Introduction
Almarai is a dairy product manufacturer and distributor that sells cream, cheese, milk, and other dairy products. The headquarters of the corporation is based in Riyadh, Saudi Arabia. The company is based in the Middle East, with Saudi Arabia as its core market. The corporation has a significant market share in the Gulf area and Saudi Arabia. Today, the organization is regarded as the region’s leading dairy firm. Almarai Dairy is one of the world’s largest integrated dairy companies. It’s farming, selling, and distribution businesses, for example, employ many workers on the farm. The firm has grown into the world’s major vertically assimilated dairy company, with a definite purpose to produce excellent, healthy food and drinks that improve the customer experience.
Problem Statement
However, in 2017, increased taxes and subsidized cuts were pinching budgetary decisions as part of Saudi Arabia’s novel head prince, Mohammed Bin Salman’s financial programs. The expatriates, who initially made up approximately a third of the population of Saudi Arabia were the primary customer of Almarai’s dairy goods, were fleeing the kingdom in droves response to fluctuations in other government policies. Almarai’s managing group, controlled by CEO Georges Schorderet, is debating how to shield and develop the company image in Saudi Arabia while still identifying reliable channels of growth prospects in this case.
Alternative Solutions
Alternative 1: Enhancing Competitiveness
To enhance the market competitiveness of a company, the quality and price of the products must be considered. Almarai Company is faced with challenges related to the price of its products. The company sold its products at higher costs that were not suitable for the customers. Due to complaints from customers, the company should strive to reduce the prices of products to lower and affordable costs. Currently, the prices of the products sold by Almarai are neither too high nor too low, and therefore a large number of the customers can afford to purchase the products. The company has made its central focus on the customer by going to more extraordinary lengths to produce products at reasonable prices, taking into account the customer’s income and purchasing power. Although the introduction of lower costs of products in the organization may have affected its profit margins leading to a slower growth rate, the company has dramatically put in place the interests and needs of the customers.
Before quoting a price for its items, the company also evaluates its competitors and differentiated offerings. Because of their quality and price, other differentiated products can draw buyers to the company. The company is also dealing with a drop in demand due to new entrants and the availability of rivals and particular items in the market. Pricing is a critical component, as is a marketing strategy, which Almarai should continuously focus on maintaining its marketing position. Setting a good pricing strategy that customers can afford is very important as it increases the number of customers in the company leading to an increase in profits. Consumers in Almarai’s target market are no longer willing to pay high costs for products since they are more price-sensitive than before. Thus, the price strategy must be determined by the demand of the clients and the overall ability to purchase.
Alternative 2: Manufacturing in Other Markets
First, Almarai Company’s weakness is exacerbated by its over-reliance on the juice and dairy segments. The company only focuses on the dairy and juice segments which increases the risks to the company. In maintaining a good marketing strategy, a company ought to diversify its risks in many industries. In providing a solution for this problem, the firm can manufacture in different markets but with fragmented dairy sources. This will lessen the possible political risk associated with implementing the plan. The plan will also lead to an expansion in the marketing strategy of the Almarai Company by spreading its risks to different markets. This action is significant for the firms as it sought to reduce various risks like strict government restrictions that may arise leading to the termination of the business. Also, the measures ensure long-term benefits where a company attracts higher profits from the various firms.
However, the action has its drawbacks, such as lowering Almarai’s control over dairy products, which even the firm cannot afford because dairy products are its primary business. Due to the diversification, the company may not be able to control its dairy products effectively. As a result, the quality of the products from Almarai Company will fail to meet their quality levels. Basically, specialization mainly helps to guarantee the quality of products of a given company. When a company opts to diversify its operations by creating more businesses, its principal focus on the prior standard of products reduces. Due to this factor, the firm may significantly reduce fresh milk sales and lose its customers. Therefore, taking this alternative will require a higher consideration of many aspects by the Almarai Company to prevent particular risks that may result in the fall of the company.
Alternative 3: Enhancing Efficiency
In order to minimize product contamination, the product hopper and dosage station ought to be pressured with sterile air. Additionally, three machines built to the most current sanitary design standards, guaranteeing safety and reliability, and hygienic manufacturing processes should be put in place. Easy use and quick modifications are made possible via an intuitive Human Machine Interface (HMI). The Almarai Company is a globally renowned brand; therefore, distributing a product under its title will be acceptable in any market.
The corporation is also noted for the excellent quality of its services and products. Saudi Arabia’s food and dairy businesses are one of the largest globally, significantly impacting consumers. Almarai can offer more outstanding product quality thanks to chemical-free cleaning techniques for packaging and delicate machine parts. Moreover, the inline cup toppers should be supplied with an ultimate cleaning alternative backed by an automated rinse bar in terms of efficiency. The rinse bar glides under the dosing station’s filling nozzles at the touch of a button. The entire dosing process can then be handled mechanically while the machines and sensitive parts are kept shut. As a result, cleaning times are reduced, and production efficiency is improved significantly.
Customers are increasingly more concerned with the quality and efficiency of food that they consume due to psychographic segmentation. The high quality of its goods backs up Almarai’s powerful brand reputation. Consumers of numerous interests, beliefs, and routines are fascinated by the incomparable quality of its products. This alternative comes with its pros and cons. In enhancing the efficiency of other products, the company will maintain the firm’s history of introducing many successful products and of higher quality. The image and brand of the company will also be held higher and recognized by many other firms, including its competitors. Also, the expansion of the products in the Almarai Company will lead to an increased market share, thereby attracting more profits to the company.
However, the alternative has its cons related to the enhancement of efficiency in the market industry. Firstly, this efficiency will require a costly investment which may affect the company’s capital. The first-time introduction of products in the market may be faced with challenges before the customers understand its quality and location. The organization, therefore, ought to have patience after enhancing measures like correct distribution strategies into the market. Every investment involves risks with the aim of generating profits later. Almarai Company should therefore be aware that this is a risky investment that is met with possible challenges. Therefore, the company should not be afraid of failure of the introduction of the high-speed machines in the production of its stuff. This will enhance its efficiency and attract more profits as a result.
Alternative 4: Large Scale Dairy Farms in the Markets
For long-term profits, Almarai Company may construct a large-scale dairy farm in new markets like Turkey, Pakistan, Iraq, and Sri Lanka, Malaysia, and Indonesia. Mainly, oil price variations have a significant impact on Saudi Arabia’s economy, and variations in the domestic and international currencies may have an effect on the Almarai Company’s cost, sales, and returns as it expands into new countries. In addition, the fact that one-third of the country’s population is expatriates could not be overlooked. These expatriates play a critical part in the country’s economy and social stability. The integration of new markets in other countries will reduce the risks that may result from the government regulations in Saudi Arabia. Geographic segmentation classifies customers reliant on their position, such as states and countries. Almarai Company vends its goods in the Gulf area, Jordan, Egypt, the Gulf area, permitting it to target different markets in numerous places simultaneously. The efforts to diversify the company’s market of products to diverse countries will increase its competitiveness in the market and attract higher profits in return.
The introduction of the products from Almarai in other countries will significantly benefit people of all ages in the country, including children. Toddlers and adults are the target marketplace for its goods. The infant method it sells is attractive to babies, but the other dairy products it sells, such as cheese, yogurt, and fresh milk, are primarily consumed by adults. Its products are not a bigot in any approach. Its kinds of stuff are sold to both men and ladies. Almarai is a brand name, and since most cultured persons care about brands, the target consumers are also sophisticated.
Consequently, this large-scale dairy farm in other new markets by the organization comes with its pros and cons. The large-scale dairy firm will guarantee a higher capital investment that will attract more profits in return. Also, the expansion is a long-term benefit to the company. Almarai will be expected to grow widely towards attaining its international marketing levels. With the efforts, Almarai will bring efficiency and scale in these markets in the select countries. The company will supply its products to many parts of the country through its ability, including remote areas. This will increase its marketability, and huge profits will emerge as a result.
On the other hand, expanding the company’s market share to these countries comes with various challenges. Although these markets are projected to have strong dairy product demand, particularly milk, the increase may cause some governmental concerns among governments. In this regard, the investment may be hindered by a political risk that may impose high taxes on foreign investors or prevent them from investing in the countries. Also, the expansion of the market share by Almarai Company may negatively impact the local businesses. Since Almarai is a great and famous company due to its production of quality products and essential services, its introduction into other countries might affect the competition levels in these countries. Many customers will be attracted to purchase products from the company, which may fail other local businesses.
In addition, some countries have unfavorable weather conditions that may lead to a disadvantage of investment. In many places, the customers may not prefer consuming products like ice creams produced by the firm. This effect may lead to making low sales in some countries and contribute to a loss. Therefore, expansion of the investment to other countries by Almarai Company should come with additional considerations put in place to ensure a successful investment.
Recommended Alternative Solution
Alternative 3: Enhancing Efficiency
From the preceding alternatives, Almarai Company should adopt enhancement of efficiency as the best alternative because it presents a broader selection of items. Almarai also has a track record of launching successful products and new items on the market. In addition, new items will be introduced under the company’s brand name, and therefore this will motivate its tailored customers to buy because it provides a high-quality product. Also, the expansion of the products in the Almarai Company will lead to an increased market share, thereby attracting more profits to the company. Once a company improves its efficiency in terms of product quality and distribution strategies, it also suggestively advances its brand image and viability. The efficiency of Almarai Company will be used to protect the overall company from the risks that may emerge due to government restrictions, including other factors.
Basically, a company can shield itself against contenders by differentiating its products and services. When Almarai Company adopts the efficiency of its products, its profitability and brand image will improve significantly. As a result, the political risk, including other elements associated with implementing the betterment of the products, will be reduced.
Conclusion
In a nutshell, Almarai Company is a global leader and a well-known brand in the dairy and food business, with a diverse product line. The Company is known for its uncompromising excellence. The company’s strong brand strategy has helped it build an efficient connection between its corporate image and its goods in Saudi Arabia and around the universe. The detrimental effects of unexpected changes in legislation on the corporation could be handled by effectively responding to the reforms and extending its market share through more and more extensions in the new product market. Almarai’s product and service diversity will be used to shield the company as a whole from hazards that may arise as a result of government restrictions and other variables.
Even though it faces various challenges that affect its success, Almarai Company can develop multiple measures to overcome the challenges discussed. The company may overcome the challenges by enhancing its efficiency, manufacturing products in other markets, creating large-scale farms in other countries, and adopting a correct pricing strategy through enhancing the market competition. From these alternatives, the enhancement of efficiency would be the best alternative as it guarantees the company huge profits and leads to the company’s success.