Strategic Management Report: Strategic Analysis of A2 Milk Company

This report presents a strategic analysis of the A2 Milk Company, examining its strengths, weaknesses, opportunities, and threats (SWOT). It delves into the company's strategic dilemma concerning outsourcing packaging and explores its resources and competencies, such as automation, reliable suppliers, research backing, advertising strategies, and quality control, using the VRIO framework to assess its competitive advantages. The analysis also considers the company's position in the market, its interactive website design, and its strong social media presence. The report includes a detailed discussion of the company's strategic choices and provides a comprehensive overview of its market position and competitive landscape, demonstrating its value, rarity, imitability, and organization in the industry.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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SWOT analysis:
Strengths- The automation technology helps the company ensures the quality and
consistency of the products. The strong relationship with the suppliers helps in easy
accessibility of the rare a2 nutrient milk. Their research backing, which is used for testing the
DNA of the rare composition of milk nutrients. A2 Milk Company is the pioneer of a2
nutrient rich milk and milk products. Another strength can be their strong social media
presence.
Weakness- Pricing can be considered as a weakness as milk is a product, which is consumed
on a daily basis, which contributes to the reasons of price influences.
Opportunities- Lactose intolerant people can be considered as an opportunity segment for
the company. Another opportunity can be the expansion and availability of business in other
countries.
Threat- Competitors like almond and soya milk brands. Another possible threat can be that
competitors in the overall category can figure out the method of DNA testing and start
copying the technological implication.
Strategic dilemma:
The strategic dilemma for a2 Milk Company can be their decision regarding outsourcing their
packaging business or operating it in-house. Both the strategies will have both advantages
and disadvantages. Advantage of outsourcing is the low cost association but lacks the

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assurance of quality control. Advantage of in-house packaging will be costly but can be
helpful in having full control of quality check.
Resources and competencies of the a2 Milk Company, which reflects, sustained
competitive advantage:
1. Automation- The a2 Milk Company adopted the process of automation for the
operational activities, which resulted in the consistency of the quality of the a2 milk
and enabled them to manage production depending on the market demand
(thea2milkcompany.com 2019).
V-Valuable Yes, it is a valuable competency as it ensures the quality
and consistency of the milk and nutrient products.
R-Rare Yes, it is a rare competency as technological support and a
strategic operational plan is required (Chatzoglou 2018).
I-Inimitable No, it cannot be imitated easily because of the
confidentiality in the technological resources and strategic
planning involved in the automation process.
O-Organized The company implemented the strategy of automation
effectively and efficiently by utilizing the available
technological and workforce capabilities.

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2. Reliable suppliers- the a2 milk Company reflects strong relationship with suppliers,
owners of the herds (thea2milkcompany.com 2019).
3. A strong backing of research, technological implementation, global, trademark and
patents.
V-Valuable Yes, it is a valuable competency as the USP of the business is
dependent on the supply of milk from a rare variety of herd.
R-Rare Yes, it is rare as they maintain a strong relationship by having a fair
contract in regards with paying premium price to the supplier.
I-Inimitable Yes, strong relationship with suppliers can be maintained by big
brands under fair contract.
O-Organized Yes, the company maintains the strong relationship by paying a
premium price and long business contract with the suppliers.

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4. Different Advertising strategy- Their advertising campaigns excluded the presence of
field, cows and farms instead they incorporated the message communicated through
real people about the benefits and about breaking the perception of lactose
intolerance.
V-Valuable Yes, it is a valuable resource as it will protect the USP of
the company and will help in innovating the product
portfolio.
R-Rare Yes, it is rare as it is difficult to be acquiring patent, high
technological availability and a strong
I-Inimitable It cannot be imitated, as it requires reliable findings of
research.
O-Organized Yes, they manage their technological and strong global
presence efficiently. It can be depicted by their reach and
availability in stores around the world.
V-Valuable Yes it is valuable competency as it allowed them to put
forward a different message by the help of real customers.
The advertising message helps in depicting the benefits of
the products.
R-Rare Yes, it is rare to have a unique communication approach
and for having such strong reach.
I-Inimitable No, imitating will be costly.
O-Organized Yes, the company organizes the advertising capabilities
efficiently.

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5. The only company to have the presence only A1 beta-casein-free dairy products by
identifying and sourcing cows that lacks a1 protein by facilitating DNA test.
V-Valuable Yes, it is valuable as this comprises their core business
competence and which make them the pioneer of this
category.
R-Rare Yes, it is a very rare competency to have. After extensive
research activities, the company was formed.
I-Inimitable It cannot be imitated because of the importance of needed
research finding, resource for DNA testing and production
of nutrient products with similar consistency.
O-Organized Yes, the company manages the reputation and position by
an efficient quality control system and a premium-pricing
contract to the suppliers of milk.

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6. Quality control at each level of supply chain, the company selects the herd of cow by
the process of DNA testing and then test each bottle of milk to check the nutrient
content for uniformity.
V-Valuable Yes, it is valuable competencies which helps in maintain
the core value of the company as well as for maintain
satisfaction and trust of consumers.
R-Rare No, it is not rare as appointing a team for quality control
can be facilitated quite easily.
I-Inimitable Yes, it can be imitated by establishing quality standards
O-Organized Yes, the company manages the competency by
coordinating the quality standard with the suppliers and by
maintaining the process of automation.

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7. An interactive design of website and strong social media presence.
VRIO Framework depicting company’s position in the market:
It helps in understanding the company’s position among the competitors (Knott 2015). It also
helps in identified effective resources and competencies (Lopes et al. 2018).
Valuable Rare Imitable Organized Competitive
advantage
Automation Yes Yes No Yes Competitive
advantage
Reliable
suppliers
Yes Yes Yes Yes Temporary
competitive
V-Valuable Yes, it is a valuable resource and competency as it allows
the company to communicate its unique brand offerings to
the target consumers and interactive media allows in
eliminating the notion of lactose intolerance (Peng and
Vlas 2017).
R-Rare No, it is not rare, as it does not require high cost or special
skills (Lin and Tsai 2016).
I-Inimitable Yes, it can be imitated by constructing a social media page
and website.
O-Organized Yes, the company dedicates time and efforts in marinating
the online presence for building higher brand recognition.

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advantage
Research and
technological
backing
Yes Yes No Yes Sustained
competitive
advantage
Different
Advertising
strategy
Yes Yes No Yes Sustained
competitive
advantage
a2 nutrient
milk pioneer
Yes Yes No Yes Sustained
competitive
advantage
Effective
quality
control
throughout
the supply
chain
Yes No Yes Yes Competitive
parity
Interactive
design of
website and
strong social
media
presence
Yes No Yes Yes Competitive
parity
References:

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Chatzoglou, P., Chatzoudes, D., Sarigiannidis, L. and Theriou, G., 2018. The role of firm-
specific factors in the strategy-performance relationship: Revisiting the resource-based view
of the firm and the VRIO framework. Management Research Review, 41(1), pp.46-73.
Knott, P.J., 2015. Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), pp.1806-1822.
Lin, C. and Tsai, H.L., 2016. Achieving a firm’s competitive advantage through dynamic
capability. Baltic Journal of Management, 11(3), pp.260-285.
Lopes, J., Farinha, L., Ferreira, J.J. and Silveira, P., 2018. Does regional VRIO model help
policy-makers to assess the resources of a region? A stakeholder perception approach. Land
use policy, 79, pp.659-670.
Peng, M.W. and Vlas, C.O., 2017. Diffusion of a twentieth-century innovation. Academy of
Strategic Management Journal, 16(1), pp.172-174.
thea2milkcompany.com (2019). The a2 Milk Company [online] Available at:
https://thea2milkcompany.com/ [Accessed 16 Mar. 2019].