Al Ain Poultry Farm: Management Strategy and Policy

Executive Summary

The poultry industry in the UAE is comprised of a number of players and as such, it is necessary for companies to engage in strategies that will enable them to gain a competitive advantage over other players in the industry. This paper gives a summary of Al Ain Poultry Farm and the industry in which it operates making a SWOT analysis of the company as well as an analysis using Porter’s Five Forces and PESTLE analysis while taking into consideration different aspects of the company such as the company structure, corporate level, and business level strategies. Recommendations are also given as to how the company can improve its performance.

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Vision

Al Ain operates on the vision of being recognized as a preferred place where households will always rely on for their poultry and dairy needs. It wants to be able to offer its customers the best and ensure that they appreciate it. This is all aimed at ensuring that there is customer loyalty and satisfaction which is the main reason for a management policy and strategy. Through this there is the conduct of drafting, implementing, and evaluating cross-functional decisions which will in the long run assist Al Ain in achieving the long-term strategies that it might have put in place.

The report will look at ways by which Al Ain can better define their intended future in terms of ensuring that their customers are satisfied by the products that they offer. Management strategy and policy will be used to come up with a long-term view that will portray the future that Al Ain would like to be in.

Mission

Al Ain believes that it can be able to build a good tradition in providing good services to its customers. It also aims at being at the forefront of innovation. Innovation and new ideas are the only way by which continued growth can be achieved. This paper will try to look at how management strategy and policy can come in handy to ensure that customers will be offered high-quality and affordable products. Management strategy is also supposed to help in achieving or having safe products that will be generally acceptable by the customers.

Introduction

In order to manage the operations of a company in a way that will ensure its success in the short run and also in the long run it is necessary for the company’s top management to come up with strategies and policies that will ensure this is done in the most effective and efficient way. To do this, it is necessary for the company to fully analyze various aspects of the business such as its operating environment, the potential market for its products and services, the opportunities, strengths, threats, and weaknesses of the company and as such enable it to determine whether its operations will be viable.

This paper seeks to conduct an analysis of Al Ain Farms poultry division, which is Al Alain Poultry Farm, within the UAE (United Arab Emirates), taking into account its strengths, weaknesses, and the opportunities and threats it faces in its industry of operation, as well as carrying out an analysis of the business environment in which the company operates using the PEST analysis and Porter’s Five Forces Model in order to determine the effectiveness of the company’s current operating strategies and their effectiveness in achieving the company’s goals and objectives. Recommendations will also be made from the information collected from the analysis.

Al Ain Poultry Farm

Al Ain Poultry Farm is a division of Al Ain Farms which is composed of the poultry and dairy divisions. The company is located in the United Arab Emirates; where the poultry division of the firm was established in 1981and it boasts of being the region’s number one provider of quality eggs and fresh poultry for its customers (Al Ain Poultry Farm para. 1-2). The company’s main focus has been fulfilling the needs of its customers as far as the constant supply of quality poultry products is concerned in order to achieve customer satisfaction as outlined in its quality policy. To do this, the company has been applying strategies and policies in line with its vision and mission.

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The company’s vision requires it carry out its operations in such a way that will lead to its recognition as the preferred supplier of choice when it comes to poultry products, while its mission is to serve its customers in such a way that will portray excellence on its part as far as customer service and quality product provision is concerned and also to become a leader in its industry of operation in terms of product innovation.

Al Ain has by and large achieved this as evidenced by the number of awards it has received as recognition for its performance, among them being the ISO certification (International Organization for Standardization), HACCP (Hazard Analysis and Critical Control Points) and the Sheikh Khalifa Excellence award which is only given to those companies that have proven their business excellence and quality management as having contributed greatly to the company’s performance (United Arab Emirates para. 1-2).

Internal Analysis

Al Ain has always been in a good position to identify and evaluate resources capabilities and core competencies. All this has been aimed at ensuring that the customers demand value from goods and services that they obtain. In making customers feel that they have got what they paid for, Al Ain has always ensured that its products are very much unique and different. Uniqueness makes the goods more authentic and help in moving customers more closely. There has been a drive aimed at ensuring that the products are affordable to the customers. As a way of internally organizing itself Al Ain has ensured that there is a quick response to specific and distinct customer needs. Customers need that closeness that will make them more active in interacting with Al Ain.

Every customer has that specific need that he feels should be attended to. This is also a systematic way of examining organizational functional activities. Al Ain has been operating mostly on course with its vision. A critical approach has been emphasized here. This explains why its products have been of choice by most customers in the UAE. Through this they have been able to command a big market share. Internal analysis has helped to look at their strengths and weaknesses which are vital in expanding business and being competitive.

Internal analysis also lays an emphasis on the mission of the company. Al Ain has been able to evaluate its capabilities and core competencies. There is more customer service and it has helped to maintain and take full charge of their market. More innovation is also there and it has helped to build more customer loyalty as it’s geared towards customer satisfaction. Al Ain has ensured that their customers are offered high quality services and products at affordable prices.

The reason for its market dominance is mostly explained by its adherence to strategic objectives. This has mostly been achieved by emphasis on the quality of the product and processing techniques. For more customer loyalty there has been insistence on hygiene and safe food, competent manpower and ultimately compliance to the standards. To stay ahead of competition and attain customer satisfaction it has been vital to emphasize on innovation and sustainable improvement. The strategies employed have also been effective as they have shielded them from stiff competition that is evident in the market.

Al Ain Poultry Farm’s SWOT Analysis

Strengths

Al Ain Poultry strength lies in the level of experience it has had in the industry as it has been in operation since 1981. This gives it an advantage over other players who have been in the market for less time and also new entrants into the market. The company has also established its products as brands in the market and as such its customers are assured of quality products and from their satisfaction the company has been able to establish a market niche for itself as well as customer loyalty. The company also has a huge resource base that it can use to invest and as such facilitate sustainable growth. This resource base is in terms of human capital as well as monetary capital.

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Weaknesses

The company’s weakness comes from the less vigorous marketing campaigns it carries out compared to its rivals. It also needs to take advantage of product innovation and differentiation as a marketing strategy in order to better position itself in the market. The company also needs to invest largely in marketing campaigns that will seek to increase its customer base and as such generate more revenues for the company.

Opportunities

UAE offers great opportunities for the company in terms of diversification and a large market and as such the company should diversify both in terms of the products it offers and expand geographically so as to take advantage of the benefits that come with such diversification and expansion. The company should also seek to take advantage of export opportunities outside the UAE as they offer a wider market and new potential consumers.

Threats

The company’s main threat comes from external factors such as competition and as such it should engage in activities that will enable it minimize the threat posed by other industry players. The competition comes from both local and international players. The international players such as those from France and Brazil pose the biggest threat as their prices are in most cases lower than those offered by the local players and they also offer quality products (USDA Foreign Agricultural Service para. 13). The company also faces threats posed by industry regulations as well as risks that come with economic uncertainty.

External Environment of Operation

The poultry industry in the United Arab Emirates has experienced major growth over the last few decades which has been attributed to the region’s population which has been growing steadily as well as peoples improved living standards attributable to a rise in their income and changes in peoples eating tastes and preferences which has led to a growth in the demand for poultry products. Prior to the establishment of the UAE federation, the region’s poultry products were largely imported after which several companies emerged such as Al Ahleia, Tasil, Al Rawda and Ras al Khaimah among others (Al Ain Poultry Farm para. 2-3).

According to Laleye, Abubacar & Afifi (13-14), these major farms have well developed operational and management systems meaning that they produce quality products as most of them are ISO and HACCP certified, thus in order to compete in the poultry industry, Al Ain has to uphold these high standards. With the growth of the industry came new challenges for Al Ain which can be analyzed as follows:

Porter’s Five Forces Analysis

Porter came up with an economic model that shows the factors that influence the nature of competition in an industry’s microenvironment thereby determining firms’ profitability. He was of the opinion that the interaction between these factors and their effect on firms is the main force behind competition. These forces include rivalry in the market, threat of entry by new competitors, the threat posed by substitute products, the power of suppliers who are present in the market as well as the buyers’ power (Ankli 230-231) According to Porter, understanding these forces enables organisations to come up with strategies that will help them to have a competitive advantage over rivals in the industry (Stahl & Grigsby p. 145).Knowledge of these forces will enable firms to be far much more ahead than their competitors as they will be able to devise the best way possible to counter them.

Rivalry in the market means that the firm is facing competition from already existing players in the industry. Seeing as the poultry industry in the UAE is comprised of several competitors, the Al Ain Poultry Farm has to act in such a way as to respond to the moves made by its rivals so that it can remain competitive. For example if the rivals engage in vigorous marketing campaigns Al Ain poultry follows suit to ensure they do not gain a competitive advantage over it. Its marketing strategies involve giving their customers offers and carrying out advertisements in different media platforms such as the print, broadcast, audio-visual and online media.

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This helps to widen their market. Al Ain also has to contend with the threat of new entrants into the market, both local and international. These new entrants pose a challenge to Al Ain Poultry as they lead to increased competition which if not matched may lead to a decrease in the demand for its products which may in turn affect its profitability. Al Ain has to be able to improve on its products as the only way by which customers will be able to stick with them.

The existence of substitute products increases the level of competition in the market as it offers buyers with alternative products to choose from. When an industry shows increasing profitability trends, it draws in new firms who pose a threat to the profitability of already existing firms and therefore entry of new players in the industry forces existing firms to change their market strategies which in effect changes the nature of competition in the industry (Campbell, Stonehouse & Houston 136-137).

The substitute products for Al Ain poultry may include products from rival companies offering poultry products as well as other companies which offer other meat products which can act as substitute to poultry products. For example beef, turkey, lamb and pork products. In such a situation, large poultry farms benefit more as they are able to remain more competitive because as they with their growth come better cost structures and as such they can be able to offer more competitive prices for their products (Colabotta 5).

The power of buyers is manifested in their bargaining power meaning that their consumption of products is based on the prices the firms are offering for their products. This determines the volume of sales the firm will make as well as the level of its profits. Consumers of poultry products in the UAE always demand high quality, affordable products meaning that poultry farms, including Al Ain, have to adhere to these standards as expected by their consumers and as such the company that satisfies the needs of these buyers better gains a competitive advantage over other suppliers (Colabotta 4).

The power of suppliers is determined by the bargaining power they hold, for example suppliers of raw materials, labour and other services (Grant 472). The prices charged by these suppliers to the firm determines the level of the firms profitability in that it determines the final price of the product which will in turn affects the demand for such products.

According to Calabotta (4), raw material suppliers in the region put pressure on poultry farm companies by offering high prices for their products but this situation is not permanent as international raw material suppliers from other countries whose agricultural markets are more developed offer their products at affordable prices and as such force local suppliers to lower theirs. Al Ain Poultry farm must therefore offer prices that seem reasonable to customers while at the same time offering them value for their money in such a way that the company’s profitability is not negatively affected.

Al Ain Poultry PESTLE Analysis

PESTLE (Political, Economic, Social, Technological, Legal and Environmental) analyses those macroeconomic factors which impact on the company and affect its decision making regarding which strategies to follow in order to achieve its goals (Hunt 249). The UAE offers a fairly stable political and economic environment which makes it conducive for Al Ain poultry to conduct its business operations such as stable inflation rates, favorable taxation laws, currency exchange rates and local and market growth rates.

There is also little interference in the running of its operations on the part of the government meaning that the company can engage in its own business practices without much outside interference. UAE regulatory bodies charged with ensuring food safety, both government supported and otherwise ensure that only safe poultry products are availed in the market. These products are inspected during the process of production and processing, while in market outlets as well as in entry points where imported products are concerned (Laleye, Abubacar & Afifi 38). Social factors such as peoples’ living standards have also impacted on Al Ain poultry’s operations especially since they have led to increased consumption trends in the region. Peoples’ eating habits have also changed leading to higher sales on the part of the company.

With the increasing development of technology in terms of information transfer and new and efficient ways of doing things, Al Ain has been able to adapt new ways of doing things and communicating company information within it and to other stakeholders which ensures efficiency on their part. Al Ain’s adoption of new production technologies will ensure that the company is able to produce more poultry products in limited space and as such be able to meet the increasing demand of poultry products and fresh chicken in the UAE region and with this be able to grow its business and the level of revenues it makes from increased sales (Colabotta 5).

Even though the economic environment in the UAE is characterized by stability, it is also proving difficult for the poultry farms due to the ever increasing prices of farm inputs required by poultry suppliers and producers such as animal feeds, high cost of technology, raw materials and veterinary services. In extreme situations, these factors cause major poultry farmers to shut down some of their branches or cut down on production (USDA Foreign Agricultural Service para. 4).

Corporate Level and Business Level Strategies for Al Ain Poultry Farm

Corporate level strategies refer to those strategies that determine the direction taken by a company as it seeks to achieve optimal performance, success and profitability in the long run (Hill & Jones 285). In line with Al Ain poultry’s quest of achieving its vision and mission as stated above, it has engaged in strategic partnerships and affiliations with processing companies and other agencies such as Win Pack, OMMAT Saudi Arabia, Hisex and Bovan in Holland.

These companies are affiliated to the poultry industry in one way or another and enable Al Ain poultry to fulfill its business operations and thus provide its customers with quality products. OMMAT Saudi Arabia, Hisex and Boval in Holland are breeding companies which supply Al Ain with poultry while Win Pack supplies packaging materials, all of which are necessary in the poultry supply industry.

Al Ain poultry also engages in different business level strategies that seek to enable it gain a competitive advantage over other players in the industry by achieving high levels of customer satisfaction. The company recognizes the importance of customer satisfaction and as such ensures that the products and services it offers to its customers are of high quality. The company also uses cost and product differentiation as means of establishing a competitive advantage over market rivals.

Company Structure and Control Systems

Al Ain Poultry’s company structure right from the top management to the lower level staff allows for easy communication of information and ideas and as such allows its staff members to engage in decision making forums that bring together a number of ideas on how to improve the company’s performance. Customers are also allowed to give their feedback to the company which is useful in decision making processes such as the kind of products they prefer and as such the company should consider putting out to the market. The management structure is also made up of a team of highly qualified managers in departments such as the marketing, financial, technical and administration departments which work together to fulfill the company’s goals and objectives.

Implementation and Control

There has been insistence on health as the first priority towards ensuring that there is a sustainable market for the continued growing business. For the proposed measures to be effective there is need for good strategies by the management in ensuring that there is proper implementation. There is a well organizational chart that has been helpful as there is consistent and effective flow of command that has ensured proper control. Collective responsibility and existence of a common goal has made it easy to put in practice what has been agreed on as the best way to move forward. Implementation and control has been guide by the need for total excellence in the business. Quality management in manufacturing of the products has also assisted in ensuring that whatever strategy that has been agreed on is put under effective control.

Recommendations

To gain acceptability the company needs to engage in more corporate social responsibility. This will enable them to be supported by the community which is favourable for business as it moves them closer to the market. The company should engage in vigorous marketing campaigns to ensure that its customers are constantly reminded of its products existence in the market as well as attract new customers. This helps in improving their sales which translates into profitability.

The company should also engage in expansion plans that will allow it to take advantage of the market opportunities that the UAE poultry industry offers. There is need to as well diversify its operations internationally so as to supply its products to international markets. In the process they will be expanding their market. Al Ain should strive to improve and insist on quality products and affordability that will strengthen their market and open up more markets.

The company is supposed to continually invest in technology as a way of ensuring that it’s more competitive in the market. Technology will help in reducing the cost of production and in the process improve returns and product quality. Al Ain is also supposed to insist on customer satisfaction that is good services, clean hygiene and high quality standards.

Al Ain poultry should also come up with strategies that are applicable and be ready to adjust them with the changing needs. This will ensure continued and sustainable growth even in the unforeseeable future. Through this they will be able to survive in the always evolving and tricky market.

Works Cited

Al Ain Poultry Farm. Profile: Business, Political, Social and Regulatory Environment. Al Ain Poultry Farm. Jan. 2010. 16 May 2010. http://www.alainpoultry.com/main.asp?id=2

Al Ain Poultry Farm. Welcome to Al Ain Poultry Farm. Al Ain Poultry Farm. Jan. 2010. 16 May 2010. http://www.alainpoultry.com/

Ankli, Robert. Michael Porter’s Competitive Advantage and Business History. Dec. 1992. 16 May 2010. http://www.h-net.org/~business/bhcweb/publications/BEHprint/v021/p0228-p0236.pdf

Calabotta, David. Change Factors Impacting the Poultry Industry & Resultant New Business Opportunities. ANH-TECH, INC. May. 2005. 16 May. 2010. http://ag.ansc.purdue.edu/poultry/multistate/Fivestatearticle.pdf

Campbell, David., Stonehouse, George and Houston, Bill. Business Strategy: An Introduction. 2nd Edition. Massachusetts: Butterworth-Heinemann, 2002. Print.

Grant, Robert. Contemporary Strategy Analysis. 5th Edition. Massachusetts: Blackwell Publishing, 2005. Print.

Hill, Charles and Jones, Gareth. Strategic Management Theory: An Integrated Approach. 9th Edition. Ohio: South Western Cengage Learning, 2009. Print.

Hunt, James., Schermerhorn, John and Osborn, Richard. Organizational Behaviour. 8th Edition. New Jersey: John Wiley and Sons, 2005. Print.

Laleye, Louis., Abubacar, Adam and Afifi, Hanan. Poultry Industry in the UAE and Bird Flu, Future Trends in Production, Processing, Marketing and Consumption. Dec. 2005. 16 May. 2010. http://cfa.uaeu.ac.ae/dfs/docs/proceeding-Final.pdf

Mankiw, Gregory. Principles of Economics. 5th Edition. Ohio: South Western Cengage Publishers, 2008. Print.

Stahl, Michael and Grigsby, David. Strategic Management: Total Quality and Global Competition. Massachusetts: Blackwell Publishing Limited, 1997. Print.

United Arab Emirates. Al Ain Dairy and Al Ain Poultry received Sheikh Khalifa Excellence Award. AMEinfo.com. May. 2005. 16 May 2010. http://www.ameinfo.com/61427.html

USDA Foreign Agricultural Service. United Arab Emirates Poultry and Products Annual Overview – September 2005. The PoultrySite.com. Sept. 2005. 16 May 2010. http://www.thepoultrysite.com/articles/424/united-arab-emirates-poultry-and-products-annual-overview-september-2005

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