Porters five force’s model of Milco Dairy
Milco was incorporated in 1973, and is part of the National Food Products Company, which has its headquarters in Abu Dhabi, United Arab Emirates. In the UAE, Milco is one of the largest dairy companies. The company utilizes a vertically integrated business model in the manufacturing and distribution operations which allows the company to deliver fresh juice and dairy products to its customers across the UAE. The company pioneered the application of the Fresh-Check Indicator on its products.
The technology of Fresh-Check is very unique in that, it measures the lifep of an item by recording actual time and temperature; this allows the freshness of the item to be calculated by integrating the ageing process of a product as a result of thermal shocks. The company offers a variety of products to its customers; these include Fresh Juice, Fruited Yoghurt, fresh Yoghurt, and Fresh Milk. Currently the company has introduced other fresh flavored product, Captain Mimo to its fresh milk range of products. In becoming the largest dairy company in the UAE, Milco’s path of success has not been easy.
This article analysis Milco’s competitive strategy using Porter’s five force model. In understanding each of these forces, Milco will have the necessary insights that can enable the company to draft the suitable strategies in order to be successful in its industry. Force 1: The Degree of Rivalry The intensity of rivalry is arguably the most palpable of the five forces in a given industry. According to Porter, this force determines the extent to which value shaped by an industry will be distributed in form of stiff competition.
This force is located at the centre of the framework. Milco as a dairy company has been able to add value successfully to its product which has helped the company to be a household name in the UAE market. In the Yoghurt category, is the most challenging category since it involves a couple of dominating players (both local and international); these include Al Ain Dairy, Al Rawabi and Oman dairy among others. Having these players in the market increases rivalry which means that for Milco to increase her competiveness, focus on freshness and naturalness is paramount.
The company current efforts to add more value on its products through repackaging is quite commendable. Milco has revisited its strategies; this has helped Milco in developing products that can satisfy customer needs. The dairy industry is one of those industries that are faced with threats of substitute products; a company like Al Rawabi Dairy is able to appeal to customers by using the freshness concept which increases consumer substitutability in this market. Moreover other more companies including are able to offer products such as Yoghurt, hence their products easily rival those of Milco dairy.
Another aspect of rivalry in the dairy industry is associated with power of the existing suppliers and buyers. Maico has an experienced Quality Control department whose function is to oversee the production process and to ascertain that the new products are of the highest quality standards. The company value addition chain system is benchmarked on ISO and HACCP standards. By guaranteeing quality to its customers, the company can develop even more customer loyalty which may lower rivalry intensity in the industry (Milco 2010).