential to plan the budget for any
expense of the company by keeping in mind the debt on company. Bega Cheese can follow
the same and business profit can also be planned that will include the monthly cost (Sloman,
2016). It will result in saving some amount and by this; it will become easy for the company
to pay interest for the firm’s debts. Besides this, an effective communication with the

BEGA CHEESE 8
creditors will also bring positivity in the debt that Bega Cheese has to pay. Due to good
reputation in the market, it can easily explain the financial condition that it is facing. It is also
a better option to approach the creditors Relief Firm for settling the debt of its firm (Noe,
Hollenbeck, Gerhartm & Wright, 2017).
 There are number of ways to overcome from the problem of recession and crisis. It is
true that strengthening the business does not only involve the financial management. It also
includes some of the strategies to broaden as well retain the customer base. It can make use of
innovative marketing strategies that will help in coming up with innovative ideas. By
properly communicating all the things with the staff members, it can boost the motivation and
morale of employees to bring proper changes at the time of crisis (Talbot-Walsh, Kannar &
Selomulya, 2018). Networking at the time of economic downturn can also prove to be fruitful
by understanding how other firms are coping. It can also discover the new customers, staff,
and opportunities with the minimum cost. Regular growth of local distributors presents the
threat in some of the market as the competition is paying higher amount to margin to the local
distributors.
 It is true that demand of high profitable and growing products is seasonal in nature.
Therefore, any type of unlikely event at the time of peak season can affect the profitability
and growth of company in short as well as medium term. There is no continuous supply of
innovative products. From the few years, the company has developed several products but
those products are often response to the growth by many other players. Secondly, the supply

BEGA CHEESE 9
of those new products is not regular that leads to low and high swings in the number of sales
over some period. Therefore, at the time of crisis, it can start the other business due to its
reputation. Therefore, it can use such strategy in which a backup business will always be with
Bega Cheese at the time of uncertainty (Coetzee,2018).
 It can also generate a pool of high skilled workforce through the successful learning
program and training. Bega Cheese Limited also invests huge resources in the training and
development of its employees. This practice results in getting high skilled and competent
workforce. Economic up stick and increment in the spending of customers, after the
economic recession has allowed the growth in this industry. Therefore, this is a better
opportunity for the Bega Cheese uses its innovative technologies to growth and beat the
competitors. Therefore, enough investment in making best use of technology can also prove
to be beneficial for the company to overcome of the issue. Decrease in the overall cost of
transportation due to the lower prices of shipping can also bring down the cost of Bega
Cheese. Therefore, this creates an opportunity for the Bega Cheese to boost its profitability or
pass the gain to customers for gaining some market share. Development in market will lead to
the dilution of competitor’s advantage (Gracia, 2018). It will enable the Bega Cheese to
increase its competitiveness as compare to its most of the competitors in the market.
 Companies can make the advantage of pressure by adopting several innovative
measures. Therefore, at the time of drought, Bega Cheese can make increment in its supply of
milk by making the effective use of such situation. It can do the proper research for getting

BEGA CHEESE 10
several measures related to such situation (Shah & Gupta, 2018). Therefore, appointment of
such time at the time these situations can prove to be fruitful for the companies.

BEGA CHEESE 11
 The new advanced technologies also provide an opportunity to the Bega Cheese
Limited to practice the differentiated pricing strategy. It will assist the firm in maintain its
loyal customers with the better service. In addition, it will also lure the new customers
through other value propositions. In the last few years, Bega Cheese has also invested some
of the amount in the online platform. Due to thus investment, various sales channels have
come for the Bega Cheese Limited (malodiya, 2018). In the coming years, Bega Cheese will
leverage this opportunity in knowing its customers effectively and serving their needs by the
use of big data analytic.
Fallouts
It is true that every solution create some kind of problem. Every strategy has some
pros as well as cons. If Bega Cheese will apply any strategy, it might happen that it will not
work properly. However, it is not necessary to show too much concern on the side of board of
directors. It is because risk is part of every business.
 Diversification is a form of corporate strategy that is basically designed for improving
the opportunities for profitability and growth. However, the negative side of this strategy is
that it requires the additional resources as well as management. Therefore, it might be
possible that its resources as well as expenses on additional management might get waste if it
will not work. Besides this, if the new market strategy fails, it can result in the increment of

BEGA CHEESE 12
risk of reduced profits because company must have incurred some cost with no gain in
revenue.
 Competitive strategy has several negative outcomes attached with the firms. The
focus of this strategy is on delivering the value to customers. However, it might be possible
that this value might change. Customers’ expectations are also changing over the time. It is
right that some parts of the competitive strategy depend on the particular supplier. Therefore,
if any supplier goes out of the business then the firm is required to adjust its strategy. In this
way, every strategy has some negative outcomes also that firm can face after the adoption.
 Adoption of new business model might fail- It might be also possible that when
company will bring change through any new business model, the employees of the firm can
resist it. Therefore, resistance to change is the major risk associated with the change
management strategy.
 Negative results by providing training- When Bega Cheese will provide training to its
employees at the tough situation, it is not very possible that they will come up with positive
results only. Therefore, it depends on the learning capacity of the person how much he or she
can grab and can apply to the business situations. This is not such area of concern, as training
is essential part of every organization whenever any change occurs outside of inside the
organization.
 Failure in marketing strategy- The adoption of marketing strategies by dairy industry
might fail due to several reasons such as improper communication, meaning not clear or

BEGA CHEESE 13
limited reach. All these issues by the adoption of marketing strategy might results into lower
customer base or the Failure to announce any product in the market.
Conclusion
In the limelight of above discussion, Bega Cheese is one of the growing dairy
industries of Australia. I have strong market presence in the Australian dairy industry with
wider customer base. Strong supplier base and good reputation is also the essential part of its
growth. Besides this, it is also facing several issues such as intense competition, debt issue,
trade issue, and economic recession. All these problems are affecting the growth of company
that requires certain strategies to adopt by the firm. Among all the strategies, diversification
and cost leadership can prove to be effective for reducing such issues as well as problems. In
this way, kit is clear that in order to become a strong competitor in the market, there is need
to adopt some strong strategies.

BEGA CHEESE 14
References
Bowen, H. P., Baker, H. K., & Powell, G. E. (2015). Globalization and diversification
strategy: A managerial perspective. Scandinavian Journal of Management, 31(1), 25-
39.
Brannen, J. (2017). Mixing methods: Qualitative and quantitative research. Routledge.
Burke, W. W., & Noumair, D. A. (2015). Organization development: A process of learning
and changing. FT Press.
Chang, J. F. (2016). Business process management systems: strategy and implementation.
Auerbach Publications.
Coetzee, K. (2018). Making a difference with dairy. The Dairy Mail, 25(1), 11-13.
Dale, C., Robinson, P., Fallon, P., Cameron, H., & Crotts, J. (2016). Business planning and
strategy. Operations Management in the Travel Industry, 21.
Davis, T. D., Shepherd, J., & Mark, T. B. (2017). Managing Costs and Liquidity During Low
Commodity Prices. Journal of ASFMRA, 77-96.
Esty, B. (2017). Bega Cheese: Bidding to Bring Vegemite Back Home. HBS Finance Case,
218-001.
Garcia, E. (2017). Continuing crisis in the dairy industry. Green Left Weekly, (1124), 11.

BEGA CHEESE 15
Gordon, A. (2017). Case study: formula safe foods—canned pasteurized processed cheese.
In Food Safety and Quality Systems in Developing Countries, Volume 2 (pp. 149-
184). Academic Press.
Gyan, A. K., Brahmana, R., & Bakri, A. K. (2017). Diversification strategy, efficiency, and
firm performance: Insight from emerging market. Research in International Business
and Finance, 42, 1103-1114.
Hansen, B. G., & Jervell, A. M. (2015). Change management in dairy farming. United
Kingdom: Routledge.
Hutchinson, N. (2016). Batten down the hatches: The dairy industry in
crisis?. Geodate, 29(3), 17.
Kharub, M., Mor, R. S., & Sharma, R. (2018). The relationship between cost leadership
competitive strategy and firm performance: A mediating role of quality
management. Journal of Manufacturing Technology Management.
Kurt, A., & Zehir, C. (2016). The relationship between cost leadership strategy, total quality
management applications and financial performance. United Kingdom: Routledge.
Lindberg, R., Nichols, T., & Yam, C. (2017). The healthy eating agenda in Australia. Is salt a
priority for manufacturers?. Nutrients, 9(8), 881.

BEGA CHEESE 16
Linton, G., & Kask, J. (2017). Configurations of entrepreneurial orientation and competitive
strategy for high performance. Journal of Business Research, 70, 168-176.
Lo, F. Y., & Hsu, M. K. (2016). Business Group's Diversification Strategy and
Sustainability. International Journal of Business and Economics, 15(1), 35.
Malodiya, D. (2018). HUMAN CAPITAL–IMPORTANCE TO
ORGANIZATION. organization, 5(5).
Muminović, S. (2016). EFFECT OF DEBT REDUCTION ON PROFITABILITY IN CASE
OF SLOVENIAN DAIRY PROCESSING MARKET LEADER. Journal of
Accounting and Management, 6(1), 21-32.
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.
Pathak, N., Hagare, P., Guo, W., & Ngo, H. H. (2015). Australian food processing industry
and environmental aspect–a review. In International conference on biological civil
and engineering (BCEE-2015) Feb (pp. 3-4).
Shah, C., & Gupta, A. (2018). Training and Its Impact On Organization
Effectiveness. Sankalpa, 8(1), 94-102.
Sloman, M. (2017). A handbook for training strategy. United Kingdom: Routledge.

BEGA CHEESE 17
Talbot-Walsh, G., Kannar, D., & Selomulya, C. (2018). A review on technological
parameters and recent advances in the fortification of processed cheese. Trends in
Food Science & Technology.
Talbot-Walsh, G., Kannar, D., & Selomulya, C. (2018). A review on technological
parameters and recent advances in the fortification of processed cheese. Trends in
Food Science & Technology.