Almarai Company Harvard Case Solution & Analysis

Almarai Company Case Solution 


Almarai Company is the producer and distributor of the dairy and the dairy food products. Moreover, theL’usine and 7DAYS products include various bakery products commence as of breads, cakes, puffs and croissants(Almarai).Almarai has international ventures as well with the International dairy and juice (IDJ) and Modern Foods Industries (MFI).

Furthermore,Almarai is a Saudi Arabia based company, as well as it has its roots in Riyadh since 1977.Almarai is one of the largest companies of the world, whichis a top ranked FMCG brand in the region of Mena. Moreover, Almarai is a market leader as it has remained the provider of the high quality standardized nutrition that is suitable for all age groups for their health concerns.


Almarai has thrived into the saturated market. It is a market leader in dairy products, as well asit has been pioneer for the technological advancement in the dairy and farming industry. Moreover, it has been diversified into different products category of bakery commodities, beverages and poultry productions along the dairy products. The quality of Almarai however, has sustained through the skilled labor of the Almarai.

Almarai has competitive advantage of dealing with the technological advancement along with the labor force which comprises of skilled employees. Almarai was able to progress with the advantage of skilled labors as it was not possible to operate the advanced technologies with the unskilled labors. However, for the purpose of production, Almarai needs unskilled labors as well.  For this purpose expatriates are hired by the different companies. Apart from this, expatriates in Saudi Arabia are common. Although a high turnover is faced by the companies that utilizethe expatriates, therefore, it can cost Almarai to maintain the efficiency of production due to increase in the turnover rate.

Moreover, the efficiency of the product can be faced by Almarai as it has the low cost advantage,thus, in order to maintain the price of the product, efficiency in the production and its quality can be suffered. Furthermore, Almarai imports material from the different countries i. e. feed stock for the production purpose. In addition to this,, it has to bear the import taxes and shipment & delivery expenses. Hence, the production cost would increase. In the situation of increase in cost, the prices of the products would increase. However, Almarai has focused towards cost leadership, therefore despite the price would suffer, the production efficiency can be influenced and the decline in the profit is faceted by the Almarai.


The Gross profit margin of Almarai has declined from the 38% to 36% continuously from 2011 to 2014. Moreover, its net profit margin has also been declined from the 14% to 13% from 2011 to 2014. The debt services have increase in between 2011 to 2014 from 13% to 14%. Furthermore, the return on equity has also demolished from 17% to 14% among 2011 to 2014 (Exhibit 1). The figures depict the declining in the revenue of the Almarai. Moreover, it has faced obstacles that can cause its sales to decline further.


History or profile of the organization

            Almarai registered as the dairy products provider in 1977. The Chairman of the Almarai, HH Prince Sultan bin Mohammad bin Saudi Al-Kabir, had some vision for the dairy products company. The vision was of transforming the traditional dairy farming industry of the Saudi Arabia in accordance with the rapidly growing market of domestic and to evolve the industrialization.................

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