Executive Summary
NADA Dairy Company is an affiliate of Al Othman Agriculture Production and Processing Company. The company pursues a market modification strategy aimed at improving its revenue performance. Most NADA products have reached the maturity phase, thus affecting the company’s sales volume. NADA equally pursues a marketing mix modification through increased advertising.
The distribution network has been expanded in order to cover a wider market. The company has adopted a Saudization policy within its HR function with a view of incorporating the Saudi culture into its operations and performance. This is proving to be a challenge to the company because it draws its labor force from all the countries it operates in, which include all the GCC member states. The company should consider addressing this challenge by delinking the Saudization from the overall corporate structure.
Introduction
Al Othman Agriculture Production and Processing Company also referred to as NADA, is a family business that was established in 1982 (Nada, 2013). The company is based in Saudi Arabia’s eastern province and mainly focuses on the production, manufacturing, as well as distribution of fresh dairy, long-life milk, and juice products. Nada has an expansive market for its array of products, which covers a significant area of the Middle East region, including UAE, Kuwait, Qatar, Bahrain, as well as Saudi Arabia itself. This report provides an exclusive description of the company’s business situation and position, including its background, strengths, weaknesses, and its competitive and marketing strategies among other important facts.
Company Background
Shaikh Mohammed Bin Abdullah Al-Othman founded NADA Dairy in 1982 as a family-owned business entity. His initial assets included 1,000 Friesian cows as well as four tracks that were mainly aimed at providing transport services. Growth and expansion of the business were realized almost immediately as NADA accumulated adequate capacity to sustain the distribution of its products to central Saudi Arabia and Bahrain by 1983. Between 1983 and 1990, the company introduced new brands for its array of products, including Labneh, Laban, Fresh Milk, and Yogurt (Nada, 2013).
The year 1991 saw yet another important innovation and development of products when NADA launched a new product of skimmed milk. An expansion of the product portfolio at the firm had not been witnessed until 1993 when NADA launched its first fresh juice product (Nada, 2013). The demand and success recorded by the juice product influenced the company’s management to introduce different flavors for the juice product, including strawberry, mango, and mixed fruit. Other product innovations that have been witnessed at the firm since then include an introduction of fresh flavored milk in 1995, the introduction of NADA long-life milk in 1998, as well as a further introduction of different fruit-flavored milk, including mango and guavas among many other flavors (Nada, 2013).
Nature of Company Activities
NADA mainly deals with the production and processing of milk and its related products. The company rears its own cows from where the milk is obtained prior to the processing. Self-rearing of the animals implies that NADA undertakes such animal husbandry chores as growing fodder, treating the animals, and overseeing the breeding and production activities.
Apart from the dairy section of the firm, NADA also processes juice products, which it manufactures and packs before availing the same to the market. Apart from the processing of milk and juice products, NADA also directly involves itself in marketing the products. The marketing exercise involves undertaking marketing research in order to determine consumer tastes and demands and coming up with the right product formula that suits the demand. It also involves determining the most appropriate packaging the company can use for its products.
Company Size
NADA Dairy is a large firm that operates throughout the GCC region, with an established presence in Qatar, Bahrain, Dubai, the United Arab Emirates, and the Kingdom of Saudi Arabia (Nada, 2013). To effectively handle its widespread operations, NADA has employed up to 2,700 employees who are stationed in the various company operating stations. In total, the 2,700-strong labor force is drawn from a mixed nationality involving 19 countries and comprises of mixed races that include Arabs, Asians, Africans, and expatriates from the western world.
Saudi nationals form the bulk of the workers at the firm, standing at 23 percent of the total population. Overall operations of the company have been structured into 26 branches, all of which have been distributed across the GCC member states and Saudi Arabia. The sales team has the highest number of workers amongst all the departments, which currently exceeds 1,300 employees. This comprises 48 percent of the entire labor force at the firm.
Vision
The overall vision statement of Al Othman Holding Company, which is NADA’s parent company, states as follows: “To be one of the key-players in supporting Saudi Arabia and the Gulf Region Economy” (Al-Othman, 2013).
Mission
NADA’s mission statement reads as follows: “We are dedicated in providing various types of High Quality Products and Reliable Services, considering their impact in supporting the region’s Economy” (Al-Othman, 2013).
Organization Chart: HRM
The HR department at NADA is structured into five major sections or areas, which include recruitment, Saudization, employment relations, compensations and benefits, and administration. In general, the HR department’s structure appears as follows:
The HR Administration manager is charged with various responsibilities, which include overseeing both employment and government relations, and offering support to the sales team. Other roles include building the administration capacity within all the GCC countries, and ensuring that the general services are run as intended.
SWOT Analysis
Strength
NADA is owned as part of a group of many companies under the Al Othman Holding Company flagship. This offers the company the advantage of stability as a result of vast resources and great experience depth (Adekola & Sergi, 2007). Because of the many year’s experiences of operating a wide range of businesses, NADA’s management enjoys greater stability, which is highlighted in the manner in which the company is run.
NADA enjoys a wide market for its products, given its success in business that has spanned over three decades of operations. This has seen it win over the confidence of its customers, who are drawn from the several GCC countries that NADA has established operations in. This means that any new market entrants have limited chances of toppling NADA as the market’s leading distributor of milk and other beverage products.
Weakness
NADA does not produce powdered milk, which has a great demand within the domestic as well as the GCC market. This has allowed room for other industry players, particularly the foreign-based companies that manufacture powdered milk, to exploit this market. The situation denies NADA additional revenues that would have otherwise been used in developing the company even further.
There is no existing partnership between NADA and other international, well-established dairy firms. While the majority of local companies have entered into such partnerships in order to increase the capacities and capabilities, NADA continues to lag behind on this front (Adekola & Sergi, 2007). This limits the company’s ability and capacity to compete with the local rival firms, which enjoy greater skills and expertise from foreign firms.
Opportunity
Saudi Arabia and the rest of the GCC countries are rich in petroleum resources, which have helped to boost the countries’ wealth significantly. This wealth trickles down to the rest of the ordinary citizens in the countries, making them able to afford the wide array of NADA products. Thus, NADA is assured of a stable market in this region, making it assured of good business and profits.
Demand for Saudi Arabia’s dairy products in the external international market has been on the rise in recent years. This provides an opportunity for NADA to increase its production capacity and sell the commodities for the export market in order to increase its annual revenue and raise its profitability.
Threat
Saudi Arabia, and indeed the rest of the GCC countries, is located in a desert region, which makes it more challenging to rear cows. This affects milk production, forcing NADA to keep a large number of cows in order to guarantee its market’s demands.
More companies have been seeking to venture into milk production and processing within Saudi Arabia and the rest of the GCC region. This poses a challenge to NADA as it is set to increase competition in the industry and lower the profitability margins.
Saudi Arabia experiences large-scale importation of mainly powdered and pasteurized liquid milk, which affects the domestic market for NADA. The importation increases competition and could affect the pricing of the commodity as well (Adekola & Sergi, 2007).
Marketing Strategy
The majority of NADA’s products have reached the maturity stage. Thus, generally, the company’s products are experiencing declining sales growth, with market saturation being one of the main reasons behind this development. NADA’s counter-strategy involves both market modification as well as marketing mix modification.
Market Modification
The company has sought to influence an increase in its sales volume by manipulating the constituent variants and modifying its market. The modification involves expanding the number of particular brand users. NADA has entered new market segments, which are different from the traditional markets which were the main focus of the company. New milk flavors, with several fruit flavor varieties, have been introduced into the market to try and appeal to a wider market. The new milk flavors include guava and mango, which are part of the 48 different fruit flavors that the company integrates into its milk brands.
NADA has also increased its overall market promotion budget, by increasing advertisement activities. An extensive electronic advertisement on both radio and TV is being carried out by the company in order to persuade customers, mainly of its competitor firms, to try out on its products. NADA is also pursuing a vigorous online campaign, which mainly focuses on social media. Potential clients are persuaded to ask questions concerning the company’s products either on Twitter or Facebook in order to have direct interaction with the company.
For both its milk and juice products, NADA is convincing customers to consume them as much as possible for health reasons. Consumers are advised to consider using milk not only during breakfast but also during any time of the day in order to benefit from its nutritional compounds. The packaging for both juice and milk products involves detailed information about the nutrients that are included, as a strategy for increasing the usage rate.
Marketing Mix Modification
Product
Product modification involves new packaging for NADA’s beverage products. The new packaging has changed colors from the previous product packages, with the most significant addition being nutritional content. The company has abandoned paper packaging in favor of plastic jerry can containers. In its promotional activities, NADA is emphasizing to the buyers that other than consuming the beverages, more benefits can be derived from using the jerry can containers for storage of other liquid products, such as water.
Place
Newmarket segments have been introduced for NADA’s products. In particular, the firm has increased its presence and activities in central Saudi Arabia, as part of its new regional market. Although NADA products were still available in central Saudi Arabia initially, the company did not have an existing regional office as it did in the Eastern province and in the rest of the GCC countries where it operates.
Price
NADA products’ prices have been revised downwards in order to target price-sensitive buyers. The new move now places NADA’s products at a relatively lower price as compared to the price charged by its main market rivals. In other brands, however, the prices for the commodities are at the same cost as those of the rival firms.
Distribution
New distribution channels have been introduced by NADA within the regional markets where it operated before. In addition, the company has opted to enlist new distributors to help in increasing the frequency of distributing the products.
Advertising
NADA has particularly increased its advertising spending to help in the creation of market awareness of its variety of products. Additional expenditure has mainly been channeled to radio and TV advertisements, with the frequency at which the advertisements are aired having been increased. Online advertisement has also been launched, with the main attention being the use of social networks, including Facebook and Twitter. Advertisement of NADA’s products has incorporated the use of celebrities in order to capture effectively capture the market’s attention.
Services
In order to help increase customer interest and thus influence growth in sales, NADA has introduced direct contact services for all its buyers. Customers can call the company using a toll-free number and have their questions or concerns addressed directly. A web address has also been availed, through which clients can communicate through the internet directly with the company.
Organizational Competitive Strategy
Mission
NADA’s main mission is to dedicate its efforts and focus on providing high-quality products, as well as reliable services for its consumers. In doing so, the firm realizes the impact involved in supporting the region’s economy.
Corporate Level Strategy
NADA pursues a diversification strategy, with particular emphasis on concentric diversification. The focus of this strategy is to ensure that the company introduces new and related products in order to keep pace with the changing consumer tastes and preferences. This strategy has seen the firm expand its product portfolio to include juice products, in addition to its original main dairy product focus. This has also seen the firm introduce a variety of fruit flavors for its milk product in order to expand on the market varieties.
Competitive Strategy
Differentiation Strategy
NADA focuses mainly on incorporating products with specific features, flexibility, low maintenance, and availability, in order to achieve differentiation. The company pursues this strategy as a means of increasing its competitiveness in the market. NADA undertakes an elaborate research and development activity, with strong coordination existing between its marketing department and the research & development department (R&D).
To achieve success under this strategy, the company has designed its HR strategies to emphasize maintaining a skill base that is highly competitive. Employees are often motivated in order to achieve greater results while pursuing the differentiation strategy.
Job History
Report: Internship at Al-Othman Agr. Prod. Co (NADA)
Weekly report, Period: 14-Jul-13 to 18-Jul-13
Conceptual Framework
The strategic contribution of any organization’s HR function must involve four basic areas, which include culture management, fast change, strategic decision making, as well as market-driven connectivity. NADA’s efforts on strategic contribution are particularly focused on the area of culture management. The company has established a whole department that is dedicated to Saudization, which implies integrating the Saudi culture in its operations and activities.
However, this highlights a bigger existing problem for the company. While NADA targets a whole regional market that includes Qatar, Bahrain, UAE, and Kuwait, its management has not considered incorporating the cultures of these countries. The labor force of the company is drawn from 19 nations, which means NADA is a multicultural organization.
This is particularly poised to affect the HR delivery of the firm in certain specific ways. The staffing will mainly focus on acquiring employees who are easy to train into adopting the Saudi culture. This will most likely affect employees who are from the GCC countries as they are not guaranteed to easily adopt the Saudization. Legal compliance is also likely to face challenges as exporting some of the practices accepted as law in Saudi Arabia may not be achievable or acceptable in other countries. Legal requirements such as maximum and minimum ages of employment may not be applied uniformly in all countries.
Personal credibility is also likely to be affected as a result of the Saudization policy of the company (Bratton & Gold, 1999). Achieving effective relationships between workers from Bahrain and those from Saudi Arabia, for instance, may not be possible. All the workers from the GCC countries are likely to look at the Saudization policy in a negative stance because it is not their traditional cultural practice. The aspect of communication within the organization and among the employees is important because it is targeted to help the achievement of corporate organizational culture.
Although Saudization is important in helping NADA to realize its corporate culture, it is important for the management to consider revising it. This will make it appear less imposing, particularly to the non-Saudi nationals.
Projects Undertaken
Following the overview of the employment relations function in the previous week, I met with the Employment Relations Manager and the three HR Specialist (Employment Relations) on a daily basis with case studies related to:
New Hire Employment/Transfers/Separation/Termination/Repatriation/process. We discussed the process before and after each of the above actions. We discussed the HR-related policies and the Personal Action Form process and the approval authorities for each HR action.
Contractual Benefits: Case studies on Employee Benefits were reviewed case by case related to:
Employee Housing / Transportation / Employee’s vacation entitlement / Leave without pay / Vacation tickets / Medical coverage & other benefits
Government Relations: covering passport / visas (all types) Renewals / General Organization of Social insurance / Work related accidents / deaths / Disciplinary actions.
While the above may appear routine, I saw how focused the HR Team was to ensure that the Employee benefits were processed in a timely manner despite HR Head Office covering the entire Kingdom of Saudi Arabia & GCC countries.
Evaluation of the Internship Experience
My internship at NADA Dairy began on 24th June 2013. I was provided with a detailed internship orientation program that was prepared by the Human Resources department, which indicated my schedule with systematic actions and activities. I held my first meeting with the Human Resources Director, who was also acting as my mentor. Initially, the HR director held the Administration Director’s position at the King Fahd University of Petroleum & Minerals (KFUPM) for a period exceeding 15 years. He is a former Business Graduate from KFUPM.
I was provided with an overview of NADA’s internship program, together with the planned schedules, as well as the expected outcome at the end of the internship period. The HR director’s insights into his career history and the wealth of experience acquired from KFUPM, both as a student and employee, helped in providing me with great motivation and inspiration.
Expected outcome
I anticipated acquiring an in-depth knowledge of NADA’s Human Resources & Administration department’s structure and operational framework. I additionally anticipated pursuing a career path option at NADA Dairy, specifically based on the Human Resources & Administration function.
I acquainted myself with general details and information about the company, including an overview of its operational area, market, size, and history. During my first two weeks of internship, I went through a short but intensive overview of the company’s operations. In particular, my focus was on the departments of Finance / Purchasing / Sales System & Sales. I undertook this after holding a meeting with my mentor. The overview I had been based on the overall guidance and direction that was provided by my mentor.
I had the opportunity to hold a series of meetings with the functional heads of all the departments that I had an interest in. The meetings, which also involved a section of key department staff, were extremely informative and provided me with a greater insight into the organization. I was able to scrutinize the overall organizational working, as well as the talent in the company. What was impressive was the fact that I met with employees with over 10 to 20 years of service and work experience with the company. This category of workers was well informed and had a history with the company which they shared with me.
At the HR department, I began my overview with the Sales Support Service section. The HR function incorporates a sales support department, which is headed by a Sales Support Manager & Sales Support Supervisors. The sales support supervisors are stationed in geographical locations within Saudi Arabia and the GCC countries. This department’s main objective is to provide HR support to the sales team. This includes administrative co-ordination with the HR head office related to the employment of the sales team. This is also extended to involve supervisory leave, location assignments, transfers, as well as oversee the internal promotion process, vacation planning, replacements, and disciplinary issue investigation. Other duties include commission payments, monitoring, and managing missing crates and product expiry liability penalties policy. The benefits of undertaking these include ensuring proper accommodation for employees in the branches. Additionally, other benefits related to sales include managing the administration of the company’s vehicles, coolers, and warehouses in 26 branches in the Kingdom of Saudi Arabia and the GCC countries.
I found this combination of sales operations integrated with the Human Resources function very interesting. I saw that given the Sales department has over 1300 workers, which represents 48% of the total employees. My view is that this operational sales support department added a great deal of value to the HR Function, as the sales support manager reports directly to the HR director. This was seen as the main focus on internal promotion and talent development, with sales helpers having the opportunity of being promoted to salesmen, and the salesmen to sales supervisors.
The HR Strategy
The Compensation & Benefits Manager elaborated further on the HR Strategy as was previously explained to me by the HR Director. NADA’s focus for HR has changed from being a process function to being a strategic business partner. The HR strategy is focused on HR strategic contribution. This involves culture management, fast change, strategic decision making, and market-driven connectivity. Other roles include business knowledge, HR delivery, personal credibility, and HR technology. The HR Function has focused on devising and implementing the strategies by focusing on the acquisition of talent and its subsequent development. It has concentrated on performance management, as well as performing the important task of reward and recognizing the employees.
NADA’s HR department is structured as follows:
- Recruitment
- Saudization
- Employment Relations
- Compensation & Benefits
- Administration
During my second week of internship, I met with the team leaders and the HR specialist, who gave me an overview of their functions and processes. This helped me to understand the basis of the HR operations. My third week is scheduled for undertaking a case study methodology in order to have an even greater understanding of the organization’s overall functioning.
I concluded the first two weeks fully engaged in the learning process which I found educative, insightful, and beneficial. The support extended to me by the management of NADA and the employees were very valuable as each member of the organization took time to prepare and present their functions & roles in a very professional manner.
Summary of Findings and Recommendations
NADA Dairy processes milk and juice products, which it sells directly to the market. The company has a wide market area, which it focuses on. It covers mainly the Eastern and Central regions of Saudi Arabia, which is the company’s local market. Internationally, NADA targets the entire GCC countries of Bahrain, Kuwait, the United Arab Emirates, and Qatar.
NADA enjoys great stability in its operations, having been in business for over three decades since its formation. Al Othman Holdings, which is NADA’s parent company, deals in a wide variety of businesses. This has ensured the company a stable financial base, with a great depth of expertise from its labor force. The growing demand for Saudi’s dairy products provides the company with a greater opportunity for growth in its business (Al-Othman, 2013).
The market for the company, however, faces several challenges, which threaten its business performance and growth. The Saudi market is experiencing an influx of dairy products from the export market, mainly powdered and pasteurized milk. Although NADA does not manufacture powdered milk, this places it at a disadvantage of growing its revenue base.
NADA’s products have reached their maturity stage, prompting the company to experience negative growth of its revenue. The company has adopted a market mix modification strategy in order to influence its overall business performance. This has included increasing advertising expenditure, targeting new market segments, and expanding the product distribution network. Advertisements are mainly aired through both radio and TV, with the company also adopting online marketing in order to target a huge audience on social networks.
References
Adekola, A., & Sergi, B. S. (2007). Global business management: a cross-cultural perspective. Hampshire, UK: Ashgate
Al-Othman (2013).AL Othman Holding Co. Web.
Bratton, J., & Gold, J. (1999). Human resource management. New York, NY: Lawrence Erlbaum
Nada (2013).About Us. Web.