Fonterra Co-operative Group Limited Strategic Analysis Report

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STRATEGIC ANALYSIS
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Contents
INTRODUCTION............................................................................................................................. 3
CURRENT STATE OF THE FONTERRA..............................................................................................3
SWOT ANALYSIS OF FONTERRA.....................................................................................................5
BUSINESS MODEL CANVAS OF COMPANY.....................................................................................7
FUTURE STATE FOR FONTERRA INCLUDING KEY PERFORMANCE INDICATORS.............................7
INVOLVEMENT OF STAKEHOLDER IN TRANSITION......................................................................10
RISK REGISTER FOR TRANSITION..................................................................................................11
CONCLUSION............................................................................................................................... 14
REFERENCES.................................................................................................................................15
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INTRODUCTION
A strategic plan is an approach which is formulated to accomplish the overall objective of the
company by analyzing market restrictions, resources, and demands of the stakeholders and so
on. Strategic analysis is an important step towards the success and growth of the company. The
strategic analysis consists of different elements used to attract and manage the financing for
achieving the objectives of the company. The report of strategic analysis consists of the analysis
of the Fonterra which is one of the biggest multinational company of the News Zealand selling
the milk and related products to more than 140 countries (Nilsson and Rydberg, 2015). The
company is a co-operative limited company where more than 10,000 farmers owned and
managed the company. To successfully achieve the goals of the company, it must do extensive
research for gaining in-depth knowledge of the industry and how it can be utilized to
accomplish the objectives.
CURRENT STATE OF THE FONTERRA
Fonterra Co-operative Group Limited is a multinational company headquartered in New
Zealand. The company is recognized as the largest exporter of dairy products where the
company successfully shared its high-quality products with more than 1 billion customers every
day. The whole company is owned and managed by 10,000+ farmers of New Zealand. The
company has its operation in more than 140 countries and out of which there are 30 are the
manufacturing sites where more than 16 billion liter milk is processed every day (Malik et al
2018). The success of the company is contributed by the people working mainly in Brazil, Chile,
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China, Indonesia as well as Malaysia. The company inspires and directs the farmers to follow
good management practices for increasing profitability as well as environmental efficiency.
The company’s primary focus is to produce and deliver quality milk from the stage of
manufacturing to delivering at the door of customers. The farmers are following the highest
standards of quality control for farm testing as well as environmental assessment (O'Neill,
2017). The Fonterra is mainly working on three major food safety measures which include:
Safety of food: manufacturing and supply of quality and safe milk and milk products
The health of consumers: manufacturing and supply of nutritious milk products
The satisfaction of consumers: the goal is to continuously satisfy and exceed the expectations
of the customers
About 95% of the milk was processed in New Zealand and the company also working on
sustainable operation and the result can be represented through the following data:
The emission from the manufacturing reduces by 5% from 2015 to 2017 and it continuously
makes the strategy to reduce it by 30% by 2030. The company also focuses on diabetic and
high-cholesterol patients by launching Anlene Hear-Plus in Malaysia. From the current data, the
company exports the milk and milk products to more than 140 countries and employs more
than 22,000 employees at 30+ manufacturing sites (Bathurst and Galloway, 2018).
Currently, the company is working on three aspects to gain a competitive advantage with the
help of cost leadership which is shown below:
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Figure 1: Current strategy of Fonterra
[Source: Fonterra, 2017]
SWOT ANALYSIS OF FONTERRA
SWOT-analysis helps to identify the strengths, weaknesses, opportunities, and threats of the
Fonterra Company.
Strengths
 The superior quality of the product
The main focus of the Fonterra is to manufacture and deliver a high quality of product to its
customers. Even the company is recognized for its quality milk and milk products and the
company uses it as a competitive advantage over its competitors. This is the reason, the
company safeguard the quality of their goods and takes all possible steps to maintain the trust
of the customers (Sultana, 2019).
 Large investment in research and development
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The company continuously invests in R&D department to enhance the quality of the product.
Milk and milk products bring lots of opportunities for the company to bring innovation to their
products. Not only this, but the Fonterra also made the partnership with different individuals,
groups or top universities to make use of the latest technology for grabbing innovation
opportunity.
 Variety of different products
The product portfolio of the company is very large selling all products which are manufactured
with the help of milk. The company tries to satisfy the needs of all customers from different
countries and bring changes in the ingredients and procedure to manufacture as per the needs
of demographic location (Stefánsson, 2015).
Weaknesses
 Weak relationship with the supplier
Due to intense competition in the dairy industry, it becomes difficult for the company to
maintain a long-term relationship with the suppliers because the competitors of the Fonterra
easily pinch the suppliers by offering them better prices.
 Too much dependent on ecology and climate
The whole process of milk manufacture depends on the ecology and climatic condition which
usually affects total output. This lowers the productivity and efficiency of the company as
compared to its competitors.
Opportunities
 Increasing demand for healthy and organic food
Due to various health issues, consumers are adopting a healthy lifestyle by consuming organic
and nutritional products. This will be a great opportunity for the company to manufacture the
milk product of low fat or less cholesterol (Jiang et al., 2018).
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 Product innovation
The company has its operation in 140 countries and all have different taste and preference,
manufacturing the milk and milk products according to their taste will help it to expand its
current business.
Threats
 Highly regulated market
The food industry is highly regulated by the government of different countries. In addition to
this, these regulations are continuously changing and adapting the food products according to
these regulations becomes difficult for the company.
 Increasing competition and private labeling products
The company faces the problem of private labeling products i.e. local players of the particular
country gives tough competition to Fonterra.
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BUSINESS MODEL CANVAS OF COMPANY
The Business Model Canvas
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Designed for: Designed by: Date: Version:

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FUTURE STATE FOR FONTERRA INCLUDING KEY PERFORMANCE INDICATORS
Fonterra is a manufacturing and retailing industry that serves dairy products worldwide. The products served by Fonterra include
milk, butter, cheese and ice-cream across the world and has many subsidiaries and joint ventures that benefit Fonterra in expanding
the business (Fonterra, 2019). The motive of the organization is serving fresh and healthy dairy products across global while
maintaining the environment and hygiene. The performance of the organization depends on the working criteria, strategy and
models used by the company for progress and productivity. There are many models that Fonterra can adopt for performance
improvement and maintaining the popularity in the commercial world (Charles Jr et al., 2017).
ANSOFF MATRIX
Ansoff matrix is significant for market planning in a strategic form. The method focuses on opportunities for growing revenue and
business by developing new products and services that can be adopted by analysis and evaluation of the current market. Ansoff
matrix will help Fonterra company in evaluating opportunities for increment in sales through various combinations for a new
market. The variety of products and services invites the customers towards organization and benefits in business growth (Schawel
and Billing, 2018). The implementation of the Ansoff matrix for Fonterra Company is as follows-
Market penetration
Market penetration focuses on selling the existing product in the current market. For that, the analysis and evaluation of the market
and products are necessary for Fonterra company. Proper analysis and evaluation will benefit the company in understanding the
trend and market need (Dawes, 2018).
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Market development
The market development will benefit Fonterra Company in selling the existing products in a new market and contributes to
expanding the business at the global level. For that Fonterra needs to focus on the new market for analyzing trend and demand of
the market (Dawes, 2018).
Product development
Product development strategy will benefit Fonterra in selling new products in the existing market. The innovation and selling of new
products contribute to increasing the number of customers and products in the market (Gurcaylilar-Yenidogan and Aksoy, 2018).
Diversification
Diversification relates to the selling of new products in a new market that will enhance the chances of business expansion along with
popularity. The innovation of new product will benefit the company in increasing number of customers which is necessary for
business profit and productivity (Gurcaylilar-Yenidogan and Aksoy, 2018).
PORTER’S GENERIC MODEL
Porter developed a generic model business strategy that will help the organization in adopting a competitive advantage. The model
is based on four factors that will benefit the Fonterra Company in business enhancement (Omsa et al., 2017). The porter generic
model for Fonterra Company is as follows-
Cost leadership
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Cost leadership focus on manipulating the prices of the products that contribute to increasing the sale and profitability. For the
achievement of cost leadership, Fonterra company needs to reduce the prices of the products or needs to decrease the
manufacturing cost that helps in increased sales and company status (Omsa et al., 2017).
Differentiation
Differentiation relates to making the product different and unique from others. For the adaptation of differentiation, Fonterra
company needs to adopt new idea and creativity for making the products unique (Omsa et al., 2017).
Focus
The strategy of focus relates to analyzing and fulfilling the demand of customers and the market. Fonterra needs to understand the
need for market by adopting proper strategy and methods for analysis and evaluation (Omsa et al., 2017).
KEY PERFORMANCE INDICATORS
 Profit
 Sales by region
 Net promotes score
 Employee turnover rate
 Employee satisfaction
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