Milco Company: Management

The history of Milco Company (UAE)

Milco Company is one of the food companies being operated under the group name National Food Product Company. Other companies under this group include Oasis Water, Milcoplastic, Arla and Lacnor. The company was established in 1973. It began as a small plant manufacturing dairy products. By 1973, no dairy company had been established; Milco, under National Food Product Company, therefore became the first venture of a dairy company in the United Arab Emirates.

After its establishment, the Milco Company worked on infiltrating through the diverse market within the United Arab Emirates. Since its establishment, Milco Company has grown to become the most technologically advanced dairy product company in the United Arabs Emirates region. The Milco Company has undergone a lot of changes in terms of its productions; during its initial stages, the company used to produce two million litres annually but now its production capacity has grown to approximately eighty million litres on an annual basis.

The company has also ventured into diversification of its brands and therefore manufactures diversified dairy products. Today, it produces one of the best brands of yoghurts within the United Arab Emirates. Some of the company’s dairy brands are Laban, Labneh and Cheese; besides these brands, the Milco Company also ventured into production of variety of juice products (Dun & Bradstreet Corporation 1189).

The success of all these ventures offered the company more expansion opportunities which led it to also get into the business of producing fresh milk which it has enhanced into fresh flavored milk products. The company has its main focus in satisfying customers’ dairy products needs by producing high quality dairy products. Milco Company supplies more than half of the population in the United Arab Emirates with its products. Its production capacity keeps on growing due to its high rate on returns on its investments.

The current annual average growth rate stands at 30%. This is attributed to its main focus on consumer satisfaction. One of the most important drivers of change in Milco Company is the use of research and innovation; this is a strategy that has continuously enabled it to develop high quality new products in its line of production. The company has also established its own milk collection centers in order to get milk directly from farmers.

This has helped it to operate at low cost production level. Milco Company uses brands that make its products very distinct in the dairy industry. It uses new product strategies through giving its products new looks, packaging and doing appropriate market positioning that gives it competitive advantage over its competitors. For instance, in 2009 the company re-launched its yoghurt and fresh milk brands by giving them new look, formulation and new packaging (Dun & Bradstreet Corporation 1193).

A part from its core business, the Milco Company also has engaged in undertaking Corporate Social Responsibility (CSR). This includes ensuring that its activities support environmental sustainability. It also contributes to the activities that are supported by its Corporate Social Responsibility policies. The Company’s eventual goal is to improve the (dairy) industry through improving standards (both social and economic) of the farmers who supply them with milk and also through the use of quality raw materials (i.e. high quality milk). Due to increasing supply of raw milk, the company decided to expand its cooling preservation and manufacturing facilities; this has also ensured that it meets the growing demands in the market.

Vision and Mission of Milco Company

Mission of the Company

The mission of Milco Company is to continuously provide for all its customers’ fruit and dairy product needs through quality excellence. This implies that the firm is devoted to ensure continuous supply to its client. Quality cannot be compromised.

Vision of the Company

The vision of the firm is to stay as a brand that the subsequent generation will grow up with. The company is committed in its brand image; that is, making it the brand for both the present and the future generations. Brand marketing is vibrant. They want the client to identify themselves with this brand.

Analysis of the environment

The market environment of Milco Company is composed of:

1. The internal environment: this environment includes the staff members, the internal customers, the technologies used within the company’s operations, wages and salaries of employees and other unseen internal factors that may arise from time to time during the company’s operations process.
2. The macro-environment: the environment consists of political factors, legal issues that may apply to the company’s operations, economic factors, technological forces, socio-cultural factors and the Milco Company’s and factors related to finances.
3. Micro-environment: the micro-environment is composed of external customers, the company’s products distributors and competitors in the dairy product industry.

It crucial for Milco Company to critically analyze its environment before beginning its marketing and other operational activities in order remain very competitive in the dairy industry. The analysis of the environment should be done in a continuous process and should be used to inform all the planning aspects of the company’s operations. The tools to be used in the analysis of the above environments of the Milco Company include SWOT analysis for internal and external environment, Michel Porter’s Five Forces for the analysis of the company’s micro-environment and PEST Analysis for external environmental factors.

SWOT Analysis

Both strengths and weaknesses can be evaluated by use of internal appraisals or external yardsticks. These include but not limited to expertise and assets that the Milco Company has at its disposal with regards to its (present and potential) rivals. Milco Company is not able to control the aforementioned factors. Population factors, technical factors among others are behind the emergency of these external factors. The SWOT analysis tool therefore analyses both the internal and external business environmental factors that affects the operations of the company.

Strengths of Milco Company

1. Continued stable growth: Milco Company has handled its expansion in a better way, a thing that has seen its productivity increase at a very high rate. The company has also been able to venture in production of other dairy products which it did not produce at its initial stages of operations.
2. High profit margins: the company operates at large scale. It also has variety of brands of dairy products in the market; besides the company’s products are high differentiated from those of its competitors hence making its products to be easily visible and identifiable in the industry and or market. This has enabled it achieve high profit margins.
3. Technical man power: the Milco Company has a professional manpower with inter international experience and expertise. This has enabled the company to operate effectively and efficiently to meet the high demands of dairy products in the market. The highly qualified manpower has also given the company substantial competitive advantage over its competitors.
4. Availability of raw materials: the Milco Company has abundant raw materials to meet its operational requirements. There receives plenty of raw milk from dairy farmers. It has even established its own milk collection points.
5. Flexible product mix: Milco Company has a very flexible dairy product mix which include yoghurt, fresh milk, and flavored milk; and besides dairy products it has a juice brand. The flexibility with which it provides dairy product mix also gives it competitive advantage over other competitors.

Weaknesses of Milco Company

1. Product perishability: most, if not all, of the products manufactured by Milco Company are perishable, especially the dairy milk products. The products require specialized preservation facilities like coolants. This has made it difficult to supply its products to the regions lacking the appropriate preservation facilities.
2. Lack of control over yield of milk: the company may wish to process as much milk as possible, but it does not have the power to determine how much milk should be produced by the dairy farmers. In this case the company can either experience over-supply or under-supply of raw milk for its core business operations.
3. New industry competitors: the dairy industry is still large and is able to accommodate more players. This has exposed the Milco Company to new competitors entering the dairy industry. The likely effect of this is low returns or reduced stock turn over for the Milco Company.

Opportunities for Milco Company

1. Export potential: the Milco Company is large and produces in large scale. It able to supply over half of the population of the United Arab Emirates with dairy products. This is an indication that the company has the potential to produce enough to supply even the foreign international markets. With its growth history the Milco Company is able to expand its operations to other parts of the world.
2. Value addition: one way through which a company can increase its profit margins is through value addition. There is an exceptional capacity for innovations in dairy product development, packaging of the products and presentation.
3. Increasing domestic production: the Milco Company can increase milk production at domestic level through assisting dairy farmers with either free or subsidized extension services. It can also engage dairy professionals to help farmers improve the quality of their milk productions. The company can initiate increased domestic production of milk through animal disease control projects, better animal feeding projects, paying fair prices to dairy farmers. This will ensure it has got enough milk stock for its plant productions.

Threats to Milco Company

1. Competitors: the Milco Company has already existing competitors in the industry who also provide consumers with similar products manufactured by the company. The company also faces competitive threats from the new entrants into the dairy industry. This may affect the company’s financial performances.
2. Milk vendors: the milk vendors are considered to be an unorganized group of merchants.

PESTEL Analysis (External environmental analysis)

This is a framework used typically by strategy consultants in examining the (external) environment in which a firm operates. In this case the external macro-environmental factors that affect the operations of the company are established and examined in details. These factors take a very crucial role in the firm’s (value-creation) opportunities of a given set of policies. Nevertheless, it is significant to note that these factors are beyond the firm’s control and thus external.

It should be noted that macro-economic factors vary in terms of geographical locations. This implies that the application of PESTEL analysis model should done with due consideration of the region a company is located. In the case the Milco Company, the PESTEL analysis is used with regards to United Arab Emirates environment. Due to the fact that the Milco Company also exports some of its products, the analysis may extend to other geographical areas (Henry 51).

Political Factors

The economic performance of dairy industry can either be discouraged or encouraged by the actions of the government agencies or the prevailing political environment. United Arab Emirates region is majorly governed through Islamic laws. The political activities are based on Islamic religion. It is important to note that the Islamic principles have been responsible for the stable political environment in the entire region of United Arab Emirates.

The stable political environment has enabled the Milco Company to grow gradually; the continued political stability is also likely to enable the company to continue growing assuming that other factors are also favorable to its growth and expansion. The government is able to influence prices of dairy products either through increasing taxes or reducing them. This means that the profitability of the dairy industry is partly influence by the political elite within the United Arab Emirates. The operations of the Milco Company and other international industry players are also influenced by the political systems of other countries to which it exports in dairy products.

For instance, different countries have different rates of tariffs on foreign products. This implies that the firm will only export to those nations with favorable (tariff) rates. The government policies are important factors to consider in the operations of the company. However, in many cases the company has been able to operate favorably within the existing policies regarding company operations. It is a fact that the favorable political environment that has existed since its formation has enabled the company to expand and grow to its current status.

Economic Analysis

The dairy industry in the expansive United Arab Emirates is affected by the government’s economic policies. In 2009, the United Arab Emirates Minister of Economy rolled out a plan that would reduce the cost of producing dairy products. The Ministry of Economy also came up with ambitious plans to develop the dairy industry sector by bring in some of the best expertise sourced from both locally and internationally. The implication of this to Milco Company’s production will be reduced production cost and increased profit margins. The government is also working towards establishing trade partnership with various foreign countries.

This will help the Milco Company to increase its export of dairy products. In the reduction of the industry production cost, the government of the UAE has come up with favorable tax policies that encourage production and reduce cost. Despite the fact that there is increased amount of imported dairy products within the United Arab Emirates, the domestic dairy industry is still growing at a proximately 10 percent annually. The dairy industry in UAE has achieved about 90 percent self sufficiency meaning that the industry is able to flourish without the need to rely on outside assistances.

Social Analysis

In doing social analysis for the Milco Company, different social factors are examined in order to enable company to understand the social factors that affect its products in the market. Both locally and internationally, buyers only want dairy products that do not pose health risks. Such opinions like “healthy food products are made at home” are likely to make potential customers to have negative attitudes towards processed dairy products.

This scenario has the effects of reducing the stock turn over of dairy products hence negatively affecting the profit margins. Producing for certain social group may prove advantageous to the company, especially in cases where a particular social groups, say the youths or the aged, like certain dairy products. The media view can influence the change of attitude by customers towards the dairy products. Young people tend to change their attitudes over a period of time. The implication of this is that the changing attitude must be put into considering when the company is diversifying its dairy products to target different market segments.

Social Factors also include the employees’ attitudes. The employees in working in the dairy company need to enjoy certain basic freedom and be fairly rewarded for their performance. This will attract more labor force into the industry and hence low labor cost in the industry. This will benefit the company through having proud employees committed to the company’s goals and objectives.

Technological Analysis

In order for any firm to enjoy competitive advantage, it is important for such a firm to adopt the use of technology in production. The main concerns of technological analysis of the company are to check whether technology enables productions of dairy products at cheap cost and high quality and standards, whether the technology offer both the consumers and the manufacturer innovative products and or services and whether the technology offers the company new ways of communicating with the consumers. One important aspect of technology is the internet. The (internet) technology has not been utilized fully. It has been almost impossible to sell dairy products through the internet. Otherwise the adoption of high technology machines has enabled most companies in the dairy industry, especially the Milco Company to increase production level.

Legal Analysis

The legislations that may come from time to time may have certain effects on the operations of the dairy industry. The government may come up with certain legislative requirements that may reduce or enhance the profitability of the company. The recent legislated plan to reduce the cost of production in the dairy sector is likely to benefit the company. It is also important to note that the prevailing legal factors determine what production activities the company can engage in and those that it cannot do. The government in UAE has some legislation that safeguard public health. There are safety standards set when handling any form of food products.

The government has also prescribed certain food products that can be sold in schools to students. Some of these food products are dairy products. Such legislations have the effects of reducing sales of dairy products.

Porter’s 5 Rival Force

1. Supplier power: the company gets raw milk from many suppliers. It is also important to note that there are many companies dealing in similar dairy products. In case it cannot offer better prices to suppliers in exchange for raw milk, the suppliers will definitely seek to supply other dairy companies offering good prices. However, due to the fact that there are many suppliers, it is able to avoid suppliers whose prices are higher than it is willing to offer. In this case there may be some cost involved when suppliers decide to switch. The suppliers do have absolute power to determine the cost of the company’s products.
2. Buyer power: the dairy products are very price sensitive. A change in price of dairy products by one company will lead buyers to switch to dairy products from other companies. The cost of switching is low and is not technical in any way. This implies that the buyers have power to determine the prices of the dairy products in the dairy industry.
3. Entry/exit barrier: there are already many companies dealing in dairy products. The companies are already operating in large scale, these include Milco Company, and they enjoy economies of scale. Competition (existing) is stiff thus locking out new entrants. The tight competition has ensured the companies have no control on prices. This means many of the companies are getting small profit margins hence easy exit.
4. Substitute: the dairy products are always similar. The only difference is differentiation. This fact makes it easy for buyers to substitute the products with the other. It, therefore, means the Milco Company has no power on customer loyalty.
5. Rivalry: the dairy industry is concentrated with dairy companies operation both in small and large scale. This implies that there is tight rivalry in the industry. This has created the need to have a complex product differentiation for the company. It also means that the company has to spend a lot on marketing the products.

Internal Analysis using Value Chain Analysis

The value chain is systematically used to examine the development of Milco Company’s development of competitive advantage. This analysis model was created by Michel Porter. The model is compost of a sequence of activities that helps the company create and enhance value. In using this analysis model the Milco Company’s activities are divided into two categories. The first is the primary activities categories and the second one is support activities category (Grant 290).

Primary Activities

1. Inbound Logistics: The Company receives raw milk from farmers and stores them in wait for processing. The Milco Company has established its own milk collection centers through which it collects milk from the dairy farmers. Within the company premises there are storage facilities that can hold enough raw milk that can sustain its production capacity.
2. Operation: the operations of the Milco Company start from the time it receives milk from the farmers to the point at which it delivers the products in the market. During the operations the milk is pasteurized; this is meant to kill germs and any form of bacteria therein. The process also includes extraction of butter that is to be used in the production of other products, the milk and other milk products are then packed appropriately before being dispatched to the market. The packaging is done according specified sizes and the targeted market. The operations of the company also involve sorting the products according to brands. During this process or operation, the quality of the overall products are checked and verified.
3. Outbound Logistics: these activities come when the products are ready for the market. This process involves the dispatch of the finished products to the final consumers. The finished products follow different channels to reach the final consumers. The channels include wholesalers and retailers. The process of taking the products to the final consumers entails the use of vehicles with specially designed and embedded coolants.
4. Marketing and sales: after the products are ready for consumption, the customers need to be aware that they are already supplied to the market. This is the stage where the company takes the responsibility to design market communication and promotion mix that will ensure the consumers are aware of its products. In this case, the company makes use of various means of product promotion which include advertising through radio, television, print media and brochures. It also does promotion through discounts, commissions and direct sales marketing.
5. Services: in order to give the best and fresh dairy product to its customers, the Milco Company has developed certain indicators showing the customers whether the dairy products have experienced several temperature changes which may affect the quality and freshness of the products. The company has done this due to its belief that quality of milk is not only determined by the expiration date printed on it but also on the way it is handled. Milco Company also gives advice to its customers on how to keep the products fresh. For instance, it advises the customers to ensure the products are kept in cool conditions right from the point of sales.

Support activities

1. Procurement: Milco Company is involved in the manufacturing of several dairy products. These products are like meet precuts and those made directly from milk. The company has a procurement division whose mandate is to ensure that raw milk and raw products are purchased. It also ensures that packaging materials, preservation materials like coolants and necessary chemicals and transport logistics are bought to be used in the manufacturing process.
2. Technology Development: Milco Company understands that technology is important with regards to competitive advantage. The company has improved its use of technology to satisfy its products consumers through constant innovation. For instance, the company has effective and efficient coolants that can keep its raw materials cool and fresh until the time of processing; this also is the case for the finished products. The company has also developed indicators, through new innovations, that help consumers to determine the quality and freshness of the dairy products rather than rely on expiry date labeled on the product package. The manufacturing process also makes use of high technology machines that are able to produce output in large scale. This has given Milco Company some significant competitive advantage over its industry competitors.
3. Human resource Management: the Milco Company recognizes the significant role played by its human resources. The company has several departments which needs employees of different expertise. These departments include production, procurement, finance and human resource department amongst others. The company recruits its competent workers based on the demands of vacancies. It has a systematic way of recruiting the workers for different departments; the new recruits are then given appropriate trainings which may include understanding the company’s mission and vision statements, company’s goals and objectives and on the job training. The company also offers competitive salaries to employees to ensure that they give their best performance; it also has other incentives that take care of the interests of the employees.
4. Firm Infrastructure: the Milco Company’s infrastructural activities are driven through careful and effective strategic planning process. The company has efficiently working Information Management System. It also has a team of competent personnel who participate in the planning process for the company’s activities. The Milco Company’s infrastructures are also well maintained to ensure efficiency and effectiveness in terms of production and customer satisfaction.

Strategic objectives for Milco Company

Growth

1. To be able to maintain a net profit rate that is equal to or surpasses the best dairy product companies in the region
2. To have efficient and effective investment and fiscal policies and procedures respectively in order to cultivate aggressive profitability and growth
3. To have a comprehensive business development plan. This will help the company to be able to set reasonable goals and objectives and also appropriate means of achieving them.
4. To enter into new market as part of the company’s expansion and growth plan. This is through development of new product line, expanded manufacturing capacity and increased manufacturing facilities.

Management

1. The company plans to have and sustain a management team that has the capability of helping the company realize both of its long and short term goals and objectives.
2. To ensure that the company always has a complete and competent management team

Security and safety

1. To make sure that all the employees work in a secure and safe environment.
2. To offer safe products to customers and all other stakeholders.

Employees

1. The company plans to have a comprehensive development programs for all its workers. This is to be done according to career needs of each employee.
2. Reduce the company’s employees’ turnover rates in order to retain high skilled work force that is conversant with the company’s operations.

Resources

1. To ensure continuous flow of raw milk to the company. This is implemented through offering fair prices to the dairy farmers, established milk collection points and large storage and cooling facilities.
2. To ensure there is sufficient and efficient transport facilities for the distribution of finished products to the selling points.
3. To minimize wastage of resources in order to reduce costs.

Quality

1. To maintain the ISO 9001 and HACCP certification
2. To avoid errors and omissions in the company’s daily operations
3. Achieve standard requirements and comply with the government and environmental obligations.

Administrative

1. To have a financial and cost management system that is standardized according to the international requirements
2. To have the company’s standard procedures of operation for all employees and stakeholders.

Company’s physical plant

1. To have an appropriate plan of technological development and application.
2. To have a proper financial plan for replacements of its equipment through the procurement department.
3. To use high capacity manufacturing plants.
4. To have a program for regular plant maintenance

Generic strategies for the company

Generic strategies are the strategic planning approaches that can be adopted by any business enterprise and is applicable to all market segments and industries. Generic strategies are important to Milco Company in terms of improving its competitive performance. In coming with the Milco Company’s generic strategies, Porter’s model is used.

1. Cost leadership: the Milco Company strives to reduce cost through all the components of its manufactured products right the sourcing of raw materials to the cost of labor. The company’s cost leader often targets a wide market so that sufficient and efficient sales can compensate for the costs of production. Since the dairy precuts are very price sensitive the company do not pass cost savings to its consumers since its brands can actually command best rates in the market segments.
2. Differentiation: differentiation helps the company’s dairy products to stand out distinctively in the dairy product market. The company produces highly quality products that are differentiated from similar products supplied to the market by the company’s competitors. The main aim of differentiating the company’s products is to target particular segments of the industry market.
3. Strategic niche: the company through its differentiated dairy products has created niches in some specific niches. The company has also established niches by use of different product sizes. All the products of the company are packaged in different sizes to target customers from different economic and social classes. The prices of the products are pegged on the size, quantity and quality.

Milco Company’s grand strategies

The grand strategies state the means by which the company will undertake to meet its long term goals and objectives. Grand strategies have been employed by almost all business entities. So it is not unique to the Milco Company. However, the way the strategies are pursued by the company determines its competitive advantage. In dealing with the company’s grand strategies, the company managers are faced with a lot of challenges in terms of decision making.

In some cases there may arise the possibility of arriving at the wrong decisions. To deal with these challenges in an effective manner it is important to categorize the corporate strategies into three grand strategies. These groupings are growth (which include efforts to develop the function of the business), retrenchment (which entail efforts to curtail the business scope of operations) and stability (which is concerned with the maintenance of the status quo (Erasmus et al 188).

Strategies for growth

The company has designed its growth strategies to expand its performance. This performance is often measured through levels of sales, marginal profits, market coverage, product mix, level of market share and other accounting procedures and market oriented variables. In dealing with its growth strategies the company employs the approach of concentration in order to attain greater penetration of the market.

The company has also adopted the strategy of backward integration in which it collects raw milk through its established centers rather than rely on raw milk suppliers. It also uses forward integration whereby it supplies some of its dairy products direct to the consumers or to the retailers. To enhance its growth, the company has embarked on diversification in order to supply the dairy products into varieties of market and also increasing the amount of product mix. The diversification adopted by the company is referred to as concentric diversification due to the reason that the product mix of the company includes related dairy products.

Stability strategies

The Milco Company uses this strategy effectively because of its high level of production. This strategy favors the company due to the fact it is already using high technology means of production and distribution of the products to the market. The company undertakes to maintain its production achievements and does not want to use outdated technology. It always strives to embrace new production technology and use it to maximize on its profitability.

Retrenchment strategies

The Milco Company usually recruits its workers when needs arise. Otherwise keeps an appropriate number of employees for its holistic operations. However, the employees are subject to retrenchment in case the company may decide to reduce its scope of operation or production levels.

The Company’s business level

The firm operation revolves around corporate (business level). The company focuses on addressing the whole scope of its operations. The company is concerned with its productions for different market segments located in various geographical regions. It has a product mix which it always seeks to enhance. The company is also involved in Corporate Social Responsibilities. At its corporate level of operations, the Milco Company decides on how to distribute its resources to different departments.

The responsibilities for product diversification fall with the company’s corporate domain. This implies that all these process of introducing new products to the product line, diversification of the market and branding are made at corporate level. The company’s corporate business level is indicated by the related product diversification; the company’s pro Milco Company duct are dairy and it has never dealt in any range of products that are far removed from dairy products (Bratton and Gold 44).

Implementation and control

This is a process that covers the planning process, monitoring and evaluating change control of the company’s operations. The purpose of implementation and control in Milco Company to provide the company with a standard approach to operations management; this is done by coming up with certain consistencies the structure of the company’s operations and having a general procedure for the process of planning, controlling, process monitoring and evaluation and reporting the progress of operations (Kotler 77).

The procedure is put in place to ensure that there are some minimum standards used in reporting the performance of the company, a brief cost plan and schedule against which the company’s changes can be examined and also controlling the actual company variables to guarantee limited effects the company’s deliverables. The aforementioned strategy is also incorporated in the firm’s marketing plan. In this case the focus is placed in marketing implementation and marketing plan controls.

Executing the firm’s (marketing) plan is what we are refereeing to as (marketing) implementation. The company prepares start date and end dates for its marketing plan. It also monitors and evaluates the effectiveness of the marketing plan during implementation process. The strategies that the company seeks to implements include positioning, competition, among other strategies. To avoid market failure during implementation, the company has come up with a precise implementation schedule. The schedule is meant for the company to achieve high level success possible during the marketing implementation process.

Marketing planning control activities of the company assists the marketing mangers in concentrating their efforts within the constraint of the company’s internal environmental and resources. The main purposes for marketing control are to make sure that the selected marketing sphere includes activities that are optimal to the operations of the company, assisting in examining consumer satisfaction by the company’s dairy products, ensuring that the marketing objectives established by the company during planning process are attained, re-evaluating objectives the performance of the marketing process and help the marketing mangers of the company to acquire the capacity to put in place forecasts and examine the existing operational programs and be able to make marketing plan for the future.

Recommendations

Looking at the Milco Company’s historical development it is right to deduce that the company has always been on constant and gradual expansion. It is important that the gradual expansion and growth be enhanced through adding more brands in the product lines. Such products may include cooking fat manufactured from dairy products. The company should also establish another niche in supplying to the market dairy products specifically meant for infants of the very aged, for instance the octogerians.

The company should also consider establishing some of its production lines in various foreign countries. It should not just be exporting finished products; by establishing parts of its product lines in other countries it will be able to reduce its operation costs especially where it establishes production in developing countries. It will be able to enjoy c heap labor and also avoid tariffs imposed on imported goods and services. The Milco Company and Lacnor belong to one group yet operate independently. This makes the administration of the two companies to be more expensive than when both were managed together. It is a fact that both companies produce related products.

It is recommended that the two companies share administrative infrastructure and resources. If possible both dairy companies should be merged together. This will help the whole group of company as a unit to reduce its total operation costs. The last recommendation is that the company should consider having its own ranch of dairy cattle. This will ensure it is able to obtain high quality raw milk cheaply hence producing low priced dairy products. This will help it increase its competitive advantage over other players in the industry.

Works cited

Bratton, John and Gold, Jeffrey. Human Resource Management: Theory and Practice. London: Routledge, 2001.

Dun & Bradstreet Corporation. Who Owns Whom. New York: Dun & Bradstreet Ltd, 2006.

Erasmus, Barney et al. South African Human Resource Management: Theory & Practice. South Africa: Juta and Company Ltd, 2003.

Grant, Robert. Contemporary strategy analysis. New York: Wiley-Blackwell, 2005.

Henry, Anthony. Understanding Strategic Management. Oxford: Oxford University Press, 2008.

Kotler, Philip. Marketing insights from A to Z: 80 concepts every manager needs to know. New Jersey: John Wiley and Sons, 2003.