Strategic Analysis and Recommendations for Open Country Dairy

This report provides a strategic management analysis of Open Country Dairy, a significant dairy exporter based in New Zealand. The report begins with an executive summary highlighting the company's position in the global market and its key operations. It then delves into the internal environment using Porter's Value Chain analysis, VRIO framework, and BCG matrix to identify the company's strengths, weaknesses, and competitive advantages. The external environment is examined through PESTLE analysis and Porter's Five Forces. A dynamic SWOT analysis is conducted to formulate three strategic options for the company, including collaboration with nutrition companies, expansion of milk production facilities, and increased investment in research and development. The report evaluates these options and concludes with recommendations for Open Country Dairy's future strategic direction, aiming to capitalize on market opportunities and address potential threats in the dairy industry.

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Strategic Management
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Executive Summary
This report sheds light on the business condition of dairy industry in New Zealand with specific
reference of Open Country Dairy, the second largest milk products exporter in the world. New
Zealand is an eighth largest milk producing country in the world with a small population of this
country leads to dairy farming. Open Country Dairy organisation takes supplies from local dairy
and exports mainly to the Pacific regions, Africa, Europe, Middle East and America. The
completion in the market is limited and buyers' power is high in the industry. The external
environment of the organisation shows marketing lucrative as the political stability and economic
boost help the organisation. More than 40,000 people are linked up with the organisation. The
supply chain of the organisation is helpful to grow and resources and capabilities are utilised
effectively by the management of the organisation. In this report, PEST + analysis with Porter’s
Five forces have been conducted in order to identify the competitiveness and external
environment of the organisation. In this respect, the internal factors of the organisation have been
identified with Value Chain analysis, VRIO framework and BCG matrix analysis. This report
provides strategic options of making collaboration with nutrition based companies and
developing milk production facilities.

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Table of Contents
3. Key Factors of internal environment...........................................................................................3
Value Chain Analysis..................................................................................................................3
VRIO analysis..............................................................................................................................4
BCG matrix..................................................................................................................................5
4. Dynamic SWOT to develop three strategic options....................................................................7
5. Three strategic options.................................................................................................................9
Evaluation of strategic options....................................................................................................9
Recommendations..........................................................................................................................10
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................12

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3. Key Factors of internal environment
Value Chain Analysis
In value chain analysis of Porter, there are two types of activities, one is primary
activities and another one is supporting activities.
Primary activities:
In inbound logistics, it is involved with a relationship with the suppliers and these are the
activities that are required to receive and distribute products. Open Country Dairy chooses their
raw materials suppliers from different parts of New Zealand. Moreover, it has its own local firms
where they develop a relationship with suppliers. In operation section, it requires transforming
inputs into outputs of the products. Operations of Open Country Dairy are related to the
maintenance, testing, assembly and packaging. In case of outbound logistics, this organisation
collects store and distributes the outputs through selling in across the globes (Chen & Kodono,
2014). They use intermediaries in processing and scheduling. In marketing and sales, Open
Country Dairy uses mainly word-of-mouth marketing and it is world’s second largest exporter of
premium whole milk. The organisation provides services emphasis on mostly global suppliers in
Pacific regions, Asian countries, Africa and Europe.
Secondary Activities
In procurement, the organisation purchases milk products from local suppliers. It helps in
maintaining profit margins that include the milk. The labours of the organisation work
accordingly and the organisation is equipped with vast technologies and machines. In managing
the human resources, Open Country Dairy employees are motivated to work as organisation

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gives rewards and incentives. The organisation takes skilled employees who have experiences in
this sector. The organisation gives training to the employees (on-the-job) training as to teach the
work culture in Open Country Dairy. In case of technology, Open Country Dairy mainly
provides stress on the food safety. It works on accreditation in New Zealand and it has taken
globally recognition as they work on technologically designed plants. Their latest technologies
provide uniformity and consistency in the product category. Firm infrastructure is world class
and it has experienced and strong management to work on. It has its locations in Auckland,
Waharoa, Wanganui and Awarua.
VRIO analysis
Value: The resources of the organisation add values as Open Country Dairy has a global
presence in the market. Moreover, the global presence of the organisation helps them to increase
sales, size and market share. The speciality of whole milk products can satisfy the buyers’
competitors cannot offer the same (Savino, Manzini & Mazza, 2015). It offers milk fats, milk
powders, milk proteins and cheese in global markets.
Rareness: Open Country Dairy is one of the biggest organisations in this sector as it is in
global milk chains. The products in New Zealand market are costly and no such other
competitors are there that they could take the desired position. Valuable resources and
capabilities of Open Country Road can lead them to desired position.
Imitability: Resources of the Open Country Road are costly in case of machines, trucks,
technologies and control maintaining products. These are hard to imitate and duplication of the
products are not possible. The organisation has been exporting milk-based products since 2004
and it has been exporting the products to Europe, Pacific regions, Africa and even in America.

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Organisation: The resources of the organisation can provide the competitive advantage
to the organisation as the value of the firm helps them to capture the market. Open Country Dairy
organizes its management system; policies, process and organizational structure in order use
fully its resources. Open Country Dairy has made such atmosphere that the suppliers and buyers
can enjoy the services.
Resources and
capability
Valuable Rare Inimitability Organised to
exploit
Strong global
presence
Yes Yes No Yes
Specialty milk
products
Yes Yes Yes No
Upscale
atmosphere for
buyers and
suppliers
Yes No Yes Yes
Table: VRIO framework analysis of Open Country Dairy
(Source: Self-developed)
BCG matrix
BCG matrix helps to understand in determining the competitive position.
Dogs: In BCG matrix, dogs mean low market share and significant output cannot be
generated. These businesses of Open Country Dairy tend to hold low market share. Open
Country Dairy in this business segment has low potential. The cheese products of the brand do

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not have the significant amount of market share. This product is available in the market by other
companies and it does not have enough chances to grow further.
Cash Cows: Cash cow means the high market share and it denotes high growth rate in
the market. The products like milk proteins and milk powers have high market growth. However,
despite slowdown in the market, the cash cow can be lucrative for the business (Shanghag, Dutt
& Bagwe, 2016).
Stars: This business unit can hold the large market share as the organisation is in faster
growth rate. Milk protein has high demand in the market has large operating segment by Open
Country Dairy. This market will be higher in next five years.
Question Marks: This business does not have large market share, however, it has growth
opportunities. Open Country Dairy sells milk fats and it has the significant opportunity in Europe
and American market as it can be next to cash cow for Open Country Dairy.
Stars
Market penetration
Horizontal integration
Milk protein
Question Marks
Product development
Milk fats
Cash Cows
Diversification
Milk proteins
Dogs
Retrenchment
Liquidation

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Milk powders Cheese products
Table: BCG matrix of Open Country Dairy
(Source: Self-developed)
4. Dynamic SWOT to develop three strategic options
Strengths-
Open Country Dairy (ODC) is the second largest milk processing companies in New
Zealand. Not only this, it is also the second largest global supplier of milk powder. There are
various strengths of this company. One of such strengths is to work closely with the farmers.
They work closely with their farmers and educate them on the ongoing global situation. They
educate their farmers on the current trend and instruct them to act accordingly. The New
Zealand government relies heavily on its dairy products. This is because of such fact the ODC
has shown its interest in expanding its presence in the country. The extension of its processing
capability with the start of work in the new plant in Waikato is one of the examples that show
that ODC is actively cashing on the created opportunity. There is a huge demand for the milk
products exports in the international market and ODC is responding to the necessity by
expanding its presence and production capability. The opening of the new plant at Waikato will
open up employment opportunities as well. This means that ODC is benefitting the local
economy of the country by becoming one of the largest exporters of milk powder and a
significant provider of job opportunities. It is able to produce milk at low cost. The cost of
feeding, housing and machinery are also low (Foote, Joy & Death, 2015).
Weaknesses-

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It is dependent on the international market, which can be either full of opportunities at times or
it can also be threatening on some occasions. On the same note, the low oil prices have
challenged the profitability of the business. This has reduced its purchasing power. Labours are
put into heavy works. This is problematic as this might affect their physical fitness, which is a
threat to the business. It is at distant from the market, which enhances the cost or freight
transport. Dairy lands are highly priced, which means that a reduced value of the dairy
products in the international market will result in a reduced profitability too (Foote, Joy & Death,
2015).
Opportunities-
Opportunities are there as well for the ODC. Being the second biggest milk processing
company of the country, it is relatively easier for it to have a suitable land to open up a new
plant. The local government of New Zealand will offer them suitable land in order to fulfil their
goal, which is to enhance their exporting capability of the milk products. There is a huge demand
for dairy products of the country in the international market. The demand will open up the
business possibility for the company. This is why OCD has capitalised on the created
opportunities by opening up its new plant in Waikato (Foote, Joy & Death, 2015). An increased
number of branches will result in increased number of productivity. Nevertheless, this will help
the company at the global platform in cashing the created opportunity.
Threats-
The price of oil is one of the biggest threats as it affects the business profitability at the
global platform (Nazlioglu & Soytas, 2012). This is understandable from the fact that the New
Zealand dairy industry is heavily reliant on the exports of dairy products. The currency

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behaviour is another threat to the Open Country Dairy (Kituku, 2014). This will eventually
reduce the profit margin in the exports of dairy products. The threat to the environment is also
evitable with an increased production of milk products. The company tends to avail the
generated opportunities in the dairy industry; however, in doing so, it will also produce an excess
of greenhouse gases. Moreover, greenhouse gases may put a substantial negative impact on
the environment (Mc Geough et al., 2012).
5. Three strategic options
The Open Company Dairy needs to utilise the three strategic options in order to utilise
the rising opportunity for the milk products in the international market. The local government of
New Zealand has already confirmed that the country needs an enhanced exporting of milk
products. This is because the demand for dairy products is set to touch a new height in the
coming years. To utilise the available opportunity, the first strategic option for OCD will be to
collaborate with some leading food & nutrition companies in the world (Wilson, 2012). This will
generate huge order demands and hence, this will enhance the profitability of the business. The
second strategic option will be to develop the milk production facilities in some potential
international market such as China and India (Fuller & Beghin, 2015). However, this will require
a thorough study on checking the feasibility of the concept in the target market. The third
strategic option will be to invest hugely in the Research & Development (R&D) process (Ernst,
Hoyer & Rübsaamen, 2013). This will be made possible by opening up few new plants specially
dedicated to the R&D process.
Evaluation of strategic options

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The first strategic option is to collaborate with few of the world’s leading food &
nutrition companies. This will be challenging as such companies will already have their
suppliers. In such circumstances, penetration into the market will be challenged (Sarasvathy et
al., 2014). The second strategic option is to develop milk production facilities in the potential
international markets. Identified potential markets are many such as China and India. Both are
few of the most developing countries. However, the real challenge will be to get approval from
the political parties especially in India (Akhter & Equbal, 2012). The third strategic option is to
invest in the R&D process. This is challenging as well because of the high cost of lands in New
Zealand (Liu, Wang & Zha, 2013). The local government is supportive of the dairy industry but
still, the problem is challenging as the government could only help in allotting the best land to
the company.
Recommendations
To get the business from the leading food & nutrition companies in the world, it is
necessary to offer the products at the cheapest prices and with high in quality. This is the
one way, which could help the brand like Open Country Dairy in winning the trust of target
companies. The political dilemma, especially in India, is a threat to a new concept. To resolve
the issue, it is necessary to collaborate with the local companies either through partnering or
through joint venturing. This will help in getting the unexpected support of the political parties
that exist there. Moreover, this will also help in understanding the diverse culture in the target
country. The R&D process can also be done by utilising the already existing research
laboratories in the country. The OCD will require investing high in receiving the services of
reputed Research & Development institutions. This strategy will help them skip away from
investing in buying the land for setting up its own R&D centre.

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Conclusion
The Open Country Dairy is the second largest milk product exporters in the world and it
has been observed that Open Country Dairy has less competition in the market as its
technological supervision is high. The external environment of the organisation proves that it
provides economic significance to NZ economics and technology like Automatic Milk System
provides benefits to the organisation. In internal factors, it has favourable supply chain and it
supplies milk to Pacific, Africa and Asia and European countries. Moreover, in milk production
and milk-based products, it has great potential in the world market. The organisation needs to
collaborate with leading food and nutrition companies with developing milk production
functioning.