Strategic Plan: Dairy Products Company

Discuss about the Strategic Plan for Dairy Products Company.

Introduction

This is a report for a three-year strategic plan for Dairy Products Company. A detailed analysis of the firm’s strengths, weaknesses, opportunities and threats was done in order to come up with a strategy to increase the company’s productivity and incomes in the industry. Also, Porter’s Five Forces were analysed and they also helped in the development of the strategy.

Swot Analysis

In this strategic plan, an analysis of the company’s strengths, weaknesses, opportunities and threats is important in making sure that the strategy works out effectively. These are factors that need to be considered by the management in coming up with the most effective ways of utilizing the available resources economically to attain the organisation’s goals (Kong, 2008). For Dairy products to develop a workable business plan, this analysis is also important for the organisation.

Strengths

The first strength that the firm has is popularity. Having operated in the industry for four years with a strong marketing team, the firm has become popular in the dairy industry and customers can easily trust their products. Most firms find it difficult to penetrate the market because they lack popularity. This is a vital strength that the firm can utilize to achieve its objectives and goals (Comino &Ferretti, 2016).  Developing a strong brand name is not easy in the competitive dairy industry and therefore this company has an advantage over others that have not gained enough popularity in the market.

Secondly, the firm has technical and management workforce which are important in making sure that the organisation works effectively in producing the dairy products and managing resources. An able and experienced marketing team is important for the firm since it helps the firm in popularising its brand name and making direct sales to their customers. The technical managers also make sure that the products that the firm produces are of a high quality.

The third strength they have is that they produce many products. This is a strength that the firm can engage in making sure that they cover a wider market. Many products promote diversification and that helps a firm to have a wider market base.

Weaknesses

One of the major weakness that the firm has is that they don’t produce their own raw materials. The main raw material for this organisation is milk. The company does not produce its own milk and they entirely depend on dairy farmers for the milk raw materials.

Another weakness of the firm is that it is a local company that has not ventured into the international market. This makes the firm have a small market base since they only concentrate on the local market.

Opportunities

The first opportunity that the company enjoys is that there is a high demand for dairy and dairy products. Milk has become a requirement for many families and people across the globe. This offers the company an opportunity to expand to these regions and make additional sales.

Another opportunity the company has is in the technological advancements that improve the production processes in the industry. The firm can increase its productivity by the use of technology in the production process.

Training and development is another opportunity that the firm has in that they can train their personnel in the various techniques that can be applied in the production process. When the workforce is equipped with the necessary skills and techniques in the industry, it becomes advantageous for them since they can produce products that are high in value as compared to their competitors.

Lastly the society is becoming more and more health conscious and milk can be used to substitute other drinks and beverages that may be having negative effects on the human body.

Threats

Competition is one of the major threats that that face the company. There are many participants in the dairy industry and that poses a major challenge with regards to the market share.  Some of the companies in the dairy industry are well established and they have very strong brand names and are deep rooted.

Another threat is that the authorities and policy makers may impose some regulations that may hinder proper operation of the company in the dairy industry. The regulations, if imposed may make the company need to invest more for compliance.

Potters Five Forces

The analysis of these factors is also important in the development of a strategic plan. The factors are external and they need to be evaluated critically.

Supplier Power

This is the ability that suppliers have to drive their prices up. This is a strong force in the case of Dairy Products Company. The farmers who supply the firm with milk which is the main raw material have the ability to change their prices as they wish. And that is a significant force that can affect the business.

Buyer Power

This force is relatively strong because there are supplementary brands in the industry. A slight price change will affect the buyer patterns. If the product price increases, the buyers will opt for the alternative brands while a reduced price will attract buyers and encourage them to use the company’s products.

Competitive Rivalry

This is a strong force because there are many competing firms in the dairy industry. Competition affects the company because it reduces its market share by offering same products. More developed brands receive more attention than the less developed brands and that affects the firm negatively (Gupta,et al., 2007).

Threat of Substitution

The threat of substitution is a strong force. This also relates to the competition being offered by rival firms. Also, milk products don’t satisfy basic needs and therefore they can be substituted by other products easily making substitution a strong force.

Threat of New Entrants

This also is a relatively strong force since the requirements for entry are few although the start-up cost may be high. New entrants pose a challenge because they come with strategies of market penetration which may affect the firm’s market. Strategies such as low pricing can affect the market greatly because consumers will prefer relatively cheap products in the market (Saunders, 2015).

Gaps in the Organization

Foremost, the basic raw material which is milk cannot be controlled by the firm. This is because farmers are independent and are not regulated in any way. Besides, there are issues with the quality of products that the company produces. This has a negative effect on their market because customers may not be ready to use low quality products. Lastly, there is a gap in the production technology and this is responsible for wastages that may be experienced in the organiasation.

Key Objectives

Market Development

To expand the regulator market reach within the country in the next two years.

To increase the customer visits to the organization for wholesale deals within the first year of implementing the strategic plan.

Process development

To streamline the company processes and increase production to 20 billion litres of milk annually by the second year of implementation of the strategic plan

People Development

To train and develop the employee skills starting immediately and will be continuous

To implement a communication system within the first year.

Product development

To increase the number of products the firm produces by the second year.

To improve the production technology.

Strategies to meet the objectives

Strategy Diamond

The CEO will be responsible for all the supervisory needs in the implementation of the strategic plan.

In market development, the sales and marketing departments will be responsible for all the activities relating to market development. To expand the market reach within the country can be achieved through having rampant promotional activities across the country. This can be done through having a promotional price in the beginning in order to make the brand popular. Performance can be measured by the number of units sold in all the market sectors.

In process development, the designing department will be responsible for the strategic activities to meet this objective. This is the department that is equipped with skills that can lead to increased efficiency and therefore increased production. A system will be installed that will automate most of the activities and this department will be in charge. The performance indicator for this strategy will be the amount of milk processed.

In the development of people, the human resource department will be responsible and skills will be developed through training programs across the world to increase efficiency.

Product development will be managed by the designing department and this will be done by installation of machines that can produce different dairy products. The performance indicator here will be the number of products that are designed within a year.

In the development of this strategic plan the organization’s environment has been analysed critically to maximize on the strengths that the company has. Weaknesses have also been addressed by the strategy in order to maximise output and increase efficiency. Besides, the opportunities and threats have been catered for in the strategy and they will be handled efficiently. This is what strategic planning theory advocates and recommends. 

References

Comino, E., &Ferretti, V. (2016). Indicators-based spatial SWOT analysis: Supporting the strategic planning and management of complex territorial systems. Ecological Indicators, 601104-1117. doi:10.1016/j.ecolind.2015.09.003

Gupta, V., Gollakota, K., & Srinivasan, R. (2007). Business policy and strategic management: Concepts and applications. New Delhi: Prentice Hall of India.

Houben, G., &Lenie, K. (1999). A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and... Decision Support Systems, 26(2), 125.

Kong, E. (2008). The development of strategic management in the non-profit context: Intellectual capital in social service non-profit organizations. International Journal Of Management Reviews, 10(3), 281-299. doi:10.1111/j.1468-2370.2007.00224.x

Saunders, L. (2015). Academic Libraries' Strategic Plans: Top Trends and Under-Recognized Areas. Journal of Academic Librarianship, 41(3), 285-291. doi:10.1016/j.acalib.2015.03.011

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