Case Study Strategic Analysis
Global-based companies are the companies that have extended their business interests to most parts of the world. These types of companies are directly affected by major global decisions. In most cases, businesses with global operations start small and eventually become big companies that serve many customers, mostly from all parts of the world.
Agrana is an example of an organization with global operations that started as a local supplier of products in Australia, before becoming a multinational company with many subsidiaries in most parts of the world (Peng 2009). Agrana expanded very fast beyond the expectations of many players in the market. As a result, the company managed to command a sizable market share in the local as well as the international market.
To begin with, Agrana specialized in the supply markets and later advanced to the sugar and starch industry. In a bid to diversify its investments, the company decided to venture in the fruits market industry (Peng, 2009).
From the beginning, Agrana was faced with many challenges in the marketplace where it had to curve its niche in a mature market in which the already existing market players had gained stability. In this market, competition was perfect because any willing and able stakeholder was at liberty to either join the industry, or not (Irwin 1996).
At the same time there were many players in the market who were giving similar services to the existing customers in that economy. Everybody was at liberty to access the right information and the skills involved in running a company that supplies services in the economy.
Although Agrana was treated as an underdog, nonetheless, the company managed to penetrate the industry and started to offer services to its customers with the intention of growing and achieving its dream vision. Managers at Agrana had to position the company strategically to gain a unique selling point in a bid to appeal to the customers (Howes & Singh 2006).
From this humble beginning, Agrana managed to identify itself as a leading market player that offered quality and affordable prices in the industry hence attracting the interest of many international companies which needed Agrana services locally.
Agrana become the main suppler of Nestle, Coca-cola, Danone, and PepsiCo, among other international companies. This helped Agrana to attain a competitive edge in the market, in comparison with other players, thereby increasing the company’s revenue.
From a resource based view, Agrana’s capital was not sufficient to help it grow and attain the standard associated with a global company. Although the company had started from humble beginnings, the company had a dream to serve the local market promptly.
However, this was not the case as revealed by the reported growth of the firm. Agrana’s growth can be credited to its profitability and flexibility, and this has made the company to survive the various conditions in the market.
Agrana enjoyed a prudent management team that was able to take up all the opportunities that came their way. The availability of enough resource mainly drawn from the profits helped this company to diversify to other businesses like sugar and starch plants. Due to this diversification, Agrana easily spread the risk to other ventures and the company managed to remain in business in spite of the challenges facing it.
If one of its business ventures failed to generate profits to the company due to certain reasons, other business ventures were not affected, and hence a steady flow of profits for the company.
Agrana continued to open different plants from different regions and within two decades, the company was already operating fifty two plants globally. This diversification helped the company to remain active and relevant to the needs of its customers.
Visionary leadership in Agrana’s management team has also played a major role in this growth, whereby they acted with utmost good faith to lead this company to the attainment of its corporate vision. After the integration of European nations to form the European Union, Agrana had one great opportunity on its disposal, in the form of an expanded market (Hitt, 2008).
The European Union member nations had signed a business agreement which helped the member firms to operate freely with minimum interruption within the region. Agrana had an opportunity to exploit large-scale production due to the increased number of customers brought forth by the increase in population.
The economies of scale was achieved because of the assumption that the bigger the scale of production in a company the more economical the production is (Hitt, 2008). This helped Agrana to produce more while lowering its production costs, hence making more profits in return (Peng 2009).
Expansion was easy due to little or not legal requirements that were needed to set up a plant in a member state. Holding all factors constant, Agrana had a competitive edge as it had diversified its operations, and this helped the company to relate well with its many market stakeholders.
The integration also came with a number of challenges. All the European nations agreed to have a common market and as a result, local companies like Agrana were threatened by the risk of competing with big companies who were entering the local markets, bearing in mind that these companies were financially stable and their goods and services had an international appeal (Kaplan 1995).
The relatively small companies were supposed to upgrade themselves to meet the international standard for fair competition, and this came at a cost to the companies involved. At the same time, a resolution within this market zone that could not favor the company operation could have easily pushed the company out of business (Staut 2006).
For instance, the sugar policy resolution that shifted Agrana’s interests from sugar- related products to fruits products. It also had to cope with various dynamics in the ever changing market. It was also hard to regulate unhealthy competition from other market players due to difficulties in decision making hence subjecting the less advantaged companies to exploitation by the big companies.
As Agrana continues to expand to all parts of the global economy, it has the chance to diversify its operations even among the Asian nations. At the same time however, it will have to face many challenges to break the ground in this region. It is understood that most of the Asians are very loyal to Asian own and managed companies and as such, this poses a big risk to Agrana’s interest in Asia.
Agrana has to work extra hard and be smart to own the Asians’ faith by proving that they are equally good service providers, just like the local companies, if not better. A good market study is required to understand the customer’s preferences and the weaknesses of the existing companies, not to mention the need to explore the unexploited areas and markets in the region.
Culture and religious beliefs are big obstacles for the smooth running of business in this area (Dunung, 1998). Agrana will find it challenging to fit in this environment of totally different believers. An economical time will have to be wasted to accomplish this primary goal before the company starts penetrating in the region (Weiss 2002).
After becoming conversant with the region’s believers and other necessary areas of need, legal requirements might be another challenge for the company to set up a plant or even an office in this region. Agrana will have to go through the long, uneconomical process to get the chance to set up their businesses along other harsh business terms (Peng 2008). After all, the main challenge lies in competition (Dunung, 1998).
The already existing companies will make it hard for Agrana to have a meaningful market share unless it applies smart approaches to the market. This is the only way that Agrana will have an impact on the Asian market.
Agrana has come a long way to become a leading company in the global market. However, the company still has a long way to go if they want to remain flexible and innovative in the face of mounting market challenges (Guenter 2006). As a global market player, Agrana has the potential to penetrate all parts of the world as long as its management is willing to abide by the company’s vision while executing authority.
Reference List
Dunung, S.,1998, Doing business in Asia: The complete guide. (2 nd Ed). San Francisco: Jossey-Bas
Guenter, S., 2006, Entering emerging markets. (2nd ed). New York: Heidelberg.
Howes, C., & Singh, J., 2000, Competitiveness matter: Industry and economic performance in the U.S. Ann Arbor: University of Michigan Press.
Hitt, M., 2008, Strategic management: Competiveness and globalization concepts. (8th ed). Duane, Ireland: Duane Inc.
Irwin, D., 1996, Against the tide: An intellectual history of free trade. Princeton: Princeton University Press.
Kaplan, E., 1995, American trade policy. London: Greenwood Press.
Peng, M., 2008, Global strategy. (2nd ed). Stamford, Mass: Cengage Learning Inc.
Peng, M., 2009, The Global business. (3rd Ed). Stamford, Mass: Cengage Learning Inc.
Staut, B., 2006, Emerging markets economies and European economic integration. New Yolk: Syracuse.
Weiss, K., 2002, Building an important export business. (3rd Ed). New York: John Willy Press.