Entrepreneurship development and Industrial Consultancy

Module.4 Overview of dairy industry

Lesson 15
SWOT ANALYSIS OF DAIRY INDUSTRY

15.1 Introduction

SWOT Analysis is nothing but analysis of a company or organization on the basis of its Strength, Weakness, Opportunity and Threat (SWOT).

15.2 Importance and Uses of SWOT

SWOT analysis is used to identify and categories significant internal factors (i.e. strengths and weaknesses) and external factors (i.e. opportunities and threats) faced by the organization. It provides information that is helpful in matching the firms' resources and capabilities to the competitive environment in which it operates and is therefore an important contribution to the strategic planning process. It should not be viewed as a static method with emphasis solely on its output, but should be used as a dynamic part of the management and business development process.

SWOT analysis involves the collection and portrayal of information about internal and external factors that have, or may have, an impact on the evolution of an organisation or business. It generally provides a list of an organisation's Strengths and Weaknesses as indicated by an analysis of its resources and capabilities, plus a list of the Threats and Opportunities identified by an analysis of its environment. Strategic logic requires that the future pattern of actions to be taken should match strengths with opportunities ward off threats and seek to overcome weaknesses.

People directly involved in various hierarchical levels of decision making in an organisation or business, or a wider sample of actors are involved if the SWOT analysis concerns a whole region or nation. Representatives from a variety of stakeholders groups should be involved, as they would bring in the analysis their own particular perspectives. At least one expert in SWOT analysis should take part or moderate the process.

15.3 Guide for Preparing SWOT Matrix

Drawing up Opportunity and Threat matrices helps in an assessment of the ‘likely probability’ and ‘impact’ of any factor on the organisation. A scoring system may be used to assign importance to factors. A factor which have a high score on both 'probability of occurrence' and 'likely impact on the organisation or business', needs close attention and play a significant part in the development of a strategic plan. Similarly, Strengths and Weaknesses can be assessed against a scoring system that allows the factors to be identified according to their significance (i.e. major, minor, neutral) and level of importance (high, medium, low).

It is possible to represent this analysis in a Performance-Importance matrix that highlights those factors which are both important and in which performance of the organisation/ business is low. It is towards these factors that strategy should be addressed. A SWOT analysis is based on hard facts. These can be time-consuming and costly to gather.

People are needed who have a good knowledge of the business sector under analysis in the specific exercise.The main tangible output is a matrix presenting the most important strengths, weaknesses, opportunities and threats for the organization examined and aiming at giving a reasonable overview of major issues that can be taken into account when subsequently drawing up strategic plans for an organization.

15.4 Advantages and Disadvantages of SWOT Analysis

The success of this method is mainly owed to its simplicity and its flexibility. Its implementation does not require technical knowledge and skills. SWOT analysis allows the synthesis and integration of various types of information which are generally known but still makes it possible to organize and synthesize recent information as well.

The most common drawbacks of SWOT analysis are: The length of the lists of factors that have to be taken into account in the analysis; Lack of prioritisation of factors, there being no requirement for their classification and evaluation; No suggestions for solving disagreements; No obligation to verify statements or aspects based on the data or the analysis; Analysis only at a single level (not multi-level analysis); No rational correlation with the implementation phases of the exercise, risks of inadequate definition of factors; over-subjectivity in the generation of factors (compiler bias); the use of ambiguous and vague words and phrases

15.5 Strengths

· Enhanced milk production with consequently increased availability of milk processing.

· Improved purchasing power of the consumer.

· Improved transportation facilities for movement of milk and milk products. Increased availability of indigenously manufactured equipment.

· Large number of dairy plants in the country.

· Vast pool of highly trained and qualified manpower available to the industry.

· Country's vast natural resources offer immense potential for growth and development of dairying.

15.6 Weaknesses

· Lack of appropriate technologies for tropical climate conditions.

· Erratic power supply.

· Lack of awareness for clean milk production.

· Underdeveloped raw milk collection systems in certain parts of the country.

· Seasonal fluctuations in milk production pattern.

· Regional imbalance of milk supply.

· Species-wise variation in milk quality received by dairy plants.

· Poor productivity of cattle and arable land.

· Scarce capital for investment in the dairy development programmes on a priority basis.

· Absence of proper data records which is essential for preparing development programmes.

· Dairy development programmes have not been fully implemented as per the needs of the region in different agro-climatic zones.

· Lack of marketing avenues for the dairy produce.

· Non-availability of software for preparing needed dairy schemes/projects.

· Lack of infrastructure for offering Dairy Business Management programmes to train dairy personnel.

15.7 Opportunities

· Greatly improved export potential for milk products of western as well as traditional types.

· Expanding market for traditional dairy products.

· Increasing demand for fluid milk as well as value added products.

· Byproduct utilization for import substitution.

· Employment generation.

· Growing demand for milk and milk products.

· Liberalized polices in dairy sector.

· Availability of large resources of unconventional feeds and fodders.

· Availability of diverse germ plasm with unique features like heat tolerance, disease resistance, draftability and ability to survive and produce under stress conditions.

· Availability of animal production technologies for faster development and effective implementation.

· Integrated structure of marketing for milk and milk products.

· Integrated structure of livestock marketing through regulated markets.

· Improved collection of data on contract basis through agencies.

· Market information intelligence system for milk and milk products.

· Development of software for project formulation for dairy enterprise.

15.8 Threats

· Introduction of foreign products in Indian market.

· Increasing chemical contaminants and residual antibiotics in milk.

· Poor microbiological quality of milk.

· Export of quality feed ingredients particularly cakes under the liberalization policy.

· Deficiency of molasses, a rich source of energy and binding agent in feed industry and constituent of urea molasses mineral lick.

· Excessive grazing pressure on marginal and small community lands resulting in complete degradation of land.

· Extinction of the indigenous breeds of cattle due to indiscriminate use of crossbreeding programme to enhance milk production.

· The liberalization of the dairy industry is likely to be exploited by multinationals. They will be interested in manufacturing value added products. It will create milk shortage in the country adversely affecting the consumers.