Al Ain Dairy Companys Quality of Products - Case Study Example

Part 2 - Literature Review Assignment - Al Ain Dairy Company’s Quality of Products

Introduction

Al Ain Dairy is the main producer of dairy products in the United Arab Emirates (UAE). Founded in 1981, the company is involved in the manufacturing of dry, evaporated, and condensed dairy products. The company’s vision is to be the recognized and preferred choice of dairy products in most, if not all, of the households in the Emirates (Al Ain Home Page, n.d.). On the other hand, the company’s mission is to maintain a substantial level of traditional excellence in customer service while leading the dairy industry in driving innovation. Besides, the company also aims at offering consumers a variety of safe and high-quality products at fair prices. In pursuit of enhancing innovation within the dairy industry, the company has currently ventured into the production of quality camel milk powder products and ice cream, which are available on the mass market (Astley, 2015). As such, the Al Ain Dairy Company produces a variety of high-quality level products for its consumers which can be revealed through an extensive literature review.

Background to the Study

The company’s success in delivering quality dairy products is attributed to its effective management, sufficient, and competent employees and its diversification across the globe. Relatively, the company employs a total of 1,700 local employees and it has extended its operations across 15 nations (Al Ain Home Page, n.d.). To survive the stiff competition from various companies, the Al Ain Company ensures a top-notch quality of its products with competence in serving its customers. Since its establishment under the directive of the late Sheikh Zayed Bin Sultan Al Nayhan in the year 1981, the company has overcome the several challenges and now it is producing large amounts of milk and other dairy products despite operating in the desert (Astley, 2015). As a result, the company manufactures a wide range of cow and camel quality dairy products. It is through the maintenance of quality products that the company has been able to scale the greater heights of milk production against a myriad of challenges. At the core of its operations, the company maintains customer satisfaction, innovation, safety and most importantly quality which are also reflected in its investments in infrastructure. Indeed, since its establishment, quality has been the key element in the company’s production process.

Statement of the Research Question

Given the success of the Al Ain Company in producing quality level of products, the research examines the quality level of the products it provides for its customers. The study question is, therefore: What is the quality level of products provided by Al Ain Dairy Company for customers and how has it managed to maintain it?

Scope of the Issue

This study evaluates how the company operates and its success within a desert where dairy farming is associated with a low production. Also, how the company has effectively managed to maintain the quality of its products since its establishment.

Significance of the Study

The study is crucial in determining the importance of promoting quality in production while meeting consumer demands. Also, it promotes a clear understanding of the effective managerial measures in increasing output volumes while maintaining quality.

Literature Review

Al-Marai’s Market Penetration

With a focus on the protection of its position and enhancing further growth as a market leader in dairy products, the Al-Marai Company has adopted various market penetration strategies. According to Sadi and Henderson, (2007), one of these strategies is the heavy discounting aimed at subduing competition while designing versions of the same items for diverse market segments. The authors aim at concentrating on the relevant management responses regarding marketing in their article titled, ‘In search of greener pastures.’ Also, the article provides a sturdy basis for the evaluation of the actual policies, future prospects, and possible alternatives. The main hypothesis promoted by these authors in their research is investigating the functioning of a dairy food business while narrowing the extensive literature through focusing on the largest company in Saudi Arabia. Following their research, the authors found out that even though various dairy food companies in Saudi Arabia have adopted varied strategies for competition, the Al-Marai applies the approach of market penetration to overcome competition. The authors did not recommend any solutions but instead, concluded that to maintain its current position, the company must surmount various obstacles such as the shifting government stance (Sadi & Henderson, 2007). In this case, the article will be useful in my research by providing adequate knowledge on the competitive strategies of the company and the current market standards, which will play a role in evaluating the quality of the products.

Since its inception, the company has significantly developed its operations. According to Strategic Direction, (n.d.), the company provides half of Saudi Arabia’s fresh milk which adds to 240 million liters per annum. The study titled, ‘Al-Marai and the Saudi Arabia Food Industry,’ is a review of the article written by Sadi and Henderson titled, ‘In search for greener pastures.’ Since the article does not offer solutions to the identified problems, this study uses the information gathered to analyze the company for future development. The study determines the inception and development of the Al-Marai Company in reference to Sadi and Henderson’s article. The findings derived from this article stipulate that even though Sadi and Henderson provide information on the company while providing a snapshot of its existence and a context for the prevalent challenges, it does not offer solutions to these issues despite the fact that this is not their intention. Moreover, the study concludes that the authors attempt to globalize, modernize, and survive in the competitive market thereby identifying strategies that have to be adopted by the Al Ain Company to maintain and increase its domination in the industry (Strategic Direction, n.d.). Hence, this study facilitates my research providing a substantial background on the company’s market distribution, sector competition, and the relevant goals and challenges in delivering quality products.

Dairy Farming in Ethiopia

In studying the impact on dairy products’ yield, the factors influencing dairy technology adoption have to be considered. Mekonnen, Dehninet, and Kelay, (2009), conducted a study in Ethiopia to determine the farming system and the impact on milk yield. The article titled, ‘Dairy technology adoption in smallholder farms in Dejen, Ethiopia,’ aims at determining the type of dairy farming in Ethiopia and the technologies used. The authors conducted a research that is based on determining the level of technological adoption in the smallholder farms of Ethiopia. In turn, these authors found that the main feed sources in this region are grazing and crop residues. Also, the population of livestock per household averaged at 11.3 cattle and animals. Moreover, they determined that men were responsible for purchasing and selling livestock while women clean the barn while making the dairy products tasks. It was also found out that the families with more resources at their disposal increased the likelihood of investing in new technologies. These authors concluded that there is an unsatisfactory level of technology adoption by the smallholder farmers which requires the involvement of investors to facilitate milk production in the region (Mekonnen, Dehninet and Kelay, 2009). As such, through this study, my research can compare the difference between large-scale farmers and smallholder farmers and how technology influences the quality of output.

The Food Sector

Another research provides a comprehensive report on the growth aspects of the food sector. According to Rafique, (2010), high growth rates, strong levels of GDP, improvements in education, and a young population among other factors influence a positive growth trend in the food sector. The research carried out on 14th April 2010 and titled, ‘Growth aspects of food sector bright: Al Rajhi study,’ aims at determining the market capitalization of the food sector. Relatively, the hypothesis of this study is structured around the in-depth analysis of the valuations for the top players in the food industry while determining its projections and performance. As a result of this research, the author found that Almarai and Savola are the leading companies in the food sector accounting for 79 percent of the aggregate market capitalization of Saudi Arabia. It was also asserted that smaller players in the industry will remain under pressure as mergers are the chief mode of growth for the big players. In his report, the author concluded that the commodity prices are expected to rise, which will be associated with a growth in revenue of products such as sugar (Rafique, 2010). Thus, this report will facilitate my research by assessing the current food industry to understand how players realize quality in their production processes.

Chinese Consumption of Dairy Products

China is one of the countries that is characterized by a rapid economic growth, which implicates significant changes in the food consumption patterns. A research conducted by Wang, Parsons and Zhang, (2010), shows that the increased market accessibility and income in China are revolutionizing their food consumption patterns which promotes high-valued food products. Under the title, ‘China’s dairy market,’ the article’s main objective is to examine the consumer demand for the main dairy products such as milk and butter while reviewing the regional disparities of the Chinese market. Also, the authors analyze the trends of the dairy products’ consumption and imports in the Chinese market. Through the research, the authors found out that China’s dairy market has significantly expanded. Nevertheless, there are some disparities regarding income groups and geographical regions. Also, China’s imports are projected to grow thereby providing a substantial market for exporters such as the U.S. These authors concluded that China is likely to become a major importer for milk powder as their major dairy product while providing investment opportunities for the nations exporting similar products (Wang, Parsons and Zhang, 2010). Indeed, the article will be useful in my research by improving the knowledge on how quality impacts the exporting and importing of dairy products with a focus on China.

The Dairy Industry

The global dairy industry consists of a wide range of countries which are characterized by their unique consumer markets and production practices. According to Douphrate et al., (2013), the average number of cows at a global rate accounts to 1-2 cows per farm. In addition, the more a farm transitions to market production, the labor force increases as well as the herd size. Titled, ‘The dairy industry,’ the article focuses on determining the trends, characteristics, and production practices of the dairy industry around the world. The authors determine the importance of dairy products as an agricultural commodity and its development through new technology such as the adoption of milk parlors and machinery for producing cheese and butter. It was found out that the international producers are faced with new setbacks regarding safety measures in the working places and food security. Furthermore, the authors determined that a focus on the quality of dairy products has been spurred by the increased competition in the production industry. In addition, they recommended that more research identify the occupational risk factors associated with sanitation-associated illnesses while developing cost-effective measures to curb such occurrences (Douphrate et al., 2013). In this regard, the article facilitates my research by providing sufficient knowledge on the safety measures that ensure production of quality dairy products as well as how competition impacts quality.

India’s Milk Production

Over the years, milk has been recognized as a nutritious food with high levels of proteins. According to Rao and Reddy, (2014), cow and buffalo milk constitute 3.2% and 4.3% of protein respectively. In their article titled, ‘An overview of the dairy industry in India,’ the authors aim at determining the level of milk production in India and evaluating its impact on the national economy. The authors dwell on the analysis of milk as the preferred farming product over cereals like wheat and rice while determining India’s significance in the milk industry. Through their research, the authors determined that unlike other nations which produce milk under the integrated farms and with hybrid cows and modern technology, India’s production is conducted by farmers with cross breed cows and little knowledge on milk production. Nevertheless, despite the little innovation in the country, it is one of the leading milk producers in the world accounting for 121.8 million tons in 2010-11. To sum up, the authors stipulated that a large percentage of the rural unemployment ventures into dairy production to sustain themselves through generating additional income (Rao and Reddy, 2014). Therefore, this study will be one of the case studies applied in my research for evidence-based analysis. In India, dairy farming plays a significant role in promoting a sustainable rural development and socio-economic transformation. An article produced by Srivastava and Kumaresan, (2015), determines India to be a nation where milk is produced by masses rather than its mass production, in which the aspect of quality is not effectively met. The article is titled, ‘Indian dairy industry.’ Its main objective is to determine the impact that technological intervention would have at increasing quality levels of the Indian dairying. An example is the technological advances used in the Al Ain Company influence the production of quality dairy products such as milk, juices, and yogurt. Relatively, the authors predict an increased demand for milk production as supply is likely to fall due to the increased consumption rates. The major finding arising from this study is that, with an increased level of quality of dairy products and the high demand of these products, the industry is bound to achieve a significant growth in revenue due to the high consumption rates. In a nutshell, the authors claimed that due to various inherent challenges, the smallholder farmers will not be able to satisfy the increasing milk demand, since they do not have access to the technological advances that promote quality in the production of dairy products (Srivastava and Kumaresan, 2015). As such, the study will facilitate my research by determining the future market gaps in the dairy farming industry and how quality is sustained in meeting the rising demands based on the use of technology in dairying.

Global News for the Food Industry

The Irish economy is gradually growing due to the increased export activities of dairy products. In an article written by the Dairy Industries International, (2015), Irish exports to the Arabian Gulf are projected to increase by approximately 50% in the next five years. Also, the report states that the Irish food board known as the Bord Bia claimed that over the year 2014, the Irish exports increased by 28% thereby producing a total amount of 247 million euros. Under the title, ‘Middle East aims for Irish dairy,’ the article is founded on determining the trends and occurrences of the major food producing nations regarding their respective products. This report entails a concise evaluation of the leading countries in food production and the major developments associated with them, in terms of packaging, collaboration among various companies, and effective leadership practices in the respective companies to produce a considerable level of quality products. On this note, through the inaugural board, participants will be provided with guidance and support to assist them grow their businesses to the overseas markets while increasing the quality of their products. As a result, the report determines the growth of Irish dairy into the Middle Eastern countries following the increased quality in their products such as cheese, milk and butter (Dairy Industries International, 2015). Thus, the report identifies the major highlights in the food production industry across the globe such as the Tetra Rex rolls packaging which induces a certain level of quality to the consumers. Also, it stipulates that more companies are projected to join the Bord Bia to help sell them to the global food market service. In this case, the article will supplement my research by incorporating the relevant management skills, competency in packaging and collaborating with other companies to ensure that the level of quality of the dairy products is enhanced.

The Al Rawabi Dairy Company

The Al Rawabi Dairy Company is focusing on venturing into new markets across the globe. According to Abdulla, (2016), the UAE-based company has expressed its interests of growing its presence in the African and Middle Eastern region. Titled, ‘UAE firm, Al Rawabi, eyes expansion in Africa and the Middle East,’ the article’s main objective is to determine the increased brand visibility of this dairy firm. The author focuses on the diversification of the Al Rawabi Company into new global markets while introducing a new category of products such as cheeses and butter, among others. The author found out that the company has already started making cheese as it also investigates on the possibilities of making ice-cream. To sum up, the author states that the increased modernization of the company will improve its output up to 70% (Abdulla, 2016). In this regard, the article will be useful in my research by assessing the impact of increased diversification on quality for a milk-producing company.

Conclusion

The extensive literature review reveals several efforts implemented by players in the food industry and more specifically dairy industry in realizing quality products to meet the customers’ needs. The Al Ain Company has adopted the approach of market penetration to overcome stiff competition in the milk industry in delivering quality products which also include, butter, juices and others. For instance, the analysis shows that the firm has adopted charging discounted prices, which reflects a focus on meeting the customer needs.

Also, the review reveals that in Ethiopia the level of technological adoption is unsatisfactory whereby only the families with more resources at their disposal increased the likelihood of investing in new technologies. Even though Ethiopians are competent small-scale dairy farmers, the lack of proper technological innovation in their farming skills translates into a reduced rate of productivity. Thus, with low technological adaptation the quality of the dairy products is likely to be negatively impacted, therefore, it is necessary that milk processing companies continue investing in technology to improve the quality of outputs.

Further, the review indicates that despite some disparities regarding income groups and geographical regions, China’s dairy market has significantly expanded as the imports are projected to grow, which has been coupled with focus on improving quality. Also, a study by Mekonnen, Dehninet, and Kelay, (2009), reveals that the large-scale producers of dairy products are faced with new setbacks regarding safety measures in the working places and food security which have been influenced by increased competition in the industry which leads to a compromised quality. Furthermore, in improving the quality of the dairy products, the producers are focusing on diversifying the outputs by introducing new products, such as ice cream and cheeses (Abdulla, 2016; Dairy Industries International, 2015). In addition, the forecasts indicate that food prices are likely to increase in the future creating opportunities for food companies.

Regarding the survival strategies, the review indicates that globalization and modernizing operations are among the most effective (Strategic Direction, n.d.). Therefore, the global market demand for dairy products is on the rise which creates a niche for major companies such as the Al Ain Dairy Company, which necessitates the need to continue focusing on improving the quality of its products amid challenges in a bid to capture a higher market share as quality has become a major determinant of demand.

The findings assist in answering the study question by revealing the efforts towards realizing quality products in the food industry. However, they provide a limited focus on Al Ain as they do not specifically explain the means through which the firm realizes high-quality level products. Therefore, a detailed study on the strategies that the firm uses to achieve quality and how it maintains it is necessary.