Strategic Management At Silver Fern Farms: An In-Depth Report

Introduction to Strategic Management

Strategic management refers to the process of formulating and implementing major goals, which is usually executed by the top management of an enterprise. This would benefit the organization as a whole (Hill, Jones & Schilling 2014, p. 6). Strategic management would involve an analysis of the external and internal environments of the organization. This would help the organization understand what strategies could be implemented and what strategies need to be improved (Wheelen et al. 2017, p. 8). In the following paper, an in depth report has been presented on the strategic management at Silver Fern Farms in New Zealand. It provides information on the existing strategies at Silver Fern Farms and recognizes gaps as well. Moreover, the company’s strategic management with respect to corporate sustainability, corporate governance and corporate social responsibility has also been taken into account.

Silver Fern Farms is a leading organization on procurement processing and marketing dealing in high end red meat proteins. The company is also responsible for exporting its products to different countries around the world. The company was founded in the year 1948, and since then it has earned a favorable reputation for producing top quality products (Silverfernfarms.coop 2018). The company is steeped in traditional values and provides 100 per cent natural beef, venison and lamb to top restaurants and small scale grocery chains all over the world. Annually, the company reels in revenue worth 2.3 billion dollars, with more than 16,000 farmers working for them. The company has over 7000 employees working for them and holds more than 30 per cent of the market share in New Zealand. 

Use of resource based view and external analysis in strategic management

The resource based view of the firm, also known as RBV, which has been around for approximately two decades, has turned out to be one of the most significant paradigms in strategic management. The theory was introduced by Jay Barney in the year 1991, where he claimed that a company can gain competitive advantage in the market based on the capabilities and resources that a firm has (Lin & Wu 2014, p.1). These resources are imperfectly imitable, rare, valuable and definitely not sustainable. Such resources would refer to intangible and tangible assets of a firm. These comprise organizational processes, routines, management skills, information or knowledge in the possession of the firm. According to the resource based viewpoint theory, the resources of a company determine its success or failure. These are the measurements of success for the company (Grant 2016, p. 27). The resources in question would remain in a latent form until and unless the firm deploys its capabilities in order to enhance sustainability and competitive advantage. For example, in human resource management, it would be important to emphasize on talent management. This would increase the value contribution of the employees, thus improving the overall performance levels of the company (Armstrong & Taylor 2014, p.4).

About Silver Fern Farms

Similarly, to ensure that the enterprise gains a competitive edge, the managers would have to alter their strategies to help the company adapt to a changing environment. The performance of a company would depend on the environment it is operating in (Rothaermel 2015, p. 2). There are various aspects of the external environment, like social, political, technological, economic and environmental factors which must be taken into account. This is because the external environment of an organization would play a crucial role in determining the scope of the enterprise as a whole. In the case of Silver Fern Farms, the aforementioned factors would have to be taken into account before one attempts to study the strategies implemented in the organization. For example, in order to implement new strategies certain political factors like political stability of the location, existing legal frameworks, trade regulations and meat manufacturing regulations would have to be taken into account (Hill 2017, p. 13). Similarly, the prevalent economic trends in the industry, the workforce available, labor costs and financial market trends will have to be studied. It is also important to take a look at the demographic factors like culture, class structure, education, health and other environmental factors which could affect the meat industry in New Zealand.

Types of strategies used by Silver Fern Farms

An analysis of the operations at Silver Fern Farms would show the existence of a few types of strategy which are found in strategic management. They are as follows:

Competitive strategy – A competitive strategic management policy is followed by the company. This strategy takes into account both external and internal factors affecting competitiveness of Silver Fern Farms. The purpose of such a strategy is to ensure that the company gains a competitive advantage in the market. In New Zealand, there are several other companies that deal in procurement and processing of red meat. The company uses policies of sustainability and corporate social responsibility to gain vantage over other companies. Such a strategy would be implemented in order to lure in more customers and also deliver top notch services to them, thus meeting customer satisfaction levels. These strategies are usually customer oriented. This helps the company meet customer demands and improve customer satisfaction. The aim of such strategic management is to build and grow a competitive advantage that is sustainable on a long term basis.

Corporate strategy –In a company as diversified as Silver Fern Farms, it is important to have a corporate strategy that takes into account its goals and objectives which must be attained in the due course of time. On the other hand, a business strategy would address strategic matters and assess the tactics and methods adopted by the company. Such a business strategy, as seen in the case of Silver Fern Farms would make use of the available resources of the company and its distinctive competencies which would be aligned with the business strategies of the company (Epstein 2018, p. 23). In the case of Silver Fern Farms, the focus of the corporate strategy would be on the innovative techniques, integration, market development, product development, diversification and so on. 

Resource Based View of the Firm

To understand the gaps in strategic management, an analysis of the company’s strengths and weaknesses has been done in the section below.

Strengths

• The company is supported by a strong work force. The employees of the company are dedicated to the company’s growth, therefore making the human resources of the company an extremely valuable asset.
• The company also has a high profitability rate. Owing to the fact that the company holds a significant share of the market, the income generation rate has been high consistently for the last few years.
• The performance of the company at the domestic level has been very strong which has established it as a forerunner in the business.

Weaknesses in strategic management

• One of the major shortcomings in the strategy of the company is it’s over dependence on raw materials. Thus, the power of suppliers is relatively high, making the company entirely reliant on the availability of resources. The need of the hour is to develop a strategy that reduces dependence on resources and makes the company sustainable on its own.
• The Silver Fern Farms was operating a large scale business and bringing in profits in billions of Australian dollars. The management was responsible for monitoring projects worth millions of dollars which ranged from infrastructure to capital investments. However, the executive committee at the company was lacking in vision that is required to recognize the actual impact of such projects on the overall organization. A company strategy should be such that the money invested by the shareholders help in mitigating risks, enhancing efficiency and providing more returns on the investment.

Corporate governance

Corporate governance refers to the board of directors along with the top management of the company who are entrusted with the task of strategic management within the organization. These people or teams are the foundational pillars for the whole organization and would be responsible for ensuring the long term success of the organization (Tricker & Tricker 2015, p. 30). The responsibilities of the governing body would comprise the following:

• Sustainability
• Strategic management of the company
• Succession planning
• Balancing risks and initiation
• Evaluation of performance
• Initiatives and monitoring progress

In Silver Fern Farms, there is a board of directors consisting of 10 members, all of whom are responsible for devising and implementing strategies of the company. The purpose of the board of directors is to protect and take care of the interests of the shareholders of the company. Since the company is a corporation (a company having more than one person investing in it), Silver Fern Farms has a board of directors. The role of the board of directors would include taking care of shareholder interests and enforcement of strategic management. In addition, the board of directors of the company is also expected to cater to the stakeholders, so as to facilitate smooth relationships between the customer and the company and that between the employees and the management. 

Corporate sustainability and social responsibility

Nowadays, there is a growing need for corporations to incorporate social issues, along with the interest of the stakeholders, in order to become better and more reliable corporate citizens. It is thus imperative for the company managers to take into account environmental impacts, government regulations, societal concerns, stakeholder pressures and so on (Eccles, Ioannou & Serafeim 2014, p. 3). Accordingly, the management is expected to devise strategies that would bring about changes to the existing mode of operations in the company. This paves the way for corporate sustainability, which can be declared as one of the most important determinants of success of an organization (Schwartz 2017, p. 1). Silver Fern Farms has a robust strategy for corporate sustainability; the reasons have been discussed below:

• There are several laws and regulations pertaining to sustainability in New Zealand that every company must abide by. Non compliance with these laws and policies could be punishable and could adversely affect the organization.
• More and more people are gradually becoming aware of the intricate relationship between a community and an organization. It has been found that enterprises affect the environment they operate out of, which could be positive or negative. In order for an organization to function effectively, it needs to facilitate cooperation and positive relationships with the community.
• Sustainability would improve the financial value of the corporation by reducing costs or expenses and increasing the revenue output. With better relationships with the community, the reputation of the company would improve which would result in increased sales.
• Since companies like Silver Fern Farms have an impact on the environment and surrounding communities, they have a moral and societal obligation to promote sustainability.

For instance, Silver Fern Farms ensures that it reduces environmental impacts by taking into introducing a number of policies and regulations which cater to the environment. In order to support the farmers who provide them with the raw materials, the company equips them with environmental and land toolkits. These help the farmers understand the environmental issues on the farms. Such toolkits would also comprehensively assess the effects of farming on the land and water resources. Using this, the farmers can educate themselves as to how to devise structured and effective environmental management plans. Similarly, the company strives up to live up to the high standards of environment sustainability as mentioned by the government of New Zealand. The company also has taken a number of measures which would promote health and safety amidst the farmers. The farmers working under the banner of Silver Fern Farms would be provided such benefits; this would set an example for other companies, demonstrating the fact that sustainable farming, as a practice, is possible and achievable and at the same time, profitable and rewarding. 

Competitive Strategy

Conclusion

To conclude, it can be said that strategic management would include all possible strategies and plans that take into account each aspect of running an enterprise. This would include human resources, finances, raw materials and so on. For a company like Silver Fern Farms, the operations are largely dependent on raw materials and human resources, farmers in this case. Thus, it is the responsibility of the management to ensure that these resources are incorporated into strategic management, as proved by the resources based view of the firm theory. In addition, a competitive strategy followed by the company would ensure that the company stands above the rest in terms of competitors and gains a vantage over them. This means that customers availing of the services would prefer the company in question over other firms in the same field. The purpose of strategic management, to sum up, is to make sure that the long term and short term goals of the company are fulfilled. 

References

Armstrong, M. & Taylor, S., 2014. Armstrong’s handbook of human resource management practice. Kogan Page Publishers.

In this reference, the authors speak about human resource as a management practice and the role of business ethics in human resources.

Eccles, R.G., Ioannou, I. & Serafeim, G., 2014. The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), pp.2835-2857.

Here, the authors talk about the importance of corporate sustainability and the need to incorporate the same as a part of strategic management to improve the overall performance of organization and to enhance productivity.

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This reference talks about the impact of economic and social factors on the organization and also speaks about the practices and strategies that could enhance the social, economic and environmental consequences of an organization.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

This reference provides a discussion on the importance of external and internal environmental analysis in strategic management and covers how external factors can affect an organization.

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Here, the authors talk about the concept of strategic management as a whole and the various theories and models pertaining to the same.

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This reference speaks about the strategic management which is necessary in an organization, especially in the manufacturing sector.

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The reference gives an in depth analysis of the resource based view of the firm theory and explains how resources and capabilities in a firm can affect its profitability.

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This is an authoritative text on strategic management and explains all relevant theories and models about the various kinds of strategies implemented by a company along with corporate sustainability.

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This reference focuses on the role of corporate social responsibility in a company and how any organization s responsible for the environmental and social impacts that its operations have on the surrounding communities.

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This reference talks about the role of corporate governance in ensuring the success of an organization. The board of directors and the executive team, along with the top management at a firm would form the corporate governance.

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