Dairy: Milk and Clover Essay

clover S. A. (Proprietary) modified (medic) is the biggest dairy processor in entropy Africa with a disturbance of R 4. 3 billion and module in excess of 6 000. trefoil collects approximately 30% of south-central Africas take out tack and processes it into well kn make trade nameed dairy and related products which is then distributed across the country and even exported into certain Afri rouse countries.In this document, medics outside opportunities and threats, and its inhumenal strengths and weaknesses provide be evaluated in assemble to complete the germane(predicate) matrices, whereafter the Grand Strategy Matrix provide be used to ponder appropriate strategies to deal with the key opportunities, threats, strengths and weaknesses Mission and Vision Statements medics mission (which answers the question What is trefoils business?) is as follows clover is a branded foods and beverages group with a strong emphasis on none value-added products. clovers South Afri can dairy business is the perfect(a) enabler to reach the Groups widely dispersed customers and consumers. Extraordinary fear is considern to develop brands which will occupy the number one or two positions in its chosen segments. It believes in the superior procurement, w ar, commercialiseing, sales and diffusion of these branded consumer goods (BCG) to its loyal consumers. A review of the mission statement shows that roughly of the 9 Cs (i. e. customers, Products, Markets, Technology, vex for survival, Growth and Profitability, Philosophy, Self Concept, associate for Public Image and Concern for Employees) arouse been utilised in a short statement. It is suggested that the pursual of the absent 9 Cs be included or elaborated upon in the mission statement Concern for employees Philosophy. Its imagery (which answers the question What do we want to become?) is as followsTo be a leading and competitive company in South Africa and selected African countries, reaching e rea l consumer on a daily basis with its near admired branded and trusted products, delivering improved and sustainable sh atomic number 18h former(a) value by being a responsible corporate citizen and preferred employer. A review of the vision statement shows stronger and more reliance by medic on its brand than on its products.However, medicks vision is near certainly achievable, and in certain aspects one whitethorn argue that the vision statement might be outdated. THE EXTERNAL ASSESSMENT Introduction Broadly, the get of an external assessment is to a companys (in this case medics) opportunities which could benefit it on the one hand, and on the other, threats that should be avoided. Gener eithery, these external forces can be divided into the following categories scotch forcesSocial, cultural, demographic and environmental forces Political, governmental and legal forces Technological forces and Competitive forces. Each of these categories will be discussed briefly, as well as the opportunities and threats will be listed under each heading. Economic Forces The current and ongoing recession had a negative impact on the companys interim financial results for the 6 months ending declination 2008.More segmentationicularly and in the words of medics head word executive director, Mr JH Vorster, a recent international publication on dairy matters utter that the industry faces a perfect storm of destructive scotch forces and South Africa and trefoil could not escape these forces. The in in high spirits spirits unemployment numbers (which increases by the day) have an impact on disposable income, which in turn has an impact on buying behaviour, especially towards branded products (which Clover prides itself on), which as a very general rule carries a price margin.This, however, will continue to foible a problem, and as such, Clover must continue to ride the thrill of brand recognition to endeavour to brace itself against the prevailing negative economi c forces, which is seen as a huge threat. A besides threat is the high number of farmers exit the business ascribable to what they primarily term unaffordability. Social, Cultural, demographic and milieual Forces Clover believes in personal sociable uplift, thereby not only donating money in general, but being flat affect in the upliftment.Its flagship upliftment programme, Mama Afrika, currently supports in excess of 10 000 people. Appropriately, Clover views this project along the following lines Clovers flagship CSI philosophy is underpinned by the principle of sustainability instead of giving people handouts, it is investing in projects that adorn communities and enhance their ability to become self-sufficient in the long term. We watch the Mamas how to fish rather than give them the fish. According to Clover, it believes thatThe company is inextricably part of the community and will and so, in terms of support and development, accept its social responsibleness Prof itability and growth are pre-requisites to fulfill its social responsibility within financial means The community, primarily has to accept responsibility for its own well-being and will only within means, be supported in this It creates wealth through company tax revenuees, employee taxes and levies which enable government to establish and get essential infrastructure like roads, education and health services Opportunities for make for and prosperity are not only created within the business, but that it, indirectly, contributes to avocation creation and combating poverty. It howevermore enforces strict environmental disposal techniques in order to protect the environment. It is be constitute that Clover views the Social, Cultural and Demographic Forces as an raise opportunity. The general deterioration of the environment is naturally a concern for Clover, as some of its biggest assets (i. e. cows) rely on a safe environment. This whitethorn because be seen as a (general) th reat. Political, Governmental and Legal Forces General scratch line and foremost, Clover must ensure that the relevant agreements are in daub with its retailers, service providers and suppliers. These agreements must also be regularly updated. Legislation The following legislation will be applicable to Clover (or at least cognisance should be taken of these Acts at all times) The Companies Act, 69 of 1973The Companies Act, 71 of 2008 (which will come into operation during 2010) The Consumer Protection Act, 68 of 2008, which provides for, inter alia, promoting a fair, accessible and sustainable marketplace for consumer products Promotion of Access to Information Act, 2 of 2000, which provides for access to information by individuals and/or entities.Broad Based melanise Economic Empowerment Act, 53 of 2003, which provides for, inter alia, increased broad- ground and effective interest of black people in the economyThe Competition Act, 89 of 1998, which provides for, inter alia, the investigation, control and evaluation of certain restrictive practices (the amendments passed during 2010 holds grave consequences in for those who do not adhere to the provisions of the Act). It might well be that a companys knowledge of particular Acts as mentioned higher up will be an opportunity. Similarly, a companys ignorance will be a threat to the company.Clover is an established company, has a legal department and therefore its knowledge of the current law and legislation are adequate. Technological ForcesClovers relationship with its customers and clients are entirely computer based (IT based). It is therefore of paramount importance that all its IT be updated regularly (and adequately). Although it has an IT department, Clover does not have a manager be quiet sufficiency to the Executive Committee (such as legal and/or Human Resources). This is seen as a weakness.Competitive Forces As mentioned in the general introduction in 1. 1 above, Clover collects approximately 30 % of South Africas draw, leaving 70% which is smooth by between 200 to 350 other dairies in South Africa. Of these, Parmalat (Pty) Ltd, Woodlands Dairy (Pty) Ltd, Nestle Dairy (Pty) Ltd, drawwood (Pty) Ltd and Dairybelle (Pty) Ltd are the biggest competitors.It does however depend on the type of products (for instance, Parmalat is the biggest processor of UHT (Ultra High temperature) milk in South Africa) and geographically (for instance, Parmalat is the biggest distributor of milk in the Western Cape). However, the mentioned companies are competitors and competitors are generally a threat.Clover relies on its brand and extensive distribution meshwork to gain the competitive advantage. Some of the smaller competitors are more than apt(predicate) to fail due to the current economic recession, thereby giving Clover the opportunities in respect of possible eruditenesss of growing market share. A further threat is the (sometimes) ease with which competitors may be successful in co nvert farmers to change one processor to another.THE EXTERNAL FACTOR EVALUATION (EFE) matrix FOR CLOVER Key External FactorsWeightRatingWeighted Score Opportunities 1. Recession may cause increase in market share0. 0820. 16 2. Social upliftment programme is passing successful0. 0540. 20 3. Knowledge of applicable legislation and law0. 1030.3 4. Possible acquisitions of competitors0. 0810. 08 5. Clover has branded products0. 1130. 33 Threats 6. Economic Recession is a great concern0. 2020. 40 7. Farmers leaving the trade0. 0820. 16 8. Agreements not updated regularly enough0. 0540. 20 9. New and revise legislation places enormous pressure on companies0. 0530. 15 10. Continual Environment Deterioration is of concern0. 0340. 12 11.IT department not close enough to management0. 0320. 06 12. Competitors are generally a threat0. 0730. 21 13. Farmers are convinced to leave Clover for its competitors0. 0720. 14 Total1. 002. 51 CONCLUSION Clover scores an average of 2. 51 out of a possibl e 4. There is therefore ample get on for improvement. THE INTERNAL ASSESSMENT IntroductionBroadly, the purpose of an internal assessment is to see and list a companys internal strengths and weaknesses. Generally, these internal forces by Clover can be divided into the following categories solicitude Forces merchandise Forces pay / Accounting Forces occupation / Operations Forces Research and Development Forces and Management Information Systems Forces. As with the External Assessment, each of these categories will be enigmatically analysed and the strengths and weaknesses will be listed under each heading. Management Management of Clover has 5 basic activities, namely Planning Organising Motivating Staffing and Controlling.Management may be seen as actively planning in order to take the company forward in line with its vision. However, the indigenceal activity may have taken a turn for the worst, as Clover unopen down one of its factories, and is in the process of restructur ing and retrenchment. It is therefore submitted that management motivation is, at the moment, a weakness.Apart from the above, the activities of management are attended to adequately and the employees are always encouraged to participate and voice concerns, even directly with management. Marketing There are 7 basic functions of market, namely Customer abstract Selling products/services Product and service planning determine Distribution Marketing research and Opportunity analysis.Clover is well positioned in the market and is a very strong branded company. That being said, its market share has re chief(prenominal)ed stagnant for the past year or two. Clovers marketing team is very strong, and centrees on the juvenile products, rather than milk. The main product of Clover is thus difficult to market.The view at this stage, is that Clovers prices of its products are sometimes too high, but the fact closure that Clover is marketing an exceedingly strong and well known brand. Fi nance / Accounting Strengths Can identify early on future shortfalls in the company and react.Had a positive net profit over die hard 6 year period. Operating profit was 22. 6% higher than 2007. Property, kit and caboodle and equipment increased from 2007. Goodwill increased as a result of acquisition of 70% of Mayo Dairy by Clovers say venture Danone Clover. Weaknesses There was a 22. 8% increase internally on operating expenses in 2008 and no mention of plans to combat same. Company suffered tax loss. Interest bearing debt increased. Cash utilisation increased by 26% from 2007. Production / OperationsClovers main product (milk) is extremely perishable and as such, Clover succeeds in putting milk, in whatever form, in its publicity within 48 hours after collection therefrom from the farmers. This is quite impressive bearing in mind that whilst most of its milk is collected at the coast (KwaZulu-Natal and Eastern Caper) most are touch on in the Highveld. It is a concern that most of its factories are not close to its source, but Clover is addressing this at the moment. Its quality control is well maintained, and fit in to Clover, each litre of milk undergoes 55 quality checks before leaving the factory. Research and Development (R & D)Clover survives on older products, but its R & D department is always busy exploring newer and ripe products. It is however difficult to do with a product such as milk. One of its most innovative products in recent years were no fat milk and vanilla milk. Management Information Systems (MIS) It might be argued that Clovers MIS is not up to scratch. It relies on data from the trade and field. There is no information officer in the company.Information is collected as and when requested and/or needed. INTERNAL FACTOR EVALUATION (IFE) matrix FOR CLOVER Key Internal FactorsWeightRatingWeighted Score Strengths 1. Managements Planning, organising staff and controlling is good0. 1040. 40 2.Brand is very strong and thus marketin g is fairly easy and successful0. 2040. 80 3. Strong marketing team0. 0530. 15 4. turnover rate increases year on year for the past 6 years0. 0930. 27 5. Production and operation very strong0. 1140. 44 Weaknesses 6. Management motivation low due to impending restructuring0. 7010. 2 7. Operating expenses rose by 22. 8%0. 0620. 12 8. High turnover but low profit margin (between 7% and 8%)0. 0510. 05 9. Factories too far away from source, thereby increasing production costs0. 0810. 08 10. Product may be seen as old and stagnant, thereby inhibiting R & D0. 0220. 04 11. MIS not adequate0. 0410. 04 Total1. 000. 002. 59 IFE CONCLUSION Clover score of 2.59 is above average, therefore indicating average to slightly strong internal position. There is therefore ample room for improvement, but it is not weak internally, which is positive. Strengths, Weaknesses, Opportunities and Threats (SWOT).SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of pl anning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. Strategies to adopt in improving Clovers mission statement Human resources Applies to all actors along the chain from producers to consumers.Producers continuing education on breeding, feeding, animal health, the bureau of institutions and groups. Milk collectors and handlers training in clean milk processes payment systems. Milk procurement organization logistics environmental issues and concerns aim is to keep cost as low as possible. Knowledge management Marketing consumer education and sense (e. g. school trips to dairies) educate the media so they can help promote milk campaigns educate health professionals so they know about the benefits.Competitiveness Producing high quality milk at lowest cost quality is coupled to other elements government can provide loans, art ificial insemination, knowledge (training programs) Productivity. private sector can provide knowledge, consultants, equipment research and development on new products and technology nutrition management (keeping costs low, quality high) Value admittance There is a phenomenal scope for innovations in product development, packaging and presentation. Steps should be taken to introduce value-added products like ice creams, flavored milk, dairy sweets, etc.This will lead to a greater presence and flexibility in the market place along with opportunities in the field of brand building. Addition of cultured products like yoghurt and cheese lend further strength both in terms of utilization of resources and presence in the market place. Export potential Efforts to exploit export potential are already on.Clover should export to Bangladesh, Sri Lanka and the Middle East. Following the new GATT treaty, opportunities will increase tremendously for the export of agri-products in general and d airy products in particular. Cooperatives Greater awareness of farmers needs Clover should not think that they are the only custodians or voice of Farmers or the only ones protecting the interests of Farmers. Clover should be open enough to understand and think out of the buffet and to understand and see what ways and means can help farmers stay loyal and be more productive. Competition With so many newcomers incoming this industry, rivalry is becoming tougher day by day.But then competition has to be faced as a ground reality. It is large enough for many to carve out their niche. Problematic distribution All is not well with distribution. But then if ice creams can be interchange virtually at every nook and corner, why cant Clover sell other dairy products too? Moreover, it is only a matter of time before we see the emergence of a frozen chain linking the producer to the refrigerator at the consumers home Perishability pasteurization has overcome this weakness partially. UHT gives milk long life. Surely, many new processes will follow to improve milk quality and extend its shelf life. Clover needs to overhaul its R & D department.