Analysis of the Business Environment and Strategy of Sealord Fishing Company

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Sealord is the largest New Zealand based fishing company (Nissui, 2011) and is headquartered in Auckland. It is partially owned by Aotearoa Fisheries Limited and the Japanese based company “Nissui”, with each holding a 50% share.(Aotearoa Fisheries Ltd, 2010) Sealord is part owner of fishing company “Westfleet” based in Greymouth and NIMPL, a mussel farm based in Tauranga. Sealord has alliances in Europe, Asia and the United States (Sealord, 2010).The industry that Sealord operates in is that of the fishing, processing and distribution business. Sealord offers frozen and canned seafood.

Threat of new entrants
It is very hard for a new company to enter the fishing industry. Firstly they must have a great starting capital as they require boats and need to hire people. Secondly the fishing industry is bound by a lot of rules from the government. As fishing is potentially exhausting our natural resources there are many national and international regulations. Each year the government sets the quota for the whole industry (Te Ara, 2011).This is based on the “health” of each fish species. To get a quota is not easy and they are worth a lot of money. However there is a threat of new entrants in the fish processing business. To enter in this part of the business still requires a large capital injection and a large investment in marketing. But it is far easier than starting a whole new fishing company as they do not vie for the quota but only buy the unprocessed fish.

Bargaining power of suppliers
As this industry is solely after natural resources it is not dependent on suppliers. However they are dependent on the health of the sea and the fish species. In the fishing industry there are many alliances and partnerships. Most of these partnerships are focused on improving the fishing industry. Sealord is a member of the DeepWater Group, who focuses on improving and monitoring fishing standards. They research the fish stocks and find way to reduce the by-catch of mammals. Their aim is to improve sustainable fishing.

Bargaining power of buyers
Within New Zealand there are only 2 main suppliers to the supermarkets, namely Foodstuffs and Progressive Enterprises. This gives them a large amount of bargaining power. It means that if either one of them would decide not to buy Sealord products, the products would not be available in half of all the supermarkets. It also means that with this power the buyers have been able to keep the prices low for the end consumer. As most of the canned and frozen fish is fairly standardised end consumers are always able to find a similar product. It means for Sealord that their margins on the product will be at the low end of the spectrum.

Threat of substitute products or services
Sealord offer quick, healthy and easy seafood. It has the most extensive range on offer. But there is a large threat of substitutes. Consumers are always on the lookout for a better, healthier, cheaper product. Recently canned chicken was introduced; this could potentially replace Sealord’s lunch items. A second threat is that of the fresh fish. Sealord has no fresh seafood on offer and cannot compete with this product range. A last threat is that of the takeaway lunch or dinner. If consumers find a quick, healthy alternative it could replace Sealord’s products.

Rivalry among existing competitors
The fishing industry is a very volatile business. There are many take-overs and mergers within the industry. Within New Zealand the competition is very strong and currently there are 171 fishing companies registered. Many of these are small companies that are owner operated and will generally on sell their catch to the bigger companies without processing the fish themselves. Their biggest competitor is Sanford, a publicly registered company (Sanford, 2011). However Sanford does not process their fish but sells it via their own market in the Auckland Viaduct. On the other hand there is also a great deal...
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