Analysing The Opportunities And Threats Of Lacnor Essay
To develop a SWOT analysis of the company, we need to analyse all its constituents: strengths, failings, chances, and menaces. To analyse the chances and menaces ofLacnor, we will utilize the two chief techniques: PESTEL analysis ( macro analysis ) and Porter ‘s5+1 forces ( micro analysis ) . In this subdivision, we will get down by PESTEL.Political:1 ) Political Instability between UAE and KSA:In mid August 2009, the map that is shown on UAE individuality card caused a struggle between UAE and KSA. The claim is that it includes parts of KSA ( Saudi arrests acknowledgment of UAE ID cards, 2009 ) . This created many jobs on the boundary lines of both states.
Trucks ‘ traveling between both states started to be delayed deliberately. In fact, the jobs started in June 2009 because of alterations in Saudi boundary line formalities ( Kasolowsky, 2009 ) .Approximately, 35 % of the juices sold in UAE are imported from KSA. In fact, many of Lacnor ‘s rivals are Saudi companies, such as: Rabie, Sun quick, Al Marai, Danao and others. Since most of Saudi merchandises are being imported through trucks, the handiness of Lacnor ‘s viing merchandises in the market is affected.
Therefore, this job really represents an chance for Lacnor.2 ) Government Control Over Monetary values:The monetary values in the juices and dairy merchandises industry is being exposed to command by UAE authorities. Although there is no exact jurisprudence written, UAE authorities frequently prohibits additions in monetary values of juices and dairy merchandises, unless the addition in monetary value is justifiable, such as a alteration in the merchandise size ( Dairy and Juice Producers ‘ Group non to raise monetary values, 2007 ) . This is justified by the authorities ‘s involvement in guaranting that consumers are non affected by any market monetary value uses for indispensable goods.
Furthermore, because most of those merchandises are sold in authorities cooperatives, the authorities has a immense impact on cut downing monetary values of those merchandises at specific times of the twelvemonth, such as what happened in Ramadan 2009 ( Ammari, 2009 ) . This governmental control, by and large, represents a menace to Lacnor and the full industry.Economic:1 ) Economic Condition:The planetary fiscal crisis of 2008 had affected persons and companies all over the universe. Because of the fiscal crisis, the income degree of persons has greatly decreased, which accordingly led to decrease in demands for many merchandises. Yet, the juices and dairy industry did n’t acquire affected by the crisis. In 2009, the dairy industry in UAE has been spread outing at a rate of 10 % despite the planetary economic lag ( Mashni, 2009 ) . This is chiefly because dairy merchandises are indispensable goods in consumers ‘ day-to-day lives.
Therefore, the economic crisis represents in fact an chance for Lacnor and other companies in the industry where many consumers have moved to purchase those merchandises that are comparatively cheap and run into their demands.2 ) Unemployment Degree:The UAE unemployment rate has increased by 3.45 % in 2007, and 4 % in 2008, and is expected to somewhat increase farther by the terminal of 2009 ( Kawach, 2009 ) .
The addition in unemployment rate, every bit good as, the really recent fiscal jobs in Dubai, which has been referred to as “ Dubai Financial Crisis, ” represent a menace for Lacnor in impacting its ability to pull foreign labour force to the market and its ability to maintain their current employees.Sociable:1 ) Lifestyle Changes:There have been many alterations in the life styles of people in the UAE. Among those alterations is the general motion by people toward less healthy life styles. This is apparent in the addition of diabetes and fleshiness rate in UAE. Peoples have been traveling toward fast-food and less healthy picks of nutrient and drinks.
In fact, many exiles claim that life in this state has affected their life styles by forcing them toward less healthy life styles ( McMeans & A ; Zaman,2009 ) . Such lifestyle alterations represent a menace for Lacnor where the company merchandises do n’t run into the new life styles of many persons.2 ) Increasing Diversity of Workforce:UAE is a multicultural environment where occupants come from all over the universe. There is an addition in cultural diverseness at the workplace that made it easier to understand and pass on with aliens. This addition in cultural diverseness represents an chance for Lacnor where they can pull better or cheaper labour from all over the universe.Technological:1 ) New Technologies ( Equipments ) :Harmonizing to Mehmet Gumus, Assistant Professor of Operations Management at theAmerican University of Sharjah, the industry in which Lacnor operates, the juices and dairy merchandises industry, is attractive in the sense that there are ever new technological inventions in the equipments used for fabrication merchandises.
The rate at which new equipments are being innovated is really high. Some of those alterations are complete new inventions such as equipments that are used to observe faulty merchandises utilizing advanced statistical techniques such as Six Sigma technique. Other alterations, nevertheless, are incremental alterations, such as equipments that increase the volume of production through increasing the velocity of these equipments. In entire, those new equipments represent chances for Lacnor.2 ) Invention Opportunities:There are many chances for inventions in the juices and dairy merchandises industry.
Through R & A ; D and new engineerings, companies runing in the industry have chances to bring forth different mixtures of juices and dairy merchandises by adding different ingredients that can bring forth new spirits. Although these inventions are by and large incremental instead than extremist, they provide chances for Lacnor.Ethical:All over the UAE, and chiefly in Dubai, there has been late a immense force per unit area by society toward recycling waste produced by companies. This force per unit area was due to the addition in the sum of waste produced in the UAE each twelvemonth. This sum has been represented in the article “ Waste: A existent challenge for Dubai ” by the undermentioned statement: “ Imagine a edifice 270m high and with the same country as a football field.
Now imagine 10 of them, all lined up, one after another. This is the sum of waste Dubai produces every twelvemonth. ” ( Stensgaard, 2006 ) . Recycling runs and undertakings are increasing and the society is seting high force per unit area on companies to recycle their waste. Those ethical force per unit areas can be considered as chances for the companies to market themselves through concentrating on their parts in corporate societal duty, they are by and large considered to be menaces that put force per unit areas on companies to lend more to societal activities that can increase their costs. For Lacnor specifically, this is considered to be a menace with the immense sum of waste the company has from their productions.
Legal:1 ) Employment Torah:Although there are many Torahs in UAE that classify the conditions for employment, there are no specific Torahs for working in the juices and dairy industry. For illustration, unlike the specific conditions related to working in health care, existent estate, or scrutinizing companies, ordinances sing who is able to work in the production of those merchandises are by and large much more flexible. This gives the industry the chance to pull better or cheaper labour.2 ) Safety Regulations:Safety ordinances at the workplace are increasing in the UAE. Articles 91 to 101 ( inclusive ) from the Labor Law in the UAE specify certain commissariats sing employee safety and wellness attention at the workplace. For fabricating companies chiefly, Torahs sing supplying employees with suited agencies of protections against hurts, occupational diseases, and jeopardies which may ensue from the usage of machinery and other equipment in the workplace are being purely imposed by authoritiess. Misdemeanors of those ordinances cause fabricating companiesa batch of mulcts and might ensue in legal actions taken against them. Those ordinances represent a menace to Lacnor as a fabrication company because they have to purely follow them.
In analysing the external environment ( i.e. chances and menaces ) , it is non adequate to look merely at the macro social factors that affect the company. The chances and menaces for the company root besides from its industry. Therefore, it is of import to utilize a micro degree of analysis by analysing the undertaking environment. This is done utilizing Porter ‘s 5+1 Competitive Forces Model which analyzes the attraction of an industry by measuring different factors, which are: themenace of new entrants, the competition degree among existing houses, the force per unit area from replacements, the bargaining power of purchasers, the bargaining power of providers, and the comparative power of other stakeholders.Porter ‘s 6 competitory forces.
In analysing the external environment ( i.e. chances and menaces ) , it is non adequate to look merely at the macro social factors that affect the company. The chances and menaces for the company root besides from its industry. Therefore, it is of import to utilize a micro degree of analysis by analysing the undertaking environment.
This is done utilizing Porter ‘s 5+1 Competitive Forces Model which analyzes the attraction of an industry by measuring different factors, which are: the menace of new entrants, the competition degree among existing houses, the force per unit area from replacements, the bargaining power of purchasers, the bargaining power of providers, and the comparative power of other stakeholders.Menace of New Entry:When analyzing the menace of new entry, there are many factors that we should look at earlier delegating a general estimation for the menace degree. One of the factors to see is the industry growing rate. The juices and dairy merchandises industry growing rate in 2009 has been estimated by the Ministry of Economic Development to be 10 % ( Mashni, 2009 ) . In visible radiation of the planetary fiscal crisis, this is considered to be a high growing rate.
The addition in the industry growing rate consequences in increasing the menace of new entrants. Another factor that should be studiedis the net income border of cardinal participants in the industry. By analyzing the fiscal statements, we found that the net income border of Lacnor and its rivals is considered to be high and, more or less, invariable in recent old ages. This stableness of high net income borders, even in the worst economic conditions, consequences in pulling new campaigners to the industry, and therefore, it consequences in increasing the menace of new entrants.
There are many factors in which one can analyze the tallness of entry barriers in the industry. One of those barriers is authorities control. As mentioned earlier, theUAE authorities has tight control over the monetary values in the industry ; we believe that this is considered to be a barrier for new entrants and therefore, it can ensue in diminishing the menace of new entrants.
Another factor to be considered in analyzing entry barriers is clients ‘ shift costs.By and large talking, there are few, if any, shift costs that are associated with juices and dairy merchandises ; this makes it easy for clients to exchange to new companies which can ensue in increasing the menace of new entrants. Another barrier to be studied is the sum of capital demands. Harmonizing to Linda Angel, Assistant Professor of Operations Management at theAmerican University of Sharjah, there are many capital demands needed to hold an effectual and efficient production in the juices and dairy merchandises industry. Those investings in demands represent jobs for new entrants which ensuing in diminishing the menace of new entrants. The last factor to see in analyzing entry barriers is the expected degree of economic systems of graduated table by new entrants. The bulk of the participants in the juices and dairy merchandises industry in the UAE have been well-established for many old ages. Most of them have extended cognition in what they are making and hold learnt how to cut down production costs throughout the old ages.
As mentioned earlier, because consumers are really sensitive to monetary value alterations of the industry merchandises, those companies have been concentrating on analyzing ways to cut down production costs in order to maintain up with high net income borders. By making so, many companies have achieved high degrees of economic systems of graduated table. Therefore, new entrants are expected to accomplish economic systems of scale really rapidly in order to maintain up with the competition.
This factor consequences in diminishing the menace of new entrants. By looking at all factors we have considered, we can see that there are, more or less, similar Numberss of factors that result in increasing and diminishing the menace of new entrants. That being said, we can reason that the menace of new entrants in the juices and dairy merchandises industry is moderate. In fact, there were no new entrants in the industry in recent old ages( 2006-2009 ) .Rivalry among Existing Firms:As with analyzing the menace of new entry, there are many factors to be considered when analysing the degree of competition among existing houses. The first factor to see is the figure of rivals in the industry. For Lacnor, there are many local and foreign rivals in theindustry, such as: Rabie, Sun quick, Al Marai, Danao, Capri Sun, KDD, Rani, Masafi, Safa, AlAin, and many others.
This high figure of rivals consequences in increasing the degree of competition among existing houses. Another factor to be considered in analysing degree of competition is the merchandise features. In general, the merchandises offered by Lacnor and other companies in the industry are, more or less, standard. There are of class many differences in gustatory sensation and quality ; yet, those differences do n’t measure up the company merchandises to be considered as alone merchandises.The standard nature of the merchandises offered consequences in increasing the competition degree among existing houses.
Another factor that should be considered is the tallness of issue barriers. Lacnor and other companies runing in the industry have many types of equipment that are specific to their production procedures and are difficult to be used in other types of productions. This consequences in increasing the tallness O issue barriers which leads to increasing the competition degree among existing houses. Finally, the fabrication capacity degree affects the competitory degree in the industry. Mr.Mohammed Al Atrash, the procurance director of Lacnor and a member on the Board of Directors, stated that a job for Lacnor and many other rivals in the industry is the capriciousness of the demand which leads by and large to high degree of productions that exceed the market demand.
Companies would follow competitory schemes to do certain that these merchandises are being sold which would increase the rivalry degree among existing houses. All in all, we can state that the rivalry degree among existing houses in the industry is really high.Pressure of Substitutes:Harmonizing to Dr. Virginia Bodolica, replacements are merchandises or services that have different seeable or unseeable features and fulfill the same exact demand of client.
Those replacements can come from the same or different industries. Equally simplified as it seems, clients buy juices and dairy merchandises to fulfill their demands for imbibing. In order to measure the force per unit area of replacements, it is of import to gauge the handiness of these replacements. Since consumers need is imbibing, there are many available replacements for juices and dairy merchandises, such as: H2O, soft drinks, energy drinks, java, tea and others.
Those merchandises are available all over the topographic points in UAE which consequences in increasing the force per unit area of replacements. Another factor to see when analyzing the force per unit area of replacements is clients ‘ shift costs. As mentioned earlier, purchasers ‘ shift costs for juices and dairy merchandises are by and large considered to be low which consequences in increasing the force per unit area of replacements. Finally, it is of import to gauge monetary value and quality degrees of replacements. The monetary values of the replacements mentioned are considered to be fluctuating around the monetary values of juices and dairy merchandises. Some of the replacements, such as H2O, are cheaper, some of them, such as soft drinks, are of similar monetary values, and others, such as energy drinks, are more expensive. As for quality, within each class of replacements, merchandises have different quality degrees.
This is being said, it is difficult to gauge the exact impact of monetary value and quality degrees of replacements without holding related informations sing to analyse which we lack. Overall, nevertheless, we can reason that the force per unit area of replacements is comparatively high.
Dickering Power of Buyers:There are many factors that should be analyzed when gauging the bargaining power of purchasers.
One of those factors is the figure of purchasers purchasing the company ‘s merchandise. Although the up-level shops buy high proportions of Lacnor merchandises, there are many of them which consequences in diminishing the bargaining power of purchasers. Another factor to be studied is the ability to incorporate backward by the purchasers.
Although many of up-level shops, such as Carrefour, Spinneys and others produce their ain fresh juices, it is by and large difficult for them to incorporate backward and bring forth UHT long-life juices and dairy merchandises because of the equipments needed every bit good as the outlook to accomplish economic systems of graduated tables rapidly, which is difficult to be done with their focal point on administering many other different merchandises. This deficiency of ability to incorporate backward consequences in diminishing the bargaining power of purchasers. In analyzing purchasers ‘ dickering power, we would unite two related factors that are of import in the analysis, which are: the being of alternate providers and the features of the supplied merchandise. As mentioned earlier, there are many local and foreign juices companies that can provide the purchasers with similar merchandises. Although there are little differences in the merchandises offered, they by and large tend to be standard merchandises. Both factors combined together consequence in increasing the bargaining power of purchasers. Finally, it is of import to analyse if purchasers have complete information sing the marketer ‘s merchandise.
Harmonizing to Mr. Samir Naoura, covering with many companies had made it easier for up-level shops to hold entree to information sing the production costs of companies in the industry, which consequences in increasing the bargaining power of purchasers. In general, the bargaining power of purchasers in the industry is moderate.Dickering Power of Suppliers:The last component from Porter ‘s original five forces theoretical account is to analyse the bargaining power of providers. There are many factors to be considered in the analysis, one of which is to see the importance of the provider ‘s input to the purchaser ‘s concern. It goes without stating that the natural stuff such as: fruits, milks, H2O and others are of important importance to the production procedure of Lacnor and other companies in the industry.
Without those natural stuffs, there will non be any production. This consequences in increasing the bargaining power of providers. Another factor to be studied is the ability to incorporate forward by the providers.
Unlike distributers, who lack the ability to incorporate backward and bring forth the merchandises, providers of fruits and milks are by and large more capable of bring forthing juices and dairy merchandises through forward integrating. This is because most of those providers specialize in acquiring natural stuff needed for specific merchandise lines, which makes it easier for them to concentrate on the production of those merchandises. In fact, many of Lacnor ‘s providers in Indonesia and New Zealand are besides manufacturer of UHT juices and dairy merchandises in their place states. This consequences in increasing the bargaining power of providers. In analyzing provider ‘ dickering power, one of the factors to be considered is the features of the supplied merchandise. Again, although there are little differences in the merchandises offered, they by and large tend to be standard merchandises for which natural stuff can be found in many topographic points.
This by and large consequences in diminishing the bargaining power of providers. However, it is of import to look at the figure of providers of natural stuffs in the industry. There are many local and foreign providers that can provide the companies with the natural stuff needed at different quality and monetary value degrees ; nevertheless, due to endure conditions in the part, many of the natural stuffs needed are being imported from foreign providers.
The importance of holding available natural stuffs throughout the twelvemonth with high quality degrees and low transit costs by and large reduces the figure of available providers to Lacnor and other companies in the industry and consequences in increasing the bargaining power of purchasers. Overall, we can state that the bargaining power of providers in the industry is really high.Relative Power of Other Stakeholders:The original Porter ‘s Five Forces Model has been modified to include the comparative power of other stakeholders, such as authorities, creditors, international stakeholders, and complementary merchandises on the industry. We have examined the impact of authorities control on the industry when analysing the political subdivision of PESTEL.
In this portion, our focal point is on complementary merchandises. “ Complementor is a company or an industry whose merchandise works good with a house ‘s merchandise and without which the merchandise would lose much of its value ” ( Bodolica, 2009 ) . Merchandises such as tea and java are considered complementary merchandises for milk. Lacnor besides has a tomato paste merchandise line. Tomato paste is an indispensable ingredient in the kitchen in this portion of the universe and is used in most traditional nutrients. Besides, it is used in by many eating houses in the production of soups, frets, pastas, and pizzas. Shifts in demand for those merchandises affect the demand degree of tomato paste.Mission vision ends and aims,An indispensable constituent of any scheme is to place its mission, vision, ends andaims.
We obtained the company ‘s mission and vision statements from the company ‘sofficial web site ( www.Lacnoruae.com ) , whereas its ends and aims were obtained from thecompany manual. In this subdivision, we will foreground those constituents and analyse them briefly.Mission statement:“ Our mission is to supply a healthy life manner to kids, young person & A ; grownups through a broadscope of premium quality merchandises. We commit to developing our people and geting the latestengineering in order to make a criterion of excellence in our organisation. ”Mission Statement Analysis:A successful mission statement should reply the undermentioned three inquiries: “ Who isbeing satisfied? ” “ What is being satisfied? ” and “ How are needs being satisfied? ” In analysingthe mission statement of Lacnor, we find that the reply to the “ Who ” inquiry is obvious andappears in the statement: “ kids, young person and grownups. ” On the other manus, the reply to the“ What ” inquiry is more complex.
Alternatively of stipulating the merchandise explicitly by saying that thecompany offers juices, drinks or other footings that specify the exact merchandise, the company choosesto advert “ healthy life manner ” as the merchandise offered. Although we believe that it is a smart thoughtto depict the merchandise as being “ healthy, ” particularly that it matches the company ‘s slogan “ LiveLife, ” it is of import to supply an thought of the exact merchandise offered to avoid confusion. Finally,the reply to the “ How ” inquiry appears chiefly in the statement “ through a broad scope ofpremium quality merchandises. ” “ Developing our people ” and “ Geting the latest engineering ” canbesides be considered as replies to the “ How ” inquiry.
Vision Statement:“ Our vision is to Strengthen and Expand our National Leadership to the Regional andInternational Markets. ”Vision Statement Analysis:A successful vision statement should include three constituents: place, market, andmerchandise. In analysing the vision statement of Lacnor, we find the “ Leadership ” place. Inanalysing the market, we can see the company ‘s vision in the “ Regional and InternationalMarket ” . The company fails to include the merchandise in the vision statement ; yet, the statement “ ToExpand our National Leadership ” implies the merchandise is the same as the current one.Goals & A ; Aims:i‚·iˆ Producing the best quality juices and healthy dairy merchandises.i‚·iˆ Reducing the sum of spirits, unreal ingredients and sugars in juices.i‚·iˆ Investing in R & A ; D and consumer research for new inventions.i‚·iˆ Maintaining changeless net income border in the short-run.i‚·iˆ Constructing the first works in Oman in 2010.i‚·iˆ Achieving workplace diverseness through engaging employees from different backgrounds.i‚·iˆ Concentrating on Corporate Social Responsibility by holding at least two contributionruns yearly.