Al Ain Dairy BASED ON COMPETITIVE ANALYSIS, CONSUMER INSIGHTS AND EMERGING TRENDS

INTERNATIONAL BUSINESS
LJUBLJANA, 26TH FEBRUARY 2013

1.

RECOMMEND NEW PRODUCTS FOR AL AIN DIARY BASED ON COMPETITIVE ANALYSIS, CONSUMER INSIGHTS AND EMERGING TRENDS.

Al Ain Dairy has played an active and influential part in the growth of the UAE’s dairy industry. Nowadays, companies in all markets try to make their products appealing and that differ from other that already exist in the market. Thus Al Ain Dairy strives for total excellence and quality management in manufacturing the highest quality local dairy products, trying to achieve the highest levels of consumer confidence in its products and services at affordable prices. In order to make impact on the market and to answer customer’s needs and new demand expectance’s Al Ain Dairy should improve its production in dairy’s and other products related with them. Therefore taking in account the challenges proposed by the Company and the desire to replicate their success in dairy in the regional market, I think it would be profitable to invest in a market oriented for production of cheese. That is due to the fact that Al Ain Dairy is a Company with lot of milk production (“(...) which has a market share of 60 per cent for milk (...)”), you would not have any problem to release this new product in the market, so that you could be able to expand your brand and improve your clients satisfaction. Ice-creams could be also a good source of investment since the weather in the Middle East often crosses 40oC and during the summer reach 45 to 50 degrees. This product it would be definitely a boom for the demand, especially for children. Any concern would be spared to mothers, since the products, by being cooled down to very minimum temperatures, don’t make the product instable. They should also to invest in new kinds of yoghurt, like yoghurts with cereals, in order to innovate their products and answer to new customer’s needs and preferences. As we can see in other developed countries, this is a market that is extremely well developed since people started to worry more and more about health issues (like Nestle as referred in the case study). Al Ain Dairy could become market leader in this area not only increasing sales but also demand. Page | 1 Student’s name: Inês Joaquim, nº 19562374 Teacher’s name: Gregor Pfajfar

INTERNATIONAL BUSINESS
LJUBLJANA, 26TH FEBRUARY 2013

By analyzing new trends, I think that Al Ain Dairy should also bet on launching juices with low-fat, since the western countries have high incidence of type 2 diabetes. With the all these new products the Company would probably guarantee a significant percentage of loyal customers.

2.

RECOMMEND A BRANDING STRATEGY FOR AL AIN DAIRY. WHAT ROLE DO COUNTRY OF ORIGIN AND BRAND OF ORIGIN PLAY IN THIS CASE?

Al Ain Dairy’s strategy is focused on customer needs, your preferences, as well as their expectations for the brand. The Company should follow of theirs values. “(...) without customers, Al Ain Dairy will not exist. (…)” Al Ain Dairy should direct its strategy to refreshing quality products (like ice-creams and juices), regarding their customer’s demand and needs, always taking in account innovation. The company is one of the most prestigious in the market (the firm only hires qualified and competent employees), offers quality products and it is located in a very hot country, facts that will probably result in a successful strategy. By producing and selling refreshing products, they show that they are also aware of its customers needs and demands. Regarding the last two principles followed by the company (business conduct and commitment to the environment), they should continue follow of their values, reducing waste as well as respecting their suppliers. The country of origin effect has been recognized as an important factor in consumers’ purchasing decisions. Furthermore, in an age of increasing international competition and globalization, the concept of country of origin has become a vital issues to discuss about. Al Ain Dairy as began in 1981 as the first dairy farm in the UAE and its main challenge was to provide consumers with an alternative to powdered milk. It was necessary to develop the milk market such as new packs of milk in order to preserve product quality. As a result of this demand the company realized their business conduct. Its role was to create a market more competitive, innovating and profitable, improving not only the customer satisfaction and also the marketing effectiveness. They should also transpire their correct business conduct by respecting their suppliers. The country and the brand of origin made the company adapt to the target market and its characteristics.

Page | 2 Student’s name: Inês Joaquim, nº 19562374 Teacher’s name: Gregor Pfajfar

INTERNATIONAL BUSINESS
LJUBLJANA, 26TH FEBRUARY 2013

3.

IF AL AIN DAIRY WERE TO EXPAND OPERATIONS INTO NEIGHBOURING COUNTRIES, LOOKING AT BOTH FORWARD AND BACKWARD INTEGRATION WHAT OPTIONS WOULD YOU SUGGEST? IF AL AIN DAIRY IS LOOKING AT EXPORTERS AND WANTS TO ENSURE ITS QUALITY WHAT OPTIONS ARE AVAILABLE?

Backward and forward integration are both verticals strategies may perform to reduce risks and interdependencies with external business partners in the supply chain. Backward integration can involve a purchase of suppliers. So in order to achieve greater efficiency and reduce costs, in my opinion Al Ain Dairy should buy one of the independent local dairy farms in countries that could become future markets for them, such as areas that show tremendous growth in the number of milk drinkers, since the text states: (“(...) Al Ain Dairy sources 70 per cent of the milk from its own local farms and 30 per cent from local farms.”). Using this strategy of backward vertically integrating (buying a milk farm), Al Ain Dairy ensures that it will have a good supply of milk and that it will receive it at a reasonable price, which allows them to expand and improve their business. On the other hand, once Forward integration is a business strategy based on merges with local companies to allow control of the direct distribution of its own products, if Al Ain Dairy follows this business strategy, it will be able to reduce distribution costs and invest more in other areas such as innovation. This way the brand can reduce distribution costs and invests more in other areas such as innovation. When it comes to exporting, the company should take in consideration two essential things to product quality, such as: regarding the expiry time
Illustration 1 - UEA and CCG

and temperature restrictions. The brand should investigate not only the distance between its neighbours (in order to know if they are capable of transporting their products) but also the conditions available in each one. In order to assure the product 's quality, the company has to make sure the necessary transportation conditions are achieved. Therefore, analyzing the map, the possible exporters and considering the limitations between UAE, Qatar, Bahrain and Oman would be appropriate choices to start production, concerning a medium/long term strategy, since Al Ain Dairy has a good reputation in those nations. They could also focus on exports to Iraq continuing to invest in long-life products. Regarding their profit and growth goals, they should approach the Uppsala internationalization model, which allows the company to expand itself gradually and even create a production line their activities in foreign markets.

Page | 3 Student’s name: Inês Joaquim, nº 19562374 Teacher’s name: Gregor Pfajfar

INTERNATIONAL BUSINESS
LJUBLJANA, 26TH FEBRUARY 2013

References:

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http://www.alaindairyuae.com/; http://smallbusiness.chron.com/example-companys-forward-integration-37601.html; http://www.businessmate.org/Article.php?ArtikelId=234; https://mospace.umsystem.edu/xmlui/bitstream/handle/10355/6572/research.pdf?sequen ce=3.

Page | 4 Student’s name: Inês Joaquim, nº 19562374 Teacher’s name: Gregor Pfajfar

References:     http://www.alaindairyuae.com/; http://smallbusiness.chron.com/example-companys-forward-integration-37601.html; http://www.businessmate.org/Article.php?ArtikelId=234; https://mospace.umsystem.edu/xmlui/bitstream/handle/10355/6572/research.pdf?sequen ce=3. Page | 4 Student’s name: Inês Joaquim, nº 19562374 Teacher’s name: Gregor Pfajfar