“Silver Fern Farms”
Text of Contents
Executive Summary .......................…………………………………………………...................3
History of the Company & Status ...............................................................................…............4
Part 1 - Environmental Analysis……………………………………….......................................5
Part 2 - Strategic Options............................................................................................................13
2.1 Based on your internal & external environment analysis conducted above, summarize the present situation faced by Silver Fern Farm........................................................................13
2.2 Describe the most important factors in the environment faced by Silver Fern Farm.....13
2.3 Present three (3) strategic options Silver Fern Farm could consider pursuing in relation to the present environmental situation.......................................................................................14
2.4 Using an appropriate decision-making methodology, assess, select & justify which of your options is the most appropriate...................................................................................................14
2.5 Discuss how the chosen option works in terms of the environmental situation and Silver Fern Farm’s strategic objectives.................................................................................................16
Part 3 - List of References……………………………………………………………................16
- Using Porter’s Five Forces, analyse the competitive forces & key success factors.............5
- Research, analyse and report on the Internal and External Environment .......................8
- Discussion on the strategic impact internal & external forces have or will have on the organization............................................................................................................................11
- Using the concepts of RBV, Competitive advantage, Generic Strategies, Product/Market Grid analysis, analyse Silver Fern Farm's functional strategies and improvement.........11
- Compare & contrast Silver Fern Farm’s functional strategies and improvement initiatives with other organizations within the industry and recommend improvements12
In this study through the overarching vision of Strategic Management and its theories, we will address various aspects of Silver Fern Farms and their success and commitment in New Zealand. The main goals are to improve strategic ways to manage and develop options for producing a strategic plan that engages the external and internal context of Silver Fern Farm, based on decision-making.
Silver Fern Farms, formerly known as PPCS Limit d, holds the entire production chain until the marketing of red meat in New Zealand. Their main strategy would be to identify the needs of the consumer and produce the highest quality products possible, respecting the animals and all production process with cutting-edge technology, in order not to harm the surrounding environment, aiming the health of the final consumer.
According to the Otago Daily Times newspaper, Silver Fern Farms was processing more than 20,000 head of cattle, 180,000 sheep and 3500 deer, in uninterrupted shifts, weekly, with a record level of profits and earnings being stipulated, and there were still farmers to supply more products, that is, a combination of successful competence. (NZ Herald 2017)
In order for the company to grow, it would require a large equity investment in the company and group strategy to manage the high capital demand. The success of Silver Fern Farm was based on respect for environmental legislation, land management, environmental improvement initiatives on farms with waste management, such as the reduction of carbon dioxide, among other strategies for good business development, self-sustaining, as the work shows bellow.
History of the Company and Status:
Silver Fern Farms Limited (Silver Fern Farms), formerly PPCS Limited, is a red meat processing company. The company also offers specialty items including sheep, and deer by-products; fancy meats, wool hides; and pharmaceutical ingredients. The company operates processing facilities across New Zealand. Silver Fern Farms sells its products through its international offices in the world.( Silver Fern Farms 2018)
This company is co-chaired by Mr. Rob Hewitt (New Zealand) and Mr. Guoxiang Wang (China). Mr. Hewitt is a graduate from Lincoln University and a director of farmlands co-operative. Mr. Wang is the chief executive officer of Shanghai Maling Aquarius co.ltd (China), he held a bachelor’s degree and formerly a senior political analyst. Among other executives are Mr. Trevor Burt who is the member of the board and Mr. Michael Schubert a chartered accountant, is the chief executive officer of the company having high level of experiences and knowledge in managing large corporate organisations for several years.
Silver Fern Farms is one of the leading procurers, processor and marketer of meat and its associate products in New Zealand. They believe in “Plate to Pasture” strategy where they identify the consumer needs and then work with farmers to grow best quality animals which will produce premium quality meat and associate products.(Silver Fern Farms 2018)
Part 1- Environmental Analysis
Strategic group is a group of firms within an industry which face the same environmental forces, have same resources and follow similar strategy in response to the environmental forces. These strategies include pricing practices, level of technology investment and leadership, product scope and scale capabilities, and product quality. Silver Fern Farm mainly fall under such strategic group which focuses on product quality and level of technology investment.(Ungerer et al. 2016)
According to Porter’s five forces there are various competitors that the meat producer industry falls into fight. Silver Fern being a meat producing company also faces the same competition.
Intensity of rivalry among existing competitors:
This measures the degree of competition between existing firms. The higher the degree of rivalry, the more difficult it is for existing firms to generate high profits. There are many competitors in this industry and it get affected from high fixed costs and lack of differentiation with other firms in the industry.(Silver Fern Farms 2018)
Threat of new competitors:
New entrants sometimes bring additional production capacity. The meat producing industry is always observe the potential new entrants and its activities.
Threat of substitute products:
This measures the ease with which buyers can switch to another product that does the same thing. Although the meat industry do not have a wide variety of substitute but the low cost products from local butchers and ready-to-eat packaged meat could be a potential threat in revenue. The excess use of chicken, eggs etc. will create challenge.
Bargaining power of buyers:
The consumers are the key factors here where stronger the power because they can force down prices , than it will force the industry to reduce their costs, buyers bargain for higher-quality, greater levels of service, and lower prices.
Bargaining power of suppliers:
The stronger the power of suppliers in an industry, the more difficult it is for firms within that sector to make a profit because suppliers can determine the terms and conditions on which business is conducted. The farmers are the suppliers in meat processing industries and are one of the competitive forces.
Critical Success factors:
The Red Meat industry has traditionally been characterised by strong competition and barriers to collaboration within the industry, and this factor was quite evident during the discussions with firms in this industry. Though there are four large firms and a number of smaller firms in the industry which are selling similar products to the same markets, there is a lack of cohesion, industry collaboration and resource sharing, and an inability for branding due to each firm being unable to differentiate from another.(Folta et al. 2016)
Impact of Globalization:
Globalization, international markets and rivalries must be included in the firm’s analyses. In fact, research shows that in some industries, international variables are more important than domestic ones as determinants of strategic competitiveness. Furthermore, because of the development of global markets, a country’s borders no longer restrict industry structures. In fact, movement into international markets enhances the chances of success for new ventures as well as more established firms.
1.2 Analysis of Macroenvironment:
An organisation’s operating environment has two parts; the Macro environment and the Micro environment. Macro Environment – This contains external forces that an organisation can't directly control, instead organisations need to manage their macro environment in a way that benefits them.(PESTLE 2018)
Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Political factors include the following types of instrument the minimum wage; anti discrimination laws; market regulations; tax and type of government regime e.g. communist, democratic, dictatorship
Changes in political scenario affects a lot when the government gave Chinese company Shanghai Maling the all-clear in September 2016 to buy a half-stake in the company, on the recommendation of the Overseas Investment Office (OIO) where the labour party raised question about the potential job losses for the closure of their Ashburton plant.
Factors include employment legislation, consumer law, healthy and safety, international as well as trade regulation and restrictions. Political factors do cross over with legal factors; however, the key difference is that political factors are led by government policy, whereas legal factors must be complied with.The meat processing industry has various compliance to follow such as Animal Products ACT 1999 (APA),The food ACT 2014 which came into force in 2016.There are many code of practices, MP templates and plans code of hygienic practice for meat, food standard 2008 has to be complied. Even approved maintenance compounds to be used if the meat is consumed by humans. Silver Fern Farm introduced Farm assured program to promote and comply the legal compliances.(Taylor 2016)
All businesses are affected by national and global economic factors. National and global interest rates and fiscal policy is set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave in society. If there is a recession will have high unemployment, low spending power and low market confidence and vice versa. Silver Fern also faced various conditions through the great recession period. Lot of proposed investments was at hold.
Social forces affect our attitudes, interests and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. People’s attitudes are changing towards their diet and health and a massive growth for the demand of organic food. Silver Fern being a meat producing company affects a lot when the demand matrix for meat consumption decreases. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. The research found out that the periodical increase of migrants in New Zealand sometimes creates shortage of processed meat, but it also depends on food habits of the migrants. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. In summary Silver Farm must be able to offer products and services that aim to complement and benefit people's lifestyle and behaviour. If they do not respond to changes in society, they will lose market share and demand for their products and services.(Taylor 2016)
Technological advances have greatly changed the way businesses operate. Organisations use technology in many ways such as Technology infrastructure, Technology systems and Technology hardware. Technology has created a society which expects instant results. It will continue to evolve and impact consumer habits and expectations, organisations that ignore this will hinder their success.(Silver Fern Farms 2018)
In Silver Fern farm the meat processing technology needs to be reconstructed to compete with other similar industry. Everyone is investing in research and development and modern machinery. The technological development in the world shows path to Silver Fern Farm to invest and concentrate in employee training programs, improve in internal communication through modern network, investment in modern machinery and processes to produce best quality meat.
Opportunities and Threats
The meat processing industry is committed to mitigating carbon dioxide emissions associated with electricity and fuel use through the Emissions Trading Scheme. Processors have had to report their biological emissions under the ETS since 1 January 2012. Iindividual companies like Silver Fern are continuing to improve their environmental performance by investing in new technologies, automation and energy efficiency programmes such as waste heat recovery, refrigeration and boiler system improvements, lighting, operational changes, process improvements. The Macro environment external forces affected the meat processing industry like Silver Fern Farm in both positive and negative ways. Through this force the industry could find ways to develop and reconstruct their technological processes, improve communication, develop a socially responsible image, improve quality of the products and protect health and safety of the workers as well as the livestock.(Silver Fern Farms 2018)
The sudden change in political environment of the country where Silver Fern might have some affects through their decision making, proposed investment plans and rigid compliances. But these threats can be overruled by taking proper organizational strategy and implement it where applicable.
The external analysis is based on an economic phase, in a scenario where the company must invest strategically. Internal analysis, such as core competency, is based on business decisions and operations Internal analysis aims at the strategic way that the company achieves internal goals. (M.A. 1995)
In this regard, citing Executive Summary, on the growth of demand on the supply of products produced by Silver Fern Farms, the strategic focus should be on new investments in infrastructure to meet both producers and consumers, reviewing these strategies periodically.
RBV combines the internal and external perspectives on the field of strategy. As the structures of competence and essential capabilities, we can define the characteristics of the RBV as: Inimitability; Durability - (resource depreciation); Appropriability - (value that the resource creates: company, customers, distributors, suppliers, or employees); Substitutability and Competitive Superiority. (Porter 1985)
The Generic Strategy and basically the strategy is about deciding what direction your company should take and how it will get there. (Porter 1985)
Companies create competitive advantage by discovering new and better ways to compete, that is, they bring innovation to the market. Innovations change the way to compete, because those who innovate, get ahead in pioneering, being the following: new technologies; new or changing the buyer's needs; the emergence of a new industry segment. (Collis 1990)
In this segment, Silver Fern Farm comes out the front because it innovated when it adopted sustainability as a flag, organic products as a new consumer need, and the pursuit of well-being for the environment, flora and fauna, and more health for the final buyer. In addition, the company has all the positive characteristics of RBV, as well as it applies them within the rules of generic strategy and competitive advantage.
Extensive cattle production, particularly in countries such as Brazil, may have lower production costs than intensive livestock production and elsewhere in the world, such as New Zealand. (PERFARM
Much depends on the available natural resources, allowing the animal to remove from the environment many of its production inputs, such as grazing itself.
It is possible that the complexity of the various variables existing in extensive productions is the reason for the low level of professionalization of management perceived in agribusinesses with these production systems. (PERFARM
Nowadays, there are several new technologies that allow the observation and control of these variables, such as Silver Fern Farm, a company developed in NZ based on sustainability, health, safety and ethical principles based on the trust of producers, traders and consumers involved.
Part 2 - Strategic Options
The study presented, a Silver Fern Farm Limited an idea of a good relationship between domestic and foreign investors, as well as guidelines and relationship goals. In this sense, sign the commitments entered into with the Shareholders through a Memorandum. Carry out a medium-term, long-term supply increase program. Better performance and long-term profitability. (Silver Fern Farms 2016)
All editing rights are a feature of Silver Fern Farm Limited, a New Zealand sustainability and environment, as the company can become a successful company that partners nature and its resources.
To help farmers manage their land in a sustainable way, the government company provides the farmer with a toolkit that teaches the farmer how to manage his business with respect to the environment, with education on the activity that he bases environmental criteria and laws of NZ in favor of producing foods with the highest degree of environmental sustainability.
Refine this policy, there are pilot farms that seek health and safety in the field, in order to demonstrate viable, rewarding and profitable practices in favor of sustainable agriculture.
Silver Fern Farms Environmental Initiatives. (Silver Fern Farms 2016)
The waste management program with environmental control, with the objective of reusing resources to the soil and increasing agricultural productivity. At another point there is the reuse of mud and wood at the water treatment station, used instead of mineral coal for biofuel burning. The focus is also on reducing the emission of carbon in the atmosphere, with productivity gains. (Silver Fern Farms 2016)
The sustainability goals are mainly associated with institutional trust, because through them, suppliers and farmers take responsibility for social and environmental issues, being the fundamental and vital tool for business strategy and long-term success. (Taylor 2016)
In this sense, the demands of society should serve as an inspiration for the company's objectives, being the fundamental basis for incorporating the principles and goals of sustainability in its operational strategy.
One of the stages of the business plan through its own initiatives, and define the relevant KPIs, because risk management and sustainability are always together.The other one’s are: Re-evaluation the purpose, beliefs and values in light of the principles of sustainability, and identification of the key material issues that might affect the achievement of the company’s purpose, delivery of its strategy, or impact access to capital. (Taylor 2016)
The logical and orderly process of decision making is fundamental for strategic management of a company, besides guaranteeing the success of the business. To do so, it is necessary to take some factors into consideration as: Decisions can involve and affect many people within the same environment, for that, one must seek to explore the situation and choose well the options to be able to create a constructive environment.
When you are responsible for making a decision, you have to rely on others to implement it, so it pays to gain the support of these individuals. One of the decision-making techniques used and the Vroom-Yetton-Jago, to make a better decision consult them. Another procedure and the Charger, including more people to broaden the discussion to help in the decision. (MINDTOOLS 2018)
The investigation of the situation in detail can gather the largest number of information for decision making. The 5 Whys technique to determine whether the stated problem is the real problem, or just a symptom of something deeper. You can also use Root Cause Analysis to trace the source of the problem.
The paradigm break or the search for other alternatives, generates different options with innovative solutions
Brainstorming is a very effective tool for creating new ideas. Other techniques are Reverse Brainstorming that works in a similar way but starts in the search for the opposite result and then turn the solution as a bull. Crawford and Round-Robin brainstorming are also effective in ensuring that everyone's ideas are heard regardless of team or idea hierarchy.
Already t that uses 4Ps (Product, Planning, Potential and People) as a way to gather different perspectives, that is, a technique that seeks the participation in the discussion of different professionals opining in different areas.
The exploitation of the options and their evaluation imply also some degree of risk, that is, each decision impacts on a type of consequence.
The ORAPAPA tool helps you evaluate the consequences of a decision by looking at the alternatives in different perspectives. We must also take into account the financial viability of a decision using the cost-benefit theorem. We can cite some effective financial techniques such as NPVs and IRRs. (MINDTOOLS 2018)
After evaluating the alternatives, the time has come to make the best decision. Decision trees are very useful when choosing clearly whether the project will succeed or not in the decision-making process. (MINDTOOLS 2018)
Decisions of the Group are extremely important, since consensus must always be sought, especially if the decision criteria are subjective. Multi-Voting and Modified Edge Fashion can help your team reach an agreement. The Delphi Technique seeks a fair and unbiased decision. When the discussion and argument cycles are anonymous and written, managed by a facilitator
Retrospective is an excellent tool to evaluate what has gone wrong with the decision taken, as this will help avoid the confirmation bias, a common psychological bias in decision making. Discuss your preliminary findings with trusted counsellors to be able to identify potential flaws or support your conclusions. The intuition and the strongest adviser, never being able to stop listening to it. Use Blindspot Analysis for overconfidence.(MINDTOOLS 2018)
Once you have communicated the decision and you should take action on the implementation of the solution. However, humility coupled with intuition can be a powerful tool for avoiding failures and correcting mistakes.
Part 3 - List of References:
Annual Reports . Silver Fern Farms [WWW Document], n.d. URL http://www.silverfernfarms.coop/investor-information/annual-reports/ (accessed 10.2.18);
Folta, T.B., Helfat, C.E., Karim, S., 2016. Resource Redeployment and Corporate Strategy, Advances in Strategic Management. Emerald Group Publishing Limited, Bingley;
Our Process - Silver Fern Farms [WWW Document], n.d. URL http://www.silverfernfarms.com/what-were-made-of/our-process/ (accessed 10.1.18);
PESTLE Analysis: Everything You Need to Know, n.d. URL https://pestleanalysis.com/pestle-analysis-everything-you-need-know/ (accessed 10.2.18);
Silver Fern Farms [WWW Document], n.d. URL http://www.silverfernfarms.com/ (accessed 10.2.18);
Otago Daily Times, 2017. Silver Fern Farms forecasts record spend.12 Dec, 2017 8:41am . Sally Era https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11957935;
Taylor, J., n.d. Presentation to Sustainable Business Council 11. Ungerer, M., Ungerer, G., Herholdt, J., 2016. Crystalising the Strategic Business Landscape : Strategy Analysis Practices and Tools for Business Leaders and Strategy Practitioners. KR Publishing, Randburg;
How to Make Decisions. 2018. Making the Best Possible Choices https://www.mindtools.com/pages/article/newTED_00.htm ;
Taylor, J. 2016. Silver Fern Farms Presentation to Sustainable Business Council
– Independent Director.http://www.sbc.org.nz/data/assets/pdf_file/0008/118529/JaneTaylor_SFF_SBCACM_July2016.pdf
Silver Fern Farms [WWW Document], n.d. URL http://www.silverfernfarms.com/ (accessed 10.4.18).http://www.silverfernfarms.com/our-company/responsible-food-producer/care-for-the-environment/
Porter, Michael, 1996. "What is strategy?" Harvard Business Review
v74, n6 (Nov-Dec, 1996):61 (18 pages);
Porter, Michael, Competitive Advantage
, The Free Press, NY, 1985.
Porter, Michael, The Competitive Advantage of Nations
, The Free Press, NY, 1990.
Collis, David J.; Montgomery, Cynthia A. "Competing on resources: strategy in the 1990s", Harvard Business Review
, v73, n4 (July-August, 1995):118 (11 pages);
M.A. Peteraf, "The Cornerstones of Competitive Advantage: A Resource-Based View," in Strategic Management Journal
1993, Vol. 14, pp. 179-191.
PERFARM, 2017. “Pecuária extensiva: características e impactos na lucratividade”. http://perfarm.com/pecuaria-extensiva/