Strategic Analysis: Evaluating Al Ain Dairy Using Porter's Five Forces

This report provides a strategic analysis of Al Ain Dairy, the largest dairy in the UAE, using Porter's Five Forces framework. It examines the competitive dynamics within the dairy industry, including the bargaining power of buyers and suppliers, the threat of substitute products, the threat of new entrants, and the intensity of rivalry. The analysis highlights Al Ain Dairy's strengths, such as its strong brand image, innovative products like camel milk ice cream, and established relationships with suppliers. The report also discusses the increasing demand for camel milk products and Al Ain Dairy's use of spray drying technology. Furthermore, it emphasizes the competitive advantage of Al Ain Dairy due to its longer presence in the industry and its substantial market share. The report concludes with a discussion of the opportunities for Al Ain Dairy to expand its market share and dominate the GCC dairy market.

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Al ain Dairy
Strategic Management

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Contents
Introduction................................................................................................................................2
Porter’s five forces.....................................................................................................................2
Power of buyers......................................................................................................................2
Power of suppliers..................................................................................................................2
Threat of substitute products..................................................................................................3
Threat of new entrants............................................................................................................3
Intensity of rivalry..................................................................................................................3
References..................................................................................................................................5

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Introduction
Al Ain Dairy is the largest dairy in United Arab Emirates (UAE). It was established in 1981.
The dairy is the first to launch camel milk ice cream. Milk powder products are also available
by the diary in market. The camelait premium ice cream and camelait milk powder were
launched in 2015 and are available in stores across UAE. Fresh, flavoured camel milk and
camel milk laban are already sold by Al Ain under a brand named Camelait in UAE. The
main market for dairy is White Gulf Cooperation Council (WGCC) for marketing camel milk
products. The demand for camel milk is increasing due to low in fat, high in calcium and rich
source of protein. It is the mission of company to make available local products to customers
around the globe. The dairy uses spray drying technology and it is the only company in UAE
to use this technology in manufacturing (Wilson, 2017). Spray drying used to produce dry
powder from liquid. In this technology liquid is dried with hot gas. In this report porter’s five
forces is prepared and applied in Al Ain.
Porter’s five forces
The dairy industry in UAE is unique and profitable. The industry is continuously expected to
grow and experience growth in future. With the increasing health awareness and standard of
living, the demand for healthy food is continuously rising. The dairy products have been
segmented into milk, laban, yogurt, curd and ice cream. Porter’s five force analysis is an
important tool for marketing. It helps to identify and measure Al Ain’s strength and position
in the particular business atmosphere (Taleb, 2015). Such framework provides better
understanding of Al Ain to it’s management. The Porter’s five force analysis is mainly
concerned with five important components and face issues and impending changes in
environment.
Power of buyers
The buyers like to collect information before delivery of products. There is a communication
network in Al Ain which helps to communicate with customers. The dairy prefers fixed
pricing method to avoid any chance of bargaining from customers. The bargaining power of
customers is low in case of Al Ain dairy farm. The customers do not have many choices due
to the monopoly in market. The demand of products is increasing frequently. The purchases
also cannot be postponed.

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The bargaining power of customers has always been important factor in the performance of
company. There is less chance of switching due to high brand image through differentiation
and uniqueness of products. The buyers do not have bargaining power. The power of buyers
is high when they buy large volume of products and are sensitive to lower prices. It is
important for the company understand power of customer and their needs so that company
can make efforts to satisfy them (Berry, 2016).
Power of suppliers
Al Ain is known for strong relations with suppliers. The supplier power of Al Ain is high
because Al Ain uses same products from same suppliers. For instance, the dairy provides the
same camelait ice cream everywhere. The service provided by suppliers is quite satisfactory.
The dairy do not import milk or substitutes from foreign countries. It gives benefit as
discount can be given by domestic suppliers. Good quality of milk and ice cream and delivery
on time helps dairy in winning trust of customers (Hill, Jones & Schilling, 2014).
The suppliers do not do business with just one company; they supply products to other firms
too. There can be some important customer to suppliers in comparison to less important
companies. The suppliers always have less bargaining power to them. Al Ain focuses on
strong relations with suppliers to make quality stronger. It also provides guidance to suppliers
to work more competently to decrease terminated expenses.
Threat of substitute products
The threat of substitute products is medium because products of most diaries are unique and
there is not much competition. There is threat of substitute products because a person can get
what is wanted by them in an easier way. If Al Ain produces fresh milk and it does not last
long and costs more and the other company producing milk which is cheaper and can be
consumed for more days, then people will like to buy milk of other company. It is because Al
Ain’s milk would not last long. If Al Ain produces powder milk at lower prices than
customers would go for powder milk. Substitute of products can change opinion of customers
and it can be threat for the market share of firm (Nagy, 2016).
Al Ain is the first dairy to produce camel milk ice cream and the company is continued to
bring innovative products to the market. The camel milk is pasteurized to produce ice cream
and makes available in six generous flavors such as saffron, cardamom, date, chocolate, lite
raspberry vanilla and chocolate. The uniqueness of Al Ain’s ice cream is that it uses 100%

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fresh camel milk (Abusheliabi, et. al. 2017). It does not add neutralizers, preservatives and
other substances. This uniqueness of dairy has less risk of substitute products.
Threat of new entrants
The threat of new entrants for Al Ain dairy is low as it is already established. There are
various kinds of dairies already in the industry of UAE. There is threat to enter at this point
because it can cause conflict for the new entrants because the customers are loyal for Al Ain
dairy and there will be no economy of scale for new entrants. There will be low distribution
channels and high existing power and government regulations. Al Ain is an established and
strong brand and it is difficult to enter in market because the new entrants face price
competition and takes enough time to establish in the dairy industry (Frésard & Valta, 2016).
It is always threat for the company when there are limited resources in industry. It results in
monopolies and becomes difficult for new entrants to enter into industry. Although Al Ain
has established a strong brand image in the market but there are lot of companies who are
already in the industry and achieved a place even though they could not cross Al Ain in terms
of market share. There are number of companies attempt to enter market and endeavour for
market share but very few can survive (Greenspan, 2015).
Intensity of rivalry
There is competitive market structure of dairies so there are high rivalry and many
competitors like Marmum Dairy Farm, Gulf and Safa Dairies and more. Al Ain is pioneer in
the dairy industry of UAE and has made substantial development in dairy production
technology. It includes high speed packing machines and bacteria testing equipment. The
dairy is beyond competition in the market, it exports to international market. It also aims to
make country self-sufficient regarding dairy products.
Al Ain has competitive advantage that the company is in the dairy industry for longer time
then it’s competitors. The market of UAE is very competitive but still there is room for
growth. The diary can dominate market by introducing it’s brand in other GCC countries in
near future (Raziq, 2015). It was the first diary which was established in UAE and currently it
comprises 36% market share. It’s specification of providing 40 high quality milk, juices and
milk products keeps the company away from it’s competitors. It assures the quality and safety

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standards. The company has competitive advantage as the demand for nutritious products is
continuously rising in European and North America markets (Dobbs, 2014).

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References
Abusheliabi, A., Al‐Rumaithi, H. O., Olaimat, A. N., Al‐Nabulsi, A. A., Osaili, T., Shaker,
R., & Ayyash, M. M. (2017). Inhibitory effect of camel milk on Cronobacter
sakazakii. Journal of Food Safety, 37(4).
Berry, D. M. (2016). 0916 Get in the driver's seat: Marketing milk and dairy products to
today's and tomorrow's consumers. Journal of Animal Science, 94(suppl_5), 441-442.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of
industry analysis templates. Competitiveness Review, 24(1), 32-45.
Frésard, L., & Valta, P. (2016). How does corporate investment respond to increased entry
threat?. The Review of Corporate Finance Studies, 5(1), 1-35.
Greenspan, R. (2015). Walmart: Five forces analysis (Porter’s model). Panamore Institute.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Nagy, P. (2016). 0918 Camel milk from commodity to added value product. The science
behind the development of the camel dairy industry. Journal of Animal
Science, 94(suppl_5), 442-442.
Raziq, A. (2015). Opportunities and contests of modern camel dairying. Journal of Camelid
Science, 8, 33-36.
Taleb, A. (2015, September). A Framework for Knowledge Sharing, Firm Innovation
Capability and Competitive Advantage in the UAE. In European Conference on
Knowledge Management (p. 879). Academic Conferences International Limited.
Wilson, R. T. (2017). Traditional milk processing and value‐added dairy products in selected
Arab countries. International Journal of Dairy Technology.