Posted at 10.01.2018
This survey studies the poultry industry in the Sultanate of Oman, highlighting the strong performance and growth in the future. Will be determined A'Saffa food as designer and supplier of its products and its own position as market innovator in the industry.
The important social and social fads reported will be the increase consumers' knowing of healthy food choices, as well as the changes of the economic climate. It was discovered that the elegance of poultry industry has declined because the highly competitive of rivalry and vitality of buyers and also higher hazards from substitutes. It is also addressed that the position of A'Saffa is medium of the change of the elegance of the industry.
Three value functions of A'Saffa : first is the logistics and Circulation network, where A'Saffa can make reliable and quality control of distributions of its products through the network in the country. Secondly operations, which include inventory management, quality assessment which support in value creation and third one is sales and marketing which keep A'Saffa completive by providing promotions offers. In other aspect, discovered that A'Saffa has three important resources and capabilities which can make its extremely efficient supply chain; success full source chain, brand reputation and the location of the firm.
At the end, recommendation is in two manner, a brief term by budgeted more cost on advert of A'Saffa as a wholesome maker and convenience the people that the plantation using natural rooster feed. In the Long term, recommended to concentrate on differential factors like diversify into more profitable fresh and iced food anticipated to probability of increase in the expense of development of the industry and which lead to less probability.
1. Launch 4
2. External Analysis: 5
2. 1Macro environmental factors affecting the Industry (PEST Research): 5
2. 2Porter's Five Causes Analysis: 6
2. 3Comparison of industry Appeal for A'Saffa: 8
3. Internal Research: 8
3. 1Assessing of food string A'Saffa Foods participate in: 9
3. 2 Value chain Examination of A'Saffa Foods: 9
3. 3Assessing a significant Resources and Capacities of A'Saffa Foods: 10
3. 4SWOT Analysis: 12
4. Strategy Options: 12
4. 1TOWS Matrix 12
4. 2Scenario Examination: research different futures: 14
4. 3Strategic Route with Ansoff Matrix 14
5. Recommendation: 15
6. Sources: 16
This report review A'Saffa Foods S. A. O. G (A'Saffa) position in the Food industry in Sultanate of Oman. To comprehend A'Saffa Foods' Strategy, will examine its internal operations and then it's successful. Then, can make suggestions for suffered competitive advantage of a future based on an assessment of external factors that influence the marketplace.
With the growth of economical globalization, Food industry in the Sultanate of Oman becomes yet another significant last ten years. The poultry industry is incredibly competitive in Oman and A'Saffa Foods is leader of the market with biggest total annual creation in Oman, Gulf Countries and other countries.
A'Saffa raised its continuous ability to meet up with the growing demand in the united states and abroad. You start with capacity of 7500 MT in 2004 and risen to the existing capacity of 17000 MT per calendar year. The company I planning to add more capacity to achieve the capacity of 21, 000 MT by end of 2011. In addition, the company released its access in Bahrain and Yemen, which is planning to enter into Kuwait soon. The revenue driver of the Company is 35 % from Omani marketplaces.
The perspective of A'Saffa is to become No. 1. and mainly being successful diversified food company in Midsection East. The products of A'Saffa are natural, healthy and slaughtered according to Islamic rules "Halal". A' Saffa has create a frozen and fresh poultry products.
Although, that Dhofar Poultry Company SAOG, Barka Chicken Company and Sohar Poultry are the main rival of A'Saffa Company but A'Saffa is still a single player on the market in Oman with 25 percent25 % of market talk about. To meet the increase wants from domestic from Oman and Gulf countries, A'Saffa has a large 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 strategies to increase this to nearly 35 % soon, A'Saffa Foods main business is making great strides to reduce the dependency for chicken breast imports to the Sultanate (Oman Observer magazine, Feb 1, 2011). In addition, and as part of its plan, A'Saffa remains to keep up its reputation as a head in the meals market and home production in Oman through the establishment of a report facility for the production of table eggs for 100 million annually, and produce of processed beef products.
A'Saffa uses its skills and knowledge to assist in issues of food security in the Gulf Countries. Where the company working as a consultant to assist in the build and operate of the largest poultry produce in Qatar.
The exterior environment analysis supplies the company with a substantial external hyperlink between its customers, competition and the products it offer. Within this section will analysis the exterior macro environment that affects the industry by using PEST evaluation and examined how it'll impact the revenue of Al Saffa. After that will assess the positioning of the competitive environment by using Five Porters and will take a look at to the elegance of the industry to Al Safa in the future years.
This step is to recognize the styles and conditions that will influence and change the industry.
Political Factors: The federal government of Oman stimulates the supports the business enterprise of food toward the meals security in the country by grants such companies. In Oman, Exempting Wholly Omani Owned or operated Companies from Taxes for 5 12 months (The law of income tax on companies, Oman, 1975). This trend is give the company opportunities helped bring by changes of the federal government and public behaviour toward the industry, changes in politics organizations and the course of political procedures, legal issues, and the overall regulatory weather.
Economic Factors: The economic changes in the world led to boost the level cost of food consumables, hence the consumer are thinking of other alternatives food at low prices. For example, buy frozen chicken at the lowest price somewhat than fresh poultry with higher-price. To compete on the low cost alternative, the business produces a frozen food rather than focusing on a fresh food only.
With international product prices rising it will also become increasingly expensive to import foods - so that it is more important than ever for the Sultanate to lessen its dependency on imported food (Oman Turbine, 2011).
Social Factors: The primary social development is increase of the customer's knowing of the health food, which lead to make a healthy and fresh alternatives food. This trend gives the opportunity for the business as the main player of Chicken Farms on the market. But in other side, it's also making a potential menace in market farmers markets in the inner region of the country which target in produce the fresh Chicken Farms. During previous 3 years, ASafa achieved and attaining Macro poultry industry in Oman and also spent the opportunity in the market.
On more cultural factor is the development of folks to become more convenience by purchasing their needs from a single store includes all the merchandise. This trend also makes the company the chance to increase demand because of its products because of the distribution of the products to the major variety of retail market. That is an opportunity for also visitors to buy a fresh poultry in a manner faster without lack of time and effort where the consumer does not need to go to poultry farms to buy fresh poultry.
Technology Factors: A'Saffa has today's international manufacture techniques and machinery. However, the technology is changing speedily and don't need to spend more cost to renew or replace the old machine for long-term.
In this section will determine the elegance and profitability of the poultry sector in Oman than assess the relative position of the company on the market.
Threat of substitutes: by evaluating the marketplace, the threat of substitutes is high in poultry in Oman because A'Saffa Foods faces many indirect competition from farmers market segments. Existing indictors in the neighborhood market, the indirect opponents are potential substitutes to A'Saffa Foods and create dangers in the foreseeable future. Farmers markets have seen a significant enlargement in Oman and providing a brand new food with convenience choice. With increasing the health awareness towards health alternatives, the farmers market segments sell fresh products and natural produce which 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 scheduled to mother nature of products, a high degree of rivalry is is available on the market. Hence, your competition is based on price and other factors like sell location and selection of product. There can be an increase in future rivalry due to the entrance of new local company "Barka Food' (because their business will concentrate on the north section of Oman, which have a large quantity of the population) and also new rivals from UAE and Saudi Arabia which will make the industry further competitive and dangerous threat in future.
Barging ability of suppliers: bargaining vitality of suppliers is extremely very low. A'Saffa Foods controlling market talk about for poultry products of over 25 per cent and numbers of local suppliers employ a limited choice of intermediaries to pick from. Thus, A'Saffa Foods is the primary customer and purchaser of raw materials in the industry. On the other hand, this set to improve with the entry of new companies with Authorities policy increase the competition on the market. Therefore, the bargaining electricity of the suppliers is a middle in the foreseeable future because expect a larger selection to provide to.
Barging vitality of potential buyers: the buying power of customers is in an increase. The federal government raise the degree of food security by promoting and encourage the small-scale providers and reduce the competition barriers by allow farmers marketplaces to come in the market which lead to increase customers choices (Al Watan paper, 2009). Because of this, the clients barraging electricity is increase and thus, the increase of customers bargaining ability will allow customer to compare prices and choose the cheaper option and this aspects take customers barging to an additional medium level.
Threats of new Entrants: the risk of new entrants is low and this is because of the role of federal government of Oman to support the local business of food toward the meals security in the united states. A'Saffa also says which it has no fear of other competitors getting into the marketplace place - either in Oman or the spot" (Times of Oman, 2010). Even though this market does not require a high infrastructure, but its needs experience to control the project proficiently and its easily to come in contact with losses because pass on of diseases (e. g Bird Flu) or change the social factors of individuals regarding the health food.
From prior section on the Porters Five factors evaluation, the poultry industry discovered reasons of the poor bargaining ability of suppliers and potential buyers and barriers to accessibility. Consequently, the business achieves profitability as yet. Therefore, the position of A'Saffa is medium of the change of the elegance of the industry. Also, the earnings of Company may be cut down from high to medium in future.
The reasons for this are increase in bargaining power of suppliers and potential buyers with the larger rivalry and the accessibility of new companies.
When the industry appeal and profitability has lowered from earlier levels, the capability to do better than its competitors depend on the business's resources and capacities which can develop in the future.
Industry Attractiveness / Profitability of A'Saffa Foods until now.
In this section will identify the major resources and capacities of A'Saffa Foods by assessing the problem of A'Saffa Foods in the food chain to take part in and analyze the major role within A'Saffa Foods value chain which delivers the great deal value to the firm.
A'Saffa Foods is the only real supplier of all their poultry products and the meals chain is provide wholesale with a route to reach end consumers. The Company has a huge plantation with high capacity and intends to increase the production in the foreseeable future to meet growing demands in Oman and Gulf countries. The A'Saffa plantation is on the key highway between South of Oman (Muscat city) and South ( Salalah city) which make circulation process are quick and well-organized. The Farm has its water resource.
From the chicken tool, no serious issues of supply chain face the A'Saffa Foods. An ardent Supply String Management (SCM) team works round the clock to identify potential suppliers and procure the required high quality recycleables regularly (www. asaffa. com).
A'Saffa has permitted 100% product supply through its branch Sales offices distributed across Oman covering all the parts and the inside markets. That is a very healthy signal of effective and intensive distribution system across the country. The full total coverage exceeds 1600 shops. With intensive branch network covering entire Oman, our reach is not merely limited by groceries, we also cater to restaurants, butcheries, catering companies and other companies.
There are three main value creating functions to provide Company's determination:
Logistics & Syndication Network: the chicken's feed is created in A'Saffa and therefore, the business has own operational control of the logist to execute QA audits to ensure that the merchandise is in a higher manner.
A'Saffa Food is the only real supplier of all their products and its own control the network of syndication of its products. To ensure that A'Saffa products are available in every Hyper & Super Markets and retail stores, A'Saffa has held a fleet of 25 reefer trucks to deliver a iced and fresh product to be available to the client whatsoever time and across Oman.
Operations: this consists of inventory management, client satisfaction and quality evaluation. A'Saffa offers a large choice of services to its consumers.
Quality Assessment: A'Saffa has a committed action of the value of the grade of its Clients/Potential buyers and to deliver finest quality of products. Also, the Company implements a Hazard Examination and Critical Control Factors systems. Furthermore, the chicken's give food to is produced in A'Saffa farm by using a scientific feed management which allow the Company to control the grade of natural fed.
Inventory management: using a technology to be sure that stock level is sufficient in any way time. Also, using forecasting system to prevent unpredicted increase or decrease in demand of the product.
Sales and Marketing: as stated before, A'Saffa Food is the only real supplier of all their products and its own control the network of distribution of its products. Therefore, A'Saffa Food is compete efficiently and increasing its sales by the promotion of a product inside a shop, focused on deliver the fresh products to retailer promptly and enhance a consumer research and environmental changes. That is an important to identify and use a strategy to compete efficiently in future.
Strategy functionality examines different types of resources and competence within the business to be able to survive in the market. You will discover two types of resources, first is physical or tangible of the business including (fund, Vegetable and labour). The other reference is the intangible resources which contain (knowledge, brand reputation and information).
To compete, A'Saffa Foods is using strategy of differentiation and cost leadership by adopting an efficient resource chain to control the cost and brand image.
A'saffa growth-oriented strategy to branch out into other complementary products began in 2009 2009 by adding value-added packaged foods. The packed products are currently out-sourced from the UAE and its own contribution to the business's important thing is less than 10 %.
A'Saffa has four significant resources and capacities:
Successful Supply chain: A'Saffa food comes with an efficient distribution network across the country. The tangible assets such a produce of Chicken's food and technical capabilities are essential for A'Saffa food to accomplish a higher EBIT. But successful source chain in insufficient as a distinct competency.
Brand Reputation: A'Saffa Food has built a brand reputation as providing a brand new food and 'Halal' local products (The word is employed to designate food viewed as allowable as per Islamic law). It has recently been through the buyer experience with products and also marketing campaign undertaken by the business to market its products. The reputation of the brand is vital of the consumer satisfaction. Therefore, the reputation is not really a competitive advantage. it is a spot of equality that the business must have in order to compete.
Financial position: the Company has a good budget in the market. In addition; the government has supported the company by a Taxes exemption that was expired in 2009 2009. Whatever the taxes deducted for another years, the profit after duty is likely to increase for another two with an expansion plan.
Location: A'Saffa has a huge capacity of its plantation which allocated in "Thumrait" in the south of Oman. This location gives A'Saffa more benefits to build a huge farm with water resources, authorities subsidy by not charging any cost of land and also close to the big city in Oman.
Despite the aforementioned resources and features of A'Saffa, the business has facing a change in its top management. The progress on Omani current economic climate has led to number of opportunities available to pros. this created a concern for A'Saffa to improve its HR plan by encourage the existing top management by pay high salary and more benefiters.
Tax exemption that was expired in '09 2009, will lead to high cost of framework for next years. Furthermore, A'Saffa has a big capacity of the creation of the fresh chicken also to change to frozen chicken, it would be more cost for the Company.
Examination of the internal and external environment is significant way of measuring of the proper planning process. SWOT examination offers information that pays to in coordinating the resources and features of A'Saffa to the competitive environment.
Summary of SWOT evaluation of A'Saff Food
Low of new entrants
Strong brand name
Healthy and quality food
Create new products
Location of the farm.
Industry is highly competitive.
Shift the buyer from fresh products to iced foods.
Trade barriers between Oman and other countries e. g Yeman.
High cost framework.
Losing effecting top management
By examine the business Threats and Opportunities (External Environment) and the weakness and talents (Interior Environment), it could be understanding, identifying and creating a strategy options for A'Saffa Food.
It's very important to A'Saffa to build the majority of its above talents, avoid its weakness, take benefit of the opportunities available and control its threats. The next is the TOWS Matrix, gives A' Saffa your options that may be could adopted:
External Opportunities (O)
Low of new entrants/Administration support.
Substitute products. /Industry is highly competitive. /Move the consumer from fresh products to frozen foods. /Trade barriers
Strong brand name/Good reputation/Healthy and quality food/Distribution network/Create new products/Location of the farm.
Using strengths to increase opportunities.
using strengths to reduce threats.
Internal Weaknesses (W)
High cost structure/ Getting rid of effecting top management.
minimize weaknesses by taking good thing about opportunities.
minimize weaknesses and avoid threats.
From the above analysis of options, the "Maxi-Maxi" Strategy designed to use strengths to maximize opportunities is the most benefit to attain the mission and perspective of A'Saffa Food.
Scenario Analysis is useful way to aids A'Saffa to make judgment in the problem of the different futures that could arrive. The take steps of make scenarios causes A'Saffa to challenge its assumption about the near future. By determining the Company plans based on a possible situations, than Company can ensure that its decisions are right even if environmental changes.
The pursuing is same of Scenario research process for A'Saffa Food :
High cost composition: A'Saffa is planning to become a number 1 1. In the Middle East by soon. this is done by giving a superior quality of the fresh and frozen food with competitive price.
From the PEST research, it was reported the key factors of politics, economic, public and technological that impact the expense of products in A'Saffa food. Thus, the main element assumption of reducing an expense of products are:
Build a fresh farm of poultry in North of Oman to raise the sales and reduce the price of sale.
Using international advert to keep up market position of A'Saffa products to be able to raise the deal of fresh products
Build a marketing plan to sale the new products during the period of validity, so that the company not getting rid of a cost of products if the is expired.
Developing these Situations: A' Saffa can start with improbability circumstance of build of new farm in North of Oman. the future scenario will one of the next:
Economy in Oman increasing: with federal support to the neighborhood firms to become more competitive. Hence the business will have a sustaining competitive advantage over a decade.
Economic slowdown : then your Company will have more cost of capicty which results the cost benefits and loss the market.
Defining strategic path might be a major challenge for A'saffa Foods. Ansoff Product/ Market matrix is an instrument to recognize the basic option and directions for A'saffa Foods. Considering A'saffa Foods approach to develop new product and penetrate new marketplaces, four different alternatives can be applied.
Taking into consideration these combinations, A'safaa Foods seem to successfully entice and penetrate the highly competitive markets by offering its high quality products in a competitive price as the company have a competitive cost gain. This itself will also specify its market development and development with reputation locally as well as existing market and internationally as new market, that may develop and enhance the existing products in the new markets. A'saffa may possibly also move toward product development strategy using their existing capacities or creating new ones to make sure total satisfaction of the changing needs of the client by developing services. The company can also implement a diversification strategy and add new production lines such as dairy products as it has the capacities and resources.
In future, A'saffa must have a platform and control models. Those models have set targets, feedback, and measurement of performance (Frances, et al, 2007). For example, the Company through the use of those models can recognize if there is a distance between released direction and desired development. By this technique, A'saffa Foods can established a plan for unforeseen situations and circumstances. For example, soon, there will be more existing or new Food creation companies entering the local market. In this situation, A'saffa Foods can use its cost control benefit and adapt its ideas to conquer the change in the extreme competitive forces.
The variable activities are designed by A'saffa Foods in nonstop developed process to administrate and control the unexpected incidents the dynamic changing environment. Those activities are best strategy to keep up with the existing competitive benefit affiliates with the firm (Frances A. et al, 2007). By apply this technique; A'saffa Foods will increase the tactical planning which therefore, continues the company doing well in long term