Strategic and Organizational Capabilities Needed by Bega Cheese - Assignment Example

Management Students Name: Institution Name: Table of Contents Introduction 3 Overview of the economic environment 4 Overview of the open systems theory 5 Strategies needed by Bega cheese to survive changing economic times 5 Strengthening the local operating environment 5 Allow foreign investment 6 Invest in new technology 7 Proper organizational structures 7 Limit the number of new products 8 Conclusion 8 References 9 Management What are the strategic and organizational capabilities needed by Bega cheese to keep ahead of the competition and thrive in changing economic environments? Introduction Bega cheese is the largest cheese manufacturer in Australia and currently one of top companies in the world that produces dairy products. Bega cheese also specializes in other dairy products such as milk powders and cheddar including mozzarella. All these products are largely sold in the Australian market with a substantial percentage of the products being exported overseas. Asia provides the largest market for the Australian dairy products. For a company that started in 1899, it has a strong base and good knowledge of how both the Australian and international market operates. Since 2007 the company has witnessed tremendous growth doubling its size over the period (Waitt & Gibson, 2013). Economic environments have been changing over time since 2007 and most regions have undergone hard economic times before bouncing back. Based on the current Australian statistics of 2014, Bega cheese is on the top of its game. It is currently being rated as the most expensive dairy factory on the basis of price to earnings (Phillips, 2014). Despite all these success, economic environments are unpredictable. This article will therefore base its contextual analysis on discussing important strategic and organizational factors that Bega cheese can employ to stay ahead of the competition. This will be done through analyzing what are the factors for Bega cheese success and what loop holes can be manipulated to help the company stay ahead of the competition. Overview of the economic environment The economic environment that any business survives in is made up of many factors. These factors range from the parent country environment to international operational standards. The major factors include political environment, technological environment, economic factors and the international operational environment. Of great importance are the economic factors which include inflation and other factors such as monetary systems (Burton-Jones, 2001). Inflation rates usually vary depending on the economic development. Political factors are also important in determining several strategic decisions made by multinationals (Tobin & Rose-Ackerman, 2011). Currently, Bega Cheese performance in Australia has not been but there is still a strong force from the upcoming local dairy companies. The election mood witnessed in the country in 2013 held back economic progress. The previous economic conditions in Australia were not conducive but a recent study indicates that the economy is currently picking up after cooling down of the political temperature. This indicates competition between companies will be stiff as 2015 approaches. To stay ahead of the competition, Bega cheese has to play cool with the current political class. This will be effective in ensuring that major deals are passed in favor of the company. Having political back up also ensures stability in the current market. Though not morally right, political or governmental support can ensure that rules of the game favor only one industry thus staying ahead of the competition (Fenna, 2013). China is largest market in Asia and most of Australian products are exported there. This indicates that an economic crisis in China will have a direct impact on the Australian economy. Companies therefore have to be backed up with other options in order to survive such periods. The only better option is capitalizing on the Australian domestic market. Overview of the open systems theory Open systems theory is very significant in deducing ways through which a particular company can effectively use its environment to stay ahead of the competition. This theory involves tackling the social political and economic forces to emerge with a new strategy that will propel a particular company ahead of the competition and survive hard economic times. To build up a strategy that will ensure Bega Cheese stays and survives the changing economic conditions, Opens systems theory is required to be used in the formulation of the plan. Open systems theory covers well the environments required to help a company thrive in hard economic times (Wetherly & Otter, 2014). Strategies needed by Bega cheese to survive changing economic times Strengthening the local operating environment Having a strong local support from the communities is one of the key factors. Bega Cheese Company has embedded itself in to the community and attracted their loyalty. The company requires strengthening the ties further in order to secure unlimited supply of dairy products from local farmers. This is more so significant with the current estimated growth of the Australian economy. Companies will be competing for raw materials and it is significant that Bega Cheese strengthen their relationship with local farmers. This can be done through offering sponsorship programs that will educate local farmers on how they can increase their productivity which in turn will increase the company’s productivity. Considering this factor will help the company to secure uninterrupted supply of raw materials even through hard conditions. Bega Cheese can also continue its trend to produce products that are first preferred by the Australian consumers. This strategy that despite the crisis experienced on the international front, the company can still maximize its sells on the domestic front. A particular study has indicated that people change eating styles during changes in economic environment. (Shemilt et al, 2013) This particular strategy has put Bega Cheese to be labeled as one of the hottest companies currently in the world. This is due to the fact Bega Cheese produces products based on local consumer preferences that end up being fully accepted in the local market. Bega cheese needs to continue with this particular trend in order to survive changing economic times. Allow foreign investment Foreign investment is very significant for covering up what the local market did not cover. Changing economic times can occur on the international front or can specifically target the domestic market. Changing economic times on the domestic front are usually driven by political activities. This is evident as witnessed in 2013 in the country. The presence of an election mood slowed down economic activities and this can have huge impacts on companies that depend solely on the domestic market (Wetherly & Otter, 2014). In order for Bega Cheese Company to survive changing economic times, it will need to continue with foreign investment. When conditions are not good on the domestic front, Bega Cheese can capitalize on the international front. Several companies are currently bidding to buy shares in Bega Cheese since the company is currently performing well both locally and internationally. The recent deal saw the company seal a mega deal that made them maximum profits. The deal between the company and Saputo ensured that they still remain at the top of their game (Wardell, 2014). Foreign investment will ensure that Bega cheese is able to survive changing conditions on the domestic front. Capital raised through such projects can be used to secure the company in harsh times (Dotsey & Plosser, 2012). Invest in new technology Investing in new technology will keep Bega Cheese Company safe from experiencing problems during harsh economic times. Hard economic times are usually witnessed with major companies laying some of their employees. The solution to this is to invest in technology that would replace most of the manual jobs. The new technology will definitely signify that less people will be employed thereby reducing resources allocated for labor. On the side of the industry, this is saving. The greater the savings, the more profits are generated which in turn sustain the company in tough conditions. Investing in new technology can help Bega Cheese survive through harsh times when other companies are forced to lay off some people in order to sustain company operations (McGraw, 2014). Proper organizational structures To survive and thrive in changing economic times, an organization requires a calm organizational environment that supports cool work flow. Organizational factors are very significant in developing developmental strategies by the company. Proper information flow is very significant in motivating employees in any organizational set up. Bega Cheese factories have had no problems with their managerial team but the trend need to be supported by proper organizational structures. Several major multinationals in the United States have crumbled down due to lack of proper structures. Bega Cheese requires these strong structures supported by ethical motives to survive any changing conditions. Ensuring that factor is achieved will positively help the company. Limit the number of new products Limiting the number of new products will ensure that Bega Cheese Company has time to concentrate on the already existing products. More number of products will saturate the market and give the company hard time when trying to promote each and every product. Promoting each product requires more resources and time investment. Handling all those products with changing economic times can prove to be a challenge. Only products prospected to do well on the market should be allowed to hit the market. Following this particular approach Bega Cheese will be able to concentrate on a few products that can thrive in any economic environment. Bega cheese is one particular product that has made the company rich and famous and it has survived all economic environments. Apart from cheese only, the company should also choose another unique product such as milk powder and concentrate on popularizing it. Conclusion The article has based its discussion on possible organizational mechanisms and strategies that can be employed by Bega Cheese Company to survive changing economic times. The discussion included a general overview of the general economic environment and the open systems theory. The strategic suggestions provided in the text have their basis on the open systems theory. The first suggestion included the need for a strong local back up. Foreign investment, new technology and limiting the number of products released in the market are also other options that can be adopted to survive through any changing economic times. Strengthening of the organizational structures provide a unique but strategic way of managing changing economic times. References Burton-Jones, A. (2001). Knowledge capitalism: Business, work, and learning in the new economy. OUP Catalogue. Dotsey, M., & Plosser, C. I. (2012). Designing monetary policy rules in an uncertain economic environment. Business Review, (Q1), 1-9. Fenna, A. (2013). The Economic Policy Agenda in Australia, 1962–2012. Australian Journal of Public Administration, 72(2), 89-102. McGraw, P. (2014). A Review of Human Resource Development Trends and Practices in Australia: Multinationals, Locals, and Responses to Economic Turbulence. Advances in Developing Human Resources, 1523422313509572. Phillips, A. (2014). Bega Cheese Tastes Victory. Retrieved December 11, 2014, from http://www.businessreviewaustralia.com/Bega-Cheese-Ltd/profiles/14/Bega-Cheese-Tastes-Victory Shemilt, I., Hollands, G. J., Marteau, T. M., Jebb, S. A., Kelly, M. P., Nakamura, R., ... & Ogilvie, D. (2013). Effects of changes in the economic environment on diet-and physical activity related behaviours and corollary outcomes: a large-scale scoping review. Tobin, J. L., & Rose-Ackerman, S. (2011). When BITs have some bite: The political-economic environment for bilateral investment treaties. The Review of International Organizations, 6(1), 1-32. Waitt, G., & Gibson, C. (2013). The Spiral Gallery: Non-market creativity and belonging in an Australian country town. Journal of Rural Studies, 30, 75-85. Wardell, J. (2014). UPDATE 2-Kingmaker Bega claims spoils in Australia 'dairy wars' Retrieved December 11, 2014, from http://www.reuters.com/article/2014/01/16/australia-bega-warrnambool-idUSL3N0KQ1HR20140116 Wetherly, P., & Otter, D. (2014). The business environment: Themes and issues in a globalizing world (Third ed.). New York NY 10016: Oxford university press. Read More