Environmental Analysis Of Silver Fern Farm – Livestock Processing Company

Company Overview

Silver Fern Farm was founded in 1948. It was initially started as a primary producer cooperative society (PPCS). The firm was established with the intention to process sheep meat only. After several rebranding of the firm, it came to be known as presently Silver Fern Farm (Roche 2012, p. 68) Silver organization is leading in all aspects of livestock products and marketing, selling venison, lamb and beef and other by-products such as wool. Silver Fern is co-owned by Shanghai Maling Aquarius Ltd, Bright Food Group; who are their well-known external investors. The company is privately held with its headquarters in Dunedin in New Zealand.

Top executives

Simon Limmer is the current Chief Executive Officer of Silver Fern. He is responsible for directing the company regarding financial performance and delivering of cutting-edge strategies. Simon has vast experience with the company has worked with the organization for ten years. Matta Ballard is the general manager People of the company while Dan Boulton is the general manager in the supply chain of the organization with experience from his former three jobs before his current one.

Organization business model

Silver Fern organization is the leading procurer, processor, and marketer of livestock product in the country. Their key strategy, ‘plate to pasture,’ that they adopted since 2008 has been beneficial to them as a company and to their customers as well (Baum, and McKelvey, 2007 114). The company works closely with the farmers from New Zealand’s Maori Federation to grow animals that give the best of red meat to customers. The Federation represents more than 18000 farmers in the country; what is more, they are the leading suppliers of Silver fern cooperation.

Once procured, the supplies are taken to the 14 meat processing site where automated processes process them. The company has invested heavily in IT to achieve efficiency. These technologies enable the firm to deliver their product all over the world. Using sophisticated information system customers order are processed and shipped to their destinations. Feedback from the customer allows the firms to improve to capture customer need; this precision in-turn generates high profits for the company.

Part one-Environmental Analysis  Analysis of the industry Competitive environment

New Zealand’s climate favors the growth of pasture which is the cattle and sheep’s diet. What is more, the county’s landscape impressively encourages biodiversity. With this mention, it is safe to conclude that Silver Fern is not the only livestock processing firm in the country. In this sector, agri-business, especially in the livestock arena, Silver Fern stands the competitive pressure that makes them re-evaluate their strategies to enable them to penetrate the market in a better way (Loch et al. 2001, p. 2). While facing competition from other members of meat processors, for instance, among meat processor in New Zealand, Silver Fern stand competition from the likes of Universal Beef Packer Ltd, BX Food, and ANZCO Foods Ltd to mention a few.

As aforementioned, New Zealand is the world’s greatest exporter of mutton, beef, and venison. Livestock business is excellent in this country, and what is more, these facts are received the world’s recognition (Polidoro and Toh 2011, p. 375). With the increasing numbers of firms mushrooming, or better still, firms that mainly focused on producing one product, for instance, a firm chooses to specialize in beef processing alone puts, Silver Fern farm in a tight situation. All these facts point to the high intensity of competition that is faced by Silver Fern Farm as being one of the industry players in a pool of meat processors.

Top Executives

The threat of new entries

Risk of new listings is also another constraint that Silver Fern has to endure. With the favorable climate condition fit for livestock rearing, comes another aspect of seasonality, this is the window to which most new players enter through into the sector (Barrett and Barrett 2003, p. 625). Sheep naturally replicate during the springtime of the year; this leads to the creation of surplus that makes it easy for a new competitor to set in. Aside from red meat competitors, their stands stiff competition arising from the substitute of the white meat industry, the poultry firms (Chen 2005, p. 120). They offer products such as eggs and chicken for those who prefer white to red meat.

Buyer Bargaining power

Due to the company’s many years in the business, the firm has strong established market, especially in their home ground. The buyer power is seen in the numbers of the product buyers, the more the buyers, the less power the consumers have on an organization (Harding, Rosenthal, and Sirmans 2003, p. 180). Concerning these statements, the Silver Fern Farm is well established in major places such as Korea, Hong Kong, Japan, German, and United Kingdom. Additionally, Silver fern has over 20 well-established restaurant supermarkets in New Zealand, backed with these numbers of restaurants it is evident that the bargaining power or their buyer is low and they cannot detect prices as they wish.

Supplier bargaining power

Sheep, cattle, and venison suppliers are well organized in New Zealand. Most, if not all of the Silver Fern suppliers are farmers who are members of the Maori federation. The Federation represents and speaks for the farmer for better prices; however, with a consideration that Silver Fern is a primary sponsor of the alliance and that the company is the leading procurer of the farmers’ products, the suppliers bargaining power is weak (Brown, Fee, and Thomas 2009, p.196). Furthermore, the company in itself is cooperation that has its supplies of 20000 sheep, cattle and dears.

Profitability of the industry

The red meat industry is quite profitable for New Zealand’s. It is considered the principal driver of the country’s economy with annual export earnings of about $7.5 billion. The numbers translate to the profitably of individual firms in the sector as Silver Fern being one of the leading company in the country (Umble, Haft, and Umble 2003, p. 256). Firms have come to a sudden realization that their production focus strategy was the constraining factor for reaching high profit and instead, they focused more on consumer needs.

Impact of globalization

Several globalization effects are impacting these organizations. Environmental concerns have been noted because of the gas emission from the industries (Kose, Prasad, and Terrones 2003, p. 58). These gases affect the quality of water and pastures; therefore, there is a struggle in striking a balance between economic activities and globalization that is touching on the quality of meat. Also, the company is striving to maintain environment regulations that New Zealand prides itself on, which is; being the only country that produces 0.5% of the world’s total gaseous emission.

Business Model

Analysis of Macro-Environment Political force

Political forces constrain the freedom of co-operation as well as individuals. If the political environment is stable, then the playing grounds for individuals are made fair, and the laws that are set are favorable for business conduction (Weyzig 2009, p. 423). Luckily, for New Zealand, the political pressures are stable in such that excellent business environment have created opportunities for the company to conduct business. For example, the bilateral and multilateral trade agreement that New Zealand has made with multiple countries such as the USA has opened up opportunities for Silver Fern to extend their market. The fair trade act, also, encourages fairness while conducting business in the country; therefore, a well leveled playing ground is set for Silver Fern to flourish in its business conduction.

Economic forces

Economic forces are essential when it comes to a company’s excellence regarding performance. For instance, the legal laws of a country determines cooperate tax rates, income tax rate as well as sale taxes (Carree et al. 2002, p. 282). These have a profound effect on the profitability of a company and restrict to an extent the kind of business that should be conducted by an organization. In New Zealand, there is a legal sales taxes rate of 15% and 33% as income tax rate for the earner of the country. After the taxes, consumers are left with low disposable income to use, hence affecting aggregate demand in the market. Consequently, this changes the demand for products from Silver Fern.

Social factors

Revenues of a company are generated after the product has been sold; this means that the society has to accept the merchandise (Bosma et al. 2004, p. 230). With that mentioned, New Zealand has a keen awareness of health matters when it comes to processed food. Fortunately, silver fern has confirmed with the countries health regulations, therefore; their products have been accepted. Again, New Zealand’s political serenity also has created opportunities such as tourist attractions. The chance provides Silver Fern to increase its sales due to the numerous premium restaurants supermarket it has established.

Technological factor

Application of IT in business has numerous advantages and sets a company to easy time and success. Using IT technology, a company can process information gather from the market sales and give almost to an accurate prediction of future demand (Driskell, Radtke, and Salas 2003, p. 297). It is what has set Silver Fern apart from the rest of red meat processors. The firm’s ability to integrate technology into their process has encouraged them to seek markets from aboard. For Silver fern, meeting the world’s standard has enabled them to gain more market share which direct impact on their profits. Also, the company has acquired efficiency in their production; this increases customer satisfaction that creates strong customer loyalty.

Threats and opportunities

New Zealand’s poultry firms are steadily gaining grounds in the market; this is a threat to Silver Fern Company. Following the Food and Agriculture Organization reports show that New Zealand red meat consumption is reducing to 25 kg per capita while that of chicken is continuously rising at an alarming rate (Hoffman and Wiklund 2006, p. 201). The popularity of white meat is gaining an audience that means, reduced customer’s number for Silver Fern in the country. Nonetheless, what is seen as an obstacle could be turned into an opportunity? The sale of white meat could be due to the affordability of the chicken; this is an opportunity for Silver Fern to revise its price and place them relatively low to their competitors. The strategy is possible for the firms considering their financial stability.

Environmental Analysis

Analysis of the organization  Mission

Mission statements are valuable to the company’s strategies because they provide strategic guidelines (Mullane 2002, p. 450). Furthermore, it is due to these statements that a company’s performance standards can be genuinely gauged and its culture sufficiently captured. Silver fern farm’s mission is to establish a strong brand that consumers can trust; ‘ we want to establish Silver Fern Farms as the brand that consumers trust to deliver that, through a reliable and sustainable chain of care from the farm to the consumer’ as the firm puts it. As their mission states it clear that the company has set a high standard and a culture that incorporates quality process in their business.

Vision Statement of Silver Fern

A well-structured vision is comparable to the map; it shows the employees and the management where the company want to be in the coming years. Factually, it acts as a framework within which a manager of a company can strategies their operational objectives and goals (Dvir, Kass, and Shamir 2004, p. 127). Silver Fern vision state; ‘Inspirational Food created by Passionate People.’ The statement is effectively used to inspire the employee to be personate in their duties. Also, it is used to capture customer’s confidence in their product.  Silver Fern vision provides a guideline for the company’s management to work on innovations to make their Food seem inspirational. Notably, the firm’s strategies are structured with a hint of influence from the organization’s vision statement.

Silver fern Core Value and operating guidelines

Core values and operating instructions are the principles and framework within which an organization conducts its business (Grojean et al. 2004, p. 236). Silver Fern Company similarly, being a great brand, has five of its core principles. The first core value is Source; meaning the firm views that food reflects from where it originates. Therefore they want to show the customers high quality by sourcing from the purest of sources.

Natural seconds the list, in this; the company takes advantage of the native status of their food sources to keep everything simple and natural. Acting with an intense sense of responsibility, the Silver Fern hold its customers in high respect by doing things the right way. The fourth core is working with skills and expertise in every step of the process and finally, selectivity. Silver fern prides itself on making a critical choice in everything they do, this selectivity, of decision which concludes the list; ultimately result to the best of everything the firms does.

Core competency

There are competent aspects that allow the firm to enjoy such recognition the first one being efficiency in from their plant (Sicilia 2005, p. 314). Having 14 meat processing plants that are equally effective in reducing running cost has increased the profit margin of the company. The second strong commodity product which creates demand on its own and the third aspect is the firm’s ability to manage the inventory levels.

Management of inventory has benefited the firm by reducing perishability of their product and meeting the unexpected demand that abruptly arises from the customer. Releasing tied capital by selling poor performing assets and collaboration with other has made the company flourish even under challenging circumstances (Koufteros, Vonderembse, and Jayaram 2005, p. 127). Lastly, steadily grow in value-added sales of new products that attract customers has been the company’s strategy for the generation of revenue.

Competitive Environment

Silver’s broad and specific goals

Every company has a goal and objective to achieve in from their business operation. Silver Fern Farm broad objective is to expand the market to the potentially profitable untapped areas. Increasing their operational base will, with no doubt reward them financially. The firm’s specific goal is to build their reputation through their brand; they intend to be known as the firm that can deliver a quality product and gain customers’ confidence.

Analysis of current problems arising from the external environment

Chicken consumption in New Zealand in increasing day by day, this is in accordance with Food and Agriculture Organization reports on February 2018. It is a problem that concerns Silver Fern farm and needs the company’s attention. Discarding the issue will ultimately reduce the demand for Silver fern product in the market (Clare et al. 2002, p. 808). Another different point is on social forces that affect Silver fern are farmers complains. Farmers’ livestock rearing methods are still yet to meet the required standards that the company need for a world-class market. Also, there have been issues of recognition of farmer that bring the best supplies into the company going unrewarded.

Analysis of functional strategies

Marketing, Finance, Operations, External Relations, Human Resource, Health, and Safety Previously, Silver’s marketing strategy was mainly focused on production. The Production strategy required the firm to lean on mass production but, due to increased competition, the company had to adapt to ‘Plate to pastures.’ The approach is more customers oriented than the previous one; it involves doing intensified research on customer needs and trying to capture the demand in their product (Koufteros, Vonderembse, and Jayaram 2005, p. 127). To ensure the survival of the company financially, silver Fern had to make tough calls such as dropping performing assets as their financial strategy. The firm drop bull beef programmed that had 600 farmers participating in and sold cold stores that were idle in Gore.

Concerning operational strategy, Silver Fern Farm focused on organizational realignment that focused on regional sales to establish deeper roots on the home ground customer. The firm also, focused on sales from China, the revenue generated enables the organization to balance their carry-over inventory (Richardson 2008, p. 142). On relation, Silver fern has established strong and profiting alliances with some of the world’s best freight Companies, this strategy will enable the company to deliver quality transport for their worldwide customers. Finally, through training programs, new employees continue to receive training with an intention to cut down the numbers of accidents involved in the meat plants. Safety gears are purchase to meet the world’s safety standards in protecting the firm’s workforce.

Improvement initiatives

Silver fern farm’s largest market comes from China direct and online purchasing (Huang, and Gale 2009, p. 402). The online buying has enabled silver fern to gather information from their buyers who give feedback by commenting on the quality of beef. Through their information system, the firm intends to improve the growing demand for high quality grass-fed red meat as well as quality aged meat. To tackle China’s market, the company, through Maori federation, is monitoring the growth of animals to meet customer’s needs.

Threat of New Entries

Previous and current impact of improvement initiatives

Previously, there has been growing concerns about food safety and security (Akintoye et al. 2003, p. 468). The improvement initiatives that were set included a partnership with New Zealand custom under NZ Secure Export Schemes. The organization facilitated Silver with enhancing supply chains security standards for overseas markets. The response was positive followed by an increase in sales due to increase confidence over the product from the organization.

Alignment of the improvement initiative with the strategic management

The management strategy of the company is to incorporate abroad customers’ voices in the firm’s business (Kline et al. 2014, p. 10). Under this strategy, customers would feel listened to, consequently feel ownership of the firm’s product; this would deepen customer relationship with the firm. Therefore, the improvement initiative provided the organization with the opportunity to win over the customers’ loyalty strategically.

Comparison of the improvement initiative

Kintyre is a meat processing industry in the same sector as Silver Fern farm in New Zealand. Silver Fern Focuses on quality improvement through their productions method and monitoring of farmer’s sheep cattle and deer, Kintyre has gone much further than that. Kintyre is focusing on improving their red meat quality by monitoring animals feed by ensuring the soil from which the pasture is grown should be as fertile as possible (Ledgard et al. 2011, p 42). This management capability of Kintyre has enabled them to cover considerable grounds on the market share although they are not as established as Silver fern farm.

Strategic options

Silver Fern’s business performance due to external and internal factors could be termed as fair. The company has strong many strong buyers which mean the bargaining power of their buyer is cut low. They are the main sponsors of their supplier as well; this advantage goes a long way in reducing their supplier bargain power (Herberg 2007, p. 2). However, some prospects are not in the company’s favor, for instance, a threat of substitution is facing the firm since chicken consumption is increasing in New Zealand.

Additionally, the quality of the firm’s product calls for better farming methods from the farmers of Maori Federation. Farmers doing well regarding their supplies are also seek better recognition and better prices. Another aspect is that the country’s income rate does not leave disposable income that is enough for their buyer to purchase premium products that generate higher yield for silver Fern Farm.

Most important factors

Through the company’s sales, the information system generates valuable information concerning the market which the management uses. From the information gathered by the system, it is evident that customer demand for quality grass-fed red meat is on the increase (Huang, and Gale 2009, p. 401). It calls for close management of the firm’s suppliers, the farmer of Maori federation. Notably, the partnership has raised some farmers’ concerns about prices and deeper involvement of the company with the farmer. It is important that the firm handle the situation, this way they will achieve both customers’ demand and solve farmers concerns.

Buyer Bargaining Power

Strategic options

In regards to farmers’ raised concerns and the new customers demand there several ways to handle the issue.

• The firm could have wards to recognize the best quality supplies from the farmer that provide grass-fed cattle, sheep, and dear. The activity would go a long way in ensuring that they have communicated their preference in term of the quality of supplies needed. The company would require monetary incentive on top of the award to compensate for the prices that farmers demand.
• The company could actively promote their farmers through publish stories on the consumer market. It would ensure that the farmer as recognized for their effort and also support the company by securing the public confidence of their quality sources (Al-Qirim 2007, p. 470). The firm would need online platforms of which they already have; therefore it would be cheap to implement in a brief time.
• Silver fern could focus on improving the regular feedback program by increasing the frequency of face to face involvement between the farmers and the cooperation. It would make the farmers feel involved with the company to a higher level. Therefore, farmers will be motivated in for more extended periods to provide the best quality due to the constant monitoring by the firm.

Best option

The best option is the first option of awards due to its ability to capture both the farmers and the new customer demand. This option, also, is aligned with the firm’s strategy that seeks to provide quality products and quality is meeting customer’s specification.

Rationale

Behind the decision are reasons such as; Silver fern largest market is from China. Recently, China has developed a new demand that was identified from the company’s information system (Huang, and Gale 2009, p. 408). The demand required natural red meat from grass-fed cattle, sheep, and dear. Coupled with the federation demands the option provided will ensure that more of grass-fed supplies will be procured and the suppliers will be awarded for such quality.

Conclusion  

 Due to Silver fern well establishment in New Zealand, the firm’s buyers and suppliers have low bargaining power. The aspect has provided the organization with the opportunity to increase its customer satisfaction level due to the steady flow of supplies. Also, as aforementioned, silver fern ability to adapt to the changing technological needs have contributed significantly to its success. However, the threat of substitute has been the firm’s most significant challenge while facing competition from poultry firms. In conclusion, this article has provided considerable information about Silver farm’s internal and external environment. The information is therefore relevant to farms that would like to analyze their internal and external surroundings.

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