AI Ain Dairy Company: Strategic Management

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Introduction

According to the book by Barnes (2002), Strategic planning refers to the process in which a company, individual person or an organization identifies the point in which it wishes to reach at a specific future date as well as the means to get there.

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Further, Roger (1988) argues that, the entire process also involves evaluation of the events that are taking place in the organization, as well as any effects caused by both internal and external environment in relation to the effects they may cause to the future success of the organization (a scan of the environment and the SWOT analysis). Olsen (2006) also wrote that it also entails setting of the goals and objectives intended to be achieved within a particular period. It should be noted that a strategic plan simply shows the direction, objectives and goals needed to be followed for the success of the organization.

Five elements key in writing the strategic plan for Ai Ain Dairy Company are, the vision statement, the mission statement, factors involved in critical success, strategies or the actions to achieve objectives and then lastly prioritized schedule for implementing the plans.

AI Ain Dairy Company

The Al Ain Dairy Company is located in the United Arab Emirates and it is one of the most leading companies in the production of dairy products there. It deals with the production of milk from camels and cows, a variety of dairy products and fruit juices. It is mainly involved in local marketing. It was established in the year 1981 with a total number of 200 cows. However, in terms of milk production there has been a significant increment of up to 175,000 liters every day. The company is fully committed to comply with any governmental environmental rules and laws needed in creating a habitable atmosphere. On that note it has installed a very good waste purification system. It is also committed to taking part in community development.

The vision

The company is focused in being referred to as the most, preferred producer of dairy products like milk, yoghurt, and flavoured milk for domestic consumption in the entire Emirates.

Mission

The mission is to ensure maintenance of excellence in terms of customer service, to be the most innovative dairy product producer and also to offer to customers a variety of very high quality dairy products which are very safe for consumption and at a friendly cost.

Values

There are four main values that act as the principle guideline of all operations in Al Ain Dairy Company. They are as follows.

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  • Proper recruitment of competent employees and a thorough training of these workers so as to ensure the quality of production are not at any time compromised. In other words, great professionalism, conduct and responsibility are highly demanded from every employee. After the workers are recruited, before starting up the job, they are taken through a serious training.
  • To offer customers a wide range or variety of products which are of the best quality and very safe for their health.
  • To ensure that all business activities are done in high level of integrity.
  • To ensure environmental protection is the first priority especially in terms of water management.

The goals and objectives

The Al Ain Dairy Company, aims at

  • Maintaining a lead in production
  • To fully satisfy all customers need
  • To offer products at an affordable price
  • To be of great help to the community
  • To ensure all the waste products are environmental friendly

The external environment analysis

A number or external factors are very challenging as far as the Dairy Company is concerned. These ranges from competition and climate

Climate: the climate found in United Arab Emirates is basically dry and hot with a maximum temperature of over 40% in some months like July and August. The average rainfall is about 120mm which falls in very short torrential. This is one of the greatest challenges in that such climate really affects the health of cattle as well as the condition of growing their feeds. This may force the company to at times import animal feeds.

Politics: Politics and the governance of United Arab Emirates is yet another factor likely to cause an effect in the production. This is because most activities are governed politically. For instance, the office of the prime minister has been bestowed a great responsibility. Also the issues of finances (treasury) are politically sorted.

Competition: Ai Ain Dairy Company is not the only company dealing with dairy products in the whole of United Arab Emirates. The following are some of the companies involved in the same area of production; Gulf Safa Dairy, Al Rawabi Dairy and Milco Dairy. As a matter of fact, demand for milk products is really rising in the country. So as to keep up with the level of competition from these companies, the Ai Ain Dairy Company is forced to reduce the prices of its products relative to these other companies as well as to reduce the cost of production.

Al Rawabi Dairy is a competitor in the sense that it majors with almost the same products as Ai Ain Dairy Company. They include production of fresh milk, flavoured milk, yoghurt and fresh juices. It is actually the greatest exporter of those products in Dubai. Therefore, it poses competition in the area of marketing the products, employment of workers as well as in the importation. Gulf Safa Dairy competes with Ai Aian Dairy Company in that it produces very high quality products due to its great technologies of dairy milk production.

Also, its very well systematic organized management is an added advantage. Also it majors with almost the same products as Ai Ain Dairy Company which includes; yoghurt, fresh and flavoured milk and juice. Milco Dairy is also a competitor of Ai Ain Company in that it produces a variety of same products. It also deals with the production of fresh milk, flavoured yoghurt and juices. It is ranked as major supplier of these products to almost half of the population found in the United Arab Emirates.

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Market and advance Technology: the dairy company of Gulf Safa distribute it productions to all its customers using distribution centers and trucks that contain refrigerators to ensure delivery of the products in good quality and within the shortest time possible. Therefore, for our company to keep up to the market standards it has to employ a number of new and improved technologies. Goods available for sale are taken within the reach of customers in both large markets as well as local markets. Generally, there are many problems in terms of marketing due to congestion of the products in the market because of the fact that these companies produce the same range of products. This factor may affect the pricing of these products.

PESTLE analysis, Value Chain Analysis and the rival forces for the company

According to the book by Roger (1988), in every company, apart from the external analysis, there should be a PESTLE analysis which is aimed at investigating factors that may affect the market of the company’s product economically, politically, technologically, socially and environmentally. Politically the Ai Ain Company has received a boost in the sense that the laws on the issue of labour, tax, environmental laws as well as the policies on food hygiene like HACCP are not oppressive to the company.

Economically, there has not been much effect to the production of the company since the interest rates on the loans in the country are very fair and the inflation rate on the dairy products is very low. The social aspects have boosted the company especially due to the fact that it deals with the dairy products which are not taboos in as far as the culture is concerned. Some social demographic factors like age is also a boost. There are a lot of people in the age of production in that country; therefore, labour is not a problem.

The rate at which the technology of dairy products production is changing is really affecting the production. This is because other competitor companies are gladly embracing the new technologies hence increasing their production. The environmental factors in terms of the climate are posing a threat to the company. This is because the hot climate is causing problems in the area of easily accessing the animal feeds. The legal factors of the country are also favorable like the issues of employment law.

The value chain analysis of any product is dependent on the process it goes through. Like in Ai Ain dairy product, each of the products is valued depending on the process it goes through. That is why the prices range depending on the value of fresh milk is not the same as of the flavored milk. The rival forces of the company include two main companies like Gulf Safa Dairy Company and the Milco Dairy. They have caused a lot of competition in terms of market and technology which have posed a challenge.

The internal analysis

Barnes (2002) states that, a company has to consider factors that can help it to succeed by using the available resources wisely to avoid making loss. It means carefully looking at the internal factors of a company which may either affect its production positively or negatively. Every company, when internally assessed must have some strength, weaknesses, opportunities and threats which may affect its production either positively or negatively. Such ranges from the organization’s reputation, professionalism of the employees, administrative strengthens and financial strength. The following is the outcome of the SWOT analysis in AI AIN Company.

There are a number of strengths associated with Ai Ain Company. First of all, Participation in the community is a major strengthen in increased Ai Ain market opportunities. For instance, Social clubs in which the company has been part and parcel of has enabled it to reach out to so many members of the community. It is widely known to support as many talents as possible in the community during community contests such as sports and cultural activities aim at cultural awareness among others. It is also known to support sports in that it sponsors many clubs as well as encouraging the youth to participate in local sports like handball, football, marathons, camel and horse races. All this aims at increasing its popularity with the community members and also winning of the customers trust, hence increasing trust.

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The company’s Customer relation is another strong point in increasing its production. It is the tradition of the company to perform a customer evaluation or market study through an external professional research, so as to get to know the opinions of the customers, perceptions, attitudes and expectation. This enables the company to come up with products which matches the interests and needs of the community.

The company produces innovative dairy products and at customer’s pocket friendly price. The company has come up with a wide range of sub products from dairy products. For example, fresh milk, flavoured milk, plain yoghurt, flavoured yoghurt and cheese among others. Also the innovative packaging is another factor that has increased its market in that different quantities and wide range of packages are in use hence leaving customers with an opportunity to choose what they need and what they can afford.

The modern technology used by the company has also been a major boost to the quality of products. The process of producing the end product complies fully with the requirements of the UAE health rules and laws like the HACCP which means hazard analysis critical control point. This is done from the very first step of milking the cow, through processing up to packaging of the very final end products. The company ensures there are as many critical points as possible. This aims at providing hygienically acceptable product. Also, the company is able to recycle packaging bottles hence reducing the cost of product.

On the other hand there are a few weaknesses in the company. The company’s resources are few and there are a few workers or employees. This affects the level of production in the company. Also, the sales strategy where by their products are only found in their retail shops. This actually leads to minimizing the marketing opportunities hence forcing customers to consume other products that are readily available or within their reach.

The strategic objectives

Olsen (2006) describes strategic objectives as the overall targets any organization has to reach in order for it to achieve a successful strategy. A number of strategic issues identified in the internal and external analysis have to be dealt with, For instance, the issues of competition, technology, political and sales strategy. To counteract the effects they may cause to the productivity of the company, a number of goal and objectives must be set which are as follows:

  • New equipments to be imported which are up to date with the modern technology. New machines needed for the processing, packaging and delivery purposes must be bought. For example, more machines to do milking, more trucks to do delivery and also refrigeration of these trucks to ensure that the products are delivered to the customers at the best quality.
  • Improvement of sales strategy: Initially, products are sold only within the company’s retail shops. Therefore, the company ought to start supplying the products in other market centres like supermarkets and other food retail shops.
  • More employees to be recruited: The process of having more employees will help in that the companies will be able to have more working shifts hence increasing its production.
  • Increase the number of cattle from 1000 to 1500 and camels from 230 to 500. This will aim at increasing the production of the company. This will also go hand in hand with introducing more means of acquiring the animal’s feeds.
  • Increase the sources of raw milk. The company ought to start purchasing milk from other dairy farms and individual farmers to increase its raw product quantity.
  • New means of capital acquisition.
  • Introduction of a new factory.

Grand strategy

According to Olsen (2006), the importation of the new machines must be done as soon as possible. This is because for the company to beat the competition in the market it has to use the modern technology. The use of the new technology is all aimed at increasing the productivity of the company. It is anticipated that by using the new modern technology, there will be an increase of about 20% in the production and also a decrease of 25% in the cost of production.

However, this does not mean the existing ones will be done away with. This is why; the employment of new workers is of paramount importance as far as this is concerned so that all machines will be working. The company needs to approach the government, banks and other organization so as to get loans to increase its capital. Due to the introduction of more cattle, a new factory and milk from other sources, a new critical point must be introduced. This is to ensure that the quality of the products is not tampered with as far as the health laws like the HACCP regulation is concerned.

Low cost strategy is very important. The company will be very committed in the area of reducing the cost of production. For example, before trying to import the animal feeds, it will try as much as possible to make use of the locally available feeds. This will actually cut down on the costs of importation. The new cattle’s that will be introduced must be of the species that are at least resistance to harsh environmental conditions as well as to various diseases. By doing this, the company is trying to ensure that extra expenses for veterinary treatments are cut hence increasing the production.

The introduction of raw milk from other sources will also be a strategy to cut down the costs. This is because, the price that the company will offer to the suppliers for every liter of milk they supply is actually relatively lower than the cost of production of that one liter the company produces itself, it is at 5% lower. This is to ensure that the issue of introducing new raw milk will be beneficial to the company.

Implementation and control

The purchase of the equipments must be done immediately. However, this will be done in phases. A few equipments will be bought and then put into work. This is because of the large amount of capital needed to purchase them. The introduction of the new technology will not be done instantly. The new and old technology will be running simultaneously to ensure that the output or overall production of the company is not tempered with.

Then, in future, after there is a satisfactory improvement in terms of production from the factory operating with the new technology, same equipments to be purchased and total replacement to be done in other factories too. Also, the delivery of the company’s products will be done first to a few retail or wholesale shops. Then later depending on the outcome, more shops can be involved in the business. This is to ensure that no major losses are incurred in the process. The process of employee’s recruitment will be done after the introduction of the new technology because, by then more workers will be needed. This step of action will call for the introduction of shifts as well as a new factory that will accommodate all these workers.

The issue of more capital must be dealt with immediately so that the source can be identified. For the company to be able to implement all the strategic goals like building a new factory, purchasing more stock and equipments, there is a need for more capital. Therefore, consultations in the form of proposals must be done with the government through relevant ministries before the budget is read. Also, the proposal must be followed to ensure an action is taken towards it. Loans also intended to be taken from the banks must be applied the soonest possible since without money nothing can be done.

Conclusion

After, all these strategies are implemented; a drastic increase in production is expected. Therefore, to avoid losses due to that, the company, must open doors of export. Prior arrangement must be done so that exportation can be effected as fast as possible. Also, the new equipments imported must be properly maintained to ensure the new technology is sustained. More variety of products can be introduced; which will help in having a wide range of products in the market. Last but not least, the company should start worker’s remuneration, where their salaries can be slightly increased and also rewarding the most hardworking one’s. This will motivate them into working harder and accomplishing all the duties that are assigned to them.

References

Barnes, S. (2002) Rapid strategic planning, Oxford University Press, Amazon.

Olsen, E. (2006) Strategic planning for Dummies. Cambridge university press, Amazon.

Roger, L. (1988) Strategic Planning for the Future. Cambridge university press, Amazon.

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