Executive summary

Strategy can be defined as the direction and scope of the firm followed long term to achieve advantage in a dynamic business environment to fulfill stakeholders’ expectations by configuring its competencies and resources (Kaplan and Norton, 2005). This study extensively evaluate the current strategic position of Dilmah Ceylon Tea Company PLC and provides insights to future strategic direction. Dilmah is a globally established Sri Lankan brand which makes immense contribution to export market of Sri Lanka (Daily News, 2020). Initially, this study analyzes the current strategic direction of Dilmah tea. Current strategy of Dilmah mainly establishes on differentiation and differentiation focus strategy. Strategic direction need to be developed based on external and internal environment analysis. Models such as PESTEL, five forces analysis are used to evaluate external environment analysis. Covid-19 pandemic hugely affects to supply chain and operation of the company. Future strategic direction should focus on revival strategy after the pandemic and ecological impact to the industry. Further, industry factors such as higher threat of substitutes and competitive rivalry should be considered to determine the business strategies. This study also analyze core competencies and strategic capabilities which assist company to compete with competitors. One of key strategic capabilities is that Dilmah is the only fully vertically integrated tea brand in the world. This report suggests some changes of vision and mission statement to align to the demands of the market place. Based on the comprehensive analysis, recommendations are made to develop future strategic direction. Key recommendations focus on developing new products to cater young generation and health conscious individuals. Further, it is recommended to enhance its operations to new geographical markets. T-Lounge is considered as good option to compete with luxury tea brands. Considering current restrictions, Dilmah has to shift 100% organic production and also it would lead to gain competitive advantage in global market.

1.0 Current strategic position of Dilmah Tea

1.1 Company overview

Introduced in British colonial era, currently Sri Lanka’s tea industry has become the top agricultural export of Sri Lanka. Its renowned global brand name called “Ceylon tea” has huge reputation for its distinct flavor and splendid quality across the globe (Tea Export Association, 2020). Dilmah is a leading Ceylon tea brand which enriches brand reputation of Ceylon tea. Even though, Ceylon tea was a front runner of global tea market, in 80s, multinational companies which control Sri Lankan tea sector gave prominence to profitability rather than quality. Ceylon tea moved away to multi origin blended tea products targeting mass market (Wijesiri et al, 2018). This lead to decrease brand identify of Ceylon tea for high quality tea. At that time, Dilmah tea was commenced pioneering the concept of “single origin tea” and made huge contribution to regaining the Ceylon tea brand name (Wijesiri et al, 2018). Dilmah Tea is considered as the first value added Sri Lankan owned global brand. Currently, Dilmah tea is available more than 100 countries and offers more than 3000 products range (Dilmah, 2020). Dilmah commits to maintain the taste, goodness and purpose by fulfilling Founder Merrill J, Fernando’s commitment to keep higher quality and integrity (Dilmah, 2020). Currently, Dilmah has around 650 permanent employees. Now, company generates USD 65 Mn worth of foreign exchange income (Daily News, 2020). Market capitalization of Dilmah is Rs 11 Bn. Dilmah achieved export of revenue of Rs. 11.6 Bn in 2020, which increase by 8% compared to previous financial year and achieved profit before tax of 2Bn in 2020. Profit was increased by 17% compared to previous year. In 2020, company exported 5.63 million kilograms of tea (Dilmah, 2020). In volatile business environment, consistent performance of Dilmah, has positively contributed to execute long term business strategy effectively.