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• Case | HBS Case Collection | November 2018 (Revised May 2019)

  Almarai Company: Milk and Modernization in the Kingdom of Saudi Arabia

  Kristin Fabbe, Safwan Al-Amin, Esel Cekin and Natalie Kindred

  With SAR 14 billion ($3.7 billion) in 2017 revenues, Almarai was Saudi Arabia’s largest dairy producer, distributor, and marketer, with a large portfolio of branded dairy products, juices, bakery goods, and infant formula and a sales presence across the Gulf region, Jordan, and Egypt. Almarai employed some 42,000 people across its operations, from its massive dairy farms to its processing plants to its vast sales and distribution operation that reached over 100,000 outlets. Notwithstanding its diverse portfolio, the core of Almarai’s business was (1) sales of branded fresh/chilled dairy products, (2) in Saudi Arabia, (3) distributed through the traditional retail channel made up of thousands of small neighborhood shops called bakalas. In October 2018, all three of these focal points were under pressure. Under the economic-restructuring programs of Saudi Arabia’s new crown prince, Mohammed bin Salman, new taxes and subsidy cuts were squeezing household budgets. Concurrently, changes to other government policies were causing expatriates—who made up about a third of Saudi Arabia’s population and were a key consumer of Almarai’s dairy products—to leave the country in droves. This case finds Almarai’s management team, led by soon-to-retire CEO Georges Schorderet, debating how the company can defend and grow its position in Saudi Arabia while also finding new sources of future growth (e.g., bringing its production model to new markets with fragmented dairy sectors or entering new product categories such as fish or ice cream). The decision of how to move forward will be based on an assessment of Almarai’s strengths, how they can be best used to drive future growth, and how relevant they will remain in a market that is changing so dramatically. The note “Saudi Arabia: A Brief Background" (HBS 719-043) is essential supplementary reading for this case.

  Keywords: Dairy; Agriculture; Kingdom of Saudi Arabia; Almarai; Schorderet; food security; public policy; self sufficiency; Gulf; GCC; Business and Government; Agribusiness; Marketing; Distribution; Change Management; Leading Change; Strategy; Government and Politics; Policy; Diversification; Integration; Horizontal Integration; Vertical Integration; Food; Brands and Branding; Growth and Development Strategy; Business and Government Relations; Agriculture and Agribusiness Industry; Food and Beverage Industry; Consumer Products Industry; Saudi Arabia; Middle East;

  Citation:

  Fabbe, Kristin, Safwan Al-Amin, Esel Cekin, and Natalie Kindred. "Almarai Company: Milk and Modernization in the Kingdom of Saudi Arabia." Harvard Business School Case 719-020, November 2018. (Revised May 2019.)  View Details

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• Teaching Note | HBS Case Collection | March 2019

  PCAOB Efforts to Improve Audit Quality (A) and (B)

  Aiyesha Dey and Paul Healy

  Teaching Note for HBS Nos. 118-108 and 118-109.

  Citation:

  Dey, Aiyesha, and Paul Healy. "PCAOB Efforts to Improve Audit Quality (A) and (B)." Harvard Business School Teaching Note 119-017, July 2018.  View Details

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• Case | HBS Case Collection | August 2018 (Revised February 2019)

  Revenue Recognition at HBP

  Paul Healy and Siko Sikochi

  In early 2014, Paul Bills, CFO of Harvard Business Publishing (HBP), sat down with David Wan, the company’s CEO, to discuss budget preparations for the coming year. Bills noted that the performance of Corporate Learning, one of HBP’s three business units, would be affected by a business model change for its largest product that required a change in the timing of revenue recognition. Corporate Learning was in the process of revamping its flagship product, Harvard Manage-Mentor (HMM) from version 11.0 (HMM11) to version 12.0 (HMM12). The revamped software would be hosted exclusively on HBP’s server rather than on its clients’ servers, allowing updates to take place continuously. Given the change, accounting standards required HBP to change the recognition of revenue from the date of software delivery (for HMM11) to ratable recognition over its contract life (for HMM12). As Bills and Wan discussed the accounting change, they recognized that its impact on Corporate Learning’s and HBP’s performance could be material and would have to be reflected in the budget. In addition, they wondered how the new accounting would affect the company’s policy for awarding sales incentive compensation on HMM, as well as how they communicated with employees and the firm’s sole shareholder, the Harvard Business School.

  Keywords: Accrual Accounting; Budgets and Budgeting; Revenue Recognition; Financial Reporting; Publishing Industry; Education Industry; United States;

  Citation:

  Healy, Paul, and Siko Sikochi. "Revenue Recognition at HBP." Harvard Business School Case 119-029, August 2018. (Revised February 2019.)  View Details

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