Parmalat Australia Ltd.'s distribution challenges and strategic improvements

¶ … Parmalat Australia Ltd. company (dairy product) Website: http://www.pauls..au / 1. Executive Summary: Needs outline: Brief Background issue general ? Main challenge o What problem gap existing current market o What proposal? (argument/) ? What expected result outcome? (How resolve challenge?) 2.

Parmalat Australia Ltd.

Parmalat Australia Ltd. is an important presence within the global dairy industry. The company -- like any other economic institution -- encounters both challenges as well as opportunities from both internal as well as external environments.

An important shortage faced by Parmalat is given by a combination of factors, namely international policies, global operations and distribution of perishable products. All these translate into a problem with distribution, which is counter-argued by a proposition of improvement. The suggestions made are expected to reduce the times of distribution and to decrease the costs encountered with products lost through demise.

2. The organisation

Parmalat Australia Ltd. is one of the leading dairy companies at an international level. Throughout its existence, it has managed to create and consolidate an important competitive position. Yet, the company struggles with internal weaknesses and external threats. The best means to assessing the company is represented by the completion of a SWOT analysis, succinctly presented throughout the table below:

Internal strengths

Internal weaknesses

- Parmalat is a global leader of the dairy industry

- It has a wide market presence on all continents, ensuring as such an increased access to a large customer base

- Parmalat possesses a strong brand and this helps it retain customer trust, improve its competitive position and support its sustained success within the international marketplace

- In July 2011, Parmalat became part of Lactis Group (Website of Parmalat Australia Ltd., 2012), strategic move which reduces its control, flexibility and adaptability to change

- Parmalat operates with highly perishable goods, meaning that it is continually prone to losses due to the alteration of the products

- Due to the nature of products sold, the company also faces challenges with logistics and distribution (Indian Dairy)

External opportunities

External threats

- There is a social trend towards the consumption of healthy products, and dairy represent a vast proportion of a healthy diet

- The company is still presented with the possibility to even further enhance its global presence and to penetrate the markets at deeper levels

- Parmalat is perceived as a high-end category of dairy products, and the access to the items is restricted by the internationalized economic crisis that reduces the spending budgets of the population

- The prices of the dairy industry are sensitive to international policies, over which the producer has no control, but which influence its operations and results (College of Agricultural Science)

Based on the analysis so far conducted, it becomes obvious that Parmalat is a strong company, whose competitive position has even further increased through its acquisition by the Lactis Group. The company continues to however face challenges from both internal and external dimensions, and the most crucial aspects are represented by the issues raised by distribution. Given the global nature of its operations, the distribution of the dairy products is sensitive to international policies, as well as contracts with various providers.

4. Distribution

As it has already been mentioned, Parmalat is subjected to risks associated with international policies, global operations and the supply of perishable products. This virtually means that it has to improve the quality of its distribution systems. The distribution process is essential to overall company success as it represents the process that ensures that the finite products reach the customers and are as such transformed into financial results (Netessine and Tang, 2009).

In such a setting then, the following are proposed to improving the distribution strategy at Parmalat:

The usage of as many direct distribution channels as possible

In international contracts, where direct distribution is not feasible, it is necessary to carefully select the distribution partners, through fierce selection based on numerous criteria (previous expertise of the partner, responsibilities assumed, contractual terms etc.)

Selective distribution to places where there is need for the products and increased customer accessibility to the products.

In a simple presentation, the distribution scheme would be as follows:

References:

Netessine, S., Tang, C.S., 2009, Consumer-driven demand and operations management models: a systematic study of information-technology-enabled sales mechanisms, Vol. 131 of International Series in Operations Research and Management Science, Springer

Strategic planning with SWOT analysis, College of Agricultural Sciences, http://www.das.psu.edu/research-extension/dairy/teams/planning last accessed on January 4, 2012

SWOT analysis: Indian dairy, Indian Dairy, http://www.indiadairy.com/ind_swot.html last accessed on January 4, 2012

2012, Targeting strategy, Business Dictionary, http://www.businessdictionary.com/definition/targeting-strategy.html last accessed on January 4, 2012

2012, Global website of Parmalat, http://www.parmalat.com/en / last accessed on January 4, 2012