Where Al Ain Dairy Should Locate Its Activities
Since its establishment in 1981, Al Ain Dairy has been basing its strengths on dairy farming. The firm was built under the directives of Sheikh Zayed Bin Sultan Al Nayhan. At the time of the company’s establishment, it had 200 heads of cattle imported from Australia. After a milk processing plant was established in the country, it created an avenue where people could purchase locally pasteurized milk and yogurt from most supermarkets (Balakrishnan, 2011). The firm also merged with Al Ain Poultry for product diversification. This saw a significant growth of the company’s revenue generation with a paid-up of AED 140 million.
Based on the above-mentioned aspects of growth and expansion, Al Ain Dairy should locate its value addition and diversification activities. This will enable the company to experience significant growth while also meeting the various needs of its customers. Value addition is the act of producing a more desirable and unique product. It is the difference between the price of the product or service and the cost of producing it.
As a matter of fact, the price of a product is determined by what customers are willing to pay based on the customer’s perceived value. The key benefits of value addition are charging higher prices of products and create a point of difference from the competition. On the other hand, diversification is the growth strategy that involves entering a new market in which the company does not operate. Through diversification, Al Ain will minimize the risk of loss to the overall portfolio.
Best Strategic Plan for AI Ain Dairy for the Next Two Years
In an organization that is growing and hopes to maintain its reputation, there is a need to clearly define a strategic plan. This will form a basis for improved productivity and increased profits. For the next two years, Al Ain Dairy should base its efforts on ensuring that customers enjoy its products’ availability. In this regard, the company’s best strategy would be to increase the sales of dairy products. As a matter of fact, the company is selling these products because they have been liked by the majority of children in the area.
While this might be the case, the company should increase its sales without compromising the quality. Al-Ain Dairy is also planning to expand its farms and invest in at least 1,200 cattle while incorporating new infrastructure plans (Balakrishnan, 2011). To ensure this, the company’s best strategy is to minimize the costs of operation by locking some of its agro-products sources that accumulate to about 90 percent of their total cost (Balakrishnan, 2011). This will help the company set a competitive price of the product as well as increasing the market share in the dairy industry.
Based on the fact that a good strategic plan is built around the organization’s needs and the context of the market, Al Ain is planning to maximize on the production of dairy products. For instance, the company intends to increase the milk supply from 2,000 liters to 10,000 liters per day for six months (Balakrishnan, 2011). The four central values guiding the company are people, business conduct, customer relationships, and commitment to the environment. These are also the pillars on which the company is dependent, and as such, it is basing all its efforts on ensuring that these four pillars are promoted so that the business can grow to a greater extent.
Resources Needed to Manage the New Initiatives
Resources are important, especially in helping companies deliver projects and services on time. This is because better resource management helps improve insight into resource availability. Al Ain’s new initiative is to reduce the cost to a greater extent by locking their agro-products (Balakrishnan, 2011). In this regard, one of the significant resources needed to manage the new initiatives is employees who form the most considerable part of the organization.No matter the size and the complexity of the company, employees are essential. With this being the case, managers should plan to advance and identify the most competent group of individuals who will become a part of the potential employees and make sure that they are available to offer relevant skills needed for the company’s growth.
Another resource that is needed to manage the new initiatives is capital. Considering that the company intends to increase the milk supply, there must be a constant supply of animal feeds that facilitate milk production. The availability of these types of animal feeds requires capital. Regrettably, if there is no enough capital, it will not be easy for the company to get everything done. As such, it will be necessary for the manager to ensure that capital flow in the company is sufficient. It would be important that the managers have a realistic idea of the capital needed to run the company.
Material goods are also essential resources that Al Ain Company needs in order to manage new initiatives. Since milk products are highly perishable and get contaminated over a very short time, there is a need for the company to ensure it delivers safe milk products to potential customers. In providing this, relevant materials will be required, especially for milk conservation, so that it does not get contaminated. This type of resource should be planned in advance; otherwise, the company may experience some of the losses that could have been controlled. It will get the company off the ground and successfully move it in the right direction.
Reasons Why Al Ain Dairy should not Consider Markets in Europe
Al Ain Company has been experiencing significant growth for the last few years. It is aiming to make the milk supply constant among its potential customers. After experiencing growth, every company may wish to expand its markets, and this is an effective way of demonstrating the growth and expansion of any business. Although Al Ain aims to grow and most probably open markets in other parts of the world, it would not be healthy to open markets in Europe.
By expanding its operations in Europe, the company will have to incur costs that could have been used for other purposes, such as increasing milk yields. Additionally, the company will highly invest in materials and instruments needed for milk conservation. This will form an additional cost since it is planning to provide milk conservation materials at the local level.
It is indicated that in Europe, there is a high production of agro products. As a result of this, Al Ain will be forced to place high prices for their products. This will make it difficult for the company to compete with their business competitors in Europe. Again, Al Ain is not familiar with the European market, and due to this, it would be difficult for the company to understand how the market operates. With this being the case, Al Ain should not open markets in Europe at the moment.
Reference
Balakrishnan, M. S. (2011). Al Ain Dairy: market expansion. Emerald Emerging Markets Case Studies, 1(4), 1-8. Web.