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Value, Rareness, Imitability, and Organization analysis using VRIO framework

Discuss about the Research and Development Cooperation.

In inbound logistics, it is involved with a relationship with the suppliers and these are the activities that are required to receive and distribute products. Open Country Dairy chooses their raw materials suppliers from different parts of New Zealand. Moreover, it has its own local firms where they develop a relationship with suppliers. In operation section, it requires transforming inputs into outputs of the products. Operations of Open Country Dairy are related to the maintenance, testing, assembly and packaging. In case of outbound logistics, this organisation collects store and distributes the outputs through selling in across the globes (Chen & Kodono, 2014). They use intermediaries in processing and scheduling. In marketing and sales, Open Country Dairy uses mainly word-of-mouth marketing and it is world’s second largest exporter of premium whole milk. The organisation provides services emphasis on mostly global suppliers in Pacific regions, Asian countries, Africa and Europe.

In procurement, the organisation purchases milk products from local suppliers. It helps in maintaining profit margins that include the milk. The labours of the organisation work accordingly and the organisation is equipped with vast technologies and machines. In managing the human resources, Open Country Dairy employees are motivated to work as organisation gives rewards and incentives. The organisation takes skilled employees who have experiences in this sector. The organisation gives training to the employees (on-the-job) training as to teach the work culture in Open Country Dairy. In case of technology, Open Country Dairy mainly provides stress on the food safety. It works on accreditation in New Zealand and it has taken globally recognition as they work on technologically designed plants. Their latest technologies provide uniformity and consistency in the product category. Firm infrastructure is world class and it has experienced and strong management to work on. It has its locations in Auckland, Waharoa, Wanganui and Awarua.

Value: The resources of the organisation add values as Open Country Dairy has a global presence in the market. Moreover, the global presence of the organisation helps them to increase sales, size and market share. The speciality of whole milk products can satisfy the buyers’ competitors cannot offer the same (Savino, Manzini & Mazza, 2015). It offers milk fats, milk powders, milk proteins and cheese in global markets.

Rareness: Open Country Dairy is one of the biggest organisations in this sector as it is in global milk chains. The products in New Zealand market are costly and no such other competitors are there that they could take the desired position. Valuable resources and capabilities of Open Country Road can lead them to desired position.

BCG matrix analysis of Open Country Dairy

Imitability: Resources of the Open Country Road are costly in case of machines, trucks, technologies and control maintaining products. These are hard to imitate and duplication of the products are not possible. The organisation has been exporting milk-based products since 2004 and it has been exporting the products to Europe, Pacific regions, Africa and even in America.

Organisation: The resources of the organisation can provide the competitive advantage to the organisation as the value of the firm helps them to capture the market. Open Country Dairy organizes its management system; policies, process and organizational structure in order use fully its resources. Open Country Dairy has made such atmosphere that the suppliers and buyers can enjoy the services.

Resources and capability

Valuable

Rare

Inimitability

Organised to exploit

Strong global presence

Yes

Yes

No

Yes

Specialty milk products

Yes

Yes

Yes

No

Upscale atmosphere for buyers and suppliers

Yes

No

Yes

Yes

Table: VRIO framework analysis of Open Country Dairy

(Source: Self-developed)

Dogs: In BCG matrix, dogs mean low market share and significant output cannot be generated. These businesses of Open Country Dairy tend to hold low market share. Open Country Dairy in this business segment has low potential. The cheese products of the brand do not have the significant amount of market share. This product is available in the market by other companies and it does not have enough chances to grow further. 

Cash Cows: Cash cow means the high market share and it denotes high growth rate in the market. The products like milk proteins and milk powers have high market growth. However, despite slowdown in the market, the cash cow can be lucrative for the business (Shanghag, Dutt & Bagwe, 2016).

Stars: This business unit can hold the large market share as the organisation is in faster growth rate. Milk protein has high demand in the market has large operating segment by Open Country Dairy. This market will be higher in next five years.

Question Marks: This business does not have large market share, however, it has growth opportunities. Open Country Dairy sells milk fats and it has the significant opportunity in Europe and American market as it can be next to cash cow for Open Country Dairy.

Stars

Market penetration

Horizontal integration

Milk protein

Question Marks

Product development

Milk fats

Cash Cows

Diversification

Milk proteins

Milk powders

Dogs

Retrenchment

Liquidation

Cheese products

Table: BCG matrix of Open Country Dairy

(Source: Self-developed)

Open Country Dairy (ODC) is the second largest milk processing companies in New Zealand. Not only this, it is also the second largest global supplier of milk powder. There are various strengths of this company. One of such strengths is to work closely with the farmers. They work closely with their farmers and educate them on the ongoing global situation. They educate their farmers on the current trend and instruct them to act accordingly. The New Zealand government relies heavily on its dairy products. This is because of such fact the ODC has shown its interest in expanding its presence in the country. The extension of its processing capability with the start of work in the new plant in Waikato is one of the examples that show that ODC is actively cashing on the created opportunity. There is a huge demand for the milk products exports in the international market and ODC is responding to the necessity by expanding its presence and production capability. The opening of the new plant at Waikato will open up employment opportunities as well. This means that ODC is benefitting the local economy of the country by becoming one of the largest exporters of milk powder and a significant provider of job opportunities. It is able to produce milk at low cost. The cost of feeding, housing and machinery are also low (Foote, Joy & Death, 2015).

Dynamic SWOT analysis

It is dependent on the international market, which can be either full of opportunities at times or it can also be threatening on some occasions. On the same note, the low oil prices have challenged the profitability of the business. This has reduced its purchasing power. Labours are put into heavy works. This is problematic as this might affect their physical fitness, which is a threat to the business. It is at distant from the market, which enhances the cost or freight transport. Dairy lands are highly priced, which means that a reduced value of the dairy products in the international market will result in a reduced profitability too (Foote, Joy & Death, 2015).

Opportunities are there as well for the ODC. Being the second biggest milk processing company of the country, it is relatively easier for it to have a suitable land to open up a new plant. The local government of New Zealand will offer them suitable land in order to fulfil their goal, which is to enhance their exporting capability of the milk products. There is a huge demand for dairy products of the country in the international market. The demand will open up the business possibility for the company. This is why OCD has capitalised on the created opportunities by opening up its new plant in Waikato (Foote, Joy & Death, 2015). An increased number of branches will result in increased number of productivity. Nevertheless, this will help the company at the global platform in cashing the created opportunity.

The price of oil is one of the biggest threats as it affects the business profitability at the global platform (Nazlioglu & Soytas, 2012). This is understandable from the fact that the New Zealand dairy industry is heavily reliant on the exports of dairy products. The currency behaviour is another threat to the Open Country Dairy (Kituku, 2014). This will eventually reduce the profit margin in the exports of dairy products. The threat to the environment is also evitable with an increased production of milk products. The company tends to avail the generated opportunities in the dairy industry; however, in doing so, it will also produce an excess of greenhouse gases. Moreover, greenhouse gases may put a substantial negative impact on the environment (Mc Geough et al., 2012).

The Open Company Dairy needs to utilise the three strategic options in order to utilise the rising opportunity for the milk products in the international market. The local government of New Zealand has already confirmed that the country needs an enhanced exporting of milk products. This is because the demand for dairy products is set to touch a new height in the coming years. To utilise the available opportunity, the first strategic option for OCD will be to collaborate with some leading food & nutrition companies in the world (Wilson, 2012). This will generate huge order demands and hence, this will enhance the profitability of the business. The second strategic option will be to develop the milk production facilities in some potential international market such as China and India (Fuller & Beghin, 2015). However, this will require a thorough study on checking the feasibility of the concept in the target market. The third strategic option will be to invest hugely in the Research & Development (R&D) process (Ernst, Hoyer & Rübsaamen, 2013). This will be made possible by opening up few new plants specially dedicated to the R&D process.

Conclusion

The first strategic option is to collaborate with few of the world’s leading food & nutrition companies. This will be challenging as such companies will already have their suppliers. In such circumstances, penetration into the market will be challenged (Sarasvathy et al., 2014). The second strategic option is to develop milk production facilities in the potential international markets. Identified potential markets are many such as China and India. Both are few of the most developing countries. However, the real challenge will be to get approval from the political parties especially in India (Akhter & Equbal, 2012). The third strategic option is to invest in the R&D process. This is challenging as well because of the high cost of lands in New Zealand (Liu, Wang & Zha, 2013). The local government is supportive of the dairy industry but still, the problem is challenging as the government could only help in allotting the best land to the company. 

To get the business from the leading food & nutrition companies in the world, it is necessary to offer the products at the cheapest prices and with high in quality. This is the one way, which could help the brand like Open Country Dairy in winning the trust of target companies. The political dilemma, especially in India, is a threat to a new concept. To resolve the issue, it is necessary to collaborate with the local companies either through partnering or through joint venturing. This will help in getting the unexpected support of the political parties that exist there. Moreover, this will also help in understanding the diverse culture in the target country. The R&D process can also be done by utilising the already existing research laboratories in the country. The OCD will require investing high in receiving the services of reputed Research & Development institutions. This strategy will help them skip away from investing in buying the land for setting up its own R&D centre. 

Conclusion

The Open Country Dairy is the second largest milk product exporters in the world and it has been observed that Open Country Dairy has less competition in the market as its technological supervision is high. The external environment of the organisation proves that it provides economic significance to NZ economics and technology like Automatic Milk System provides benefits to the organisation. In internal factors, it has favourable supply chain and it supplies milk to Pacific, Africa and Asia and European countries. Moreover, in milk production and milk-based products, it has great potential in the world market. The organisation needs to collaborate with leading food and nutrition companies with developing milk production functioning.

Reference List

Akhter, S., & Equbal, I. (2012). Organized retailing in India-challenges and Opportunities. Zenith International Journal of Multidisciplinary Research, 2(1), 281-291.

Barkema, H. W., Von Keyserlingk, M. A. G., Kastelic, J. P., Lam, T. J. G. M., Luby, C., Roy, J. P., ... & Kelton, D. F. (2015). Invited review: Changes in the dairy industry affecting dairy cattle health and welfare. Journal of dairy science, 98(11), 7426-7445.

Chen, F., & Kodono, Y. (2014). Fuzzy VRIO and SWOT Analysis of Chery Automobile. Journal of Advanced Computational Intelligence and Intelligent Informatics, 18(3), 429-434.

Ernst, H., Hoyer, W. D., & Rübsaamen, C. (2013, May). Sales, marketing, and research-and-development cooperation across new product development stages: implications for success. American Marketing Association.

Foote, K. J., Joy, M. K., & Death, R. G. (2015). New Zealand dairy farming: milking our environment for all its worth. Environmental management, 56(3), 709-720.

Foote, K. J., Joy, M. K., & Death, R. G. (2015). New Zealand dairy farming: milking our environment for all its worth. Environmental management, 56(3), 709-720.

Foote, K. J., Joy, M. K., & Death, R. G. (2015). New Zealand dairy farming: milking our environment for all its worth. Environmental management, 56(3), 709-720.

Fuller, F. H., & Beghin, J. C. (2015). China’s growing market for dairy products. Iowa Ag Review, 10(3), 5.

Holahan, P. J., Sullivan, Z. Z., & Markham, S. K. (2014). Product development as core competence: How formal product development practices differ for radical, more innovative, and incremental product innovations. Journal of Product Innovation Management, 31(2), 329-345.

Kituku, B. U. (2014). The effect of foreign exchange rate fluctuation on the financial performance of motor vehicle firms in Kenya. Unpublished MBA Project.

Liu, Z., Wang, P., & Zha, T. (2013). Land?price dynamics and macroeconomic fluctuations. Econometrica, 81(3), 1147-1184.

Mc Geough, E. J., Little, S. M., Janzen, H. H., McAllister, T. A., McGinn, S. M., & Beauchemin, K. A. (2012). Life-cycle assessment of greenhouse gas emissions from dairy production in Eastern Canada: a case study. Journal of dairy science, 95(9), 5164-5175.

Nazlioglu, S., & Soytas, U. (2012). Oil price, agricultural commodity prices, and the dollar: A panel cointegration and causality analysis. Energy Economics, 34(4), 1098-1104.

Sarasvathy, S., Kumar, K., York, J. G., & Bhagavatula, S. (2014). An effectual approach to international entrepreneurship: Overlaps, challenges, and provocative possibilities. Entrepreneurship Theory and Practice, 38(1), 71-93.

Savino, M. M., Manzini, R., & Mazza, A. (2015). Environmental and economic assessment of fresh fruit supply chain through value chain analysis. A case study in chestnuts industry. Production Planning & Control, 26(1), 1-18.

Shanbhag, M., Dutt, M. L., & Bagwe, S. (2016). Strategic Talent Management: A Conceptual Analysis of BCG Model. Imperial Journal of Interdisciplinary Research, 2(7), 98-132

Wilson, T. (2012). A review of business–university collaboration. International Journal of Marketing, 5(1), 09-23

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