Strategic Management Inputs For An Australian Agribusiness: A Case Study Of GrainCorp Essay.

This assessment focuses on your understanding and appreciation of Strategic Management Inputs. You are required to identify a corporation in the Agribusiness food related sector of Australia. This report should include the following items:

1.Identify an Agribusiness operating in Australia.
2.Identify its business units and products and services lines.
3.Identify its business revenue units and discuss the importance of the largest of these revenue units.
4.Analyse the Agribusiness’ external environment.
5.Discuss its political, economic, social, technological, environmental and legal operating environment.  
6.Analyse the Agribusiness’ internal organisation.
7.Discuss its resources, capabilities, core competencies and competitive advantages

Make recommendations for the future strategic direction of the selected Agribusiness.

Write the report in English with structured sentences that conform to academic writing guidelines.

Follow a report structure with an executive summary, table of contents and conclusion.

Use Harvard referencing style in text and in the list of references. A minimum of eight (8) journal articles and textbook references are required to show basic research.

Identification of Agribusiness (GrainCorp)

The report aims at providing an overview of strategic management with respect to an agri food related business of Australia. The firm chosen here is GrainCorp that is a top international agribusiness with growing assets and expertise on the processing of agrifood (graincorp.com.au 2018). The firm boast of having diversified operations spanning over the four continents with a global supply chain. The integrated mix of its assets along with business allows the firm in delivering higher quality of assurance, confidence and scale of supply and competitive price. The report commences with the identification of its business units, service lines and products. The report also identifies the revenue units with a focus on the largest revenue unit. The report puts forward an analysis of the external environment of the Agrifood business. There is also an analysis of the internal organization with a discussion of its capabilities, resources, competitive advantage and core competencies. The report also puts forward recommendations for the futuristic strategic direction of the chosen agribusiness.  

GrainCorp represents one of the largest transport and grain storage network across eastern Australia. The firm possess seven large grain ports. It is a renowned malt producer having the largest integrated edible oil businesses across Australia. The core business of the firm lies in the storage and receival of the grains and the other related commodities (graincorp.com.au 2018). The firm is also responsible for providing logistics and marketing of the commodity produced. The firm was initially found as public sector agency of New South Wales and was responsible for the transportation of grains from the local points of collection. Later it became known as Grain Handling Authority. The firm however privatised in the year 1992 with the majority of its shares being transferred to the grain growers. The firm quality grain and value added capabilities of processing made it a sought after name in close to thirty countries. The operations of GrainCorp also extended to the other states of Australia with the help of amalgamations with various grain-handling operators.

The business of the GrainCorp includes storage, logistics and the marketing units. However, the firm announced the creation of a single business unit for its grains through combining the existing logistics, storage and the marketing units (reuters.com 2017). The streamlining of the firm’s grain operation helped in it in enhancing customer performance, have a single point of contact, ensuring easier business, enhance competition against global competitors and ensuring access to the network of the firm.

Business Units, Products, and Services

GrainCorp offers a wide range of fats and oils for meeting the needs of bakers, caterers and food manufacturers (graincorp.com.au 2018). The products of the firm finds applications in bakery, frying, snack food, infant formula, chocolates and confectionary, alternatives of dairy fat and cosmetics and chemicals. The products of the firm are available in Asia, New Zealand and Australia in both smaller packages as well as in bulk containers.

The firm undertakes various service lines like commodity management, supply chain services, technical services and service of the liquid terminals that includes storage, handling and drumming (graincorp.com.au 2018).  

For most of the financial year of 2017, GrainCorp undertook operation through four major business revenue segments that comprised of storage & logistics, oil and malts and marketing (annual report 2017). Later in the year 2017, the firm simplified the business unit through creations of single business unit for Grains from the existing business related to marketing and storage & logistics, which is presently the largest business revenue unit.

The business revenue unit providing malt is the fourth largest in the world.  It also provides other products and brewing ingredients to the craft brewers, global brewers and the distillers (annualreports.com 2013).  Its importance lies in the fact that it provides the firm with a stable earnings due to the continued demand for the specialty products. Even when the revenue for the malt remains down, its capacity utilization remains quite higher due to the strategic location of the highly efficient plant.

The external environment of the agribusiness comprises of outside influences or factors that influences the business operation (Hueske, Endrikat and Guenther 2015). The business must however react or act for keeping up with the flow of the operations. The six segments of the external environment of a business include the political, economic, social, technological, environmental and legal.

Australia represents a liberal democracy with political stability. This makes the country suitable for investment in agriculture (Zajda 2013). In other words, Australia represents a growing economy with stability in the business environment. The country also has a well-educated, skilled and multilingual workforce, competitive cost structure and strategic time zone that provide an ideal ambience for businesses to flourish. In fact, the presence of the factors provides a sophisticated market and a suitable ambience for the agribusiness in driving technology and innovation.

Australia is an economically stable country having higher rates of growth. The company also has a higher gross domestic product (GDP) compared to Germany, France and United Kingdom (Tylecote 2013). Thus, Australian economy has a lower degree of risk, stable rate of interest, stronger growth in GDP, higher employment levels, increasing exchange rates and a lower inflation rate. This provides an ideal environment for the agribusiness to flourish. The country also represents a lower unemployment rate that stands closely at percent.

Business Revenue Units and Their Importance

Australia is a multi lingual and multicultural country with English being the dominant language spoken by the people.  The government contributes close to 4.5 percent of the gross domestic product (GDP) on education (Koenig 2017). Higher education in Australia has led to the creation of employment opportunities. Besides, tertiary education is widely available and undertaken by the larger proportion of population. The positive socials structure of Australia prompted the growth of the agrifood related firm GrapeCorp in Australia.

Australia plays a vital role in collaborating with the international technology and science. The government of Australia funds close to fifty five percent of all the research and development (Dodgson 2018). The newer technologies lead to creations of the newer processes and products along with reduction of the cost, quality improvement and innovation. Hence, such developments prove beneficial for the growth of the agrifood related business of Australia.

The environmental protection act of 1974 established procedures that ensured environmental impact to considered under the decision making of the government. Australia had numerous acts implemented for the protection of the environment (Schaltegger and Wagner 2017). The country mainly suffered scarcity in the water resource, problems with the water quality and its constant availability. There was also increased salinity due to the inland diversion of water and clearance of land for farming. The country also faces soil erosion. Thus, the environment of Australia seems quite challenging for the growth of the agribusiness.

As a new legal framework, Australia introduced a disability and age discriminations, an increase of minimum wage rate and greater requirements of the firms to undertake recycling of activities (Hepple 2014). The new implementation of the various laws has an impact on the actions of the organization. In such a scenario, if new procedures and systems are to be implanted as a part of the agribusiness then it could have an impact on the cost of the firm. Changes in the legal framework can also have an influence on the demand of the customers using the service or the product.

The analysis of the internal organization of the agribusiness in Australia represents the manner in which it remains structured for carrying out the activities. The internal organization is  determined by resources, core competencies and the competitive advantage.

GrainCorp operates on resources based on the core grains, operating geographies and the integrated activities of the firm.

The core grain includes barley, wheat, canola and sorghum. The firm primarily focuses on grains of drier climate since it can afford comparative advantage of the grain origination, proximity towards market growth and necessary technical expertise on these areas (graincorp.com.au 2018). The operating geographies cover regions of Australia, Asia, Europe and North America as these regions ensures close to fifty percent of global trade. Lastly, the integrated activities comprises of the supply chain, processing and origination. GrainCorp tries to capture and create value along the grain chain with an insight into the customer requirements.

Analysis of External Environment

The firm operates in the international grain market thereby offering growth prospects in demand for the grains and the processed grains that includes edible oil and malt. Population growth and the rising affluence in the subsequent forty years will lead the increase of global demand for grain by close to fifty percent along with a 100 percent increase in global trade for grains (graincorp.com.au 2018). The core competency lies in the application of the comparative advantages in supply of malt, edible oil and grains and thereby participate in the growth opportunity that will not only help in serving the customers of Australia but worldwide. The core competency of GrainCorp lies in its commitment of providing a sustainable and safe work environment for the visitors, employees and the contractors. GrainCorp tries to embrace a commitment that hardly cause any harm. The firm therefore proactively manages health, safety and the environmental risk. Besides, GrainCorp also believes in recognizing the need of a sound environmental management practice and ensure the responsible utilization of the resources. The firms approach towards the environmental management is determined through assessment, identification and control of the material risks across the operations.

GrainCorp tries creating and capturing values for the shareholders, consumers and the growers through the various competitive advantages that are as follows (graincorp.com.au 2018):

Strategic Assets: This represents the firm’s distinctive end-to-end network at all the stages of grain chain within the core grains of the firm.

Grain Origination: This refers to the access of the grains with stronger quality advantages for satisfying diversified range of the consumer products.

Geographic Location: This implies the proximity of the firm towards the growth of the grain market in Middle East, Asia and Africa.

The recommendations include:

1. By building accurate frameworks for maintenance of productivity, profitability and innovation that determined competitiveness of the agribusiness sector in face of the declining terms of the trade.
2. By maximizing the effective use of the human capital by focusing on the workforce and the skills
3. Review of the regulatory and the business-operating environment for focusing on the business development of the sector.Further, the agribusiness sector should review the instances of occurrence of duplication and red tape. For example, this includes resources like labour, water, logistics and labelling, market access and ingredients of the products.
4. By undertaking newer models of ownership and environment within the industry for facilitating capital investment necessary for underpinning growth
5. Development of supply chains, partnerships and the operating environment for capitalising on the market and the export opportunities.
6. Creating support for the agriculture by enhancing and protecting social licence of industry that helps in developing connect with the community. Such tools also encourage the direct participation of the farmer.  

Conclusion 

To conclude, one can say that GrainCorp represents a renowned agribusiness and food ingredients company that has a business model integrated across the three primary grain activities of supply chain, processing and origination. In the report, one can find that the firm has three segments of reporting, grains, malt and the edible oils. The value of GrainCorp lies in committing to the safety, delivering to the customers, leading the way and owning the results. It also puts forward a fact of how the things are done at GrainCorp and how the firms behave customers, stakeholders and one another. Through the report one can also find how the agribusiness firm manages variability in earnings through participation across multiple geographies and grains chain, deliver growth through the realisation of opportunities and competition in the international grain market and the improvement in the shareholders returns through the creation and the capture of the value along the supply chain of grain.

References:

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