A Review of Fonterra Group’s Strategy and Business Model
Fonterra was formed in the October 2001 merger of the New Zealand Dairy Group (NZDG), Kiwi Cooperative Dairies, and the New Zealand Dairy Board (NZDB). It has become the world’s leading exporter of dairy products, responsible for over a third of international dairy trade. The Group is co-operatively owned by over 10,500 dairy farmers whose products make their way to customers in approximately 140 countries. Fonterra aims for global dairy leadership and its purpose is to sell their farmer shareholders’ milk (Fonterra Co-operative Group, 2011).
Analysis of the Dairy Industry using Porter’s Five Forces Porter’s first force describes the threat of potential entrants. Barriers to entry and economies of scale are significant for new entrants. However, New Zealand’s deregulated market structure and relatively low cost might attract entrants as a base of export oriented supply and processing. The threat of new entrant is medium (Vallyon, 2003). Porter’s second force is bargaining power of buyers.
The New Zealand dairy industry exports 95% of the country’s dairy production. Continued consolidation of food manufacturing and retailers has the effect of reducing overall numbers of buyers in the industry and increasing their purchasing power (Vallyon, 2003). Faced with the fact that buyers face few switching costs, it is fair to say that buyers have high bargaining power in the industry. Porter’s next force is bargaining power of suppliers. The dairy industry is a seller’s market with global demand exceeding supply.
This opens up opportunities for other uprising overseas markets to the industry with suppliers from India, China and Brazil. Fonterra supplies are secured through the co-operatives structure and a significant threat exists if Fonterra fail to make competitive milk payouts to its farmer shareholders (Vallyon, 2003). It is clear that Fonterra suppliers have some bargaining power in the industry. Porter’s fourth industry force is the threat of substitute products. Dairy milk is a unique natural product without any artificial substitutes.
However there is development of alternatives including soya milks and non-dairy milks such as goat, buffalo and sheep. Danone, Unilever and Coca-cola have also made significant acquisitions or partnerships with organic milk producers. Although a dairy product, organic milk can be considered as a parallel value chain as it requires different knowledge and techniques at each stage of the process (Vallyon, 2003). In this sense, the force is low to medium. Porter’s final force is the intensity of competitive rivalry.
As a global leading dairy exporter, Fonterra faces increasing threats as global competitors become aware of its size and influence in the industry. Continued consolidation of industry could see competing dairy resources being merged into larger, more efficient competitors. In the evolution of trade liberalisation, competitors may respond through increasing global growth strategies (Vallyon, 2003). Hence this force is high. Fonterra’s Strategies Fonterra’s business model is a farmer-owned co-operative, widely spread around the vertically integrated New Zealand Dairy Industry.
At Fonterra, the goal is to build a business that pays the farmer shareholders the maximum sustainable price for their milk and that maximises profits from the capital invested in the Co-operative (Fonterra Co-operative Group, 2010). To achieve this, Fonterra has three key strategies in becoming the company that is the source of natural dairy nutrition to the world. Firstly they intend to deliver sustainable co-operative performance. With its scale and reach of operations, Fonterra creates enormous logistics complexities.
However, when it comes to processing, recent projects like Drier 4 at Edendale (ED4) in Southland are said to be the most efficient milk powder unit in the world. Likewise, in order to optimise the supply chain at home so to deliver product to their customers as efficiently as possible, Fonterra expanded a key cool and dry store logistics hub that has taken more than 50,000 truck movements off local roads and has largely eliminated the need for contracted storage around the Waikato (Fonterra Co-operative Group, 2010). This is working alongside with the enhanced use of rails to move products around the country.
Then elsewhere, the Group has also taken its development online with the launch of globalDairyTrade (gDT), an internet-based auction platform through which sellers offer to sell commodity dairy products (Q&As: globalDairyTrade Information Portal, 2011). In 2010 gDT has sold 359,000 metric tonnes on the platform (Fonterra Co-operative Group, 2010). Fonterra’s second strategic goal is to build trusted brands in chosen markets. Fonterra has a strategy to strengthen their positions in key regional markets where ownership of the supply chain gives a degree of competitive advantage (Fonterra Co-operative Group, 2010).
The focus has been on high growth markets within Asia/Africa/Middle East (Asia/AME) and Latin America, and the existing strong market franchises in ANZ. Anlene provides a great insight to Fonterra’s brand strategy at work. Created in Asia in 1991 to support bone health, Anlene is now the clear number one high-calcium milk brand across Asia. Priced at 30-50% above regular milks, Anlene is a trusted premium brand in the Asia market, which has an expanding middle class that is caring more about healthy nutrition for the whole family (Fonterra Co-operative Group, 2010).
Additionally, Fonterra has continually restructured their investment portfolio to ensure they can capitalise on the most promising market opportunities. To support its expansion in Africa and the Middle East, they have purchased the remaining 51 per cent stake in Saudi New Zealand Milk Products (SNZMP), a dairy manufacturing facility in Saudi Arabia, has secured manufacturing capacity to support growth plans in the Middle East. Currently packing Anchor and Anlene milk powders and producing processed cheese, SNZMP supplies 20 countries in the region (Fonterra Co-operative Group, 2010).
The third strategy Fonterra have adopted is to grow lasting customer partnership with the world’s leading food and nutritional companies. The company looks to improve their ability to source and add value to dairy supply so to strengthen their position as the supplier of choice from around the world. In order to achieve it, they have focused on developing customer partnerships in premium ingredients and in foodservice solutions. Premium ingredients are products that are more advanced than standard dairy ingredients. Examples are nutritional bases for infant formula and growing-up milk powders (Fonterra Co-operative Group, 2010).
Fonterra is already the preferred supplier of all five of the world’s largest infant formula companies with stronger demand from their customers to partner them. Key customers have strong growth ambitions and they are looking to Fonterra as a preferred source of high-quality paediatric nutrition products. A premium ingredients category with exciting prospects is pharmaceutical lactose, with Fonterra a world leader in lactose excipients through their joint venture with RoyalFrieslandCampina which develops, produces and markets high quality lactose used in the pharmaceutical, nutrition and food industries (Fonterra Co-operative Group, 2010).
A Custom Essay Sample On
Buy One Degree Organic Foods Products At Your Local Whole Foods Market Anna Seacat
Final Project Milestone Two Apple Csr Reflective Essay Final Project Milestone Two Apple Csr Reflective Essay
Essay On Plastic Harm The Environment Encore Events Csr Thesis Questionnaire
Image Titled Write A Last Minute Essay Step
Additionally To Increase Participation And Sp Awareness We Are Launching Csr Essay Competition Students At High School And Universities Are Invited
Corporate Social Responsibility University Essay Writing Home Topic Profile In The Organization Corporate Social Responsibility
Research Paper Finance Subject
Superior Quality Essay Writing Service For High School University And College Students Research Papers Csr Buy Cheap Essays Online
The Children Stand In Organized Manner For The Morning Assembly
How World S Companies Act On Corporate Social Responsibility
This Preview Has Intentionally Blurred Sections Sign Up To View The Full Version
Cover Letter Character Sketch Template Custom Essay Writing Service Highlights Post Character Example Essays Xexample Of
Upsc Ies General Studies Solved Papers Engineering Services Examination 2017 2018
Essay On Csr
Esb Are The Winners Of The Outstanding Achievement In Corporate Social Responsibility Award
Corporate Social Responsibility Of Fonterra Kibin Pleasure Of Health Corporate Social Responsibility Essay
Corporate Social Responsibility Assignment Writing Homework Dissertation Thesis Writing Help
Iicsr Logo Today S Research Csr
Essay Writing Competition Conducetd For High School Students Of Nizambad Dist Telangana State Topic Was Organic Fertilizers Higher Yield And Preserve
Essay On Csr Millicent Rogers Museum
Responsibility Essay Dissertation Proposal Corporate Social Responsibility Responsibility Essay Dissertation Proposal Corporate Social Responsibility
Final Project Milestone Two Apple Csr Cheap Essay Writing Service What Does Community Service Mean To
Research Proposal On Csr Research Essay Writing Service
Related Post of essay on csr
Compare And Contrast Poetry EssayPropose A Solution EssayJames Joyce EssaysDepression Essay TopicsInterview Essay ExampleJohn Donne As A Metaphysical Poet EssaysRhetorical Analysis Essay SamplesStem Cell Research Persuasive EssayScholarship Essay Examples Financial NeedIntroduction Of A Descriptive EssayThe Ways We Lie EssayEssay PlaceHow Long Should A College Essay BeEssay On Mass MediaTypes Of English EssaysEarthquake EssaysDoes God Exist Philosophy EssayDriving Age EssayEssay On The Progressive EraHistory Of Soccer EssayIn Search Of Our Mothers Gardens EssayEssay On Ganesh ChaturthiIllustration Essay SampleCreative Essay ExamplesArgument And Persuasion EssayTuesdays With Morrie EssaysLove Story EssayEssay About Summer VacationJournalism EssayScholarships Essay ExampleWriters Job OnlinePro School Uniforms EssayHow To Write A Critical Essay ExampleCustom EssaysPhilosophy Essay IdeasEssay On Technology And SocietyYouth Today EssayArgumentative Essay Paragraph StructureArranged Marriage Vs Love Marriage EssayEssay Of Abraham LincolnFarenheit 451 EssayStatutory Interpretation EssaySamples Of An Argumentative EssayDiet Analysis Essay800 Word EssayReading EssaysSame Sex Marriages EssaysShort Descriptive EssayEssay On CompassionIntros To EssaysEssay On Importance Of Women EducationGraduate Essay SamplesForgiveness EssaysEssays On LanguageExamples Of Symbol In LiteraturePersonal Essay Thesis StatementScarlet Letter Symbolism EssayConcept Topics For An EssayEssay On Rabindranath Tagore In HindiHow To Write Expository EssayBest Topics For EssaysThe Book Thief EssaySteps To Writing An Argumentative EssayHappiness Essay FreeEssay On The War Of 1812Communication And Technology Essay5 Paragraphs EssayEssay ScoreOf Mice And Men Character Analysis EssayCompare And Contract EssayComing Of Age In Mississippi EssayFifty Shades Of Gray SampleIntroduction To Macbeth EssayExample Of Poetry Analysis EssaySeptember 11 2001 EssayEnglish Is My Second Language EssayBreast Cancer EssaysConcept Essay TopicDescriptive Essay Topics ListPersuasive Essay Ideas For High SchoolTopics For An Analytical Essay14th Amendment EssayEssay About My MotherEssays For YouThe Alchemist Novel ReviewEssays Online UkMonroe Doctrine EssayEssay On Binge DrinkingDescriptive Essay Example PlaceAnalytical EssaysEnglish Essays BookHigh School Graduation EssayWhistle Blowing EssaysRomeo And Juliet Essay ThesisGlobalization Essay TopicsHelp Writing College EssaysTopic To Write EssayEssay Writting ServicePandit Jawaharlal Nehru EssayEssays On The Cask Of AmontilladoGovernment Essays500 Words Essay ExampleFreelance Jobs For WritersEssay On Goals In LifeCompare Contrast Essay Topics College StudentsSharing And Caring EssayCommercial Analysis EssayGood Topics For An EssayEssay On Steroids In SportsDefinition Of Motivation By Different AuthorsDifferent Types Of Argumentative EssaysHomosexuality EssayOutline Of A Persuasive EssayWriting Paper ServiceAmericanism EssaysSample Apa Essay PaperSample Book Review For CollegeEssay On Mother Teresa In HindiPoetry Essay ExampleEssay RaterMy Best Movie EssayExamples Of Anecdotes In EssaysOptimism EssaysEssay OverpopulationChemistry AssignmentsMilitary Essay ExamplesPaper WritersCapital Punishment EssayStart EssayEssay On Child LaborOzymandias EssayFuture Technology EssayThe End Justifies The Means EssayExample Of A Analytical EssayWitchcraft EssayEssays Online To BuyBenefits Of Technology EssayEssay About StudentMasters Essay SampleMulticultural Education EssayApa Style Essay PaperOdysseus Is A Hero EssayEssay On Good BehaviourGoing For The Look But Risking Discrimination EssayEssay On LiberationSouth Korea EssayRaisin In The Sun EssayWays To Write A Good EssayAnalytical Essay Thesis ExampleEssay Of EnvironmentA Good Essay StructureEssay On The Fall Of The Roman EmpireTelevision EssaysRacial Profiling EssaysInformative EssaysFor The Death Penalty EssayConclusion For Compare And Contrast EssayExamples Of An Analytical EssayEssay On Police CorruptionDavid Copperfield Dickens SummaryStory Of AlchemistExamples Of Autobiography EssaysMy Favourite Film EssayEssay On Our ConstitutionBurro GeniusAcademic Essays DatabaseDivision And Classification EssayMiscommunication EssayTerrorism And Islam EssayExistentialism EssaysEveryman EssayEssays On William ShakespeareEducation EssaysWhy I Love America EssayMadness In King Lear EssayEssay About CultureExample Of Rough Draft EssayEducation System EssayResearch EssayAbortion Essay IntroductionSports In India EssayEssay On Our Education SystemRadiation EssayFood Crisis EssayReal Estate EssayMy Home EssayPaper Writing Service CheapPossible College Essay TopicsMy Life Essay For StudentsRenaissance Essay TopicsEssay Writing ScamsGlobal Warming Persuasive Essay OutlineThe Men We Carry In Our Minds EssayGeorge Orwell Essay On WritingEssay Of TeacherCollege Vs High School Essay Compare And ContrastHow To Start An EssayGood Essay VocabularyMahatma Gandhi EssayEssay On Conservation Of WildlifeEssay On CitizenshipMexican EssaysNed Kelly Hero Or Villain EssayMy Favourite Dish EssayShopaholic EssayPerformance Enhancing Drugs EssayReasons To Go To College EssayRebellious Teenager EssayExample Of Illustration EssayKarl Marx EssayIntroductory Essay SampleExpository Essays SampleLong Essay On Environmental PollutionAn Inspector Calls Essay QuestionsHow To Quote In An EssayThe Fountainhead EssayEuropean History Essay TopicsEssay Copyright CheckerDescription Essay ExampleCritical Thinking Essay ExamplesPersuasive Essay MakerEssays About The Great GatsbyReview Of The Alchemist BookThe Catcher In The Rye Essay TopicsAvro Arrow EssayDavid LurieStreet Children EssayEssay HelperEssay On GreedComparative Essay TopicsRichard Cory EssayGoing Green EssayTeenage Problems EssayMise En Scene EssayEssay On PlayEssay Writing About My SchoolCompare And Contrast College Essay ExamplesCriminology EssayReasons Why Abortion Should Be Legal EssayChristian Worldview EssayEdit My EssayFilm Essay StructureOthello As A Tragic Hero EssayHow To Write A Contrasting EssayReflective EssayAlbert Camus The Stranger EssayEssay On School LunchesEssay On Effective Leadership500 Page EssaySparknotes EssaysInformative Essays ExamplesDoes A Compare And Contrast Essay Have A Basic StructureThe Alchemist ReviewDance Essay TopicsSociological EssaysEssays About English LanguageEssay Response FormatDescriptive Essay On New York CityTeam Player EssayIdeas For A Definition EssayFamily Business EssayStudying Abroad EssayEssay About Experiences In LifeAn Essay About YourselfSamples Of Informative EssaysMiss Havisham EssayAll My Sons EssaysEssays BlogEssay About Anne FrankComparative Essay SampleLife Of Pi Survival EssayFreak The Mighty EssayGoals In Life EssayApology Essay To TeacherPersuasive Essay QuestionsBrevity Is The Soul Of Wit EssayEssay On ShylockNature EssayLegalization Of Weed EssayPersonification EssayRousseau EssaysA Thousand Splendid Suns ThesisA Room With A View EssayEssay About Writing ProcessSummary Of Two Gentlemen Of Verona5 Types Of EssaysMy Favorite Sports EssaySpeech Is Silver But Silence Is Golden EssayInterpretive Essay OutlineA Essay About EducationAutobiography Essay FormatCause And Effect Essay PowerpointFree Essay SamplesArgumentative Essay Outline ExamplesEssay On Population Explosion WikiEssay On PtsdSummary Of The Alchemist NovelMedical Persuasive Essay TopicsProblem Solution Essay Topics ListMaking Decisions EssayHorror Story EssayEssay Environmental PollutionPersonality Essay SampleOnline Academic Writing JobsThe Dust Bowl EssayEssay On India In 2020EssayoutlineTruman Show EssaysTerrifying Halloween StoriesHow To Write The Best College Application EssayShould The Driving Age Be Raised To 18 EssayEssay On Human EvolutionArgument Persuasive Essay TopicsStrategic Management EssaysCommunity Service EssaysEssay With Thesis Statement ExampleDefinitional Essay TopicsArgumentative Essay IntroductionEssay On WaterResearch Paper SmokingMla Format Sample PaperBooks On Essay WritingAgrumentative EssayIs Global Warming Man Made EssayArgumentative Essay About EuthanasiaProblem Solution Essay IdeasWriting VacanciesAmerican And French Revolution EssayPersonal Experience Narrative EssayA Successful Person EssayGood Opening Sentences For EssaysLiterature Essay SampleMy Family Essay SampleExpository Essay On MusicExspository EssayKing Lear EssayGenetic Modified Food EssayEssays On Importance Of EnglishLiterary Analysis Essay On Fahrenheit 451Cognitive EssayScience Essay TopicBrain Drain In India EssayEssay For InternetShort Essay Writing SamplesDupont EssayUniversity Assignment HelpThe Yellow Wallpaper Critical EssayWhat Is Success EssayAnalytical Essay Topic IdeasEssays About New York CityAlchemist ReviewFossil Fuels EssayThesis Statement In An EssayRain In Different LanguagesWhere Can I Buy An Essay OnlineMemoir Examples EssayPersuasive Essay Topics College LevelAbortion Essay AgainstMoral Values SpeechEconomic EssaysManagement EssaysUniversity Essay Writing ServiceEssay Topics For Research PaperSparknotes One FlewMicroeconomics Essay TopicsDebate EssaysA Compare And Contrast EssayCurrent Events EssayEssays On New YorkIf I Won The Lottery EssayFall Of Rome EssayWriting An Essay In SpanishSovereignty EssayObesity Essay ConclusionHero Essay ExamplesFsu Admission EssayCool Topics For PresentationBible EssaysProfile Essay TopicsThe Last Leaf By O Henry AnalysisIf I Could Change The World EssayCritical Essay FormatWhat Is An Analytical EssayEssay On Michelangelo250 Word EssayCatcher In The Rye Essay PromptsClassical Argument EssayEssays About High SchoolReflective Essay DefinitionEssay On The Origin Of LanguagesEssay On BooksA Dream Essay WritingEssays On My SchoolOthello Essay ThesisDivision And Classification Essay ExamplePlant Cell EssayNovel EssaysEdward Said States EssayAnti Smoking EssayVerbal Communication EssayEssays On Leadership QualitiesEconomics Essay WritingIn Cold Blood EssaysDecriptive EssayGay Marriage Should Be Legalized EssayEssays On Police BrutalityEssay Writing DescriptivePharmacy Essay ExamplesCourage Definition EssayWriting An Abstract For An EssayExpository SamplesEssays Written For YouEditing EssaysEssay Death PenaltyArthur Miller EssaysEssay PlagiarismBusiness Strategy EssayHinduism EssaysPersonal Belief EssayEssay Of SuccessThe Myth Of Sisyphus And Other EssaysExample Of Human Resource PlanningWebsites That Write EssaysEssay About DrugsHow To Write An Objective EssayEssay Mass MediaPersuasive Speech Global WarmingEssay Questions For Fahrenheit 451Essay On Research MethodsHammurabi Code EssayEssay On Different TopicsArgumentative Essay Outline TemplateEssay ReviewerAmerican Literature EssaysSample Of Short EssayFredrick Douglass EssayEssay On Natural ResourcesProfanity EssayFrederick Douglass Learning To Read And Write EssayIllustrative Essay IdeasIndividuality EssayE Commerce EssayExamples Of Informal EssayEssay On Fast Food NationProposal EssayGood Persuasive Essay Topics For Middle SchoolLmu Essay PromptAccounting EssaysEssay In Hindi LanguageEssay Writers FreeJob As A WriterComparison Essay Topic IdeasEssay On Best TeacherTerm Paper WritersEssay On Christianity ReligionHeroism EssaysSample Of Descriptive Essay About A PersonEssay On The AwakeningFinancial Need Scholarship EssayRutgers Essay ExampleGender Pay Gap EssaySchool Uniform Debate EssayEssay ImmigrationI Wandered Lonely As A Cloud EssayKantian Ethics EssayFsu Essay ExamplesJane Austen Essay TopicsEssay On RamadanFreelance Writing ServicesLanguage And Culture EssayCompare Contrast EssayInternet Censorship EssayA Rose For Emily EssayEssay On Role Of MediaPersuassive Essay IdeasShark.comExplanatory Essay TopicsPersuasive Essay TopicEssays On Illegal ImmigrationGothic EssayBest Vacation EssayBusiness Essay TopicsMy Room EssayChemistry Project IdeasOedipus EssaysEssay On Family RelationshipsPatriotism Essay For KidsWriting A College Level EssayCollege Essay Help Online FreeProgramming Assignment HelpDream Analysis EssayBest Essay Writing ServicesEssays To BuyNutrition EssayWrite Essays For MeWorld Poverty EssayHome Safety EssayResearch Essay Proposal ExampleCambodian Genocide EssayBusiness Essays Samples