SSP: Brookside Dairy Company
To prepare, select a company with which you are very familiar or for which you can easily obtain information. You may wish to use the organization you are thinking of proposing for the Sustainable Solutions Paper (SSP), which you will complete throughout the course. This would allow you to repurpose information from the Discussion for a portion of your SSP. If you wish to take advantage of this opportunity, please review the SSP template located in this week�s Learning Resources to ensure the organization you choose for this Discussion also satisfies the SSP requirements. Review this week�s Learning Resources, particularly Exhibit 1 in Porter and Millar�s article �How Information Gives You Competitive Advantage.� You can use this chart to guide your value chain analysis for this post.
Briefly describe the organization you selected and the industry in which it is located. Explain the concept of value chain and its impact on business strategy. Next, explain how technology impacts a value chain. Apply Value Chain Analysis to identify strengths and weaknesses in areas of the value chain for the organization you selected. Describe the linkages (relationships) between the areas, and explain the strategic significance of the organization�s value chain in terms of the larger value system.
Brookside Dairy Company
Brookside Dairy Company Limited has since the beginning been the leading East Africa dairy company. Its operations are fully fledged in Kenya, Tanzania, and Uganda. It has the largest network of farmers, collection of milk, and the capacity for milk storage in east Africa. It is known to be the leading producer for milk and dairy products. Currently, it produces fresh milk, yoghurt, long life milk, butter, and ghee (Valentino, 2012).
Potential Impact of System Thinking
The potential benefits of applying systems thinking to this organization is that it helps one to see how things work and thus enables one to identify anything that is of value or of waste in the service or product delivery resulting to a better service and reduced costs. On the other hand, the potential drawbacks of applying systems thinking to this organization are that, it may be applied where the original problem statement was quite useful and thus affecting the organizations functions (Ing, 2013).
Others may use it as a flavor but instead, they end up replacing the best flavor. This are the times when system thinking is not really mandatory to the organization because it may end up affecting its structure for no good reason. It is only advisable in cases where the organization is not really functioning as required so it may be applied to solve its problem. Once we know the importance of the systems and the system thinking, it is good to ask ourselves questions like: “Which specific part of the system do I need to first attend to?” or “How relevant is this system to the dairy production?” This will probably help in the systems thinking decision-making.
Stakeholder Identification and Value Analysis
Brookside Dairy has partnered with stakeholders such Kenya creameries limited to help develop the regional and local dairy and livestock sector to a world-class standard. In the last 10 years that they have been in a serious operation, they have ad infinitum invested in superlative operations making them the region’s leading dairy product processor with a fully-fledged operation in several areas. The company is guided by the code of “Goodness for all” through which they commit themselves to a reciprocally beneficial partnership with their value chain (farmer, supplier, transporter, distributor, retailer and the employee, the community where they operate, consumers, and other people in the industry. The road map to success is always defined by a obligation to the quality right from the farm, through product processing up to the delivery of the products to the buyers. Brookside Dairy has been the market leader for technology and innovation through partnering with diverse stakeholders in the dairy industry and livestock industry joined with the contribution of skilled and dedicated staff with a unvarying yearning to meet and surpass consumer needs.
General forces analysis
A host of external affects the firm’s choice of direction and action, and ultimately its internal processes and organizational structures. They are also referred to as the remote environment (Martin, 2014).
Economics: The key trends facing the industry the industry include the high prices of milk from farmers and the recent increment of salary to the workers by the government. The company has to adjust in such economic changes by producing more to maintain the earlier profits. Additionally, the amount of disposable income per every individual has been fluctuating affecting the performance and planning of the Brookside Company.
Technology: The Company has adopted several technologies to safeguard the products and enhance accountability. Such technology includes system, application and Product (SAP) which check how the products and raw materials are used. The company has also CCTV surveillance that monitor everybody conducts in the company. The company has a fast internet connection for faster delivery of data using SAP
Demographics / Social / Culture: The company has no any other culture apart from the ones provided by the government on how workers should act. Because it is a production company it works on 24 hours on a daily basis. This means that some employees have to report to work at night. Although at times some employees are missing to report at night in some cases, they have solved that by employing many employees in one docket. Most of the employees have one day off in a week and the holidays are observed in Brookside
Government / Legal / Military: As much it makes profit, the company has been affected by the government laws on tax. The Kenyan economy is quite challenging compelling these companies to pay relatively high taxes through the employees and the company (Martin, 2014). The company must also observe the national holiday hence employees on such days come to work willingly. Therefore, the company has gone ahead to pay to times more for the workers who report on such days. It is quite expensive.
Physical environment: traffic jam has been of the company’s problem. Workers do not get late intentionally; the jam in Kenya is questionable. The urban development in Kenya is growing at a high rate, something that has started threatening the company since in future it will not have a room for expansion.
Five Forces Model
The five forces mode is a powerful but a simple tool that is used to learn the power in a business situation. It evaluates the strength of the current position and the strength where the organization is heading to (Martin, 2014). The five force models are the bargaining powers of the suppliers and buyers, threat of substitute product, threat of new competitors, and the industry rivalry
Threat of new entry: Entry into the market in of dairy is no news in Kenya following the availability of raw materials and easy way of making milk. In general, it is very easy to get into dairy farm in Kenya; this has been a great problem to Brookside Company. A report carried by Kenya dairy limited indicated that more 10 serious firms have entered into the industry in the last 5 years. The major barriers of new entry are weak hence companies such as fresha have come into the market. However, Brookside has created strong barriers by proprietary know-how, difficult in brand switching, restricted distribution channels and high scale threshold
Substitutes: The Company has been faced with major milk substitute such as milk powder that is produced by DAIMA. It relatively cheap hence customers go for it. Another substitute for processed milk is the fresh milk that is now available in supermarkets. The milk is relatively cheap and is fresh from the farm; hence people go for such milk instead of the processed milk that is believed to have been mixes with some chemicals such as peroxide.
Bargaining powers of suppliers: The bargaining powers of the suppliers are low hence does not affect the price fluctuation of the company. However at times when the a low season of milk the suppliers become few in the market increasing the prices of raw materials that in turn affects the company. This is the cause of periodical hike in milk prices in supermarkets. It has been the problem of the company for a long period.
Bargaining power of buyers: This is the force that allows the buyer to demand higher or lower prices. When the number of buyers are few they are likely to demand for low prices. Brookside has been the mother of dairy in Kenya for the last one decade. It was commanding great number of customer. However, the emergence of company’s like DAIMA, fresha, molo milk has drastically changed the game; the company currently cannot set their price since here many companies in Kenya producing the same product which can substitute for the customers.
Competitive Rivalry: Major competitors of Brookside are DAIMA, Fresha, KCC, and molo milk. Until their emergence recently, Brookside role in the industry has been diminished. They no longer dictate the prices of dairy products. New companies such as fresha have come into the market using cost-effective strategy of dominating the market, thus the prices of some product have be to lowered to fight for customers. As such the company revenues have been reduced.
Chain value analysis.
|Business Process||Your Organization||Competitor 1( DAIMA)||Competitor 2( KCC)|
|Management||Perfect, with very little management issues||Good, but consist of racism||Better|
Strength of the company
Strengths includes: The demand profile which is extremely optimistic Margins are quite reasonable yet on packed milk, and the flexibility of the product mix is good with enough balancing equipments. Moreover there are plenty of raw materials that come from githunguri and kiambu. The company has technical human resource that hand technical power of the company
Weaknesses of the company
Weaknesses include competitions which becomes tougher since there many companies entering into the marker day in day out. Logistic of procurement has been affected by the bad roads that connect the company with suppliers. This has increased the cost of production. Perishability of some products such as fresh milk that only last for three days affects production. When being transported the milk ge spoilt at a high rate. Lack of control yield has been major fluctuations of the production since milk sometimes becomes a limited factor in the industry.
As said by the CEO “failure is never final, and success will never end. The company has some critical opportunities. One important opportunity is value addition. There is a scope for development, innovation, presentation and packaging of the materials. The steps are taken to introduce value added commodities such as ice cream, flavored milk. This will enhance flexibility in the market along with the chances in the field of building the brand (McDowell & Dick, 2013). Finally in value addition, the company is looking to infant, nutritionals and geriatric foods. Another opportunity is export potential, as among the leading dairy company in eastern Africa, efforts are put in place to make it chief exporter too.
Unorganized sector of milk vendors: currently the milk vendors have occupied pride in dairy industry. They are disorganized affecting producers and consumers of the company.
Organizational Strategy Type Analysis
As defined by Gehani (2013), differentiation strategy is a marketing technique that is used by companies to establish a strong identity in the current market. Using this strategy, manufactures introduce numerous varieties of the same product thus cover a wide range of the commodities available. Differentiation strategy creates the brand of the company in a manner that differentiates itself from the competition and creates a unique image that other companies do not have (Gehani, 2013). As seen in Brookside, the company has been the leader while others are followers. As said by the CEO, “we think but they copy.” to implement the differentiation strategy, the company has a variety of activities.
First, Brookside should introduce the Ultra Treated milk (UHT) to cater for individuals who cannot afford the fridges in Kenya and other countries. Middle class and low class people consist of the majority of Kenyans; hence, buying a carton of UHT milk is very convenient (McDowell & Dick, 2013). Secondly, the company should produce more products than before as a perfect way of being unique from other companies. They should try to make biscuits on top of yoghurt, milk, cream, butter, cheese, cream and many others. This is rarely found in other East African companies. Wide ranges of the varieties facilitate competition using other products when one of the products faces stiff competition in the market (Hughes-Morgan, & Ferrier, 2014). For example, Sameer Agriculture Livestock Limited is the chief Brookside’s competitors on yoghurt; however, the company does not produce cheese and butter which give Brookside an advantage in the market. The most and very important differentiation strategy that Brookside should use is the production of milk powder. In Kenya, the production of milk is seasonal, in that, at times it is excess while sometimes it is limited. In this way, it should adapt the conversion of excess milk into powder form that can be used in future when milk becomes a limiting production factor. The milk powder can also be bought by some companies who face milk drought, an activity which might make almost all companies depend on Brookside. Lastly, while other companies are located in one place, Brookside has to employ its uniqueness by enlarging its main branches outside the capital city of Kenya.
The differential strategy has got much impact on the company hence should be regularly followed. First, the company will maintained sustainability situation by creating barriers by perception of reputation and uniqueness, creating switching prices through uniqueness of the company (Hughes-Morgan, & Ferrier, 2014). The strategies will also raise the buyers’ performance, and create a high level of enjoyment in both customers and the company. Lastly, being unique in reference with customers’ needs mean high quality and less breakdowns that ensure the company always make profits. In general, the strategy will decentralize the functions of the company outside its traditional area; hence, its effect will be felt by a number of people. Producing a variety of products assures the customers that on the shelves of Brookside, one has to pick something since there are a lot tastes. As a result, the sales of the company increases which increase the revenue of the company. Expanding it outside of one community will also tell customers that the company is a multinational premise that can operate everywhere in Kenya.
Action plan analysis
The goal of the action plan is to employ the differentiation strategy in the company so that it strives through the current competition (McDowell & Dick, 2013). After the formulation of the objective, then the planning team is formed. It includes people who are directly engaged in the activity of the company and have the powers to decide on some critical issues of the company. They include the board of governors, directors and managers (Martin, 2014). The important issues that should assist the implementation strategy of differentiation in Brookside include: 1) production of more products. 2) Decentralization of the company branches 3) production of milk powder to be used in times when is there is no milk from farmers 4) production of long life milk that can stay for about five months.
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