This statement studies the chicken industry in the Sultanate of Oman, highlighting the strong performance and development in the foreseeable future. Will be discovered A'Saffa food as maker and supplier of its products and its position as market head in the industry.
The important ethnic and social fads reported will be the increase consumers' knowing of healthy food, as well as the changes of the financial climate. It had been found that the elegance of poultry industry has declined because the highly competitive of rivalry and electric power of potential buyers and also higher threats from substitutes. It's also addressed that the positioning of A'Saffa is medium of the change of the attractiveness of the industry.
Three relevance functions of A'Saffa : first is the logistics and Syndication network, where A'Saffa can make successful and quality control of distributions of its products through the network in the united states. Secondly operations, which include inventory management, quality evaluation which support in value creation and third an example may be sales and marketing which keep A'Saffa completive by giving marketing promotions offers. In other side, found that A'Saffa has three important resources and capacities which will make its extremely skillful supply string; success full resource chain, brand reputation and the location of the organization.
At the finish, recommendation is in two manner, a brief term by budgeted more cost on advert of A'Saffa as a healthy manufacturer and convenience the people that the farm using natural rooster feed. In the long run, recommended to concentrate on differential factors like diversify into more profitable fresh and frozen food credited to possibility of increase in the price of creation of the industry and which lead to less probability.
This report study A'Saffa Foods S. A. O. G (A'Saffa) position in the meals industry in Sultanate of Oman. To understand A'Saffa Foods' Strategy, will evaluate its internal businesses and then it's successful. Then, can make tips for suffered competitive advantage of a future based on an evaluation of external factors that have an impact on the market.
With the expansion of monetary globalization, Food industry in the Sultanate of Oman becomes an additional significant last a decade. The chicken industry is extremely competitive in Oman and A'Saffa Foods is innovator of the market with biggest annual production in Oman, Gulf Countries and other countries.
A'Saffa increased its continuing capacity to meet up with the growing demand in the united states and abroad. Starting with capacity of 7500 MT in 2004 and risen to the existing capacity of 17000 MT per 12 months. The company I planning to add more capacity to attain the capacity of 21, 000 MT by end of 2011. In addition, the company announced its accessibility in Bahrain and Yemen, which is planning to enter Kuwait soon. The revenue drivers of the Company is 35 % from Omani market segments.
The eyesight of A'Saffa is to become No. 1. and mainly earning diversified food organization in Middle East. The products of A'Saffa are natural, healthy and slaughtered as per Islamic law "Halal". A' Saffa has create a iced and fresh hen products.
Although, that Dhofar Poultry Company SAOG, Barka Poultry Company and Sohar Chicken are the main competition of A'Saffa Company but A'Saffa is still an individual player on the market in Oman with 25 %25 % of market share. To meet the increase requires from home from Oman and Gulf countries, A'Saffa has a big capacity of its plantation which allocated in "Thumrait" in the south of Oman, which is the modern international manufacture techniques and machinery.
With a home grown market show for chicken products of over 25 per cent and ideas to increase this to nearly 35 per cent in the near future, A'Saffa Foods central business is making great strides to lessen the dependency for fowl imports to the Sultanate (Oman Observer papers, Feb 1, 2011). Furthermore, and as part of its plan, A'Saffa goes on to keep up its reputation as a leader in the meals market and local creation in Oman through the establishment of a study facility for the creation of stand eggs for 100 million on a yearly basis, and produce of processed meat products.
A'Saffa uses its skills and know-how to assist in issues of food security in the Gulf Countries. Where in fact the company working as a advisor to aid in the build and operate of the major poultry production in Qatar.
The exterior environment analysis supplies the company with a substantial external website link between its customers, opponents and the merchandise it offer. In this particular section will analysis the external macro environment that impacts the industry by using Infestation analysis and evaluated how it will impact the revenue of Al Saffa. From then on will assess the position of the competitive environment by using Five Porters and can check out to the attractiveness of the industry to Al Safa in the upcoming years.
Political Factors: The federal government of Oman encourages the supports the business of food toward the food security in the united states by grants or loans such companies. In Oman, Exempting Wholly Omani Owned Companies from Tax for 5 Time (The law of tax on companies, Oman, 1975). This trend is give the company opportunities brought by changes of the federal government and public attitudes toward the industry, changes in political organizations and the direction of political procedures, legalities, and the overall regulatory climate.
Economic Factors: The economical changes in the world resulted in increase the level cost of food consumables, hence the consumer are planning of other alternatives food at low prices. For instance, buy frozen chicken breast at the lowest price rather than fresh chicken with higher-price. To remain competitive on the low cost alternative, the company produces a frozen food rather than focusing on a fresh food only.
With international item prices rising it will also become ever more expensive to import food products - which makes it more important than ever before for the Sultanate to lower its dependency on brought in food (Oman Turbine, 2011).
Social Factors: The primary social trend is increase of the customer's awareness of the health food, which lead to produce a healthy and fresh alternatives food. This trend gives the chance for the business as the main player of Chicken Farms in the market. But in other side, it's also making a potential risk in area of interest farmers markets in the inner region of the united states which target in produce the new Poultry Farms. During previous three years, ASafa achieved and increasing Macro poultry industry in Oman and also spent the opportunity on the market.
On more public factor is the style of folks to become more convenience by buying their needs from a single store includes all the merchandise. This craze also makes the business the opportunity to increase demand for its products due to the distribution with their products to the largest volume of retail market. That is an opportunity for also visitors to buy a brand new poultry in a way faster without lack of time and effort where in fact the consumer doesn't need to go to chicken farms to buy fresh chicken.
Technology Factors: A'Saffa has a modern international manufacture techniques and machinery. However, the technology is changing swiftly and don't need to invest more cost to renew or replace the old machine for long run.
In this section will examine the attractiveness and profitability of the poultry sector in Oman than determine the comparative position of the business in the industry.
Threat of substitutes: by examining the market, the threat of substitutes is saturated in poultry in Oman because A'Saffa Foods encounters many indirect competition from farmers market segments. Existing indictors in the neighborhood market, the indirect rivals are potential substitutes to A'Saffa Foods and create dangers in the foreseeable future. Farmers markets have observed a significant enlargement in Oman and providing a fresh food with convenience choice. With increasing medical awareness towards health alternatives, the farmers market segments sell fresh products and natural produce and this also cause a threat potential in the future.
Degree of Rivalry: in Oman, the poultry business is highly competitive. Because the few main players on the market and lack of differentiation anticipated to nature of products, a higher degree of rivalry is exists on the market. Hence, the competition is dependant on price and other factors like sell location and selection of product. There is an increase in future rivalry due to the entry of new local company "Barka Food' (because their business will concentrate on the north area of Oman, that have a large range of the population) and also new competition from UAE and Saudi Arabia which can make the industry further competitive and dangerous threat in future.
Barging vitality of suppliers: bargaining electricity of suppliers is incredibly very low. A'Saffa Foods controlling market show for chicken products of over 25 % and numbers of local suppliers have a very limited selection of intermediaries to select from. Thus, A'Saffa Foods is the main customer and purchaser of raw materials in the industry. Alternatively, this set to improve with the entrance of new companies with Federal policy boost the competition on the market. Therefore, the bargaining power of the suppliers is a middle in the foreseeable future because expect a larger selection to deliver to.
Barging power of potential buyers: the buying electric power of customers is within an increase. The government raise the level of food security by encouraging and encourage the small-scale providers and reduce the competition barriers by allow farmers markets to come in the market which lead to increase customers options (Al Watan papers, 2009). As a result, the customers barraging ability is increase and therefore, the increase of customers bargaining electricity will allow customer to compare prices and choose the cheaper choice which aspects take customers barging to an additional medium level.
Threats of new Entrants: the threat of new entrants is low and this is because of the role of administration of Oman to aid the neighborhood business of food toward the food security in the united states. A'Saffa also says that it has no fear of other competitors stepping into the market place - either in Oman or the spot" (Times of Oman, 2010). Despite that this market does not require a high infrastructure, but its needs experience to manage the project effectively and its own easily to come in contact with losses because pass on of diseases (e. g Bird Flu) or change the social factors of folks about the health food.
Comparison of industry Elegance for A'Saffa:
From previous section on the Porters Five factors research, the poultry industry discovered reasons of the weak bargaining vitality of suppliers and potential buyers and obstacles to entry. As a result, the business achieves profitability until now. Therefore, the positioning of A'Saffa is medium of the change of the appeal of the industry. Also, the income of Company may be lower from high to medium in future.
The known reasons for this are upsurge in bargaining power of suppliers and clients with the larger rivalry and the accessibility of new companies.
When the industry elegance and profitability has lowered from earlier levels, the capability to do much better than its rivals rely upon the business's resources and capabilities which can form in the foreseeable future.
In this section will identify the major resources and features of A'Saffa Foods by analyzing the situation of A'Saffa Foods in the meals chain to take part in and analyze the major role within A'Saffa Foods value string which provides the great deal value to the firm.
A'Saffa Foods is the sole supplier of all their rooster products and the meals chain is provide wholesale with a channel to attain end consumers. The Company has a huge plantation with high capacity and intends to improve the production in the foreseeable future to meet growing requirements in Oman and Gulf countries. The A'Saffa plantation is on the main highway between South of Oman (Muscat city) and South ( Salalah city) which will make circulation process are quick and well-organized. The Farm has its water supply.
From the poultry tool, no serious issues of source string face the A'Saffa Foods. A fervent Supply Chain Management (SCM) team works at any hour to recognize potential suppliers and procure the required high quality recycleables in a timely manner (www. asaffa. com).
Value chain Analysis of A'Saffa Foods:
A'Saffa has permitted 100% product availability through its branch Sales office buildings propagate across Oman covering all the regions and the inside markets. That is an extremely healthy signal of effective and intense distribution system in the united states. The full total coverage surpasses 1600 retailers. With considerable branch network covering entire Oman, our reach is not simply limited by groceries, we also cater to restaurants, butcheries, wedding caterers companies and other companies.
Logistics Circulation Network: the chicken's feed is made in A'Saffa and therefore, the business has own operational control of the logist to execute QA audits to ensure that the products is in a high manner.
A'Saffa Food is the only real supplier of all their products and its control the network of circulation of its products. To make sure that A'Saffa products are available in every Hyper Super Marketplaces and retail stores, A'Saffa has possessed a fleet of 25 reefer trucks to provide a frozen and fresh product to be accessible to the client at all time and across Oman.
Operations: this consists of inventory management, customer satisfaction and quality assessment. A'Saffa offers a large choice of new products to its consumers.
Quality Diagnosis: A'Saffa has a committed action of the importance of the quality of its Clients/Purchasers and deliver highest quality of products. Also, the business implements a Hazard Analysis and Critical Control Tips systems. Furthermore, the chicken's give food to is manufactured in A'Saffa plantation by by using a scientific supply management which permit the Company to regulate the quality of natural fed.
Inventory management: using a technology to ensure that stock level is enough in any way time. Also, using forecasting system to avoid unpredicted increase or reduction in demand of the merchandise.
Sales and Marketing: as stated before, A'Saffa Food is the only real supplier of most their products and its own control the network of distribution of its products. Therefore, A'Saffa Food is compete successfully and increasing its sales by the promotion of something in the shop, committed to deliver the fresh products to retailer promptly and boost a consumer research and environmental changes. That is an important to recognize and use a technique to compete successfully in future.
Assessing a significant Resources and Functions of A'Saffa Foods:
Strategy functionality examines different types of resources and competence within the organization to be able to survive on the market. A couple of two types of resources, first is physical or tangible of the business including (funding, Plant and labour). The other reference is the intangible resources which consist of (knowledge, brand reputation and information).
To compete, A'Saffa Foods is using strategy of differentiation and cost authority by adopting an efficient supply chain to regulate the price and brand image.
A'saffa growth-oriented strategy to branch out into other complementary products commenced in '09 2009 by adding value-added packaged foods. The packaged products are currently out-sourced from the UAE and its contribution to the company's important thing is less than 10 per cent.
Successful Supply string: A'Saffa food comes with an efficient syndication network in the united states. The tangible property such a manufacture of Chicken's food and technological capabilities are essential for A'Saffa food to accomplish an increased EBIT. But successful resource chain in limited as a definite competency.
Brand Reputation: A'Saffa Food has built a brand reputation as providing a fresh food and 'Halal' local products (The word can be used to specify food viewed as allowable according to Islamic legislation). It has recently been through the buyer experience with products and also advertising campaign undertaken by the business to market its products. The trustworthiness of the brand is very important of the consumer satisfaction. Therefore, the reputation is not really a competitive gain. it is a spot of equality that the business must have in order to be competitive.
Financial position: the Company has a good financial position in the market. In addition; the government has supported the company by a Tax exemption which was expired in 2009 2009. Whatever the duty deducted for the next years, the revenue after duty is likely to increase for another two with an expansion plan.
Location: A'Saffa has a big capacity of its plantation which allocated in "Thumrait" in the south of Oman. This location provides A'Saffa more gain to build a large farm with normal water resources, administration subsidy by not charging any cost of land and also near to the big city in Oman.
Despite the aforementioned resources and capacities of A'Saffa, the business has facing a change in its top management. The progress on Omani market has led to quantity of opportunities available to experts. this created a concern for A'Saffa to improve its HR insurance policy by encourage the prevailing top management by pay high salary among others benefiters.
Tax exemption that was expired in 2009 2009, will lead to high cost of structure for next years. In addition, A'Saffa has a big capacity of the creation of the fresh chicken and change to frozen chicken, it might be more cost for the business.
Examination of the inner and exterior environment is significant way of measuring of the proper planning process. SWOT analysis offers information that pays to in corresponding the resources and capabilities of A'Saffa to the competitive environment.
By examine the Company Hazards and Opportunities (Exterior Environment) and the weakness and talents (Inside Environment), it could be understanding, identifying and developing a strategy options for A'Saffa Food.
From the above evaluation of options, the "Maxi-Maxi" Strategy designed to use strengths to maximize opportunities is the most benefit to achieve the mission and perspective of A'Saffa Food.
Scenario Analysis: research different futures:
Scenario Analysis is useful way to helps A'Saffa to make wisdom in the problem of the various futures that can arrive. The take steps of make cases pushes A'Saffa to concern its assumption about the near future. By determining the Company plans predicated on a possible situations, than Company can ensure that its decisions are right even if environmental changes.
High cost framework: A'Saffa is planning to become a #1 1. In the Middle East by soon. this can be done by providing a superior quality of the new and iced food with competitive price.
Build a new farm of poultry in North of Oman to improve the deal and reduce the price tag on sale.
Using international advertisement to maintain a market position of A'Saffa products to be able to raise the deal of fresh products
Build a marketing intend to sale the new products during the period of validity, so the company not getting rid of a cost of products if the is expired.
Economy in Oman going up: with administration support to the neighborhood firms to become more competitive. Hence the Company will have a sustaining competitive advantage over a decade.
Economic slowdown : then the Company will have more cost of capicty which effect the cost edge and loss the marketplace.
Strategic Route with Ansoff Matrix
Defining strategic course might be a major challenge for A'saffa Foods. Ansoff Product/ Market matrix is an instrument to recognize the basic option and guidelines for A'saffa Foods. Taking into consideration A'saffa Foods approach to develop new product and penetrate new market segments, four different alternatives can be employed.
Taking into consideration these combos, A'safaa Foods appear to successfully draw in and permeate the highly competitive marketplaces by offering its high quality products in a competitive price as the business have a competitive cost gain. This itself will also determine its market development and growth with reputation locally as well as existing market and internationally as new market, which will develop and improve the existing products in the new marketplaces. A'saffa could also move toward product development strategy with their existing features or creating new ones to assure total satisfaction of the changing needs of the customer by developing new products. The business can also put into action a diversification strategy and add new creation lines such as dairy products as it has the features and resources.
In future, A'saffa should have a construction and control models. Those models have establish targets, feedback, and dimension of performance (Frances, et al, 2007). For instance, the Company through the use of those models can identify when there is a distance between released way and desired trend. By this system, A'saffa Foods can place an idea for unforeseen occasions and circumstances. For example, in the near future, you will see more existing or new Food production companies entering the neighborhood market. In this situation, A'saffa Foods may use its cost control benefits and adjust its strategies to overcome the change in the hostile competitive pushes.
The variable actions are planned by A'saffa Foods in nonstop developed process to administrate and control the unexpected events the energetic changing environment. Those activities are best strategy to keep up with the existing competitive benefit affiliates with the organization (Frances A. et al, 2007). By apply this technique; A'saffa Foods will increase the tactical planning which therefore, will keep the company doing well in long term
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