Synlait Milk is an innovative dairy processing company that has experienced rema
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Synlait Milk is an innovative dairy processing company that has experienced remarkable growth in a tough dairying environment. Since beginning manufacturing operations in 2008 Synlait Milk based in mid-Canterbury has grown its revenue to $759 million, its supply base to more than 200 farms and its staff to more than 550 people. Synlait Milk has performed very well on the back of global demand for safe, reliable, protein-rich foods. The company processes more than 700 litres of milk a year to produce a range of infant and adult nutritional milk products that it exports to more than 40 countries (Synlait, n.d.).
Synlait was created by dairy farmers Barry Dingle and Juliet MacLean in partnership with John Penno, a senior scientist at Dexcel, the dairy industry’s research centre. Rather than supplying skimmed milk powder to Fonterra the trio were looking for ways to increase the value of the milk they produced. In particular, they were keen to develop innovative added-value milk products. Their vision was to build Synlait into a “major supplier of high-value, hightechnology ‘milk components’ to food producers worldwide.” (Oram, 2006).
Synlait began in 2000 as a corporate farming business with the purchase of Robindale farm, one of the largest farms in New Zealand. By 2005 Synlait owned eight farms and in 2006 the decision was made to establish a manufacturing plant to produce innovative milk products. A growing customer base and considerable resources in milk powder production resulted in early growth for the company. As Synlait moved beyond ingredients manufacture to becoming a significant global supplier of infant nutritional products, Bright Dairy of China became a significant shareholder in 2010 (NZ Herald, 2010). Read ‘Our History’ for more details.
To date Synlait’s strategy has focused exclusively on manufacture by selling select products to leading global food companies that own strong brands (Skellern, 2016). Alongside world-class processing facilities, Synlait Milk has established strong relationships with key players across the entire value chain including milk suppliers, market distributers and key customers, such as A2 Milk Company. Two key planks of Synlait’s strategy are its differentiated milk supply and its manufacturing excellence. Firstly, Synlait differentiates its product at the production stage through breeding and feeding technologies. This enables it to produce products that satisfy individual customer requirements. Secondly, Synlait’s specialist manufacturing facility allows flexibility to meet a range of individual customer specifications.
Synlait listed in 2013 on the NZ stock exchange (Berry, 2013) and has experienced impressive growth, recording a net profit after tax of $38.2 million in 2017 up from 34.4 million in 2016. Synlait won the Deloitte Top 200 Best growth strategy for 2016. In 2016 Synlait announced plans to raise $98 million for a $300m expansion programme over the next three years including increasing its infant formula manufacturing and expanding manufacturing facilities with a second site (Cronshaw, 2016).
Explain three elements of cultural web and how they relates to above story.
Explanation / Answer
Johnson and Scholes in 1998 describe a cultural web, identifying several elements which can be used to influence the organisational culture.
Differentiated milk supply and manufacturing excellence are the two main pillars driving the company's strategy. Synlait has been able to scale up profitably by executing the strategy in a well orchestrated manner.
Control systems, organisational structures and power structures are the three elements of the cultural web which seem to be most active for Synlait.
Control systems are the processes to monitor whatever is going on in the company. This has helped the company monitor its processes and Tinker them when needed which has held in manufacturing excellence for the company. Synlait specialised manufacturing facilities enable the company to meet customer needs.
Organisational structure refers to the reporting lines and the various levels of Hierarchy in an organisation . The company has been able to come up with differentiated products because all the employees have been completely involved in the product development process. They have understood the need of such a product for the customer and come up with innovative solutions which has helped them in making the differentiated Milk products. Synlait differentiate its product at the production stage through feeding and breeding Technologies.
Power structure refers to the design as to who makes the decisions and how much does he wield the power . The company has identified infant nutrition products as one of the key areas of growth and has given the company in that direction. The senior management has been able to extend their vision of market growth to the entire company because no company can grow without the support of its employee base. Innovative added value Milk products have been the team foundation for the company and it has been extended throughout the organisation in a successful manner. This has helped the company grow to create expense in a profitable way.
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