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Transcript of Management Organization, DMK
Management Organization April 7, 2012
Page 1 of 23
Management Organization
Deutsches Milchkontor
4/7/2012
Student
Marco Engler
Management Organization April 7, 2012
Page 2 of 23
Executive Summary
The report gives an overview about Deutsches Milchkontor; the company`s short cut history, the
possibilities, the organizational circumstances, the organizational structure, the environment; in
general and in Germany; and the possible options. To be more precise, in some cases there is a closer
view on Sanobub, one of DMKs brands.
DMK is a company which is well- known in its current operating markets, financial health and has a
good image. DMK is established in the European market and has the potential to expand in a broader
way. The Deutsches Milchkantor is very financially healthy and profitably operating in more than 100
countries. Furthermore, DMK is market leader within the dairy sector in Germany.
The aims are to get a stable milk prices, increase the market share and expand the product ranges
The market in Germany is the major source of the company`s profit and DMK get an important
leading player in the European diary market.
Wherefore it seems important to keep the research volume running on the same level. However,
introducing a new strategy and accessing a new market are recommendable.
The recommendation is to expand in the Asian markets by building up a joint venture with a
company which gained already experiences in this market.
Management Organization April 7, 2012
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DMK –
Deutsches Milchkontor
Preface
The assignment is, based on internet research and descripts published by the firm itself, about the
business environment of DMK, Deutsches Milchkontor. The group received the task to write a report
about an own chosen company from the food- and agriculture sector. Furthermore, a grade sheet
was handed out to write an assignment which includes several aspects which have to mention within
this document. To meet the guidelines and accomplish the aim of the report; the research was based
to find out information about the story of DMK, its management situation, partnerships and
organizational structuring of DMK, issues and the market in general respectively.
In this report, the Deutsches Milchkontor is also named as DMK.
The foundlings are listed in the Executive Summary on Page three. The report is structured by the
guidelines of this grading form which is also included at the end of the report.
Marco Engler, Leeuwarden, 23.10.2011
Management Organization April 7, 2012
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Table of Contents
Executive Summary ............................................................................................................................................................ 2
Preface............................................................................................................................................................................... 3
Table of Contents ............................................................................................................................................................... 4
1 Introduction .............................................................................................................................................................. 5
2 Analysis of current situation ...................................................................................................................................... 8
2.1 Mission. .. ……………………………………………………………………………………………………………………………………………………………….8
2.2 Vision……… .......................................................................................................................................................... 8
2.3 Goals……………. ..................................................................................................................................................... 8
2.4 Strategic .............................................................................................................................................................. 8
3 Internal environment .............................................................................................................................................. 10
3.1 Core competence .............................................................................................................................................. 10
3.2 Synergy ............................................................................................................................................................. 10
3.3 Value creation ................................................................................................................................................... 10
3.4 Functional analysis............................................................................................................................................. 10
3.5 Corporate culture .............................................................................................................................................. 11
3.6 Organizing ......................................................................................................................................................... 11
3.7 Total Quality Management ................................................................................................................................ 11
4 External environment .............................................................................................................................................. 12
4.1 Porters five forces.............................................................................................................................................. 12
4.2 PESTEL Analysis ................................................................................................................................................. 13
4.3 SWOT Analysis ................................................................................................................................................... 14
4.4 Confrontation matrix ......................................................................................................................................... 14
4.5 Conclusion SWOT .............................................................................................................................................. 15
5 Strategic gap ........................................................................................................................................................... 16
5.1 Current situation ............................................................................................................................................... 16
5.2 Desired situation ............................................................................................................................................... 16
5.3 Gap ................................................................................................................................................................... 17
5.4 Limiting conditions ............................................................................................................................................ 17
5.5 New goals of the desired situation: .................................................................................................................... 17
6 Strategic choice ....................................................................................................................................................... 18
7 Implementation ...................................................................................................................................................... 20
8 Conclusion and Recommendation ............................................................................................................................ 21
9 References .............................................................................................................................................................. 22
10 Exhibits .................................................................................................................................................................. 23
Management Organization April 7, 2012
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1 Introduction
The introduction gives a clear overview about the company, the size, the image and the most
important facts like the current situations evaluate thoroughly the external and internal
environment. Afterwards, the Strategic gap shows the difference between the current and the
desired situation; measured by the founding of part two. The results of the strategic gap lead to the
strategic choice to show the possibilities and ways to reach the desired situation. The
implementation gives an overview about the important steps how to implement and achieve the
desired situation. At the end, there can be find a conclusion and recommendation of the report.
DMK is a German diary which was founded in April 2011; the both cooperative organized companies
from the northern of Germany, Humania Milchindustrie GmbH and Nordmilch GmbH merged to
DMK, to become the market leader in the German diary industry. The DMK employs 5,500
employees in 25 sites with the head office in Everswinkel, Germany. (DMK, 2011)
Nowadays, through the merger; the DMK constitutes of three cooperatives and a lot of
subcontractors. In 2010, the net profit exceeded I € 4 billion what leads DMK a market leader in
Germany and a leading player in Europe either. (DMK, 2011),
DMKs legal form is a GmbH and registered in Bremen, Germany. The concern is centralized but there
are several sites and cooperatives. The organizational structure of Deutsches Milchkontor can be
seen in the picture below.
Exhibit 1.1 Organizational structure, Deutsches Milchontor
Management Organization April 7, 2012
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The Deutsches Milchkontor is the head of several subsidiaries to serve a wide range of products and
attend potential clients. The subsidiaries can be seen in the picture below. (DMK, 2011)
Exhibit1.2 firm structure, DMK Deutsches Milchkontor GmbH
How to seen above, the portfolio includes all kinds of dairy products like yoghurt, cream products,
butter, and several kinds of milk or desserts. Furthermore, there are cheeses, dietetics, ice crème,
health products like functional food, novel foods, health supplements; dextrose or baby foods, teas,
tube feedings, drinks and concentrates. So, there are products for men, women, children and babies.
(Products - DMK Deutsches Milchkontor GmbH, 2011)
These products are divided into ten brands. These brands are: Milram, Ravensberger, Osterland,
Sanobub, Oldenburger, Humana, Casarelli, Intact and Leben’s Biolabor.
Exhibit1.3 brands, DMK Deutsches Milchkontor GmbH
Management Organization April 7, 2012
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DMK is the market leader in Germany and operating in 100 countries worldwide; to keep the position
against the competitors Langnese/Ola, Movenpick, Nestle/Scholler, Haagen dazs, Ben & Jerry’s,
Landliebe, DMK introduced some joint ventures. Successful collaborations are the joint venture
wheyco GmbH, and Nord-Contor Milch GmbH.
The brands respectively divisions are important. The brands are small to sustain flexibility and react
on temporary changes.
DMK says on its website:
“The sales mix makes DMK a reliable partner – nationally and internationally
We will protect our long-term leadership positions by means of a strategically designed sales mix:
70% of sales to the domestic market will be balanced with 30% of sales through the export business,
with deliveries to more than 100 countries all over the world – a very healthy constellation
economically.
Turnover by product group is split into 50% fresh dairy products, 40% cheese and 10% milk powder.
This split enables stable medium-term costing’s and investments. And it provides adequate flexibility
if individual markets fluctuate. “
The profit allocation is shown in the picture below.
Exhibit 1.4 Profit- DMK Deutsches Milchkontor GmbH.
Another key aspect is the research and development department. DMK is producing products on a
high- quality level and focused on the product innovations like organic food. Through the focus of
research DMK is able to keep the value of 6,7 billion litre milk, every year. (Research & Development
- DMK Deutsches Milchkontor GmbH, 2011)
As a result of it, DMK is a company which is well- known in its current operating markets, financial
health and got a good image. DMK is established in the European market and has the potential to
expand in a broader way. Thanks its healthiness base there are a lot of possibilities to find new ways
and options.
Management Organization April 7, 2012
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2 Analysis of current situation
This analysis shows the current situation; divided in the external and internal environment in detail.
The common tools like SWOT, PESTEL, Porter`s 5 forces are used to explain the benefits and issues
thoroughly.
2.1.1 2.1 Mission
The self- chosen mission is quite clear. “We will make good use of our capacities and market shares
for stable milk prices and excellent market positioning.” (Strategy - DMK Deutsches Milchkontor
GmbH, 2011)
2.1.2 2.2 Vision
“A systematic business strategy makes DMK even stronger in the market. The merger of Humana
Milchindustrie GmbH and NORDMILCH GmbH arose from a highly successful, long-standing
collaboration. Our primary goal is to earn attractive milk prices with long-term stability for the
cooperative owners of both companies.” (Strategy - DMK Deutsches Milchkontor GmbH, 2011)
2.1.3 2.3 Goals
The primary goal is to earn attractive milk prices with long-term stability for the cooperative owners
of both companies. (Strategic expansion of the cheese business, Profitable growth of the branded
goods business, Securing our market share in fresh dairy products, Further development of the
ingredients business, Expansion of the ice cream, baby food and health products business areas).
Another central focus will be the expansion of the international business within the EU and
increasing participation in international growing markets such as Asia
2.1.4 2.4 Strategic
DMK profits from its clear and consequent strategies. The main goal, according to the mission, is to
earn a stable and attractive milk price. This goal shall be accomplished by developing a logical
progression in existing business areas.
The main points are:
- A strategic expansion in the cheese business and a profitable growth of the branded goods
business sector.
- Securing of the market share in the fresh dairy business
- Logical progression in ingredients business
- Expansion in the ice cream, baby food and health food product business
2.5 Global Strategy
A central focus lies on the expansion within the European Union states and access the market in Asia.
DMK is using its capacities, experiences and knowledge to increase the market share and achieve the
goal of stable milk prices, in Germany, Europe and in Asia as well.
Management Organization April 7, 2012
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2.6 Corporate-Level Strategy
In order to ensure its product quality, DMK has to be more focused on product innovations, the retail
sector marketing, reputation and the price- performance ratio, the small brand awareness and the
sessional products respectively the demand of these products and the consumer needs.
Furthermore, they have to be aware of changes within the markets and progresses of competitors.
Hence Humana and Nordmilch have merged to Deutsches Milchkontor and have started some joint
ventures to find new market niches, expand the product range and improve the market leading
position in Germany.
One majority claim and a huge potential disadvantage can be raises due to the small brand
awareness.
2.7 Business- Level Strategy
The mission of Deutsches Milchkontor DMK, to offer and deliver a wide range of several dairy
products for a fair and stable price is a rather difficult mission then as they are acting on such an
international scale. The agriculture business is every time depending on legal regulations and
agricultural aids. One aspect is that they have to set new trends and reach a big target group like
children, men and women in all markets. So, DMK always needs to come up with new product
innovations, and has to be able to adapt new trends, in particularly, in the health food and genetic
food business and needs to be sure that they can maintain the same quality and same price level.
The same price level is formulated in the mission of DMK. However, the product unit and the high
quality standard of the technology is the big plus of the company.
2.8 Functional – Level Strategy
DMK is a merger of two companies which have already cooperated before. The aims of the merger
were to get a stable milk prices, increase the market share and expand the product ranges Therefore,
it was necessary to get together and put the strengths of the high quality standard and the new
technologies together. DMK gets more aware and established its premium ingredients in the market.
Nowadays, the market in Germany is the major source of the company`s profit and DMK get an
important leading player in the European diary market. The next step is to expand the market share
in Europe and Asia. Therefore, it seems important to improve the marketing and distribution areas,
during the financial aspect and the well-developed R&D sector.
Management Organization April 7, 2012
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3 Internal environment
3.1 Core competence
The core competence of Deutsches Milchkontor is producing, developing and improving all kinds of
dairy products. They are focused on research and development to fortify the market position.
Furthermore, another core competence is the wide range of products, alternatives and the market
leading position.
3.2 Synergy
DMK is using the synergy effect of the brands name, which is standing for quality, and the progress of
its research programs. They are profiting on the corporative sites and the agriculture aids which are
used to get the newest technologies. The name Deutsches Milchkontor stays for quality and product
innovations. A side effect is that DMK profits of the legal regulations related to health and quality in
Germany and Europe where the producing locations are.
3.3 Value creation
The dairy producer creates values through the name and the price levels of its different brands. But a
problem is the small brand awareness of some subsidiaries. DMK is offering a wide range of products
in the dairy sector and is bonded in legal regulations of quality and health. With this big product
portfolio DMK can reach a lot of customers within all societies. Furthermore there is a wide range of
several alternatives for each product to enables DMK to act in every market respectively market
niche with its different brands.
3.4 Functional analysis
Management and
Organization
Marketing Human Resource
- The management
quality is good.
Measurable through
the market position
and the financial
situation
- The staff quality is
high. The educational
system in Germany is
very well.
- The company is
centralized and
includes well- known
brands.
- DMk is bonded on
national controls and
legal regulations.
- Distribution channels:
mostly Supermarkets.
- Big market share,
market leader
- The marketing and
advertising could be
more efficient.
- Customer satisfaction
is good. Consumers
likes the high quality
level.
- The staff satisfaction
is high.
- Employee experiences
are very well.
Finance Production Research and Development
- DMK is very healthy
and market leader in
Germany. They have
to reduce the high
production costs.
- DMK has a good
quality control; they
are improving also its
products and the
employees
continually. They have
to reduce the high
production costs.
- They are known for a
lot of product
innovations in the
health food business
sector
- Great laboratory and
technology
circumstances
Management Organization April 7, 2012
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3.5 Corporate culture
The corporate culture can be described as adaptable culture. The company is focused on an
adaptability culture which can be determined by the fast ability of interpreting and translating signals
of environmental changes like legal regulations. DMK is focused on the external market and takes
over other companies like or creating new joint ventures to work more flexible in all markets and
expands the business. Furthermore, DMK is a learning organization and they have to be it as a result
of fast changing markets, genetic progresses, regulations and other things. The image below shows
an overview of the corporate cultures. Deutsches Milchkontor and its subsidiaries know the fact that,
nowadays, people are aware what food they buy for their body and health. For instance, in the
genetic food segment, the consumers are willing to pay higher prices.
3.6 Organizing
DMK can be described as centralized organization with a few of subsidiaries how to seen on the
picture 1.2 on page four. Further, DMK can also be described as a learning organization with a view
of total quality. Deutsches Milchkontor is bonded to a lot of external factors and has to act flexible.
The organizational structure is shown on picture 1.3 on page five. Hence, DMK has to adapt to
changes in their external environment. The enterprise is adaptive in a sense of changing in the
markets and innovations of the products, the clear structure and centralized organization helps to act
in a logical way. There is a head office and 25 brands like Sanobub which are acting more or less
separate in their own segment. One problem can rise by continually following of this organization
type if DMK expands in other cultural environments like Asia, every office could not determine
decisions, which are related to the environmental circumstances, by themselves.
An important fact in relation to the leadership, controlling and HRM is also that the dairies are
agricultural cooperatives. This model means that the cooperatives are owned by equally shared
shareholders.
3.7 Total Quality Management
To ensure the Quality, DMK introduced a research and development program and is using a control
system to ensure the hygiene within the producing areas and the quality of the ingredients like milk.
Another benefit is the close bond with the dairies. There are also controls of hygienic in Germany
what improves the quality enormous.
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4 External environment
4.1 Porters five forces
Every enterprise is within a specific industry, thus, Meso market environment plays a very important
role in enterprise strategy. We use the “5 forces model” to analyse the basic competitive situation in
the dairy industry to summarize the most important tendencies. Furthermore, we are looking for a
sixth force since DMK is dependent on legal regulations.
Internal /Rivalry/ Competitors
Related to one of the brands, Sanobub: This company is operating in the competitive industry, the
biggest competitors are: Langnese/Ola, Movenpick, Nestle/Scholler, Haagen dazs, Ben & Jerry’s,
Landliebe. Compared with those companies, Sanobub have to develop the popularity of their brand
and improve their own brand awareness. On the other hand, all competitors, for instance in
Germany, are bonded on the same legal regulations. These regulations increase the producing costs
enormously.
Bargaining power of buyer and supplier
DMk produces dairy products but since a small retailing sector, there is a big jeopardy if competitors
getting aware of this gap. As a market leader in Germany, the global player image in Europe and the
few brands, DMK is able to deal with all target groups and target markets in their operating market
segments and market niches. They are depending on innovations of themself and need to be focused
on changes in the needs and desires of the consumer and the progression of its competitors.
Therefore, the power of buyers is quite low; in contrast to the power of supplies which is very high.
Within the last years, there were a lot of strike calls and strikes because the dairy cooperatives
wanted more money for their milk derivatives. The ingredients can be delivered by suppliers with a
long time relation. Useful is a wide range of products, a good reputation and satisfied, loyal
customers. DMK and its brands can deal with loyal consumers.
The bargaining power of buyers is low, especially as consumers are interested in their local products
and DMK is offering those. The bargaining power of suppliers is quite high but contracts and long
term relationships helps to minimize trouble
Potential entrants
Within the ice- cream industry, the entrance barrier is low , there is no need of high science and
technology for producing ice cream. Therefore, some local companies are able to easily produce this
kind of products and threaten Sanobub. To establish the good market share, Sanobub should not
only maintain their high quality, but they also need to develop their own features, instance of making
taste different from others.
As a result of this the new entrance of competitors is quite high.
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Substitutes/Complements
Ice cream, as a kind of desserts, is very popular all over the world, the demand of ice cream is quite a
lot and basically there are a lot of substitutions for this kind of product.
In conclusion, with the analysis of Sanobub by the Porter's 5 Forces, it can be suggested that
Sanobub needs to develop a wider market range and attract more customers by making good tasting
ice cream, so that keep the foothold in the fierce competition.
4.2 PESTEL Analysis
Political
Deutsches Milchkontor is bonded on regulations of goverments, within countries they are operating.
Another important aspect is the role of the European Union. These regulations are influencing the
market, so, even the competitors. The European Union and the governments are trying to improve
and ensure quality. In fact, DMK is profiting of controls and regulations to ensure quality but the
competitors “have to” participate in the same way. In the international scale, due to the producing
costs there could be a chance for companies in countries beyond of the European Union.
Economical
Increasing costs, in particularly in the producing sector, are a common issue. All companies are faced
with the problem and must be focused on changes in research, development and their environment
as well. For instance, there is a lack of efficiency by using solar energy due to the low solar radiation.
Therefore, DMK is depending on innovations and improvements beyond their own business and
business competences
Until now, DMK could face these problems and is, in Germany, market leader and a global player.
Social/ Cultural/ Demographical
Social cultural aspects are very important for Deutsches Milchkontor because there are different
desires in different cultures. For instance, in some countries of Eastern Europe, people using more
goat milk than cow milk. The effect of demographical structures within a society is low. DMK is
reaching all target groups with its different brands.
Technological
DMK is operating on a high technology level which is underlined by the market leading position in
Germany and the important role they are playing in all of the 100 countries, worldwide.
Ecological
DMK is successfully operating in organic food. This example can be used to highlight the importance
and awareness of ecological circumstances.
Legal regulations
The jeopardy of legal regulations has risen to a big problem of the DMK. The European Union
determined salaries of dairy producers in the EU. Hence, companies from abroad respectively out of
Management Organization April 7, 2012
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the European Union can skip these regulations but direct competitors are bond on the same
regulations.
As a market leader, DMK can use its position to force a cost leadership strategy.
4.3 SWOT Analysis
Strengths Weaknesses
60 years of experience
Latest technologies
Premium ingredients
Fresh milk & cream are a major
part of the ingredients.
High quality standard
Nature based ingredients
Authentic taste
Customer loyalty
Financially health
Innovations
Small brand awareness
Weak marketing
Small distribution area
Retail sector
Seasonal product
High production costs
Opportunities Threats
Strengthen marketing
Expand in new markets
Broaden the distribution area
Well known and strong competitors
Still increasing of production costs
Changes in legal regulations
4.4 Confrontation matrix
Strengths Weaknesses
Op
po
rtu
nitie
s
S1 - market position
O2 – expand in new niches
S8 - costumer loyalty
O1 – strengthen marketing
S7 – authentic taste
O5 – broaden the distribution channels and
areas
W1 – small brand awareness
O1 - strengthen marketing
W5 – seasonal products
O2 – expand in new niches
W2 – weak marketing
O1 – strengthen marketing
W3 – small distribution areas
O4 – broaden the distribution area and
channels
Th
re
ats
S1 - market position
T3 – changes in legal regulations
S10 – innovations
T2 – high producing costs
S5 – high quality standard
T1 – strong competitors
S8 – consumer loyalty
T2 – high producing costs
W1 – small brand awareness
T3 – strong and well known competitors
W2 – seasonal products
T1 – high producing costs
W3 – retail sector
T3 – changes in legal regulations
This type of a confrontation matrix is chosen because the most important strengths and weaknesses
respectively opportunities and threats are matched and the founding emerges obviously.
Management Organization April 7, 2012
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4.5 Conclusion SWOT
There are a lot of strengths of DMK, what underlines the quality of the company and its goods but it
should also clarify the importance of awareness in the market and improving of the product quality,
product innovations and possible new market niches to reach new customers. The SWOT illustrates
the danger of external and uncontrollable forces like the legal regulations.
It is extremely important to force the strengths, the market position and the brand reputation to
avoid big entrances of competitors or loss of market shares. Important threats are the possibilities of
changes in the legal regulations. DMK has to deal with this important issue.
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5 Strategic gap
The Strategic gap is related to the gap between the current and the desired situation.
5.1 Current situation
DMK is operating in countries and market leader in Germany. Deutsches Milchkontor is offering a
wide range of dairy products with its brands. With an amount of 6.7 billion litre of milk per year they
produces, DMk get an important leading player in the dairy market in Europe.
The product portfolio; seen on the picture 1.3 on page four, shows the goods within the dairy
segments which are produced by DMK and branded by its brands. There is a wide range of several
parts what helps to make DMK as an important company within the segment.
DMK is a merger of two companies which wanted to bond the power of both companies – Humana
and Nordmilch. Whereby, DMK get a mighty company with a lot of strengths. Hence, it can be
determined that the main issues and jeopardies are not internal, but rather external. However,
Deutsches Milchkontor could reach a still broader group of clients if the lack of distribution channels
and areas getting adjusted.
The own brands are well known like the competitors as well. On that account, there could a problem
of market share loss arising.
According to the SWOT Analysis on page 13, there is a big loyal customer base but a lack of brand
awareness and marketing, although the company is in view of the financially aspect very profitable.
5.2 Desired situation
DMK wants to keep the milk price stable. The next logical step of DMK would be to get higher market
shares outside Germany and introduce its brands in new markets. A potential new market could be
Asia.
Deutsches Milchkontor is a richly company and should obtain these circumstances. Wherefore it
seems important to keep the research volume running. By introducing a new strategy or accessing a
new market there are several goals necessary.
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5.3 Gap
DMK is operating in a segment with well- known brands and; accordingly, an importance of product
innovations. If a company is working on such an international scale with a profit of four billion € per
year, there is a huge need of occupation in other markets, respectively getting a bigger foothold in
these important markets in Asia. Another gap is within the functional strategy. Whereas the part of
R&D and the finance is very well, there is a lack of marketing and distribution.
5.4 Limiting conditions
A market entrance leads to a big financial expenditure, a company restructuring and a lot of time. An
access to get a bigger market share is estimated with a time span of three years.
5.5 New goals of the desired situation:
- Analysing of the Asian market and the cultural differences
- Evaluate current legal regulations
- Looking for joint venture, merger or acquisition options
- Expansion rather than redeveloping of the marketing strategy
- Persevere competitors and their market share
- Deciding whether market access seems successful
- Reconsidering of company structure
This part shows that the gap comes up due the lack of the distribution areas.
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6 Strategic choice
The part illustrates the different strategies which are considered and leads to a logical result how to
improve the weaknesses of DMK.
The strategy to expand the company in other markets is the Growth Strategy. This means there is a
growth in the staff, the profit and product portfolio but it leads also to more costs, expenditures and
an increasing in the staff and presumably a change or expansion in the product portfolio to serve
new goods for new clients with a other social, cultural or demographical background and reach their
needs.
There are three options to access new markets for DMK
Option one, merger or acquisition with/of an Asian company or a company with experiences of the
market
Merger: There is the possibility to look for an Asian company and merge with it. The plus of this
option is that the Asian company can learn from the technologies of DMK, the procedures and use
the successful company strategy. The costs of a merger are quite high due to the sizes of both
companies. However, the profit in Asia can be much higher if they are offering with their distribution
channels and the name in a; for this company, well- known market.
Acquisition: The benefits are slightly the same like by the merger option but an acquisition is much
more expensive. Another important aspect is that a potential company which is interested in an
acquisition is mostly unsuccessful and unable to work alone. Therefore, the costs of restructuring and
improving are also expensive. This option seems therefore problematically. The suitability could also
not be given since there are no experiences in this social cultural environment. But the project is
feasible.
Option two, joint venture of an Asian company or a company with experiences in this market
A joint venture with a company which has equal rights is the easiest way and would not be that much
expensive. Another benefit is the cost and risk sharing. Moreover, DMK has also experiences in
building up joint ventures. The project seems feasible and due to the risk minimizing also suitable
and acceptable as well.
Option three, own entrance
Option three is related to an own access in the market. The costs are quite high, the name is
presumably unknown in Asia and there is no knowhow or experience in the market. Besides, DMK
has to build up, by a bottom up strategy, completely new distribution channels and find new
suppliers. The expenditures in costs and time are very high. The suitability could also not be given
since there are no experiences in this social cultural environment. But the project is feasible.
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The alternatives are based on the SWOT analysis and the confrontation matrix. Below, there is a
table with important aspects and suitable rating of the options. The rating system has been
estimated as follows: 1 = very well, 2, 3 = middle, 4, 5, and 6 = very bad.
Strategic confrontation matrix Option one Option two Option three
Time 4 2 5
Costs 4 3 5
Volume of restricting 5 1 1
Expected profitability 3 2 4
Risk of failing 1 3 5
Acceptability 3 2 4
Feasibility 2 1 4
Suitability 2 1 2
Sum 23 15 30
In light of the results, the best option to introduce in the market of Asia should be option two;
building up a joint venture.
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7 Implementation
The implementation part is describing the steps how to implement the strategy.
The implementation process is very easy, especially because there are a lot of experiences in joint
ventures by DMK. Deutsches Milchkontor can use its technologies to produce the products and get
the chance to learn how other companies work. The joint ventures have to build up new distribution
areas and get new local suppliers in Asia.
The cultural conversion rather than adjustment is one of the important aspects in this project. There
is a huge risk by dealing with a different social or cultural behaviour. DMK needs to understand and
implement an Asian working ethos. The factional and operational planning is described on page 17 or
illustrated below:
New goals of the desired situation:
- Analysing of the Asian market and the cultural differences
- Evaluate current legal regulations
- Looking for joint venture options
- Expansion rather than redeveloping of the marketing strategy
- Persevere competitors and their market share
- Reconsidering of company structure
- Considering of products; consumer needs
- Considering how to operate and building laboratories.
- Introducing
The organizational structure will be the same since the joint venture is more or less a subsidiary and
therefore not affecting the company. However, the joint venture needs an individual organization,
ordinarily consisting of both companies. The organization includes an information system, an own
mission, separate goals; this means separate to the companies which are operating mainly in other
markets with other conditions, a clearly structured management plan and a leadership model.
The Human Resource Management can be used from DMK due to its high standard, the quality and
the technologies whereas the staff should be locally based to reduce costs and bonding the joint
venture with the areas and create a friendly and trustful image.
The implementation of a joint venture seems very easy due to the risk, costs and responsibility
sharing. If DMK choses a company to build up the joint venture, they should be aware that the
partner gained experiences in the Asian market.
Management Organization April 7, 2012
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8 Conclusion and Recommendation
Deutsches Milchkontor is a healthy company with a lot of benefits. The company is market leader
and its brands got a nice image. There are a lot of strengths and opportunities but there are also
weaknesses and threats as well, especially by accessing a new market with a different culture.
The recommendation is to expand in the Asian markets by building up a joint venture with a
company which gained already experiences in this market. The advice is to extend the chances of
DMK to get a leading global player. The options seems hopefully and promising a good future. The
expansion rather than getting a bigger market share should be the next logical step.
Management Organization April 7, 2012
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9 References
Brands - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH.
Retrieved October 22, 2011, from http://www.dmk.de/en/produkte-marken/marken.html
DMK. (n.d.). DMK. Retrieved October 23, 2011, from http://www.dmk.de/de/index.html
Managing bodies - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor
GmbH. Retrieved October 22, 2011, from
http://www.dmk.de/en/dmk/organisation/organe.html
Produkte - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH.
Retrieved October 21, 2011, from http://www.dmk.de/de/produkte-marken/produkte.html
Profit- DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH.
Retrieved October 22, 2011, from http://www.dmk.de/de/dmk/zahlen.html
Research & Development - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches
Milchkontor GmbH. Retrieved October 22, 2011, from http://www.dmk.de/en/forschung-
entwicklung/index.html
Strategy - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH.
Retrieved October 22, 2011, from http://www.dmk.de/en/dmk/strategie.html
Management Organization April 7, 2012
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10 Exhibits
Exhibit 1.1 Organizational structure, Deutsches Milchontor ............................................................................... 5
Exhibit1.2 firm structure, DMK Deutsches Milchkontor GmbH ............................................................................ 6
Exhibit1.3 brands, DMK Deutsches Milchkontor GmbH ...................................................................................... 6
Exhibit 1.4 Profit- DMK Deutsches Milchkontor GmbH. ...................................................................................... 7