Strategic Management Analysis: Saputo's Growth and Competencies

This report provides a comprehensive analysis of Saputo's strategic management in the competitive global dairy market. It begins by examining the reasons behind Saputo's success, emphasizing the role of timely acquisitions in expanding its market presence and production capacity. The report then delves into Saputo's key success factors, including its market-focused approach, lean production methods, and high investment capabilities. Distinctive and core competencies are identified, with an exploration of how they have evolved over time. The analysis also addresses the challenges Saputo faces, such as market fluctuations and intense competition. Finally, the report offers strategic recommendations for future growth, including product diversification and market expansion, concluding with a summary of the key findings and their implications for Saputo's continued success.

Running Head: STRATEGIC MANAGEMENT
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Finance for Strategic Managers

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Table of Contents
Introduction......................................................................................................................................3
Reason behind Success over other Competitors..............................................................................3
Saputo’s Success Factors.............................................................................................................4
Distinctive Competencies and Reason behind development...........................................................5
Core Competencies and Changes in Them..................................................................................6
Challenges to Growth and Profitability...........................................................................................7
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
The global dairy market is highly competitive. The organizations operating in the market face
challenges to retain their share. The market highly regulated and the organizations need to follow
the strict rules (Namada, 2018). Presence of strict policies makes the operation in the global
market even more intense. Despite the challenges, Saputo, one of the key players in the Canadian
dairy industry, managed to sustain in the market. The current research deals with analysis on the
success factors and the core competencies of the organization. The research also discusses the
challenges faced by the organization and the recommendations.
Reason behind Success over other Competitors
Timely acquisition of other businesses is the key success factor for the competitors. It is
beneficial for the businesses in several ways. Firstly, acquisition helps the businesses to obtain
quality employees or meet the additional skill needs. It also helps the businesses to obtain better
knowledge on the industry and the business intelligence. If the acquired business possesses
advanced infrastructure, the buyer organization becomes benefitted by those.
Obtaining funds and valuable assets is another advantage for the acquisition. Buying the
production or distribution facilities is cost effective than building the infrastructure. The
businesses which has unused capacity in large amount or is marginally profitable, are considered
as preferred target for acquisition.
High growth is one of the key benefits of acquisition. When an organization is facing issues to
obtain growth in a market, acquiring an existing organization can be beneficial for enhancing
growth (Jones, Harrison & Felps, 2018). The distribution channels of target business enable the

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organizations to acquire wider base of customers. In addition, after acquisition, the businesses
also get the chance to diversify the products. As an effect, the organization obtains long-term
prospects. As the business becomes able to share marketing expenses, obtain higher purchasing
power and cut down the cost, profitability increases. The growth of the organizations increases
after acquisition (Kumar & Pansari, 2016). When the businesses in the same location are
acquired, the chance of duplicate facilities reduces and the revenue increases. Acquiring another
organization in the market reduces the competition. In addition, the business also becomes able
to develop new intellectual property. It provides the organization with new growth opportunities.
Saputo’s Success Factors
The following acquisitions contributed to the success of Saputo—
1. Saputo initially tried to expand its business in Canada through acquisition but it faced
challenges from other plants. So, the organization focused on the US market. Initially, it acquired
two cheese plants in Vermont and Maryland. This acquisition increased production capacity of
the organization.
2. The next acquisitions were Illinois-based Stella Foods, Robert Bass's Specialty Foods
Corporation and Dairyworld in British Columbia. These acquisitions enabled the organization to
grow as one of the largest businesses in North America. Its number of plants, size of workforce
and the sales volume increased. The improved capacity enabled the business to compete with
other firms with other product categories.

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Distinctive Competencies and Reason behind development
The distinctive competencies of the organization are-- knowledge on the market and the market-
focused approach, lean production, high investment capability, diversified customer base and
diversified product category.
The knowledge on the market enabled the organization to identify the growth opportunities and
respond accordingly (Saeidi et al., 2015). Timely identification of the business opportunities is
necessary to obtain the optimum benefit from those. In case of a Saputo also, the knowledge on
market helped it to find out the opportunities before the competitors. So, the business became
able to obtain the advantage.
Unlike the competitors, Saputo adopted a market-focused approach. The market-focused
approach is effective to identify the external and internal factors that can impact the business
activities. As an effect, the business becomes able to identify the threats and opportunities in the
market and can respond accordingly. Due to adaptation of the market-focused approach, the
businesses become able to gain awareness on the customers. It helped them to serve them as per
the need. It, in turn, helped the businesses to increase the sales and retain the customers.
Promotion is one of the effective techniques to inform the customers about the products and
services of the business. The promotion is even more important in the intensely competitive
retail market. Saputo management gives importance on promoting its products to the retail
customers. As an effect, creating a unique image becomes possible for the organization.
The lean production helps the businesses to utilize the minimum amount of resources. The lean
production reduces cost of the organization as the expenses of handling large amount of
inventory and the waste reduces. Saputo management gives importance on embracing the lean

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approach in the production. As an effect, the business became able to get rid of the unnecessary
costs and increase the profitability.
The high investment capability is one of the key competencies as it helps the businesses to grab
the new opportunities in time. In case of Saputo, the high investment capacity helped the
organization to acquire the businesses which brings the most profit. The acquisitions helped the
business to increase the share in the market in a time-efficient and cost-effective manner. The
large share in the market assisted the business to stay ahead of the competitors.
The diversified customer base helps the businesses to increase the sale to the optimum level.
Catering to different types of customers enables the business to remain profitable irrespective of
the market condition (Coccia, 2017). Saputo mainly caters to three types of customers such as
the retails, the frozen food organization and the restaurants. Diversity in the customer base is
beneficial for the business to remain profitable.
The diversity in the product range also enables the business to attract large number of customers
and increase the sale. Therefore, the diversity in product also facilitates the businesses to remain
profitable in the market. In addition, the product diversity is also beneficial for obtaining the
competitive advantage. In this case, the wide range of cheese offered by Saputo assisted the
organization to create a distinctive image other than the competitors. In addition, presence of
other product categories such as snacks helped the business to increase the sale and the market
share.
Core Competencies and Changes in Them
Knowledge on the market and the market-focused approach developed from the experience of
the long years of operation. From the years of operations in the Canadian and the US market,

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Saputo management became able to identify the growth opportunities. As an effect, utilizing
those became easier for the organization. The aggressive approach of the management also
enabled the business to act on the basis of every opportunity in the market. The profitability of
the organization and the investment of the owners is the key factor behind the development of
huge financial resources. The lean management adopted by Saputo is a key reason behind the
increased profitability (Albrecht et al., 2015). By incorporating lean production, the business
became able to cut down the extra expenses. It allowed the organization to earn more profit. The
management also invests on the new capacity and assets strategically. It helps the business to
obtain high return on the investment. It, in turn, increased the financial capability further. The
strategic selection of the acquisition targets is one of the key sources of competencies for the
organization. The appropriate selection helped the organization to increase the product range and
customer base. It helped the business to obtain the competitive advantage.
Challenges to Growth and Profitability
Saputo management faces the following challenges at the time of optimizing its growth—
1. Fluctuation in the USA milk market— The price of milk in the USA is not regulated. So, it
varies frequently. Dependence on the milk market can reduce the profitability of Saputo in the
future.
2. Strict regulation in Canada market-- the regulatory framework and the pricing system is highly
complex in the Canada market. The complex pricing affects the profitability of the organization.
So, extensive dependence on the Canadian dairy industry can also damage the growth of the
organization.

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3. Increased competition in Canada—The number of multinational organizations in the market of
Canada is increasing. As an effect, the competition for the local organization is also increasing.
Saputo, being a local business, is experiencing increasing threat in the market.
Recommendations
The following recommendations can help Saputo to grow further—
1. Product Diversification— Saputo management can give importance on introducing new
products such as snacks. It would be effective to get rid of the risks associated with the pricing
system in the USA and Canada market.
2. Entering new market— Saputo management can give importance on identifying new markets
for expansion. Entering the less competitive markets would be beneficial for finding out and
leveraging new growth opportunities.
Conclusion
The discussion indicates that Saputo management used aggressive acquisition strategies to
succeed in the USA market. However, the price fluctuation, strict policies and the intense
competition are the risk factors for the business. The management can address these issues using
product diversification and by entering in the new makets.

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References
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Jones, T. M., Harrison, J. S., & Felps, W. (2018). How applying instrumental stakeholder theory
can provide sustainable competitive advantage. Academy of Management Review, 43(3), 371-
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Kumar, V., & Pansari, A. (2016). Competitive advantage through engagement. Journal of
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Namada, J. M. (2018). Organizational learning and competitive advantage. In Handbook of
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Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate
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