Strategic management Final assignment

The case of Olympus Dairy Industry

Tutors name: Sarmaniotis Christos Students name: Malaki Nikoleta Year: 2011-2012 Mba Intake 2010-2012

Olympus Dairy Industry was founded in 14 May, 1965 by the Agricultural Cooperative Union and the Agricultural Bank of Greece. The function of Olympus Dairy Industry is the industrial production and trading of dairy, juice, cheese, and any kind of food and liquid or any relevant products. Sarantis brothers are the two owners-founders of the company (www.olympos.gr). Davis defines the value chain as the sum of activities that are essential for the transformation of raw materials and the delivery as finished products to the consumer (cited in Bales et al). Brown (1997, as cited in Walters and Lancaster) regarded the value chain as a tool to disaggregate a business into strategically relevant activities. This enables identification of the source of competitive advantage by performing these activities more cheaply or better than its competitors. If we want to start with primary activities, inbound logistics, describes the way that raw material is received and stored in warehouse. 30 trucks, with cooling booths for the best preservation possible, are available for the delivery of raw materials in the factory or the industry. As soon as the products reach their destination, they are collected and transferred to the warehouse with the use of palettes. The system of transformation within the unit is automatic. Then, they are taken for sampling to check suitability and stored. If a product does not meet the high standards of the company it is sent back to the supplier. Operations describe the processes needed to transform inputs into products, ready for use. In this case, since the first material here is milk, the process of pasteurization is vital. Since Olympus produces many types of milk and also yoghurt, cheese and juice, the steps can differ. Generally speaking, the main line of action here is pasteurization and standardization of the product either via local operations or central operations. After that, products are delivered to the bottling department, where they are packaged and ready for delivery. As far as yoghurts are concerned, the same process is followed, except for the extra activity of coagulation. Then, yoghurts are put into special packages. Finally, for juice to be produced, water is mixed with aroma, which is pasteurized in 90 Celsius degrees. Then they are packaged in silicon bottles. All products are put on palettes and into the vans for delivery. Outbound logistics deal with finished products and their distribution. As mentioned before, the warehouse department is fully automated, functioning with ERP and ATLANTIS software. Ready or semi-ready products are transported on palettes. Then they are delivered to clients packaged in palettes or directly from the factory to the distribution channel. Also, WIFI

antennas are put in entrance and exit so that they can detect barcodes put in palettes so as better control inventory. Marketing and sales is concerned with the identification of customers needs and generation of sales. It seems that Olympus is very capable of doing so, since the company holds the second place in the Greek market nowadays, after Delta. Sales are continuously on the rise, despite the fiscal crisis and the fact that Olympus milk has the highest price than all other dairy products. The most striking information is that the previous year, the company did not spend a single cent on advertising, since their best advertisement is word-tomouth, according to the owners. Regarding service, Olympus has a very close relationship with its customers. Any dissatisfaction regarding products can be immediately reported in the companys website. Then, it is dealt by the department in charge. Furthermore, there is a close relation between the various departments of the company so as to achieve quick and efficient communication for any problems to be resolved. The new technology in orders and delivery helps the company deliver products on time, with no delay and transaction problems. Now, moving to the support activities, the companys culture is deeply shaped under the agricultural tradition the owners carry. According to their saying, the two brothers have been raised in an environment when farming was a daily activity. Although the company started out as a minor player, they have manages to prove everyone wrong, investing in control system, equipment and technological advances to make the company one of the more competent ones in the market. Human resources management deals with the hiring, recruitment, training and compensation of the human capital. The company employs 421 employees, 372 of which are regular employees and 49 workers. Every one of them is given a card which recognizes the persons that came in and out of the factory. Olympus considers human capital to be one of the four levels of production. Since commitment is one of the most important drivers for great performance, the company tries to compensate and preserve its stuff (Kamukama et al). Technology plays a vital role in the function of organizations. Lately, Olympus Dairy Industry has invested a lot of money in technology, by automating almost every part of production, warehousing, delivery and packaging process. In this way, the cost is limited and the process is faster and more reliable (Lamprinopoulou et al).

The purchase of materials is done by 79 suppliers this moment. The equipment for procurement is highly modernized, ensuring the greatest transportation and quality of products. Chopra and Meindl (2001, as cited in Sankaran and Luxton) state that there is an urge for a strategic fit between the value chain of a company and its competitive position. Porter considers competitive advantage to be the ultimate goal of a company, and the strategy the means to achieve that. He suggests that the essence of competitive position is for each firm to realize its core competences, key features and resources and make use of those effectively (Dewitt et al). Bowmans strategy clock proposes several strategies that a company follows in order to create a competitive advantage against its competitors (www. Mindtools.com/import.rss). Among strategies, it is pretty evident that Olympus adopted the differentiation strategy. They have tried and managed to identify their brand name with quality, thus seeking greater prices (the Antedote). However, high prices seem to be a great obstacle for any company, while in economic recession. Since Bowmans strategy clock so resembles Porters generic strategies, a suggestion according to him could be one from New Zealand. The cost leadership strategy is followed in the dairy industry of the country. Akoorie and Scott-Kennel (1999, as cited in Sankaran et al) clarified that this strategy addresses a narrow group of buyers and differentiate both product characteristics and customer services in markets for sophisticated food ingredients, but at the same time it focuses on cost advantage, and brand name. In this way Olympus reputation would stay intact and the company would prove capable of responding to both public and market interest, thus being reliable (Walters and Rainbird). For a company to compete effectively, the mission statement should be followed. It expresses the purpose of existence of maintenance in the organization and its role in achieving the vision and mission of the organization (Al-Turki, 2011). Olympus mission is to be able to produce products of high quality, manipulating fully its resources, maintain and increase their share in the market and preserve the reputation they have so tried to create over the years (Handly). Furthermore, it is necessary to add here that all Olympus products comply under the Management System for Security of Food ISO 220000:2005. Also, Hazard Analysis Critical Control Points (HACCP) implementation is essential for reassuring security and high quality. Regarding the position of the company in the market, a SWOT analysis is important to evaluate position and scope. The Strength of the company mainly lies on its geographical location, exactly in the center of Greece and

full of mountainous and lowland areas. A possible weakness can be the high price of the products. Due to the economic recession, consumers may turn to products with low quality and low prices. The Opportunity seems to have been taken when the owners of Olympus Dairy Industry, against the ominous conditions, created the company. Ever since, they seem to be always to date with current demand and customers needs. This is evident by the acquisition of two subsidiaries in Bulgaria and exporting activities to many countries, including India, Canada, Cyprus and lately USA. Finally, Threats are always identified with competition. Olympus holds the second position nowadays, with Delta industry ahead. Also, due to increased demand of dairy products worldwide, other companies have started to enter the market, like the Dutch subsidiary Friesland, which now holds a considerable share in the market. In order to compete, the know-how is essential. The experience of the two brothers seems invaluable here since they have the knowledge for best resource use (Lamprinopoulou et al). Since Olympus Dairy Industry has based its strategic position on quality, the equipment and high technology in its facilities are mandatory for this purpose, as mentioned above. The activities, from the delivery of products to the factory to the distribution to stores are fully automated and cost-saving. The timing of the market entry in 1990, when milk trade was at its peak, was a risk but the cleverest move at the same time. Finally, the ecological conscience on behalf of the consumers is followed so as to meet the consumers needs. Since demand is an essential part of a companys competitive position, Olympus has to stand up to the needs of the market. The company has started activities as recycling of paper and batteries and saving of water sources recently, showing a great social responsibility, not only towards its customers but also to the land we live in.

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Lamprinopoulou, C., Tregear, A. and Ness, M. (2006), Agrifood SMEs in

Greece: the role of collective action, British Food Journal, Vol. 108 No. 8, p. 663676 Richardson, B. (1994), Strategic Management: Leading across the Strategic Management Domain, Management Decision, Vol. 32 No. 8, p. 27-41 Sankaran, J.K and Luxton, P. (2003), Logistics in relation to strategy in dairying: The case of New Zealand dairy, International Journal of Operations & Production Management, Vol. 23, No. 5, p. 522-545 Semos, A. and Kontogeorgos, A. (2007), HACCP implementation in northern Greece Food companies perception of costs and benefits, British Food Journal, Vol. 109, No. 1, p. 5-19 The Antidote, (1997), Management Theory, Issue 4

Walters, D. and Lancaster, G. (2000), Implementing value strategy through the value chain, Management Decision, Vol.38, No.3, p.160-178 Walters, D. and Rainbird, M. (2004), The demand chain as an integral component of the value chain, Journal of Consumer Marketing, Volume 21, No.7, p. 465-475

Electronic addresses: Olympus Dairy Industry. Available from http://www.olympos.gr [accessed at 08.02.2001] Mind Tools Ltd (1996-2012), Bowmans Strategy Clock: Making Sense of Eight Competitive Positions. Available from http://www.mindtools.com/import.rss [accessed at 05.02.2011]