Swot analysis for Fonterra
Strengths of Fonterra Shareholders’ Fund
• Highly skilled workforce through successful training and learning programs. Fonterra has investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
• Highly successful at Go to Market strategies for its products.
• Automation of activities brought consistency of quality to Fonterra Shareholders’ Fund products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Superb Performance in New Markets – Fonterra Shareholders’ Fund has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
• Successful track record of integrating complimentary firms through mergers ; acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
• Strong dealer community – It has built a culture among distributor ; dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.
• Good Returns on Capital Expenditure – Fonterra Shareholders’ Fund is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Successful track record of developing new products – product innovation.
Weakness of Fonterra Shareholders’ Fund – Internal Strategic Factors
Weakness are the areas where Fonterra Shareholders’ Fund can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.
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• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Fonterra Shareholders’ Fund needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Fonterra Shareholders’ Fund is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
• High attrition rate in work force – compare to other organizations in the industry Fonterra Shareholders’ Fund has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Fonterra Shareholders’ Fund
• The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Fonterra Shareholders’ Fund has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
Opportunities for Fonterra Shareholders’ Fund – External Strategic Factors
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• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Fonterra Shareholders’ Fund’s products thus providing an opportunity to the company – either to boost its profitability or pass on the benefits to the customers to gain market share.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Fonterra Shareholders’ Fund.
• New trends in the consumer behavior can open up new market for the Fonterra Shareholders’ Fund . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Organization’s core competencies can be a success in similar other products field. A comparative example could be – GE healthcare research helped it in developing better Oil drilling machines.
• New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Fonterra Shareholders’ Fund to drive home its advantage in new technology and gain market share in the new product category.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Fonterra Shareholders’ Fund in other product categories.
• The market development will lead to dilution of competitor’s advantage and enable Fonterra Shareholders’ Fund to increase its competitiveness compare to the other competitors.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Fonterra Shareholders’ Fund to increase its profitability.
Threats Fonterra Shareholders’ Fund Facing – External Strategic Factors
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• Liability laws in different countries are different and Fonterra Shareholders’ Fund may be exposed to various liability claims given change in policies in those markets.
• Rising raw material can pose a threat to the Fonterra Shareholders’ Fund profitability.
• The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Fonterra Shareholders’ Fund
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.