Strategic Management Report: Dairy Farmers in the Australian Market

This report offers a comprehensive strategic analysis of Dairy Farmers, an Australian agribusiness. It begins with an executive summary and introduction to the company, followed by an in-depth examination of its external environment, including political, economic, social, technological, environmental, and legal factors. The analysis then delves into Dairy Farmers' internal organization, assessing its resources, capabilities, core competencies, and competitive advantages using a SWOT analysis. The report highlights the company's strengths, such as its adaptability and processing facilities, while acknowledging weaknesses like a limited product portfolio. Opportunities in Asian markets are identified, along with threats from major competitors. The analysis of resources includes tangible and intangible assets. The core competencies of working closely with farmers and customer satisfaction are also discussed. The report concludes with recommendations for future strategic direction, emphasizing the need for strategic planning, investment in technology and R&D, and expansion into Asian markets to maintain competitiveness and ensure sustainable growth in the dynamic dairy industry.

Running head: STRATEGIC MANAGEMENT
Strategic Management
[Dairy Farmers]
Name of the student:
Name of the university:
Author note:

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Executive summary
The dairy industry has been serving humanity with milk and various dairy products. This study
does revolve around the same theme. The study has “Dairy Farmers” as the centre of
discussion. The study finds that “Dairy Farmers” is a reputed name in the Australian dairy
industry. Their core competencies such as working closely with farmers and customer
satisfaction have helped them survive the increasing market competition. However, the study
finds that the future growth of the firm can be in troubles. There is a need for increased strategy
making, and more investments into new technologies and R&D projects to retain significant
market shares. Moreover, the firm should look for opportunities in Asian markets. The study
recommends a few points of suggestions for its future strategic direction. These are:
1. Strategic planning is the necessity to protect productive agriculture
2. Preservation of water quality and quantity
3. Food, animal and people safety for the increased reputation of the dairy industry
4. Farmers should be able to avail necessary operations activities
5. Robust environmental management
6.

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Table of Contents
Introduction......................................................................................................................................3
Body.................................................................................................................................................4
External Environment Analysis...................................................................................................4
Internal Organisation Analysis....................................................................................................7
Conclusion and Recommendations................................................................................................10
Conclusion.................................................................................................................................10
Recommendations for the future strategic direction..................................................................10
References......................................................................................................................................12

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Introduction
Agribusiness is a firm operating in the agribusiness food-related sector of a country. An
agribusiness can have huge product and service lines depending on its internal capabilities, and
external business opportunities and challenges. This study also discusses an agribusiness
popularly branded as “Dairy Farmers” in Australia. The Dairy Farmers Pty Ltd. is a subsidiary
brand of Lion Dairy & Drinks. Lion Dairy & Drinks sells milk and other dairy products under
the Dairy Farmers brand. Dairy Farmers came to existence in 1900 with few Australian farmers
collaborated to serve pure milk to Australians (Dairyfarmers.com.au 2019). They formed
together with a co-operative firm named “The Dairy Farmers Co-operative Milk Co. Limited”.
Gradually in a few years, they went on to achieve many new milestones. They started to be
known as a brand of National Foods after when acquired by Japanese-owned food and Beverage
Company in 2008 (Dairyfarmers.com.au 2019).
Dairy Farmers brand is mainly popular for selling fresh milk in New South Wales and
Queensland. However, it sells UHT “long-life” milk across Australia. The list of products also
includes the likes of desserts, “Thick & Creamy” yoghurt, creams, buttermilk and custard. Dairy
Farmers were also producing the “Ski” yoghurt range until being acquired by National Foods.
With this acquisition, Fonterra purchased the “Ski” brand (Dairyfarmers.com.au 2019).
The main purpose of this task is to assess the external business environment for Dairy
Farmers as well as its internal organisation. Moreover, the study also gives a few points of
recommendations to Dairy Farmers for its future strategic direction.

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Body
This section analyses Dairy Farmers concerning its internal and external business
environment.
External Environment Analysis
 Political
International commodity pricing will remain more or less the same for a few more years
(Cortazar et al. 2018). Until the moment, it happens the operative cost will continue to go up.
Large farms will increase in numbers. Moreover, farm ownership will change more into
corporate ownership (Magnan 2015). Hence, Dairy Farmers will expectedly face increased
competition from both existing and new dairy farms in Australia.
 Economic
Economies of scale will expectedly underpin improved profitability. This means an increased
production of dairy products. This may also result in the expansion of exports mainly in Asian
markets. Dairy Farmers already has a good product portfolio (Dairyfarmers.com.au 2019). By
increasing the portfolio a bit they can perform even better than they are currently doing. An
expansion in the portfolio will depend more on the resource capabilities of the firm. With an
increase in economies of scale, the employment structure will also be influenced. Hence, the
number of employees will grow in each of the farms in Australia. Moreover, the role of a farm
manager will become more common (Fitz-Koch et al. 2018). Dairy Farmers should capitalise on
the opportunities thus created by increasing their employee base. They can recruit more people

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with excellent industry-related skills and experience. This will only happen when they create
rooms for people. An increase in product portfolio should be the strategy after conducting a
thorough market analysis for gaining awareness of product-related trends in the dairy industry.
 Social
People are growing in the knowledge of products and services they consume. They have access
to articles on consumable products. This is in the form of popular magazines, popular daily
newspapers, TV adverts and news, online news, website and journals articles, etc. The wave of
news floating on these channels has influenced the understanding of common people towards
consumable products. Hence, Dairy farmers should be careful with their skill-based consumers
as these consumers make informed decisions mostly (Birch, Skallerud and Paul 2018). It is very
difficult to fool these consumers with products low-in quality. Many dairy companies are there
other than the Dairy Farmers from which, the Australian can buy from their desired dairy
products. By working more on the quality part and offering competitive rates, Dairy Farmers can
create opportunities for them in Asian markets. Notably, demand is huge there for Australian
dairy products in China (Xu and Wu 2018). There is a reputation built up for Australia dairy
products such as they are purely sourced from natural resources and are competitively priced.
 Technological
The abundance of digital technology is growing and is influencing the dairy sector as well.
Farms with increased resource capabilities will soon become data-driven (Senyo, Liu and Effah
2019). The data-driven business will narrow down the market competition. Farms those with
better technological capabilities will only stay in the competition. The stated fact suggests the
need to switch to digital technologies quickly or else the level of competency for a firm will be

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affected (Senyo, Liu and Effah 2019). Dairy Farmers will expectedly receive more competition
from major dairy farms as digital technologies will be in use to access and respond to data
feedback at a faster pace. Digital technologies will benefit the industry with information sharing.
Hence, the information will flow at a faster pace and with more accuracy across the sector
leading to improved collaborations in international Research & Development (R&D) (Mohnen,
Polder and van Leeuwen 2018).
 Environmental
Over the decades to come, it is more likely that the dairy industry in Australia will have to act
according to the outcomes of climate change. Dairy products are prone to extreme weather
conditions. The logistics operations will be affected by hotter and drier weather conditions. The
extreme hotter and drier temperature will limit the growth opportunities for dairy farming
(Finnegan, Goggins and Zhan 2018). This indicates the need to be flexible with changing
environmental landscapes. Dairy Farmers must understand the industry response to climate
change to be able to devise new strategies. The firm should utilise its resources to respond
accordingly, and avoid unproductive competition from both existing and new entrants. Food
safety will be more into the picture. This means an increased product mix to offer only valuable
products. Nevertheless, food safety will be a potential risk considering the extreme climatic
changes (Kerr and Wilson 2018).
 Legal
There will be legal monitoring of the business in the dairy industry. The Federal Government
Policy for Research & Development (R&D) will influence the total expenditure on R&D. The
expenditures will depend a lot on the value it carries for the national economy. At the state level,

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the level of investments in the dairy industry will reduce. This will create the needs to have
increased investment supports from central industry bodies to keep providing services to farmers
(Harray et al. 2018). Dairy Farmers could be in pressure from increased regulatory policies. This
may limit their investment capability leading to reduced R&D. The structure of water will come
under the regulatory guidelines leading to increased dependence on the government policy for
irrigation (Lawrence, Dickie and Woods 2018). The regulations for food labelling has become
stricter (Lawrence, Dickie and Woods 2018). This means Dairy Farmers will need to invest
more on food labelling to avoid undermining the legitimate value of the products.
Internal Organisation Analysis
SWOT Analysis of Dairy Farmers
 Strengths
Flexibility and ability to adapt can be considered the strength for Dairy farmers. It currently has
11 processing facilities (Dairyfarmers.com.au 2019). The fact speaks of their tendency to
respond to the demand and adjust to the local culture.
 Weaknesses
The product portfolio is not as bigger as of Fonterra and other industry biggies. The fact is
justifiable considering that Fonterra has higher resource capabilities than Dairy Farmers has.
However, it is still undeniable that relatively limited resource capabilities have been affecting the
Dairy Farmers’ business (Teece 2018). The other major weakness is its inability to compete
strongly with the majors of the Australian dairy industry. Notably, the industry is highly

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competitive and is expected to get bigger with new entrants and acquisition of digital
technologies by oldies.
 Opportunities
Dairy Farmers has no operations outside the country. Indeed, there are growing opportunities in
Asian markets. China, Singapore, India and Pakistan are few Asian countries that could be
potential destinations for dairy products. China has already proved beneficial for Australian dairy
products. The Chinese people have high respects for Australian dairy products for its natural
taste and competitive pricing (Xu and Wu 2018). Hence, Dairy Farmers should look for growth
opportunities in Asian regions.
 Threats
The increasing business competency of major dairy companies like Fonterra Australia is already
a threat because Fonterra has successfully maintained very healthy market shares. There is very
less room to grow for Dairy farmers if it does not bring a revolution with their use of
technologies, investment in R&D, expansion into Asian markets, resource capabilities and
management strategy (McNaughton 2018).
Resources
Resources broadly have two distinct types. These are Tangible Resources and Intangible
Resources.

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Tangible Resources for Dairy Farmers include Finance and Physical Resources. Sales
revenue for Dairy Farmers closed at a mark of AUD135, 204 in 2018 (Dfmc.org.au 2019).
Physical resources for Dairy Farmers include 11 processing facilities until the date.
Intangible Resources for Dairy Farmers include Brand, Culture and Human Resources.
Dairy Farmers has created a good standard for its employees, customers and stakeholders. It has
been helping the firm to have a good run in the industry. Employees working in the firm are
offered standard pay. Moreover, employees receive other employment benefits like retirement
benefits (Dfmc.org.au 2019).
Capabilities
Dairy Farmers has its processing facilities. It also enjoys an efficient supply chain
network. The firm ensures that its farmers have an adequate understanding of modernised
farming techniques. To increase their capability in this aspect of the business Dairy Farmers has
an intensive focus on knowledge management (Dairyfarmers.com.au 2019). However, they need
to show such intensiveness at the practical ground.
Core Competencies
Dairy Farmers has two core competencies that provide them a competitive advantage
over its rivals or else it would not have become easier to survive despite receiving huge
competition from Fonterra and other major dairy companies in Australia. Being able to work
closely with farmers has been one of the competency factors for Dairy Farmers

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(Dairyfarmers.com.au 2019). This has helped it to offer freshly sourced milk and other dairy
products to customers. This has helped Dairy Farmers to meet its customers’ needs. Moreover,
customer satisfaction has also emerged as one of the core competencies for Dairy Farmers
(Dairyfarmers.com.au 2019).
Conclusion and Recommendations
Conclusion
Therefore, Dairy Farmers has the potential to grow provided it works on to expand its resources
and capabilities. While doing so they may not afford to lose on the business’ core competencies.
Dairy Farmers should look for new marketplace such as Asian markets. With sufficient
resources and capabilities at hand, Dairy Farmers should do better in the Asian markets. To
remain competitive in Australia Dairy Farmers needs to invest more in new technologies and
R&D. The environmental condition in Australia and its changing regulatory guidelines for the
dairy industry will continue to pose the challenge if not managed strategically.
Recommendations for the future strategic direction
1. Strategic planning is the necessity to protect productive agriculture
The Federal and State Governments recognize the value of agriculture for the Australian
economy. Strategic planning should be in the form of foreseeable coexistence with the
unconventional gas mining industry. Long-Term strategic planning should be there to identify
ways in which to enjoy coexistence between industries.

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2. Preservation of water quality and quantity
Preservation of groundwater resources is essential for the sustained growth of the dairy industry.
A continuous supply of freshwater should be there for farmers to rely upon irrigation and to
operate milk-harvesting equipment.
3. Food, animal and people safety for the increased reputation of the dairy industry
Undeniably, the health and wellbeing of employees, consumers and animals are crucial for the
sustained success of the Australian dairy industry. Dairy Farmers should ensure Quality
Assurance Programs to provide excellent food safety and safe work practice standards.
4. Farmers should be able to avail necessary operations activities
Supplier farmers of “Dairy Farmers” should have access to efficient techniques of farming.
These resources should cost-effectively come to them. This means Dairy Farmers will more
have to invest in improving its specific infrastructure requirements. Moreover, farmers need to
be given appropriate compensation for any operational impact.
5. Robust environmental management
There is a need for safeguard mechanisms for unconventional gas mining projects to manage
soil, water and the air quality. This is also necessary to protect the reputation of the company. In
this process, the nationally consistent and regulated framework can be of paramount significance.