Strategic Management (MAF 640)

Quiz 1 Semester March-July 2015

MACC220 8A

a) Impact on the competitive environment after the events by using the Porters five
force model below:
i. Bargaining power of buyer.
In the consistently sales for the last few years, the bargaining power of
buyer is medium-to-high for FarmFirst Chickens. The news of the avian virus is
informed throughout the country by the Health Department. Caused by the
announcement, the public reaction to consume chicken is decreasing.
Due to the avian virus outbreak, the bargaining power of buyer is decline
or low as the two major supermarket chain back off from the regular order.
Attributable to the temporarily cancel order by the giant retailers, some of the
smaller customers follow them. As for the result, the sales volume for FarmFirst
Chickens will be half for at least the next 6 months.
For the short term, if the avian virus can be preserved quickly, the
bargaining power of the buyer can be recover to medium-to-high as the sales also
can be improved from half of the losses . But if the avian virus keep in spreading
for the long term, the sales of FarmFirst Chickens will continue to decrease as the
bargaining power of buyer is low.
ii. Threat of substitute products.
As one of the major player in the chicken suppliers industry, FarmFirst
keep their product position at the equivalence with its competitors. Thanks to the
equivalence position in the industry, threat of substitute products are low-tomedium. This is because consumers mainly use chickens in their nutrients.
But in the recent time, some of the consumers substitute the product with
the new Atkins fish diet. Consumers prefer to have healthy lifestyle by eating
more fish and less chicken. As a result of the changes, threat of substitute product
for FarmFrist Chicken is mid-to-high.
For the short term, the sales volume is declining because the changes in
the consumers sociocultural. However in the long run, the sale volume and the
threat of substitute product can be restore if the consumers get back to the old
lifestyle, otherwise the sale volume and the position maintained in the industry
will continuously decreasing.

Strategic Management (MAF 640)

Quiz 1 Semester March-July 2015

MACC220 8A

b) Two most important PESTEL analysis that have been considered by FarmFirst in

formulating new strategy to remain stable in the business are as followed:

i. Political Segment
The board has reviewed the potential investment opportunities in the
Middle East, as one of it is to acquire Halal Bird. In view of the political segment,
the board is undertake a favourable decision on unwilling to invest in the company
as the political situation there is fragile and represents a high risk.
It is difficult for FarmFirst Chicken to survive and expand in unsecured
market as the legal activities are breakable. The decision are also reliable as the
recent event occur within the country are still unstable. FarmFirst Chicken might
face riskier strategy if they expand in the Middle East and try to safeguarding the
risk within the country
ii. Economic Segment
The board make a smart move when they were informed that one of their
major competitor, SongBird has been force to cull all their chicken, it make new
strategy to improve sales growth.
Due to the recent outbreak, the demand for chicken supply is decreasing as
the consumers less to consume chicken. In addition, the healthy lifestyle being
practise by the consumers also affected the demand of chicken in the market as
they swap to substitute product which is fish.