Comparable Analysis Case Study Solution
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Since, one of the driver of increasing sales is advertisement, the market players in Saudi Arabia most likely take help from the foreign advertisement companies for the purpose of improving their business representative characters in the eyes of consumers. Brand awareness is significantly important for the companies to make the customers aware of the product content and features. Food industry has been using a high standard of advertisement. The kingdom has been hugely investing to make the country incredible in the eyes of foreign investors.
Recent development in dairy sector in Saudi Arabia
The government of Saudi Arabia has pushed for self-sufficiency which in turn has laid the basis for the modern dairy sector. One of the significant factor is the health awareness that is playing greater role in driving the dairy product market. People are now concerned to cut down their consumption of high-calorie and fatty foods, hence shifting to the healthy or nutritious products. In the dairy product category, the new product development has slowed but still the companies have put their focus on extensive campaigning and packaging improvement.
In addition to this, even though Saudi Arabia is the arid environment all around the world, the success of the dairy sector is attributed to the technology application. The use of technology help the companies in sustaining the ambient temperatures and to use computers for the purpose of monitoring the temperatures and humidity in the setup. The milk production is being automated in Saudi Arabia. There are many other initiatives that have been taken by the Saudi government in an attempt to further develop dairy industry:
- The government has conducted trade shows for business development.
- The government has provided incentives for reducing the cost of production.
- Also, the tax incentives are provided for the development of dairy industry.
- The technology is being prioritized for knowledge sharing for production of milk.
- The companies are taping the international markets for further export development for milk and milk products.
- Lands are allocated to dairy companies to increase the cattle field.
- The dairy products are easily available in the retail stores.
Comparable Analysis – quantitative and qualitative
Quantitative analysis
Significantly, the financial health of the competitors are assessed by using ratio analysis. It measures the relative performance of the market competitors that tend to characterize the financial health of the companies.(Cohen(, 2000)
| Ratios | SADAFCO | Halwani Bros. Co. | National Agricultural Development Co |
| Return on investment | 0.23 | 1.65 | -0.11 |
| Return on invested capital | 0.24 | 0.09 | 0.01 |
| Return on assets | 0.18 | 0.05 | 0.01 |
| Operating margin | 0.34 | 1.07 | 1.78 |
| Gross profit margin | 2.72 | 0.14 | 0.51 |
| Debt to equity ratio | 0.27 | 0.88 | 0.33 |
| Return on equity | 0.78 | 0.62 | 0.02 |
| EBITDA margin | 0.34 | 0.15 | 0.50 |
Table 01 shows ratio analysis between competitors
Return on investment
The return on investment of Halwani Bros. Co is higher as compared to SADAFCO and NADEC, which shows that the company has gained generated on the investment in relation to the invested amount, it also demonstrates the efficiency of the investment.
Return on invested capital
The return on invested capital of SADAFCO is higher than competitors, assessing the efficiency of the company at allocating the capital to profitable investment under its control.
Return on assets
The return on assets of SADAFCO is more than competitors, which shows that the company is able in generating the massive profit returns from its assets. Not only this, it shows that the management of the company is efficient in generating income from the assets on its balance sheet.
Operating margin
The operating margin of NADEC is higher as compared to SADAFCO and Halwani Bros. Co., which indicates that the company is left with revenues after the entire operating of variable cost have been paid. The operating margin of SADAFCO is higher than Halwani, which shows that how well the company is supporting its operations. Also, it is to highlight that the company is more stable because it makes enough money from the business operations to support the business.
Gross profit margin
The gross profit margin of SADAFCO is higher than its competitors i.e. 2.72, which shows that the company effectively manages its cost of sales. Not only this, it also indicates that the company has more to cover for financing, operating and other cost...............
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