Competitive Advantage Of Carroll Cotton Company In The Cotton Industry

• Identify a Fibre focused Agribusiness operating in Australia.

• Identify its business units and products and services lines.

• Identify its business revenue units and discuss the importance of the largest of these revenue units.

• Identify different business level strategies (cost leadership, differentiation, focus and integrated cost leadership/differentiation)

• Analyse the Agribusiness' business level strategy.

• Draw and discuss its model of competitive reality.

• Identify an implementation plan and an evaluation strategy.

• Make recommendations for the future strategic direction of the selected Fibre focused 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. 

Threat of New Entrants in the Cotton Industry

                                                         Figure 1: Porter Competitive Model

The Caroll Cotton Company engages in growing and harvesting of cotton at upper Namoi valley where there are higher chances of a new entrant. Farming industries experience the threat of new entrant as the industry is not much protected nor there are no such policies which protect the industry (Moschandreas, 2013). Everybody with required instruments can start farming company, and in fact to some extent, the government will help the company in some ways or the other (Porter, 2013). The basic role of this company is to boy produce prom the farmers who grow the cotton around this area.

In this industry buyer (Carroll Cotton Company) has so much power over the producers. The person who farms the cotton does not have much power to control the price of cotton. In many cases, the cost of the cotton is controlled by Carroll Cotton Company and other companies in the market. Whoever, when many companies open in the area, the scenario may change as farmers will have alternatives to take their produce to different companies thus selling at the price of their will (Raskovich, 2014). The law of demand states that as the demand (those buying cotton) rise the supply (those producing the cotton) lower thus, the price of cotton will rise. The vise versa which is, when the demand (those buying cotton) fall the supply (those producing cotton) rise thus the price of cotton will fall is true. To make the bargaining power of buyers high, the producers must come-up with many industries in the market.

In the market cotton has a small number of substitutes, for instance, some of the products which can substitute cotton include bamboo, hemp, ramie, jute, and linen (Turner & Pau, 2016). Those crops can replace cotton ass they perform the same task in the market. This means that those are the biggest competitor of Carroll Cotton Company in the market. However, according to the statement which was released by the company’s owner he never mentioned anything about the substitutes in the market (Cadle, et al., 2015). This means the company may not face stiff competition from those substitutes as they never actually exist in this market. In this area, services and product are not highly substituted, and farmers do not even know if other products will grow in this area thus making the Carroll Cotton Company the most prosperous company.

In farming, industry suppliers are those companies which supplier chemicals, fertilizers, and other farming tools. Like buyers also suppliers do not have a lot of bargaining power over the farmers. This is because there exists a lot of companies which can offer the same services to the farmers and in some cases, the same services are provided by the government at reduced prices. The reason as to why the government offer’s the same services to the farmers is to protect them against exploitation by foreign companies in the pretense of offering the same services to the farmer at an increased price (Magretta, 2012).

Bargaining Power of Buyers in the Cotton Industry

Carroll Cotton Company is equipped with some competitive advantage which enables it to operate in this market smoothly with much struggle. According to the chief executive officer who is also the owners Scott and Trudy Davies there are some planned activities in the company which would help in stocking more stock thus acts as a competitive advantage. Some of those planned activities include

The Carroll Cotton Company is planning to upgrade its equipment and also the size of the storage. This is as a result of the continuous growth of this industry experienced every year even in dry seasons. In the interview, Carroll Cotton gin owner Scott Davies says that the reason why there will be an improvement on equipment and capacity is “We’ve seen continual growth each year, even in dry seasons,” Carroll Cotton. He continues to say that the area is known for sorghum growing but in the current days, farmers are using the cotton as a plan in their rotation thus this makes the production of cotton to increase thus more, and equipment for storage is required. The increased production of the crops leaves the owner with no other option but to expand the place where the in-excess will be stored. However, the increased number of the production is doing wonders to the company as the owners say “with this upgrade, we’re meeting the demand from local growers.” The company is selling the excess to the market thus making a massive profit in the long run (Harry Field, 2014).

With the farmers opting to rotate the sorghum with cotton, the output of cotton has increased from the year 1995 to 2010 with an average output of 2500 bales every year. The owner states that for the past six seasons the company had processed an average of 75000 bales of cotton with only 100000 bales ginned the previous year. The company is predicting the new plant will take an increased capacity of around 175000 bales on each season which will mean that it will cut the ginning time by almost half (Barnett & Steckel, 2014). This is as a result of increased cotton growth each year even in the dry season as Mr. Davies says. However, Davies maintains that the increase in production won’t affect the number of employees the company has. He argues that the company will keep current staff numbers. However, it will work to improve the plant efficiency in the market. An increase in efficiency will result in a rise in production and also refines the ginning process in the long run. This will give the company more capital resources thus making it giant in the market and very hard for other companies to compete in the long run. As a result of this other companies will fears Carroll cotton Company in the surround as it is using an increase in cotton production as a competitive advantage in the market (Johnson Hake, 2016).

                                                Figure 2: Cotton produced in Bales

Substitute Products in the Cotton Industry

Current the company is operating at upper Namoi valley, but with the increase in cotton production, the company is planning to find another market at the north of Boggabri, down to primer and across to willow tree. Venturing into the new market will make the Carroll Cotton Company so strong that it will be hard for other companies to compete with it currently. When a company ventures in different markets, it means that the resources will be pulled from the different market and assembled in one strong pool which is hard to be defeated by other companies.

                                                 Figure 3: Areas the company operates in

The new improved technology will give way for the introduction of Bollgard III which will be used in the company. The introduction of new and improved technology will help the company not only produce quality products on the market but also it will be timely and cost-effective (Cudd, 2016). The improved technology will enable the company to provide quality products required by the consumers who purchase them. Improved technology will act as a company competitive advantage as the company will be able to sell the products to the consumers a reduced price to the cost of production cost. Improved technology will be able to cater for increased productions in the market making it easier for the company to produce and market more products in the market

                                    Figure 4: The relationship between the level of technology and output

In conclusion, Carroll Cotton Company can utilize the above factors for its benefits and force other companies out of the market in the long run. And also, even if some companies will remain in the market Carroll Cotton Company will continue to be the market leader, and others will follow.

References:

Barnett, K. A. & Steckel, L. E., 2014. Giant Ragweed (Ambrosia trifida) Competition in Cotton. 3rd ed. Weed Science, v61 n4 (10 2013): 543-548.

Cadle, J., Turner, P. & Paul, D., 2015. Business analysis techniques : 72 essential tools for success. 4th ed. London [England]: British Computer Society.

Cudd, ‎. d. W., 2016. Harnessing the Power of Technology to Improve Lives. 2nd ed. Amsterdam: Amsterdam IOS Press, Incorporated 2017.

Harry Field, ‎. S., 2014. Overall equipment effectiveness : a powerful production/maintenance tool for increased profits. 3rd ed. New York, NY: Industrial Press.

Johnson Hake, ‎. A. K. ‎. D. H., 2016. Cotton production manual. 4th ed. Oakland, Calif. : University of California, Division of Agriculture and Natural Resources.

Magretta, J., 2012. Understanding Michael Porter : the essential guide to competition and strategy. 2nd ed. Boston, MA: Harvard Business Review Press, cop.

Moschandreas, M., 2013. Business economics. 2nd ed. London ; New York: Business Press.

Porter, M. E., 2013. The competitive advantage of nations. 4th ed. London: MacMillan.

Porter, M. E., 2014. Michael Porter on competitive strategy.. 3 rd ed. Boston, Mass.: President and Fellows of Harvard College.

Raskovich, A., 2014. Pivotal buyers and bargaining power. 4th ed. Washington, DC : Economic Analysis Group, Antitrust Division, U.S. Dept. of Justice.

Turner, P. & Pau, D., 2016. Business analysis techniques. 5th ed. Johanneshov: TPB.