In UK the dairy industry is growing to a greater extent as they are having expertise for processing and distributing with the dairy products. They are known for there freshly pasteurised milk which is healthy for the humans (Gould, 2012). Thus, the industry highly focuses on the developing with high standards of production and coming up with new products to be served. Further, in this report detailed analysis of dairy industry is been done which assist includes the determination of competitive challenges and the opportunities which are faced by the industry.
It is an efficient model which is highly been used to evaluate the external factors which have a great influence on the operations of the dairy industry (Industry Overview. 2015). Further, this industry is a sub-set of agricultural industry which means it involves the activities such as production, sale of milk products such as cheese, milk, cream, cheese etc. which provides with high satisfaction level to the customers. Further, there are number of factors which affects the dairy industry. Thus, following factors are as follows:
- Political- The policies and regulations determined by the government which are related to the dairy products has a great influencer on the decisions made by the farmers for keeping there livestock and producing with the products. If the policies are in favour of promoting beef than the farmer will slaughter the cow rather than keeping them for milk (Ismail and Nielsen, 2010).
- Economic- The most important element which highly affects the dairy industry is the purchasing power of the people in the economy. It is been seen that milk is an considered as a basic thing which is purchased by every individual irrespective of there purchasing power. Thus, it can be concluded that the sales of this would not hit if the income is low.
- Sociological- In the present scenario, people are shifting towards the vegan lifestyle which have a negative effects on the sales of the dairy products. Moreover, people are concerned about there weight so they are avoiding the products as they are having greater amount of fat components in them. Thus, the industry has to come up with low fat products so as to retain there sales in the market.
- Technological- This is an important factor which has helped the dairy manufacturers to market the products to the customers which assist them to increase with there sales volume. Moreover, in the recent time, the farmers are practising with different technological equipments which ultimately increase the cost price of the products.
- Legal- In this the manufacturers are obliged to follow all the laws which are been determined for the production as well marketing the products in the market. Further, it is important to determine the ingredients and the expiry date of the products so that no one is harmed by it.
- Environmental- It is been clear that the whole dairy industry is dependent on health and availability of livestock (Law, Harvey and Reay, 2013). Thus, it is important for the farmers to take several measures to keep there livestock away from diseases so that it do not effect there quality products. Moreover, the products must be stored in a proper manner so that they do not loose there effectiveness.
Porter's five forces
It is an important model which is used to analyse the different parameters of the industry which assist in developing the strategy for the business. Thus, under this there are mainly five factors which which affects the dairy industry. The following are been determined as under:
- Threat of new entrants- In this industry it requires with high amount of capital for making the investments. Thus, it is not possible for people to start with this and attain the economies of scale. So there low degree of new entrants in the industry.
- Threat of substitutes- It is having a medium degree of substitutes products in the industry. As in the market there are large number of other substitutes for the milk, thus it is important to focus on other dairy products which will help to retain the competitiveness in the industry (Papademas and Bintsis, 2010). This will also result in increasing the profitability of the industry. Moreover, the cost price of the products also vary from time to time and as per the brand. This increases the degree to substituting the products with others.
- Bargaining power of buyer- In this industry, there are large number of firms which are serving with the similar products with different brands. Thus, it is crucial for the organization to develop high quality and unique products to gather the customers. Further, it is clear that the bargaining power of customers is very high as they are having number of options available with them.
- Bargaining power of suppliers- As in this industry the suppliers are mainly the farmer which are serving with the milk to the companies for the final products. Thus, the bargaining power is low in this case (Robinson, 2012).
- Rivalry among competitors- In the industry there are large number of competitors which includes big companies as well as the local people which are serving with the same products to the customers. Thus, for this industry there is high degree of competition level in the market. Thus, it become important to maintain the quality of the products so as to provide the customers with efficient products which satisfy them to a greater extent.
From the above report it can be concluded that the dairy industry is growing with the time but the needs and preferences of the people are changing on the regular basis. Thus, it becomes important for the organizations to evaluate there demands and develop with the products accordingly. Further, the micro as well as macro environmental factors have a great impact on the operations and sales of the dairy