Dairy: Milk and Clover Essay

cloer S. A. (Proprietary) Limited ( clover) is the biggest dairy processor in southeastern Africa with a turn overover of R 4. 3 billion and staff in excess of 6 000. medick collects approximately 30% of southeast Africas milk supply and processes it into good known brand dairy and related products which is then distri notwithstandinged nation in ally and scour exported into certain African countries.In this document, medics foreign opportunities and terrors, and its screennal strengths and weaknesses give be evaluated in order to complete the relevant matrices, whereafter the Grand Strategy Matrix will be used to word appropriate strategies to deal with the key opportunities, threats, strengths and weaknesses Mission and Vision Statements Clovers mission (which answers the question What is Clovers business?) is as follows Clover is a brand foods and beverages group with a strong stress on value-added products.Clovers South African dairy business is the perfect enabler to reach the mathematical groups widely dispersed customers and consumers. Extraordinary cargon is interpreted to develop brands which will occupy the image one or two positions in its chosen segments. It believes in the superior procurement, production, merchandise, sales and distri preciselyion of these branded consumer goods (BCG) to its loyal consumers. A check up on of the mission statement shows that nearly of the 9 Cs (i. e. Customers, Products, Markets, Technology, disquiet for survival, Growth and Profit force, Philosophy, Self Concept, Concern for Public Image and Concern for Employees) have been utilised in a short statement. It is suggested that the future(a) of the absent 9 Cs be included or expound upon in the mission statement Concern for employees Philosophy. Its raft (which answers the question What do we want to become?) is as followsTo be a leading and war-ridden ships bon ton in South Africa and selected African countries, reaching any consumer on a daily basis with its most admired branded and trusted products, delivering improved and sustainable sh argonholder value by being a responsible corporate citizen and preferred employer. A review of the vision statement shows stronger and more reliance by Clover on its brand than on its products.However, Clovers vision is most certainly achievable, and in certain aspects one may argue that the vision statement capacity be outdated. THE outside(a) ASSESSMENT Introduction Broadly, the purpose of an external assessment is to a come withs (in this case Clovers) opportunities which could benefit it on the one hand, and on the another(prenominal), threats that should be avoided. Generally, these external forces can be divided into the following categories Economic forcesSocial, cultural, demographic and environmental forces Political, governmental and legal forces expert forces and competitive forces. Each of these categories will be discussed briefly, as well as the opportunities and threats will be listed to a lower place each heading. Economic Forces The current and ongoing recession had a negative stupor on the companys interim financial results for the 6 months ending December 2008.More particularly and in the oral communication of Clovers Chief Executive, Mr JH Vorster, a recent international publication on dairy matters give tongue to that the industry faces a perfect storm of destructive economic forces and South Africa and Clover could not flying these forces. The high 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 get carries a price margin.This, however, will detain to pose a problem, and as such, Clover must continue to ride the wave of brand recognition to endeavour to brace itself against the prevailing negative economic forces, which is seen as a huge threat. A further threat is the high number of farmers leaving the trade callable(p) to what they generally term unaffordability. Social, Cultural, Demographic and Environmental Forces Clover believes in personal social uplift, thereby not only donating money in general, but being directly involved in the upliftment.Its flagship upliftment programme, Mama Afrika, presently supports in excess of 10 000 people. Appropriately, Clover views this project along the following lines Clovers flagship CSI doctrine is underpinned by the principle of sustainability instead of giving people handouts, it is investing in projects that empower communities and enhance their ability to become self-sufficient in the long term. We teach 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 wherefore, in terms of support and development, accept its social indebtedness Profitability and growth are pre-requisite s to fulfill its social responsibility indoors financial means The community, in the main has to accept responsibility for its own well-being and will only within means, be supported in this It creates wealth through company taxes, employee taxes and levies which enable government to establish and maintain essential infrastructure standardised roads, education and health services Opportunities for work and prosperity are not only created within the business, but that it, indirectly, contributes to job creation and combating poverty. It furthermore enforces strict environmental disposal techniques in order to protect the environment. It is therefore that Clover views the Social, Cultural and Demographic Forces as an exciting 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 may therefore be seen as a (general) threat. Political, Governmental and Legal Forces Gener alFirst and foremost, Clover must ensure that the relevant agreements are in place 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 teaching by individuals and/or entities.Broad Based Black Economic Empowerment Act, 53 of 2003, which provides for, inter alia, increase broad-based and effective participation of black people in the economyThe Competition Act, 89 of 1998, which provides for, inter alia, the investigation, come across and evaluation of certain restricti ve 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 above will be an opportunity. Similarly, a companys ignorance will be a threat to the company.Clover is an set up company, has a legal subdivision 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 prevailing importance that all its IT be updated regularly (and adequately). Although it has an IT department, Clover does not have a manager wet copious 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 milk, leaving 70% which is collected by between 200 to 350 other dairies in South Africa. Of these, Parmalat (Pty) Ltd, Woodlands Dairy (Pty) Ltd, Nestle Dairy (Pty) Ltd, Milkwood (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 towering 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 network to gain the competitive advantage. Some of the smaller competitors are more than likely to fail due to the current economic recession, thereby giving Clover the opportunities in respect of possible acquisitions of growing market share. A further threat is the (sometimes) ease with which competitors may be successful in convincing farmers to change one processor to another.THE EXTERNAL FACTOR EVALUA TION (EFE) MATRIX FOR CLOVER Key External FactorsWeightRatingWeighted Score Opportunities 1. Recession may curtilage increase in market share0. 0820. 16 2. Social upliftment programme is super 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 massive concern0. 2020. 40 7. Farmers leaving the trade0. 0820. 16 8. Agreements not updated regularly enough0. 0540. 20 9. New and amended legislation places wide pressure on companies0. 0530. 15 10. Continual Environment Deterioration is of concern0. 0340. 12 11.IT department not nasty 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 possible 4. on that point is therefore ample room for improvement. THE INTERNA L ASSESSMENT IntroductionBroadly, the purpose of an national assessment is to refer and list a companys internal strengths and weaknesses. Generally, these internal forces by Clover can be divided into the following categories care Forces market Forces Finance / Accounting Forces Production / Operations Forces question and reading Forces and Management Information Systems Forces. As with the External Assessment, each of these categories will be cryptically analysed and the strengths and weaknesses will be listed under each heading. Management Management of Clover has 5 basic activities, namely Planning Organising propel Staffing and Controlling.Management may be seen as actively planning in order to take the company forward in line with its vision. However, the motivatingal activity may have taken a turn for the worst, as Clover closed down one of its factories, and is in the process of restructuring 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 advance to participate and voice concerns, even directly with management. Marketing There are 7 basic functions of marketing, namely Customer analysis Selling products/services Product and service planning Pricing Distribution Marketing look for and Opportunity analysis.Clover is well positioned in the market and is a very strong branded company. That being said, its market share has remained stagnant for the sometime(prenominal) year or two. Clovers marketing team is very strong, and focuses on the forward-looking products, rather than milk. The main product of Clover is thus demanding to market.The view at this stage, is that Clovers prices of its products are sometimes too high, but the fact stay that Clover is marketing an extremely strong and well known brand. Finance / Accounting Strengths Can let out early on future shortfalls in the com pany and react.Had a positive net profit over last 6 year period. Operating profit was 22. 6% higher than 2007. Property, plant and equipment increased from 2007. blessing increased as a result of acquisition of 70% of Mayo Dairy by Clovers joint venture Danone Clover. Weaknesses There was a 22. 8% increase internally on run expenses in 2008 and no mention of plans to combat same. Company suffered tax loss. Interest bearing debt increased. Cash engagement 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 packaging within 48 hours after collection thereof 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 processed 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 qual ity overtop is well maintained, and according 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 innovative 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 extract milk. Management Information Systems (MIS) It might be argued that Clovers MIS is not up to scratch. It relies on information from the trade and field. There is no information officer in the company.Information is collected as and when call for 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 marketing is passably easy and successful0. 2040. 80 3. Strong marketing team0. 0530. 15 4. Turnover 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 change magnitude production termss0. 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 planning and divine services marketers to focus on key issues. SWOT stands f or 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 role 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 awareness (e. g. school trips to dairies) organise the media so they can help promote milk campaigns educate health professionals so they know rough the benefits.Competitiveness Producing high quality milk at lowest cost quality is linked to other elements government can provide loans, artificial insemination, knowledge (training programs) Productivit y.Private sector can provide knowledge, consultants, equipment research and development on new products and technology nutrition management (keeping costs low, quality high) Value entree 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 nominal head and flexibility in the market place along with opportunities in the field of brand building. Addition of well-mannered products like yoghurt and cheese lend further strength both in terms of example 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 dairy products in particular. Cooperatives Greater awareness o f 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 box and to understand and see what ways and means can help farmers stay loyal and be more productive. Competition With so many newcomers entering this industry, competition is comely tougher day by day.But then competition has to be faced as a screen background 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 sold virtually at every recess 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 cold chain linking the producer to the icebox at the consumers home Perishability Pasteurization has overcome this weakness partially. UHT gives milk long life. Surely, many new processes will follow to im prove milk quality and extend its shelf life. Clover needs to slide by its R & D department.