Tassal Fish Farm Business Strategy

Tassal Group According to the 2014 Annual Report, Tassal recorded a decline in revenues for the 2014 fiscal year. However, it improved the net income and EPS, so the performance was not all bad. The company was able to lower its gearing ratio as well, and increased its net assets. Thus, performance was mixed, but there is still concern about the declining revenue. Opportunities Since revenues are one of the biggest problems that Tassal has, finding new revenue streams is going to be one of the key strategic focal points.

The company notes that among its challenges are to get product from Tasmania to markets, something that is difficult with fresh seafood. Processed and packaged seafood is more stable, but there are benefits to accessing distribution channels in the more populated areas of Australia. For example, the company has sought to acquire De Costi, which is a seafood company at the Sydney Fish Market (Acheson, 2015). This move would be a form of downstream vertical integration, wherein Tassal would gain access to a key distribution point in the country's biggest city.

Further to this, there is an opportunity for Tassal to sell other kinds of seafood. The company is currently a salmon specialist, and when there are supply issues with regards to that salmon, the company can find itself in a difficult position with respect to revenues. Other seafood products would be the sort of diversification that will allow Tassal to have more stable revenue streams, and may add value to the company's existing distribution channels. The company also has the opportunity to improve its margins by reducing its ecological footprint.

The fish farming sector has come under government scrutiny for the waste that it creates, and that is something that can be a challenge to companies like Tassal, who may end up footing the bill for cleanup of environmental waste that they create (Eco Daily, 2015). Lowering the potential liability of its activities is a key way to improve the net margins, allowing for profit improvement even when there is persistent erosion of revenues. It is also possible that the company can increase its production capacity. This means doing two things.

First, it needs to find new sites, demonstrate its ecological soundness and make the right applications to government. Second, it needs to find ways of selling that salmon. The company may be able to succeed by canning, creating products, freezing, or just finding ways to get fresh salmon to more markets in Australia faster. All of these approaches can work. Many people in Asia like fish, but have little exposure to salmon.

So it is entirely possible that new markets can be developed to soak up additional supply that is created. Competitors The best way to deal with competitors is to put out a better product, to have a better price and to have a better brand. Many salmon products have relatively weak brands, especially when they are sold at fish counters, where there can often be no branding at all. A response to this might be to increase the branding that Tassal has, in particular where its packaged products are concerned.

That would increase the profile of the company and allow it to charge a premium to its competitors. Moreover, the company has an opportunity to make salmon a more desirable fish than other fish, something that reflects the reality that salmon does compete with other fish types in the eyes of consumers. Borrowing Strategically, the issue of expansion is tricky, as usually that means increasing borrowing. If the company wants to expand beyond its current means, it will need to access capital markets in order to finance that expansion.

With declining sales, the timing is probably not right to tap the equity markets, but with a fairly low gearing ratio, the company can borrow in order to facilitate its expansion. This strategy would be the lowest cost of capital for the company, and it would allow for future earnings from the expansion to be used to pay down the borrowing.

Tassal meets the normal criteria for a borrower in that it has a fairly stable business, hard assets for collateral, and will have a much easier time borrowing for expansion that it would raising new capital in the equity markets. Improving Price Improving price is perhaps a bigger challenge than increasing volume. To get a better price, there are a few different strategic options. First, the company can create more value-added products, such as processed foods.

These can be sold in more countries as they are more shelf-stable, and the spices and seasonings are fairly low cost relative to the value that they bring to the finished product. As.