This paper explores the opportunities for New Zealand to establish an internationally competitive sheep dairy industry. France is among the world leaders in sheep dairy production and therefore can offer valuable lessons to New Zealand in its early stages of development. Information was gathered through a literature search and several cases studies, where seven New Zealand and six French industry experts were interviewed. The strategic capabilities and structural forces of the sheep dairy industries in both France and New Zealand were compared. The study found that New Zealand sheep dairy (NZSD) industry should pursue a differentiation strategy that focuses on customer responsiveness, innovation and quality to achieve a competitive advantage. This study also identified that responsible Innovation is a critical factor for the NZSD industry to sustain a competitive advantage.