To develop a SWOT research of the business, we need to evaluate all its components: strengths, weaknesses, opportunities, and dangers. To analyze the opportunities and dangers of
Lacnor, we use the two main techniques: PESTEL examination (macro evaluation) and Porter's
5+1 pushes (micro research). In this section, we will begin by PESTEL.
1) Politics Instability between UAE and KSA:
In middle August 2009, the map that is shown on UAE personal information card induced a issue between UAE and KSA. The say is that it includes parts of KSA (Saudi halts reputation of UAE Identification cards, 2009). This created many problems on the edges of both countries. Trucks' moving between both countries started to be delayed intentionally. In fact, the problems were only available in June 2009 because of changes in Saudi boundary formalities (Kasolowsky, 2009).
Approximately, 35% of the juices bought from UAE are imported from KSA. In fact, many of Lacnor's opponents are Saudi companies, such as: Rabie, Sunshine quick, Al Marai, Danao and others. Since almost all of Saudi products are being brought in through trucks, the option of Lacnor's competing products in the market is affected. Thus, this problem actually represents an opportunity for Lacnor.
2) Administration Control Over Prices:
The prices in the juices and dairy products industry is being subjected to control by UAE federal government. Although there is no exact law written, UAE authorities often prohibits raises in prices of juices and milk products, unless the increase in price is justifiable, like a change in the merchandise size (Dairy products and Juice Suppliers' Group never to increase prices, 2007). That is justified by the government's involvement in ensuring that individuals are not damaged by any selling price manipulations for essential goods. Furthermore, because almost all of those products can be purchased in authorities co-ops, the federal government has a huge impact on lowering prices of those products at specific times of the entire year, such as what took place in Ramadan 2009 (Ammari, 2009). This governmental control, generally, represents a danger to Lacnor and the whole industry.
1) Economic Condition:
The global financial meltdown of 2008 had afflicted individuals and companies all around the globe. Due to the financial meltdown, the income level of individuals has greatly reduced, which consequently resulted in reduction in demands for many products. Yet, the juices and dairy products industry didn't get influenced by the turmoil. In 2009 2009, the dairy industry in UAE has been widening for a price of 10% despite the global economical slowdown (Mashni, 2009). This is mainly because milk products are essential goods in consumers' daily lives. Thus, the economical crisis symbolizes in fact an opportunity for Lacnor and other companies on the market where many consumers have shifted to buy those products that are relatively inexpensive and meet their needs.
2) Unemployment Level:
The UAE unemployment rate has increased by 3. 45% in 2007, and 4% in 2008, and it is expected to marginally increase further by the finish of 2009 (Kawach, 2009). The upsurge in unemployment rate, as well as, the very recent financial problems in Dubai, which includes been referred to as "Dubai Financial Crisis, " signify a hazard for Lacnor in influencing its ability to attract international labor force to the market and its ability to keep their current employees.
1) CHANGES IN LIFESTYLE:
There have been many changes in the standards of living of men and women in the UAE. Among those changes is the general motion by people toward less healthy life-style. This is noticeable in the increase of diabetes and obesity rate in UAE. People have been moving toward fast-food and less healthy selections of food and beverages. In fact, many expatriates declare that moving into this country has influenced their lifestyles by pressing them toward less healthy lifestyles (McMeans & Zaman,
2009). Such changes in lifestyle represent a hazard for Lacnor where the company products don't meet the new lifestyles of several individuals.
2) Increasing Variety of Workforce:
UAE is a multicultural environment where residents come from all over the world. There can be an increase in social variety at the work environment that made it much easier to understand and talk to foreigners. This increase in cultural diversity presents an opportunity for Lacnor where they can catch the attention of better or cheaper labor from all over the world.
1) New Technologies (Machines):
According to Mehmet Gumus, Assistant Professor of Functions Management at the
American College or university of Sharjah, the industry where Lacnor manages, the juices and dairy products industry, is attractive in the sense that we now have always new technologies in the instruments used for developing products. The speed at which new instruments are being innovated is very high. Some of these changes are complete new innovations such as machines that are being used to detect faulty products using advanced statistical techniques such as Six Sigma strategy. Other changes, however, are incremental changes, such as instruments that improve the volume of creation through increasing the swiftness of these instruments. In total, those new tools stand for opportunities for Lacnor.
2) Technology Opportunities:
There are extensive opportunities for innovations in the juices and milk products industry.
Through R&D and new systems, companies operating in the industry have opportunities to create different mixtures of juices and dairy products by adding different ingredients that can produce new flavors. Although these improvements are usually incremental rather than radical, they offer opportunities for Lacnor.
All above the UAE, and mainly in Dubai, there has been recently a huge pressure by modern culture toward recycling throw away produced by companies. This pressure was due to the increase in the amount of waste produced in the UAE every year. This amount has been displayed in this article "Waste: A genuine challenge for Dubai" by the following affirmation: "Imagine a building 270m high and with the same area as a basketball field. Now consider 10 of them, all prearranged, one after another. This is actually the amount of waste material Dubai produces every year. " (Stensgaard, 2006). Recycling campaigns and projects are increasing and the population is putting ruthless on companies to recycle their throw away. Those ethical stresses can be considered as opportunities for the firms to advertise themselves through focusing on their contributions in corporate social responsibility, they are usually considered to be hazards that put pressures on companies to add more to social activities that can increase their costs. For Lacnor specifically, this is known as to be always a danger with the large amount of waste the business has from their productions.
1) Employment Regulations:
Although there are numerous laws and regulations in UAE that classify the conditions for occupation, there are no specific regulations for employed in the juices and dairy products industry. For example, unlike the specific conditions related to working in healthcare, real house, or auditing companies, legislation regarding who's able to work in the creation of these products are generally much more adaptable. This gives the industry the chance to catch the attention of better or cheaper labor.
2) Safety Laws:
Safety laws at the work place are increasing in the UAE. Articles 91 to 101 (inclusive) from the Labor Rules in the UAE designate certain provisions regarding employee safeness and healthcare at the work environment. For making companies mainly, laws and regulations regarding providing employees with ideal means of protections against injuries, occupational diseases, and risks which may result from the use of machinery and other equipment at work are being strictly imposed by government authorities. Violations of those regulations cause processing companies
a lot of fines and may bring about legal actions considered against them. Those regulations represent a menace to Lacnor as a creation company because they need to strictly follow them.
In analyzing the external environment (i. e. opportunities and threats), it isn't enough to look only at the macro societal factors that influence the company. The opportunities and threats for the business stem also from its industry. Thus, it is important to employ a micro degree of analysis by analyzing the task environment. This is done using Porter's 5+1 Competitive Forces Model which analyzes the attractiveness of a business by assessing different facets, that happen to be: the
threat of new entrants, the rivalry level among existing businesses, the pressure from substitutes, the bargaining ability of potential buyers, the bargaining ability of suppliers, and the comparative vitality of other stakeholders.
Porter's 6 competitive makes.
In analyzing the exterior environment (i. e. opportunities and dangers), it isn't enough to look only at the macro societal factors that have an effect on the business. The opportunities and dangers for the company stem also from its industry. Thus, it is important to use a micro degree of analysis by studying the task environment. That is done using Porter's 5+1 Competitive Pushes Model which analyzes the appeal of a business by assessing different factors, that happen to be: the risk of new entrants, the rivalry level among existing firms, the pressure from substitutes, the bargaining ability of clients, the bargaining ability of suppliers, and the comparative electric power of other stakeholders.
Threat of New Entrance:
When studying the risk of new entrance, there are extensive factors that people should look at before assigning a general estimate for the hazard level. Among the things to consider is the industry expansion rate. The juices and dairy products industry development rate in 2009 2009 has been estimated by the Ministry of Economic Development to be 10% (Mashni, 2009). In light of the global financial meltdown, this is considered to be a high development rate. The increase in the industry expansion rate results in increasing the risk of new entrants. Another factor that should be studiedis the profit margin of key players on the market. By learning the financial statements, we discovered that the profit percentage of Lacnor and its own competitors is known as to be high and, pretty much, constant in recent years. This steadiness of high income, even in the most severe economic conditions, brings about attracting new prospects to the industry, and therefore, it ends up with increasing the risk of new entrants. There are various factors in which one can examine the elevation of entry barriers in the industry. One particular barriers is administration control. As stated earlier, the
UAE federal government has limited control over the prices on the market; we believe this is considered to be always a barrier for new entrants and therefore, it can cause decreasing the risk of new entrants. Another factor to be looked at in studying entrance obstacles is customers' transitioning costs.
Generally speaking, there are few, if any, switching costs that are associated with juices and milk products; this helps it be easy for customers to switch to new companies which can lead to increasing the threat of new entrants. Another hurdle to be analyzed is the quantity of capital requirements. According to Linda Angel, Assistant Professor of Operations Management at the
American School of Sharjah, there are extensive capital requirements had a need to have an effective and efficient creation in the juices and milk products industry. Those assets in requirements represent problems for new entrants which leading to decreasing the risk of new entrants. The previous factor to consider in learning entry obstacles is the expected degree of economies of size by new entrants. The majority of the players in the juices and dairy products industry in the UAE have been well-established for many years. Most of them have considerable knowledge in what they may be doing and also have learnt how to lessen production costs throughout the years. As stated early, because consumers are extremely hypersensitive to price changes of the industry products, those companies have been focusing on studying ways to reduce production costs in order to keep up with high profit margins. By doing so, many companies have achieved high levels of economies of scale. Thus, new entrants are likely to achieve economies of scale very quickly in order to keep up with the competition. This factor results in decreasing the threat of new entrants. By looking by any means factors we've considered, we can easily see that there are, more or less, similar amounts of factors that lead to increasing and lessening the risk of new entrants. That said, we can conclude that the risk of new entrants in the juices and dairy products industry is modest. In fact, there have been no new entrants on the market in recent years
Rivalry among Existing Businesses:
As with studying the threat of new entry, there a wide range of factors to be looked at when analyzing the level of rivalry among existing organizations. The first factor to consider is the amount of competitors on the market. For Lacnor, there are numerous local and international rivals in the
industry, such as: Rabie, Sun quick, Al Marai, Danao, Capri Sunlight, KDD, Rani, Masafi, Safa, Al
Ain, and many more. This lot of competitors ends in increasing the amount of rivalry among existing companies. Another factor to be looked at in analyzing level of competition is the merchandise characteristics. In general, the products offered by Lacnor and other companies in the industry are, pretty much, standard. There are of course many variations in preference and quality; yet, those distinctions don't qualify the business products to be considered as unique products.
The standard character of the merchandise offered brings about increasing the rivalry level among existing businesses. Another factor that should be considered is the height of exit barriers. Lacnor and other companies operating on the market have various kinds of equipment that are specific with their production procedures and are hard to be utilized in other styles of productions. This ends up with increasing the elevation o exit obstacles which brings about increasing the rivalry level among existing companies. Finally, the processing capacity level influences the competitive level on the market. Mr.
Mohammed Al Atrash, the procurement administrator of Lacnor and a member on the Panel of Directors, stated that a problem for Lacnor and a great many other competitors in the industry is the unpredictability of the demand that leads generally to advanced of productions that go beyond the marketplace demand. Companies would follow competitive strategies to be sure that these products are for sale which would increase the rivalry level among existing businesses. All in all, we can say that the rivalry level among existing companies on the market is high.
Pressure of Substitutes:
According to Dr. Virginia Bodolica, substitutes are products or services that have different visible or invisible characteristics and fulfill the same exact need of customer. Those substitutes will come from the same or different companies. As simplified as it seems, customers buy juices and milk products to meet their needs for drinking alcohol. To be able to assess the pressure of substitutes, it's important to estimate the availability of these substitutes. Since consumers need is drinking alcohol, there are numerous available substitutes for juices and dairy products, such as: water, soft drinks, energy beverages, coffee, tea among others. Those products can be found all around the places in UAE which results in increasing the pressure of substitutes. Another factor to consider when studying the pressure of substitutes is customers' transitioning costs. As stated earlier, customers' switching charges for juices and dairy products are generally regarded as low which results in increasing the pressure of substitutes. Finally, it's important to calculate price and quality degrees of substitutes. The prices of the substitutes brought up are considered to be fluctuating around the costs of juices and dairy products. A number of the substitutes, such as normal water, are cheaper, a few of them, such as carbonated drinks, are of similar prices, and more, such as energy beverages, are more costly. For quality, within each group of substitutes, products have different quality levels. This is being said, it is hard to estimate the precise impact of price and quality degrees of substitutes without having related data regarding to analyze which we lack. Overall, however, we can conclude that the pressure of substitutes is relatively high.
Bargaining Ability of Purchasers:
There are extensive factors that needs to be analyzed when estimating the bargaining electricity of buyers. One of those factors is the amount of buyers buying the company's product. But the up-level stores buy high proportions of Lacnor products, there are most of them which results in lessening the bargaining electricity of clients. Another factor to be examined is the ability to combine backward by the customers. Although some of up-level stores, such as Carrefour, Spinneys while others produce their own fresh juices, it is generally hard to allow them to integrate backward and produce UHT long-life juices and dairy products as a result of gadgets needed as well as the expectation to attain economies of scales quickly, which is hard to be achieved with their give attention to distributing many other different products. This inabiility to integrate backward leads to reducing the bargaining ability of customers. In studying clients' bargaining power, we would incorporate two related factors that are important in the analysis, which can be: the lifestyle of alternative suppliers and the characteristics of the supplied product. As mentioned earlier, there are numerous local and international juices companies that can provide you with the purchasers with similar products. Although there are small dissimilarities in the products offered, they generally have a tendency to be standard products. Both factors put together together lead to increasing the bargaining vitality of clients. Finally, it is important to analyze if buyers have complete information about the seller's product. Corresponding to Mr. Samir Naoura, working with many companies had managed to get easier for up-level stores to have access to information regarding the production costs of companies in the industry, which results in increasing the bargaining vitality of buyers. Generally, the bargaining vitality of buyers on the market is average.
Bargaining Ability of Suppliers:
The last element from Porter's original five pushes model is to analyze the bargaining ability of suppliers. There are various factors to be considered in the examination, one of which is to consider the importance of the supplier's insight to the buyer's business. It goes without saying that the natural material such as: fruits, milks, drinking water and more are of significant importance to the production procedure for Lacnor and others in the industry. Without those recycleables, there will not be any production. This brings about increasing the bargaining power of suppliers. Another factor to be analyzed is the capability to integrate ahead by the suppliers. Unlike vendors, who lack the capability to assimilate backward and produce the products, suppliers of fruits and milks are usually more with the capacity of producing juices and dairy products through forward integration. This is because the majority of those suppliers specialize in getting raw materials necessary for specific product lines, which makes it easier to allow them to focus on the production of those products. In fact, a lot of Lacnor's suppliers in Indonesia and New Zealand are also maker of UHT juices and milk products in their home countries. This leads to increasing the bargaining vitality of suppliers. In studying company' bargaining electric power, one of the factors to be considered is the characteristics of the supplied product. Again, although there are small distinctions in the merchandise offered, they generally have a tendency to be standard products for which raw material can be found in many places. This generally brings about decreasing the bargaining electricity of suppliers. However, it is important to check out the number of suppliers of recycleables in the industry. There are numerous local and international suppliers that can provide you with the companies with the raw materials needed at different quality and prices; however, due to climate in your community, many of the recycleables needed are being imported from international suppliers. The need for having available recycleables over summer and winter with high quality levels and low transportation costs generally reduces the number of available suppliers to Lacnor and other companies on the market and ends in increasing the bargaining ability of buyers. Overall, we can say that the bargaining electricity of suppliers on the market is very high.
Relative Ability of Other Stakeholders:
The original Porter's Five Causes Model has been improved to add the relative power of other stakeholders, such as federal government, collectors, international stakeholders, and complementary products on the industry. We have analyzed the impact of administration control on the industry when studying the political portion of PESTEL. In this particular part, our focus is on complementary products. "Complementor is a company or a business whose product works well with a firm's product and without that your product would lose a lot of its value" (Bodolica, 2009). Products such as tea and espresso are believed complementary products for dairy. Lacnor also has a tomato paste product line. Tomato paste can be an essential ingredient in your kitchen in this part of the world and is utilized in most traditional foods. Also, it can be used in by many restaurants in the production of soups, stews, pastas, and pizzas. Shifts in demand for those products impact the demand degree of tomato paste.
Mission vision goals and aims,
An essential component of any strategy is to recognize its mission, eyesight, goals and
objectives. We obtained the business's mission and eye-sight statements from the company's
official website (www. Lacnoruae. com), whereas its goals and aims were extracted from the
company manual. In such a section, we will point out those components and evaluate them briefly.
"Our mission is to give a healthy life-style to children, children & adults via a wide
range of premium quality products. We invest in expanding our people and acquiring the latest
technology to be able to reach a standard of excellence in our organization. "
Mission Statement Evaluation:
A successful objective declaration should answer the following three questions: "Who is
being satisfied?" "What's being satisfied?" and "How are needs being satisfied?" In analyzing
the mission statement of Lacnor, we find that the response to the "Who" question is obvious and
appears in the assertion: "children, youth and parents. " Alternatively, the response to the
"What" question is more technical. Rather than specifying the merchandise explicitly by saying that the
company offers juices, drinks or other terms that specify the exact product, the business chooses
to refer to "healthy life style" as the merchandise offered. Although we assume that it is a good idea
to describe the product as being "healthy, " especially that this matches the business's slogan "Live
Life, " it is important to offer an idea of the precise product wanted to avoid misunderstanding. Finally,
the answer to the "How" question appears mainly in the statement "through a wide range of
premium quality products. " "Developing our people" and "Acquiring the latest technology" can
also be looked at as answers to the "How" question.
"Our perspective is to Strengthen and Expand our National Command to the Regional and
International Market segments. "
Vision Statement Evaluation:
A successful perspective statement will include three components: position, market, and
product. In studying the vision statement of Lacnor, we find the "Leadership" position. In
analyzing the market, we can easily see the company's vision in the "Regional and International
Market". The business fails to include the product in the perspective statement; yet, the statement "To
Expand our National Leadership" implies the merchandise is the same as the existing one.
Goals & Targets:
· Producing the very best quality juices and healthy dairy products.
· Reducing the quantity of flavors, artificial materials and sugars in juices.
· Purchasing R&D and consumer research for new inventions.
· Maintaining regular profit margin in the short-term.
· Building the first vegetable in Oman in 2010 2010.
· Achieving place of work diversity through hiring employees from differing backgrounds.
· Centering on Corporate Friendly Responsibility insurance firms at least two donation
campaigns each year.