Agribusiness is a major sector in Australia with contributing a substantial amount in the international investment and gross income of Australia. Dr. Corran McLachlan, who was one of New Zealand’s richest men, founded the A2 Milk Company in 2000. The organization was formerly known as A2 Corporation Limited that commercializes intellectual property associated with a2 milk products such as infant formula. It was later renamed as A2 milk company that an ASX 200 public listed company. They operate its activities in several countries such as Australia, the United Kingdom, China, and the United States. They are more concentrating on nutritional products, experience strong growth through sales capabilities, and has expanded the U.S. market (Esty and Fisher, 2019)
Their main vision is to be a smart and innovative choice for daily nutrition. They maintain consistently high quality branded products that are diversified into Australia fresh milk into nutritional products. Their ambition is to be the most attractive nutritional company, which fulfills their developing digestive health needs. It has been recognized that the company is achieving substantial gains in revenue and earnings in the 2017 financial year at $300 million. They are continuing their growth capabilities and planning to broaden its organizational capabilities into other global markets (Pal et al., 2015). In the following, an effort has been made to discuss the business units of the A2 milk company. In addition, the discussion has been made on the external environment and determination of internal competitiveness of A2 Milk Company.
It is stated that A2 Milk Company is having a broad number of business units in the Australian market involving food supplies under the A2 premium fresh milk brand, consumer section under Australian infant formula brand with 32% market share, and daily ingredients supplied through A2 protein. They are diversifying their market business units, which are assisting them in catering to a different assortment of consumer segments.
(T1 2016 MPK732 Marketing Management, 2019)
As per the figure above, it has been stated that sales of A2 milk in Australia has increased by 48% as compared to 2011. It is also noted that sales have been increased by more than 90% in these subsequent two years.
Under the section of consumer segment, A2 Milk Company is delivering a wide assortment of products such as A2 MilkTM Full Cream, A2 MilkTM Light, A2 MilkTM Full Cream Milk Powder, and Premium A2 MilkTM powder with Manuka honey, which is completely free of A1 protein. This denotes that A2 Milk Company is targeting diverse customer needs in the agriculture sector with its different product portfolio. Among all their products, Premium A2 MilkTM powder is the largest selling brand in the Australian market (Mucchetti and Zambrini, 2017).
The major revenue units for A2 Milk Company are their food supply, consumer, and ingredient supply distribution. The largest revenue units are consumer division, which is due to the reason that the infant formula brand is attaining a great percentage of market share and continues to grow its market position (Banerjee, 2018).
The PESTEL analysis of A2 Milk Company has been described below to understand the bigger picture of the market environment.
It is stated that government regulations and policies are said to be an influence on the decision of farmers. Various government regulations could be in favour of A2 Milk Company. In 1986, the ministry of government supported the new market schemes that are utilized to make the A2 Milk Company. From the era of 1986 to 1992, support of export was carried down to 22% form 45.6% as they were facing the issues of competitive parity. By late 2000, every state had achieved regulatory arrangements that could permit them to develop the A2 Milk products in the market. In addition, A2 Milk Company was allowed to set its own prices by enabling an adequate supply of milk. This also stated that the state was given the power of set price as well as negotiate the quotas in order to ensure that the supply is reliable. They should give the capability to control the prices with the dairy industry. The Australian Industry Council and the leaders of dairy farmers claimed that deregulation has assisted in increasing the production of milk. It did not meet the expectations of customers as it brought down from 6.4 million tonnes to 2.5 million tonnes (Kian and de Souza, 2017).
The economic factor which affects the A2 Milk Company in Australia, is the purchasing power. It is quite evident that it is milk, which is a vital part among Australian consumers and makes purchases irrespective of their economic situation. As the consumer of Australia has high purchasing power so the price of A2 Milk products is also high. The trends of consumption per capita income have been constant in Australian economy irrespective of preferences of the customer. There is also the fact that there is high purchasing power and developing demand in Australia as a comparison to the China market. The A2 Milk Company still succeed in the market irrespective of the fact that demand is growing rapidly. In 2012, 48 billion liters of milk has been consumed by China’s consumers as they take milk products from Australia. It is to be stated that after A2 Milk Company was registered on ASX its share gone up to 200% and stock prices up to 650% (Duarte-Vázquez et al., 2018).
The social factors have also a major effect on the A2 Milk products. The consumption trends of Australia consumers are rapidly changing as their tastes and preference are evolved. The health issues are a major factor as consumers have multicultural influences considering food consumption. A2 Milk Company follow this trend as it produces with A2 milk protein and selling skim milk products as a new development. The overweight issue in Australia has been still high and continued to rise at a high rate i.e. 69% men and 54% women respectively. It has been stated that A2 Milk Company utilizes nutritional milk which is pure and organic as their competitors also give a tough fight by producing infant baby formula like A2 (Tavana, Yazdani and Di Caprio, 2017).
The technological improvement like fat testing was introduced by the A2 Milk Company in Australia and several other companies also to test the fat level in the milk products. They have now transformed into a commercially innovative market with the changing needs of customers. The initiation of fat testing assists them in building healthy trends so that Australian consumers start embracing. The A2 Milk Company also deliver natural and organic products that do not incorporate genetic engineering and technological process (Priyadarshini et al., 2018).
The environmental factors that influence the A2 Milk Company in Australia are the current weather condition which might considerably manage the transportation of the assets and finished product. These organizations that develop an extremely vast amount of waste might require to manage their environmental habits and contribute to maintaining the prices as well as quality so that more and more customer can be generated (Chia et al., 2018).
The legal factors affecting the A2 Milk Company is the intellectual property laws to protect the patent of the organization. It is stated that if there is a chance of stealing data then A2 Milk can lose its competitive edge and profitability. It is also to make sure that the A2 Milk is treated fairly and opportunities are to be given regardless of ethnicity, gender or religion. Health and safety laws also affect the A2 Milk Company by executing the proper regulations in order to ensure a certain level of quality to keep the customers safe (Duarte-Vázquez et al., 2018).
The internal organization of the A2 Milk Company is continuing to develop international intellectual property rights as proprietary processes, patents, and trademark with respect to A2 MilkTM products. The internal competitiveness of A2 milk company involves human resource management, strategic location, resource effectiveness, which assist in achieving competitive edge and profitability (Mahmoodani et al., 2018).
It is stated that there are many resource capabilities being recognized for A2 Milk Company. The major resource capabilities are market diversification, which refers to the fact that the customer plays a great significance to the personalized services and traditional store so they should develop maximum resources to open their outlets. They need to analyze the cost-benefit analysis of each distribution channel and compared with the resource capabilities of the organization. The A2 Milk Company need to develop an effective distribution plan and ensure that it satisfies the market effectively and deliver the products that will meet the preferences of the customer. Another major capability is brand awareness, which stated the fact that the A2 Milk Company delivers an opportunity in order to interact with the customers and establish a cordial relationship with the customers to achieve positive recognition form them (Portillo-Tarragona, et al., 2018).
The core competency of the A2 Milk Company is their diversified target audience, which is divided into narrowly and specifically defined groups. They have diverse business units with different product range, which allows A2 Milk Company to satisfies the customers locally and internationally in the manner to stay ahead in the market. Another core competency is their international existence, which is diversified into China, United States, Australia, New Zealand, and a number of emerging markets in Asia. It further assists in developing the position to become an international brand. The A2 Milk Company maintain the social as well as the financial status of the farmers in order to make sure that more innovative products could be delivered to the customers (Ormrod, 2015).
The value chain analysis of the A2 Milk Company is-
In conclusion, it has been stated that the A2 Milk Company produces highly nutritious products that are identified into A1 and A2 protein, which is different from cow milk. They are dealing with various external factors in the Australian market, which assists in analyzing the competitive advantage as well as economic opportunities. In the above, the discussion has been made on the internal competitiveness of the A2 Milk incorporating resource capabilities, core competencies, and competitive advantage are being recognized. It is to be stated that internal competitiveness helps in effectively dealing with the external factors and enhancing the market share. Their external factors favour operations of A2 milk as high purchasing power in order to continue its growth in the few decades.
Banerjee, S. (2018) A2 Milk: The Unknown Story About a Milk Protein. Acta Scientific Nutritional Health, 2, pp.28-31.
Bathaei, A., Mardani, A., Baležentis, T., Awang, S.R., Streimikiene, D., Fei, G.C. and Zakuan, N. (2019) Application of Fuzzy Analytical Network Process (ANP) and VIKOR for the Assessment of Green Agility Critical Success Factors in Dairy Companies. Symmetry, 11(2), p.250.
Chia, J., McRae, J., Enjapoori, A., Lefèvre, C., Kukuljan, S. and Dwyer, K. (2018) Dietary Cows’ Milk Protein A1 Beta-Casein Increases the Incidence of T1D in NOD Mice. Nutrients, 10(9), p.1291.
Duarte-Vázquez, M.A., García-Ugalde, C.R., Álvarez, B.E., Villegas, L.M., García-Almendárez, B.E., Rosado, J.L. and Regalado, C., (2018) Use of urea-polyacrylamide electrophoresis for discrimination of A1 and A2 beta-casein variants in raw cow's milk. Journal of food science and technology, 55(5), pp.1942-1947.
Esty, B. and Fisher, D. (2019) The a2 Milk Company. HBS Strategy Case, 44(7), pp.719-424.
Kian, L.C. and de Souza, R. (2017) Utilizing Excess Capacity in Last Mile Using 4 th Party Milk Run. In 2017 6th IEEE International Conference on Advanced Logistics and Transport (ICALT), 56(3), pp. 127-132.
Mahmoodani, F., Perera, C.O., Abernethy, G., Fedrizzi, B. and Chen, H. (2018) Lipid oxidation and vitamin D3 degradation in simulated whole milk powder as influenced by processing and storage. Food chemistry, 261, pp.149-156.
Mucchetti, G. and Zambrini, A.V. (2017) Milk Quality and Processing. Advances in Dairy Products, 23(8), p.147.
Nystrom, J. and Winston, D.R. (2016) A2 milk marketing and human health. Journal of Animal Science, 94, pp.18-18.
Ormrod, N.G. (2015) Business Models: A Unit of Analysis for Company Performance. Sustainable development, 63(7), pp.32-78.
Pal, S., Woodford, K., Kukuljan, S. and Ho, S. (2015) Milk intolerance, beta-casein and lactose. Nutrients, 7(9), pp.7285-7297.
Portillo-Tarragona, P., Scarpellini, S., Moneva, J., Valero-Gil, J. and Aranda-Usón, A. (2018) Classification and measurement of the firms’ resources and capabilities applied to eco-innovation projects from a resource-based view perspective. Sustainability, 10(9), p.3161.
Priyadarshini, A., Rajauria, G., O'Donnell, C.P. and Tiwari, B.K. (2018) Emerging food processing technologies and factors impacting their industrial adoption. Critical reviews in food science and nutrition, 34(8), pp.1-20.
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Tavana, M., Yazdani, M. and Di Caprio, D. (2017) An application of an integrated ANP–QFD framework for sustainable supplier selection. International Journal of Logistics Research and Applications, 20(3), pp.254-275.
Ziggers, G.W., Conte, F., Del Nobile, M.A., Faccia, M., Zambrini, A.V. and Conte, A. (2017) Policies and Strategies for Eco-Friendly Dairy Product. Advances in Dairy Products, 55, p.412.
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