Management Organization

April 7, 2012

Management Organization
Deutsches Milchkontor
4/7/2012 Student Marco Engler

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Executive Summary
The report gives an overview about Deutsches Milchkontor; the company`s short cut history, the possibilities, the organizational circumstances, the organizational structure, the environment; in general and in Germany; and the possible options. To be more precise, in some cases there is a closer view on Sanobub, one of DMKs brands. DMK is a company which is well- known in its current operating markets, financial health and has a good image. DMK is established in the European market and has the potential to expand in a broader way. The Deutsches Milchkantor is very financially healthy and profitably operating in more than 100 countries. Furthermore, DMK is market leader within the dairy sector in Germany. The aims are to get a stable milk prices, increase the market share and expand the product ranges The market in Germany is the major source of the company`s profit and DMK get an important leading player in the European diary market. Wherefore it seems important to keep the research volume running on the same level. However, introducing a new strategy and accessing a new market are recommendable. The recommendation is to expand in the Asian markets by building up a joint venture with a company which gained already experiences in this market.

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DMK Deutsches Milchkontor

Preface
The assignment is, based on internet research and descripts published by the firm itself, about the business environment of DMK, Deutsches Milchkontor. The group received the task to write a report about an own chosen company from the food- and agriculture sector. Furthermore, a grade sheet was handed out to write an assignment which includes several aspects which have to mention within this document. To meet the guidelines and accomplish the aim of the report; the research was based to find out information about the story of DMK, its management situation, partnerships and organizational structuring of DMK, issues and the market in general respectively. In this report, the Deutsches Milchkontor is also named as DMK. The foundlings are listed in the Executive Summary on Page three. The report is structured by the guidelines of this grading form which is also included at the end of the report.

Marco Engler, Leeuwarden, 23.10.2011

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Table of Contents
Executive Summary ............................................................................................................................................................ 2 Preface............................................................................................................................................................................... 3 Table of Contents ............................................................................................................................................................... 4 1 2 Introduction .............................................................................................................................................................. 5 Analysis of current situation ...................................................................................................................................... 8 2.1 Mission... .8 2.2 Vision .......................................................................................................................................................... 8 2.3 Goals. ..................................................................................................................................................... 8 2.4 Strategic .............................................................................................................................................................. 8 3 Internal environment .............................................................................................................................................. 10 3.1 Core competence .............................................................................................................................................. 10 3.2 Synergy ............................................................................................................................................................. 10 3.3 Value creation ................................................................................................................................................... 10 3.4 Functional analysis............................................................................................................................................. 10 3.5 Corporate culture .............................................................................................................................................. 11 3.6 Organizing ......................................................................................................................................................... 11 3.7 Total Quality Management ................................................................................................................................ 11 4 External environment .............................................................................................................................................. 12 4.1 Porters five forces.............................................................................................................................................. 12 4.2 PESTEL Analysis ................................................................................................................................................. 13 4.3 SWOT Analysis................................................................................................................................................... 14 4.4 Confrontation matrix ......................................................................................................................................... 14 4.5 Conclusion SWOT .............................................................................................................................................. 15 5 Strategic gap ........................................................................................................................................................... 16 5.1 Current situation ............................................................................................................................................... 16 5.2 Desired situation ............................................................................................................................................... 16 5.3 Gap ................................................................................................................................................................... 17 5.4 Limiting conditions ............................................................................................................................................ 17 5.5 New goals of the desired situation: .................................................................................................................... 17 6 7 8 9 10 Strategic choice....................................................................................................................................................... 18 Implementation ...................................................................................................................................................... 20 Conclusion and Recommendation............................................................................................................................ 21 References .............................................................................................................................................................. 22 Exhibits .................................................................................................................................................................. 23

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1 Introduction
The introduction gives a clear overview about the company, the size, the image and the most important facts like the current situations evaluate thoroughly the external and internal environment. Afterwards, the Strategic gap shows the difference between the current and the desired situation; measured by the founding of part two. The results of the strategic gap lead to the strategic choice to show the possibilities and ways to reach the desired situation. The implementation gives an overview about the important steps how to implement and achieve the desired situation. At the end, there can be find a conclusion and recommendation of the report. DMK is a German diary which was founded in April 2011; the both cooperative organized companies from the northern of Germany, Humania Milchindustrie GmbH and Nordmilch GmbH merged to DMK, to become the market leader in the German diary industry. The DMK employs 5,500 employees in 25 sites with the head office in Everswinkel, Germany. (DMK, 2011) Nowadays, through the merger; the DMK constitutes of three cooperatives and a lot of subcontractors. In 2010, the net profit exceeded I 4 billion what leads DMK a market leader in Germany and a leading player in Europe either. (DMK, 2011), DMKs legal form is a GmbH and registered in Bremen, Germany. The concern is centralized but there are several sites and cooperatives. The organizational structure of Deutsches Milchkontor can be seen in the picture below.

Exhibit 1.1 Organizational structure, Deutsches Milchontor

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The Deutsches Milchkontor is the head of several subsidiaries to serve a wide range of products and attend potential clients. The subsidiaries can be seen in the picture below. (DMK, 2011)

Exhibit1.2 firm structure, DMK Deutsches Milchkontor GmbH

How to seen above, the portfolio includes all kinds of dairy products like yoghurt, cream products, butter, and several kinds of milk or desserts. Furthermore, there are cheeses, dietetics, ice crme, health products like functional food, novel foods, health supplements; dextrose or baby foods, teas, tube feedings, drinks and concentrates. So, there are products for men, women, children and babies. (Products - DMK Deutsches Milchkontor GmbH, 2011) These products are divided into ten brands. These brands are: Milram, Ravensberger, Osterland, Sanobub, Oldenburger, Humana, Casarelli, Intact and Lebens Biolabor.

Exhibit1.3 brands, DMK Deutsches Milchkontor GmbH

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DMK is the market leader in Germany and operating in 100 countries worldwide; to keep the position against the competitors Langnese/Ola, Movenpick, Nestle/Scholler, Haagen dazs, Ben & Jerrys, Landliebe, DMK introduced some joint ventures. Successful collaborations are the joint venture wheyco GmbH, and Nord-Contor Milch GmbH. The brands respectively divisions are important. The brands are small to sustain flexibility and react on temporary changes. DMK says on its website: The sales mix makes DMK a reliable partner nationally and internationally We will protect our long-term leadership positions by means of a strategically designed sales mix: 70% of sales to the domestic market will be balanced with 30% of sales through the export business, with deliveries to more than 100 countries all over the world a very healthy constellation economically. Turnover by product group is split into 50% fresh dairy products, 40% cheese and 10% milk powder. This split enables stable medium-term costings and investments. And it provides adequate flexibility if individual markets fluctuate. The profit allocation is shown in the picture below.

Exhibit 1.4 Profit- DMK Deutsches Milchkontor GmbH.

Another key aspect is the research and development department. DMK is producing products on a high- quality level and focused on the product innovations like organic food. Through the focus of research DMK is able to keep the value of 6,7 billion litre milk, every year. (Research & Development - DMK Deutsches Milchkontor GmbH, 2011) As a result of it, DMK is a company which is well- known in its current operating markets, financial health and got a good image. DMK is established in the European market and has the potential to expand in a broader way. Thanks its healthiness base there are a lot of possibilities to find new ways and options.

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2 Analysis of current situation

This analysis shows the current situation; divided in the external and internal environment in detail. The common tools like SWOT, PESTEL, Porter`s 5 forces are used to explain the benefits and issues thoroughly. 2.1.1 2.1 Mission The self- chosen mission is quite clear. We will make good use of our capacities and market shares for stable milk prices and excellent market positioning. (Strategy - DMK Deutsches Milchkontor GmbH, 2011) 2.1.2 2.2 Vision A systematic business strategy makes DMK even stronger in the market. The merger of Humana Milchindustrie GmbH and NORDMILCH GmbH arose from a highly successful, long-standing collaboration. Our primary goal is to earn attractive milk prices with long-term stability for the cooperative owners of both companies. (Strategy - DMK Deutsches Milchkontor GmbH, 2011) 2.1.3 2.3 Goals The primary goal is to earn attractive milk prices with long-term stability for the cooperative owners of both companies. (Strategic expansion of the cheese business, Profitable growth of the branded goods business, Securing our market share in fresh dairy products, Further development of the ingredients business, Expansion of the ice cream, baby food and health products business areas). Another central focus will be the expansion of the international business within the EU and increasing participation in international growing markets such as Asia 2.1.4 2.4 Strategic DMK profits from its clear and consequent strategies. The main goal, according to the mission, is to earn a stable and attractive milk price. This goal shall be accomplished by developing a logical progression in existing business areas. The main points are: A strategic expansion in the cheese business and a profitable growth of the branded goods business sector. Securing of the market share in the fresh dairy business Logical progression in ingredients business Expansion in the ice cream, baby food and health food product business

2.5 Global Strategy A central focus lies on the expansion within the European Union states and access the market in Asia. DMK is using its capacities, experiences and knowledge to increase the market share and achieve the goal of stable milk prices, in Germany, Europe and in Asia as well.

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2.6 Corporate-Level Strategy In order to ensure its product quality, DMK has to be more focused on product innovations, the retail sector marketing, reputation and the price- performance ratio, the small brand awareness and the sessional products respectively the demand of these products and the consumer needs. Furthermore, they have to be aware of changes within the markets and progresses of competitors. Hence Humana and Nordmilch have merged to Deutsches Milchkontor and have started some joint ventures to find new market niches, expand the product range and improve the market leading position in Germany. One majority claim and a huge potential disadvantage can be raises due to the small brand awareness. 2.7 Business- Level Strategy The mission of Deutsches Milchkontor DMK, to offer and deliver a wide range of several dairy products for a fair and stable price is a rather difficult mission then as they are acting on such an international scale. The agriculture business is every time depending on legal regulations and agricultural aids. One aspect is that they have to set new trends and reach a big target group like children, men and women in all markets. So, DMK always needs to come up with new product innovations, and has to be able to adapt new trends, in particularly, in the health food and genetic food business and needs to be sure that they can maintain the same quality and same price level. The same price level is formulated in the mission of DMK. However, the product unit and the high quality standard of the technology is the big plus of the company. 2.8 Functional Level Strategy DMK is a merger of two companies which have already cooperated before. The aims of the merger were to get a stable milk prices, increase the market share and expand the product ranges Therefore, it was necessary to get together and put the strengths of the high quality standard and the new technologies together. DMK gets more aware and established its premium ingredients in the market. Nowadays, the market in Germany is the major source of the company`s profit and DMK get an important leading player in the European diary market. The next step is to expand the market share in Europe and Asia. Therefore, it seems important to improve the marketing and distribution areas, during the financial aspect and the well-developed R&D sector.

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3 Internal environment
3.1 Core competence The core competence of Deutsches Milchkontor is producing, developing and improving all kinds of dairy products. They are focused on research and development to fortify the market position. Furthermore, another core competence is the wide range of products, alternatives and the market leading position. 3.2 Synergy DMK is using the synergy effect of the brands name, which is standing for quality, and the progress of its research programs. They are profiting on the corporative sites and the agriculture aids which are used to get the newest technologies. The name Deutsches Milchkontor stays for quality and product innovations. A side effect is that DMK profits of the legal regulations related to health and quality in Germany and Europe where the producing locations are. 3.3 Value creation The dairy producer creates values through the name and the price levels of its different brands. But a problem is the small brand awareness of some subsidiaries. DMK is offering a wide range of products in the dairy sector and is bonded in legal regulations of quality and health. With this big product portfolio DMK can reach a lot of customers within all societies. Furthermore there is a wide range of several alternatives for each product to enables DMK to act in every market respectively market niche with its different brands.

3.4 Functional analysis

Management and Organization The management quality is good. Measurable through the market position and the financial situation The staff quality is high. The educational system in Germany is very well. The company is centralized and includes well- known brands. DMk is bonded on national controls and legal regulations. Finance DMK is very healthy and market leader in Germany. They have to reduce the high production costs. Marketing Distribution channels: mostly Supermarkets. Big market share, market leader The marketing and advertising could be more efficient. Customer satisfaction is good. Consumers likes the high quality level. Human Resource The staff satisfaction is high. Employee experiences are very well.

Production DMK has a good quality control; they are improving also its products and the employees continually. They have to reduce the high production costs.

Research and Development - They are known for a lot of product innovations in the health food business sector - Great laboratory and technology circumstances

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3.5 Corporate culture The corporate culture can be described as adaptable culture. The company is focused on an adaptability culture which can be determined by the fast ability of interpreting and translating signals of environmental changes like legal regulations. DMK is focused on the external market and takes over other companies like or creating new joint ventures to work more flexible in all markets and expands the business. Furthermore, DMK is a learning organization and they have to be it as a result of fast changing markets, genetic progresses, regulations and other things. The image below shows an overview of the corporate cultures. Deutsches Milchkontor and its subsidiaries know the fact that, nowadays, people are aware what food they buy for their body and health. For instance, in the genetic food segment, the consumers are willing to pay higher prices.

3.6 Organizing DMK can be described as centralized organization with a few of subsidiaries how to seen on the picture 1.2 on page four. Further, DMK can also be described as a learning organization with a view of total quality. Deutsches Milchkontor is bonded to a lot of external factors and has to act flexible. The organizational structure is shown on picture 1.3 on page five. Hence, DMK has to adapt to changes in their external environment. The enterprise is adaptive in a sense of changing in the markets and innovations of the products, the clear structure and centralized organization helps to act in a logical way. There is a head office and 25 brands like Sanobub which are acting more or less separate in their own segment. One problem can rise by continually following of this organization type if DMK expands in other cultural environments like Asia, every office could not determine decisions, which are related to the environmental circumstances, by themselves. An important fact in relation to the leadership, controlling and HRM is also that the dairies are agricultural cooperatives. This model means that the cooperatives are owned by equally shared shareholders. 3.7 Total Quality Management To ensure the Quality, DMK introduced a research and development program and is using a control system to ensure the hygiene within the producing areas and the quality of the ingredients like milk. Another benefit is the close bond with the dairies. There are also controls of hygienic in Germany what improves the quality enormous. Page 11 of 23

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4 External environment
4.1 Porters five forces Every enterprise is within a specific industry, thus, Meso market environment plays a very important role in enterprise strategy. We use the 5 forces model to analyse the basic competitive situation in the dairy industry to summarize the most important tendencies. Furthermore, we are looking for a sixth force since DMK is dependent on legal regulations. Internal /Rivalry/ Competitors Related to one of the brands, Sanobub: This company is operating in the competitive industry, the biggest competitors are: Langnese/Ola, Movenpick, Nestle/Scholler, Haagen dazs, Ben & Jerrys, Landliebe. Compared with those companies, Sanobub have to develop the popularity of their brand and improve their own brand awareness. On the other hand, all competitors, for instance in Germany, are bonded on the same legal regulations. These regulations increase the producing costs enormously. Bargaining power of buyer and supplier DMk produces dairy products but since a small retailing sector, there is a big jeopardy if competitors getting aware of this gap. As a market leader in Germany, the global player image in Europe and the few brands, DMK is able to deal with all target groups and target markets in their operating market segments and market niches. They are depending on innovations of themself and need to be focused on changes in the needs and desires of the consumer and the progression of its competitors. Therefore, the power of buyers is quite low; in contrast to the power of supplies which is very high. Within the last years, there were a lot of strike calls and strikes because the dairy cooperatives wanted more money for their milk derivatives. The ingredients can be delivered by suppliers with a long time relation. Useful is a wide range of products, a good reputation and satisfied, loyal customers. DMK and its brands can deal with loyal consumers. The bargaining power of buyers is low, especially as consumers are interested in their local products and DMK is offering those. The bargaining power of suppliers is quite high but contracts and long term relationships helps to minimize trouble Potential entrants Within the ice- cream industry, the entrance barrier is low , there is no need of high science and technology for producing ice cream. Therefore, some local companies are able to easily produce this kind of products and threaten Sanobub. To establish the good market share, Sanobub should not only maintain their high quality, but they also need to develop their own features, instance of making taste different from others. As a result of this the new entrance of competitors is quite high.

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Substitutes/Complements

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Ice cream, as a kind of desserts, is very popular all over the world, the demand of ice cream is quite a lot and basically there are a lot of substitutions for this kind of product. In conclusion, with the analysis of Sanobub by the Porter's 5 Forces, it can be suggested that Sanobub needs to develop a wider market range and attract more customers by making good tasting ice cream, so that keep the foothold in the fierce competition. 4.2 PESTEL Analysis Political Deutsches Milchkontor is bonded on regulations of goverments, within countries they are operating. Another important aspect is the role of the European Union. These regulations are influencing the market, so, even the competitors. The European Union and the governments are trying to improve and ensure quality. In fact, DMK is profiting of controls and regulations to ensure quality but the competitors have to participate in the same way. In the international scale, due to the producing costs there could be a chance for companies in countries beyond of the European Union. Economical Increasing costs, in particularly in the producing sector, are a common issue. All companies are faced with the problem and must be focused on changes in research, development and their environment as well. For instance, there is a lack of efficiency by using solar energy due to the low solar radiation. Therefore, DMK is depending on innovations and improvements beyond their own business and business competences Until now, DMK could face these problems and is, in Germany, market leader and a global player. Social/ Cultural/ Demographical Social cultural aspects are very important for Deutsches Milchkontor because there are different desires in different cultures. For instance, in some countries of Eastern Europe, people using more goat milk than cow milk. The effect of demographical structures within a society is low. DMK is reaching all target groups with its different brands. Technological DMK is operating on a high technology level which is underlined by the market leading position in Germany and the important role they are playing in all of the 100 countries, worldwide. Ecological DMK is successfully operating in organic food. This example can be used to highlight the importance and awareness of ecological circumstances. Legal regulations The jeopardy of legal regulations has risen to a big problem of the DMK. The European Union determined salaries of dairy producers in the EU. Hence, companies from abroad respectively out of Page 13 of 23

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the European Union can skip these regulations but direct competitors are bond on the same regulations. As a market leader, DMK can use its position to force a cost leadership strategy.

4.3 SWOT Analysis

Strengths
60 years of experience Latest technologies Premium ingredients Fresh milk & cream are a major part of the ingredients. High quality standard Nature based ingredients Authentic taste Customer loyalty Financially health Innovations

Weaknesses
Small brand awareness Weak marketing Small distribution area Retail sector Seasonal product High production costs

Opportunities
Strengthen marketing Expand in new markets Broaden the distribution area

Threats
Well known and strong competitors Still increasing of production costs Changes in legal regulations

4.4 Confrontation matrix

Strengths Opportunities
S1 - market position O2 expand in new niches S8 - costumer loyalty O1 strengthen marketing S7 authentic taste O5 broaden the distribution channels and areas

Weaknesses
W1 small brand awareness O1 - strengthen marketing W5 seasonal products O2 expand in new niches W2 weak marketing O1 strengthen marketing W3 small distribution areas O4 broaden the distribution area and channels W1 small brand awareness T3 strong and well known competitors W2 seasonal products T1 high producing costs W3 retail sector T3 changes in legal regulations

S1 - market position T3 changes in legal regulations S10 innovations T2 high producing costs S5 high quality standard T1 strong competitors S8 consumer loyalty T2 high producing costs

This type of a confrontation matrix is chosen because the most important strengths and weaknesses respectively opportunities and threats are matched and the founding emerges obviously.

Threats

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4.5 Conclusion SWOT There are a lot of strengths of DMK, what underlines the quality of the company and its goods but it should also clarify the importance of awareness in the market and improving of the product quality, product innovations and possible new market niches to reach new customers. The SWOT illustrates the danger of external and uncontrollable forces like the legal regulations. It is extremely important to force the strengths, the market position and the brand reputation to avoid big entrances of competitors or loss of market shares. Important threats are the possibilities of changes in the legal regulations. DMK has to deal with this important issue.

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5 Strategic gap
The Strategic gap is related to the gap between the current and the desired situation. 5.1 Current situation DMK is operating in countries and market leader in Germany. Deutsches Milchkontor is offering a wide range of dairy products with its brands. With an amount of 6.7 billion litre of milk per year they produces, DMk get an important leading player in the dairy market in Europe. The product portfolio; seen on the picture 1.3 on page four, shows the goods within the dairy segments which are produced by DMK and branded by its brands. There is a wide range of several parts what helps to make DMK as an important company within the segment. DMK is a merger of two companies which wanted to bond the power of both companies Humana and Nordmilch. Whereby, DMK get a mighty company with a lot of strengths. Hence, it can be determined that the main issues and jeopardies are not internal, but rather external. However, Deutsches Milchkontor could reach a still broader group of clients if the lack of distribution channels and areas getting adjusted. The own brands are well known like the competitors as well. On that account, there could a problem of market share loss arising. According to the SWOT Analysis on page 13, there is a big loyal customer base but a lack of brand awareness and marketing, although the company is in view of the financially aspect very profitable. 5.2 Desired situation DMK wants to keep the milk price stable. The next logical step of DMK would be to get higher market shares outside Germany and introduce its brands in new markets. A potential new market could be Asia. Deutsches Milchkontor is a richly company and should obtain these circumstances. Wherefore it seems important to keep the research volume running. By introducing a new strategy or accessing a new market there are several goals necessary.

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5.3 Gap DMK is operating in a segment with well- known brands and; accordingly, an importance of product innovations. If a company is working on such an international scale with a profit of four billion per year, there is a huge need of occupation in other markets, respectively getting a bigger foothold in these important markets in Asia. Another gap is within the functional strategy. Whereas the part of R&D and the finance is very well, there is a lack of marketing and distribution. 5.4 Limiting conditions A market entrance leads to a big financial expenditure, a company restructuring and a lot of time. An access to get a bigger market share is estimated with a time span of three years. 5.5 New goals of the desired situation: - Analysing of the Asian market and the cultural differences - Evaluate current legal regulations - Looking for joint venture, merger or acquisition options - Expansion rather than redeveloping of the marketing strategy - Persevere competitors and their market share - Deciding whether market access seems successful - Reconsidering of company structure This part shows that the gap comes up due the lack of the distribution areas.

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6 Strategic choice
The part illustrates the different strategies which are considered and leads to a logical result how to improve the weaknesses of DMK. The strategy to expand the company in other markets is the Growth Strategy. This means there is a growth in the staff, the profit and product portfolio but it leads also to more costs, expenditures and an increasing in the staff and presumably a change or expansion in the product portfolio to serve new goods for new clients with a other social, cultural or demographical background and reach their needs. There are three options to access new markets for DMK Option one, merger or acquisition with/of an Asian company or a company with experiences of the market Merger: There is the possibility to look for an Asian company and merge with it. The plus of this option is that the Asian company can learn from the technologies of DMK, the procedures and use the successful company strategy. The costs of a merger are quite high due to the sizes of both companies. However, the profit in Asia can be much higher if they are offering with their distribution channels and the name in a; for this company, well- known market. Acquisition: The benefits are slightly the same like by the merger option but an acquisition is much more expensive. Another important aspect is that a potential company which is interested in an acquisition is mostly unsuccessful and unable to work alone. Therefore, the costs of restructuring and improving are also expensive. This option seems therefore problematically. The suitability could also not be given since there are no experiences in this social cultural environment. But the project is feasible. Option two, joint venture of an Asian company or a company with experiences in this market A joint venture with a company which has equal rights is the easiest way and would not be that much expensive. Another benefit is the cost and risk sharing. Moreover, DMK has also experiences in building up joint ventures. The project seems feasible and due to the risk minimizing also suitable and acceptable as well. Option three, own entrance Option three is related to an own access in the market. The costs are quite high, the name is presumably unknown in Asia and there is no knowhow or experience in the market. Besides, DMK has to build up, by a bottom up strategy, completely new distribution channels and find new suppliers. The expenditures in costs and time are very high. The suitability could also not be given since there are no experiences in this social cultural environment. But the project is feasible.

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The alternatives are based on the SWOT analysis and the confrontation matrix. Below, there is a table with important aspects and suitable rating of the options. The rating system has been estimated as follows: 1 = very well, 2, 3 = middle, 4, 5, and 6 = very bad.

Strategic confrontation matrix

Time Costs Volume of restricting Expected profitability Risk of failing Acceptability Feasibility Suitability Sum

Option one
4 4 5 3 1 3 2 2 23

Option two
2 3 1 2 3 2 1 1 15

Option three
5 5 1 4 5 4 4 2 30

In light of the results, the best option to introduce in the market of Asia should be option two; building up a joint venture.

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7 Implementation
The implementation part is describing the steps how to implement the strategy. The implementation process is very easy, especially because there are a lot of experiences in joint ventures by DMK. Deutsches Milchkontor can use its technologies to produce the products and get the chance to learn how other companies work. The joint ventures have to build up new distribution areas and get new local suppliers in Asia. The cultural conversion rather than adjustment is one of the important aspects in this project. There is a huge risk by dealing with a different social or cultural behaviour. DMK needs to understand and implement an Asian working ethos. The factional and operational planning is described on page 17 or illustrated below: New goals of the desired situation: Analysing of the Asian market and the cultural differences Evaluate current legal regulations Looking for joint venture options Expansion rather than redeveloping of the marketing strategy Persevere competitors and their market share Reconsidering of company structure Considering of products; consumer needs Considering how to operate and building laboratories. Introducing

The organizational structure will be the same since the joint venture is more or less a subsidiary and therefore not affecting the company. However, the joint venture needs an individual organization, ordinarily consisting of both companies. The organization includes an information system, an own mission, separate goals; this means separate to the companies which are operating mainly in other markets with other conditions, a clearly structured management plan and a leadership model. The Human Resource Management can be used from DMK due to its high standard, the quality and the technologies whereas the staff should be locally based to reduce costs and bonding the joint venture with the areas and create a friendly and trustful image. The implementation of a joint venture seems very easy due to the risk, costs and responsibility sharing. If DMK choses a company to build up the joint venture, they should be aware that the partner gained experiences in the Asian market.

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8 Conclusion and Recommendation

Deutsches Milchkontor is a healthy company with a lot of benefits. The company is market leader and its brands got a nice image. There are a lot of strengths and opportunities but there are also weaknesses and threats as well, especially by accessing a new market with a different culture. The recommendation is to expand in the Asian markets by building up a joint venture with a company which gained already experiences in this market. The advice is to extend the chances of DMK to get a leading global player. The options seems hopefully and promising a good future. The expansion rather than getting a bigger market share should be the next logical step.

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9 References
Brands - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH. Retrieved October 22, 2011, from http://www.dmk.de/en/produkte-marken/marken.html DMK. (n.d.). DMK. Retrieved October 23, 2011, from http://www.dmk.de/de/index.html Managing bodies - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH. Retrieved October 22, 2011, from http://www.dmk.de/en/dmk/organisation/organe.html Produkte - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH. Retrieved October 21, 2011, from http://www.dmk.de/de/produkte-marken/produkte.html Profit- DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH. Retrieved October 22, 2011, from http://www.dmk.de/de/dmk/zahlen.html Research & Development - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH. Retrieved October 22, 2011, from http://www.dmk.de/en/forschungentwicklung/index.html Strategy - DMK Deutsches Milchkontor GmbH. (n.d.). DMK Deutsches Milchkontor GmbH. Retrieved October 22, 2011, from http://www.dmk.de/en/dmk/strategie.html

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10 Exhibits
Exhibit 1.1 Organizational structure, Deutsches Milchontor ............................................................................... 5 Exhibit1.2 firm structure, DMK Deutsches Milchkontor GmbH............................................................................ 6 Exhibit1.3 brands, DMK Deutsches Milchkontor GmbH ...................................................................................... 6 Exhibit 1.4 Profit- DMK Deutsches Milchkontor GmbH. ...................................................................................... 7

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