Business Review of Tasimania Salmon
... In so doing, an internal and external environmental analysis was conducted to identify environmental changes that could create strategic issues, or make necessary changes to current corporate and business level strategies. ... The Tassal group is a company with one core business, that being the production of farmed Atlantic Salmon. Tassal operates only in the domestic market, and currently has a 64% market share making it the market leader for farmed, value added Atlantic salmon. ... External Environment: The external environment has been analysed , and from this analysis it was noted that, in Australia, the salmon farming industry is subject to a high level of regulation from the Australian Quarantine and Inspection Service (AQIS). ... This has eliminated the highest barrier to entry for the Australian industry, that being access to smolt, infant salmon, which normally could only be access by purchasing a company with a share in Salmon Enterprises of Tasmania Ltd or by building their own infant salmon facility (Tassal. ... As such there is an increased threat of new entrants facing Tassal, as the New Zealand salmon farmers have access to more resources and government support then the domestic competitors, and they are now free to compete in the ¡¥head¡¦s on gilled and gutted¡¦ (HOGG) industry segment, of which Tassal is the market leader and previously faced only domestic competition (Tassal. ... One concern that this raises is that of increased international competition from some of the major salmon producing countries, Norway and Chile. Chile has previously flooded the international market with average quality salmon for low prices, most likely to show its capability to product large quantities of salmon in an attempt to scare competition (Bjorndal T. ... One other issue facing Tassal is that of technological advances in genealogy and genetic modification of salmon. Canadian fisheries are already developing salmon with growth rates 400% to 600% faster then normal, increased resistance to disease, and increased efficiency in converting feed to flesh (Michael L. ... As well as this, Tassal¡¦s relative size compared to the international competitors is small, which can be seen through the national levels of farmed salmon production (Food and Agriculture Organisation 2002), with Oceania representing less then 1% of world production of farmed finfish, and Tassal representing about 25% of the regional production. ... The current per kilogram price for Tassal¡¦s products is between $22/kg and $32/kg depending on the cut of the salmon, and this suggests that the product attracts a premium price in the market, with imported products having lower per kilogram prices. ... Firstly, Tassal has been able to develop a well integrated set of business units resulting from the vertical integration of the firm. ... 2) Competing in the changing environment The change in environmental conditions, such as barriers to entry for international competitors, and the uncertain future of the salmon industry, with genetic engineering and socio-cultural issues, mean that Tassal must address their competitive strategy to ascertain what strategy would best suit these new conditions. 3) Internationalisation of Tassal Given the global nature of the salmon industry, Tassal must acknowledge the 4) Corporate Governance and Risk Management Issues Recommended Strategies: Issue 1 - Tassal¡¥s Growth and Expansion: Option 1: Maintain the Status Quo Currently Tassal is a single business entity with virtually all income coming from its salmon operation. ... Option 2: Diversification to Hedge Risk Another option for Tassal is to develop a strategy to diversify the company to eliminate the risks associated with the possible erratic future of the salmon market. ... In terms of activity sharing, Tassal¡¦s current operations are suitable to growing both salmon and trout with only a minimum amount of change. ... Demographic - „P Population growth is leading to increased demand for salmon (Michael L. ... However exports of salmon will suffer in that profit margins will be reduced. ... The American market for imported farmed salmon is now worth US$885 million and is expected to grow at almost 6% per year. „P Recent problems with mad cow disease and now the chicken flu have led to a shift toward other forms of meat products, of which salmon is one. ... Technological - „P developing strains of salmon through breeding that grow faster, more efficiently convert food to flesh, resist disease, and tolerate crowded conditions (Michael L. Weber 1997) „P Scientists in Canada sought to boost the production of salmon farms in Atlantic Canada by implanting a gene that produces a kind of antifreeze in northern fishes such as winter flounder. Although this research did not produce fish that could withstand freezing temperatures, it did lead to technology that increased the growth rate of Atlantic salmon by 400 percent to 600 percent. ... (CSIRO 2004) Global (Competition)- „P 1991, 126 companies operated 471 Atlantic salmon farms, while 41 companies operated 523 Pacific salmon farms. ... Chiles farmed salmon production grew to more than 34,000 tonnes (Michael L. Weber 1997) „P Atlantic salmon production at Scottish farms was 40,600 tonnes in 1991. ... salmon farms produced 132,021 tonnes of salmon. ... Weber 1997) „P 440,000 tonnes, or nearly one third of world salmon consumption, was produced on salmon farms. ... Bargaining Power of Buyers- - As Tassal has differentiated its product, with the perception of the highest quality farmed Atlantic salmon in the world, buyers have relatively little power. Threat of Substitutes- - There are a high level of substitutes for farmed salmon including wild salmon, trout, other finfish, and indirectly beef, lamb and chicken. ... Competitor Analysis: Market Commonality - Many of the firms in the salmon farming industry compete across several international markets (multi point competition) this indicates that although competition is rarely active, responses to competition are swift. ... Although they have an advantage in terms of the quality of the product, this still represents only a small portion of the Japanese market for salmon. ... com) - Brands Royal Tasmania, Tasmanian Smokehouse, Tasmanian Supreme - ISO 9002 accreditation - Commitment to R&D and the development of selective breeding, husbandry, farming techniques and sites, and R&D co-operatives - Preferred supplier to Australia¡¦s largest retailers - Knowledge base built up over years of industry experience, and technical knowledge developed by marine biologists employed by Tassal Capabilities - The vertical integration of the Tassal group allows for more effective and efficient operations and controls to be implemented - Provides product with perceived quality levels much higher then any international competitor, as shown by cost of salmon in the Japanese market. ... Finally the non-substitutability of the core competency is shown by the firm specific knowledge held by Tassal¡¦s marine biologists in terms of feeding and development patterns of the salmon. ... (Tasmanian waters, suitable for salmon farming) - Advanced: Australia has access to well developed communications systems, and also international distributions systems. ... Demand Conditions: - the salmon farming industry in Australia represents only 7000 tonnes of a world market of in excess of 85 000 000 tonnes representing less then 0. ... Appendix 6 Value Chain Analysis Primary Activities: „P Inbound Logistics - - Smolt (juvenile salmon) must be purchased from Salmon Enterprises of Tasmania Pty Ltd (Saltas) and the amount which can be purchased is proportional to the level of shareholding in the company.