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Farm Fresh Diaries Case Study | Solution in 2020

Farm Fresh Diaries Case Study

Farm Fresh Diaries Case Study Details:

Chaudhry Zahoor Ali, hailing from Gujranwala, successfully took over and expanded his family business of dairy farms to an extent of having five dairy farms with an aggregate turnover of PKR 59 million per annum. His dairy farms formed part of the key supply line for a major brand of packaged milk owned by a multinational consumer goods company.

It took his youngest son, Chaudhry Ekram Ali, an MBA from Edinburgh (and the highest educated member of the family) to take the family business a step further. Ekram convinced his father and his two elder brothers to initiate Farm Fresh Dairies and move into the business of packaged and processed milk.

Farm Fresh Diaries Case Study

Their brand, simply called Farm Fresh, was first introduced in the Punjab market and experienced moderate success, as there were limited resources for advertising and distribution. Ekram, however, managed to bring more capital into the company by converting it into a partnership, bringing two major dairy farm owners into the business. He also negotiated and obtained a huge loan from a leading commercial bank (much against his father’s liking). With this much-needed money at his disposal, he hired the services of an experienced distribution firm and with some skilled business acumen and pulsed advertising, managed to penetrate into major cities like Lahore, Faisalabad, and Islamabad, etc.  

Farm Fresh Diaries Case Study
Farm Fresh Diaries Case Study

Next was the move to target Pakistan’s commercial hub, Karachi. There, despite some concentrated effort, Farm Fresh could only have limited success. The reason lies more in the supply and demand gap than anything to do with product quality or brand awareness. With production based in Gujranwala, it was a long haul bringing the packaged milk containers to Karachi, and consumers and retailers alike complained about out of stock situations.

Farm Fresh Diaries Case Study

To overcome this problem, Ekram wants to set up an indigenous production facility in Karachi, but for that, the company will have to rely on its supply line on dairy farms situated in Sindh. There are, however, serious reservations inside the company about buying raw milk from other dairy farms. One of the partners, Mian Iftikhar, thinks it is contrary to the company’s interests to rely on suppliers when Farm Fresh has always sought its strength from having its own dairy farms.

Farm Fresh Diaries Case Study

Ekram’s elder brothers, Aslam and Inam, though involved more in managing the dairy farms than the Farm Fresh business, tend to agree with Mian Iftikhar on this point. Zahoor Ali, though officially President of the company, is now too old to take an active interest in the company. The other partner, Malik Azmat, favors Ekram, but then it is understandable, as he also happens to be his father-in-law!

An alternative idea, suggested by Chaudhry Aslam, the eldest brother, is to buy or set up their own dairy farms inside Sindh. He believes Inam, the younger brother, can look after the farms in Punjab, while he, Aslam, can take care of the set-up in Sindh. Ekram, the CEO, while not saying anything openly, is not quite confident of the entrepreneurial and managerial skills of his eldest brother to vie for this suggestion.

Problems are not confined to matters of expansion only. The dairy farmers of Punjab, till they were only managing their farms, were used to a simplified, flat structure with high centralization and little formalization. Once they moved into the packaged milk industry, they faced problems related to labor unrest, unionization, and amalgamation into the corporate culture for which all of them barring Ekram, were unprepared and untrained.

Farm Fresh Diaries Case Study

Ekram, however, worked hard, keeping himself in the forefront to deal with corporate challenges. He set up functional departments like production, finance, HR, MIS, and marketing & sales; hired and appointed departmental heads in each area, acquiring highly paid, seasoned professionals (though most of his partners and his own family were first aghast when they got to know the salaries which these professionals were to draw!).

Ekram also set up reporting relationships, worked hard with the HR people to charter out career plans for his employees, and emphasized that every employee and department must have Key Performance Objectives (KPO’s). His focus was always on improving coordination through the use of effective information processing systems and well-defined procedures. In this regard, he runs a tight ship.

Edram also expanded the product line, though with little focus on Marketing Research, simply following what other leading companies had done in the market. Farm Fresh introduced its low calorie version (Farm Fresh Lite), Farm Fresh Cream, Farm Fresh Delight (flavored milk in vanilla and chocolate), and Farm Fresh Butter. He has now asked his Production, Finance and Marketing Directors to work on a business plan for Farm Fresh Ice Cream and even Farm Fresh Chocolate.

Farm Fresh Diaries Case Study

One of his most ambitious plans includes setting up company-owned retail outlets, by the name of Fresh-Mart, selling entire product lines of Farm Fresh, offering package deals, and membership discounts, besides the usual merchandise found in superstores. While the Marketing Director, Anila Haq, a young business graduate, is enthusiastic about the idea and believes it would be a daring step by the company.

The Director Sales, Maroof Yazdani, an old hand in the consumer markets, is skeptical about the plan, saying that a lot of brands being sold in superstores are being marketed and distributed by their multinational rival in packaged milk category, and its distributors may not like to deal with their own partner company’s competitor, especially since Fresh-Mart does not intend to keep any other company’s dairy or milk products.

Another problem posed by the Karachi market is autonomy. The Zonal Sales Manager for Karachi, Rashid Hameed, wants a more decentralized operation believing that Maroof is keeping things too tightly in his own hand, not allowing the territory sales teams in Karachi to use back end commissions or upfront discounts to wholesalers and retailers at their own discretion, which is hindering the prospects for Farm Fresh in Karachi. Anila, meanwhile, believes that the urbane, fast-lane consumer of Karachi will not be attracted towards Farm Fresh till the brand incorporates some glitz and excitement.

Farm Fresh Diaries Case Study

In this connection, she convinced Ekram to have racy, trendy television advertisements developed by an ad agency. The ads may or may not have attracted the consumers, but they certainly raked up a lot of controversy within the company. The conservative Chaudhry family did not approve of the ads and Ekram had to argue and defend the idea with his father and elder brothers.

So, while Farm Fresh continues to do a good job in maintaining high efficiency within its supply line – the dairy farms, and coordinating it well with their production unit in Punjab, the rest is still a question mark for the company, in so far as its corporate strategy and vision are concerned.

Ahmed Foods Case Study Solved
Farm Fresh Diaries Case Study

Farm Fresh Diaries Case Study Solutions:

Question No. 1: How would you classify the corporate level strategy using the Miles and Snow typology in the following steps taken by the management?

  • When Ekram moved his family’s dairy farms business into the packaged milk industry?
  • When Aslam considers setting up Farm Fresh own farms in Sindh?
  • When Ekram consider setting up their retail outlets?
  • When does the company look to expand its product line?

Answer (1):

  • In this scenario, Ekram used the Prospector Strategy and somewhat Analyzer Strategy as they converted their main domain of business, first they were just operating as a supplier of the milk only but now they are working on a package milk business which will enable them to make their own brand and raise their overall profitability, the idea for expansion introduced because Ekram knew that having their own dairy farms would give them a major core competency in their field and they will have the advantage of vertical integration as well which will reduce their cost of production hence lower product price.
  • In this scenario, Ekram used the Analyzer Strategy, while he wants to run a stable business activity, the Karachi hub facing the shortage issues, the demand and supply gap was increase gradually which was leading to the limitations of success for farm fresh, so in order to make the business activities more smooth and efficient and resolve this problem, Ekram was thinking to seek the opportunity to establish a farm facility in Sindh province.
  • In this scenario, Ekram was again seeking for more opportunities in the market to increase their profitability and market share as a firm, he seeks to use Analyzer Strategy to open up their own retail outlets by the name of Fresh Mart in different cities of Pakistan, where only the products of farm fresh will be available, firm will offer different discount ad membership packages in these retail outlets which will eventually attract more customer and will also bring the brand loyalty for the firm, hence higher profitability as well as market share can be achieved.
  • In this scenario, Ekram is applying Prospector Strategy because he is looking for expanding his business and the current product line with new products which will help them create a better brand overall within the dairy industry, he is looking to go for Farm Fresh Lite, Farm Fresh Chocolates, Ice Creams, Butter and many more, so he was looking for more creativity in their product line, the decision is overall risky but he is more inclined toward the growth of the farm-fresh and wants to bear every risk in order to bring creativity in their products.

Farm Fresh Diaries Case Study

Questions No. 2: Do you agree with zonal sales manager Karachi in terms of flexibility, focus, and control dimensions? Elaborate with solid reasoning.

Answer: Yes! The concern of the zonal sales manager was on the point; sales department require a complete Decentralize System and Low Formalization in order to bring the creativeness in their job, sales jobs aren’t same as the manufacturing jobs where labors were required to follow same production process as other labors are doing in order to maintain the efficiency and quality of the product, which bring high formalization in their jobs, but in a sales job, employees interact with different sort of customers daily with each having their own unique personality.

So the way to deal with them has to be different every time, in order to bring this creativeness in the jobs, salespeople require complete autonomy and no formalize a way to sale the product in the market, so the demand that zonal sales manager was asking for is completely legit and farm-fresh has to engage a low formalize sort of sales department where employees can use different way sale out the product, this will also groom their employee and can be beneficial for the firm in the long run.

Apart from the formalization, Zonal Sales Manager also wants a Decentralized system in their department, in order for its employee to use different sorts of tactics to sale out the products, having a centralized decision-making system, doesn’t give them the right to do this without taking the permission from the upper department, which was creating the conflict. The best way to deal with this problem is to set out the profit goals that firm requires from their sales department and provide them complete autonomy to apply whatever tactic they want to use to increase the sales of the firm.

Farm Fresh Diaries Case Study

Question No. 3: What is the core competency of Farm Fresh? Can it use this core competency to its advantage in developing new products and/or finding new domains, or would it have to search for other core competencies?

Answer (3): The main core competency of Farm Fresh was having their Own Dairy Farms they didn’t have any upward vertical integration which makes them highly competent because they are working totally independently, not depending on any other supplier for the raw material which saves them from many unpredictable problems such as being short in the raw material because of supplier issues, further, they always know about the quality of the raw material (milk) which enable them to guarantee a high-quality product every time which wouldn’t be possible with external supplier because there would always be uncertainty.

It also safe Farm Fresh a huge cost of production by deducting the costs of suppliers and also on some extend the cost of inbound logistics, saving these costs help them in setting a lower price in the market than what their competitors are charging which will, in turn, help them attract more customer and gain more market share.

They were already thinking about expanding their business with their Core Competency of being their own supplier because of their Own Farms to Farm Fresh Lite, Farm Fresh Chocolates, Ice Creams, Butter and many more, so in this sense, they don’t need any other competency to be the best in the market if they want to stay in the domain of dairy product.

If they want to switch the whole domain of their business then they might need some other competency as well in order to bring the best in the market because in that businesses having their Farms wouldn’t help them because dairy might not be the part of the raw material they needed to manufacture their product, so in whatever domain they will expand in the future, as long as they have the power of vertical integration, either backward or forward it would help them establish the core competency in the field.

Farm Fresh Diaries Case Study

Power and Politics in Farm Fresh Diaries Case Study
Power and Politics in Farm Fresh Diaries Case Study

Question No. 4: Do you agree that power and politics model can be used to analyze and resolve the conflicts within Farm Fresh? How?

Answer (4): Yes! The power and political model can apply on all the conflicts that farm fresh is facing recently, there are no. of conflicts that has arisen within Farm Fresh, one of them was the family of Ekram who are against the advertising of the product which is eventually preventing the growth of their product, Ekram can use the Political Model in order to negotiate with their family for the need of advertising for the success of the product. Further the sales manager was demanding the complete autonomy in their department to take the enable their sales employees to take the decisions on the spot.

Ekram can use Empowerment Process to provide the autonomy to the sales department and give them total autonomy to make their decision and fulfill the given profit targets, this is how this conflict can easily be solved. Another conflict that was dangling in Farm Fresh was Ekram’s brother was looking for the power in the farms of Punjab and future venture which is going to be in Sindh, but Ekram was not so much confident about management skills of his eldest brother.

So in this case, Ekram can use the Power and Political Model as he can give the responsibility to manage the Farms in Sindh to his eldest brother but just for manufacturing department, all the other Finance, HR, Marketing departments will be undertaken by the decision of Ekram itself, in this way he can satisfy his brother by his power and solve the conflict.

Question No. 5: Do you find a paradox in the way Ekram is trying to manage Farm Fresh in terms of structural requirements?

Answer (5): Yes! Ekram was stuck in so many paradoxes because of the different mindset he was interacting too, his family member was so much conservative in nature and doesn’t allow Ekram to do anything that goes against their level of thinking, for the company is needed to operate with stability and doesn’t need to look for growth opportunities and expanding the area and domain of business in any forms, but on the other side, Ekram was very keen to grow their business and groom their products in the market to increase the overall profitability of their business.

He was not ready to just work as a supplier for other firms and let them make the profits, that is why the family of Ekram wasn’t really happy with the decisions made by Ekram to expand the business and especially hiring professional of Marketing, Operations, HR, Finance and Sales with a huge amount of salary and many skilled labors for the sales of products and to bring the creativity in their business, for the Ekram Family it was just an addition of multiple costs in their business which is not going to pay off in the future and that is why they didn’t ready to support.

Ekram with the capital needed in building this business empire and so Ekram borrowed the capital from financial investors and obviously a huge bank loan to settle down this whole business plan, further Ekram was intended to use the advertising medium on the television to spread the awareness of their multiple products available in the market but again his family was totally against this idea, for them ads doesn’t attract much of the customer instead it creates the controversy for the firm in the market and raise the competition for the firm in the market, so that is why investing in advertising is just a waste of money in the eye of Ekram’s family.

Farm Fresh Diaries Case Study

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Muhammad Abbas

A Graduate of IQRA University, Pursuing Masters Program from IQRA University as well, Work as an Assistant Manager - Finance in Unilever Pakistan, Having Couple of Published Articles in Internationally Recognized Journals, Aim to Help the Students in Every Possible Manner to make them Achieve their Desire Goals!!! :) :) :) Keep Learning!!!

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