Strategic management is the process of developing capabilities which enable a company to create value for different stakeholders like customers, society and shareholder while operating the business in competitive market (Grant, 2016). It is very important for a firm to analyze its external and internal environments and develop strategies accordingly. The major objective of this report is to analyze the external and internal environments of a chosen agribusiness company i.e. The Australian Agricultural Company (AACo). Under external analysis, some external factors are analyzed like social, legal, economic, technological and environmental. These factors have a huge impact on organization’s operations and growth. By conducting internal analysis, resources and capabilities of this company are analyzed. At the end of the report, some recommendations are provided for the future strategic direction of The Australian Agricultural Company.
About Organization (The Australian Agricultural Company)
Australian agribusiness industry occupies an important place in the economy of Australia. It has sound track record in enticing international investment across the agricultural supply chain. Agribusiness industry in Australia is a $256 billion dollar industry and continuously growing. It is the major contributor to the GDP and economic prosperity of Australia (Australian Trade and Investment Commission, 2018). As a foundation of Australian sector, food and agribusiness has been the iconic part of country’s identity.
The Australian Agricultural Company (AACo) is one of the leading organizations to the Australian agribusiness sector. It is an agricultural organization that operates and owns feedlots and farms covering around 7M hectares of land in Northern and Queensland, approximately 1percent of Australia’s land mass. It is an ASX listed company which runs its operations as top firms in the country. It was established in 1824 via an act of British Parliament with entitlement to choose 1,000,000 acres in New South Wales for development of agriculture (AACO, 2018). AACo is among the biggest producers of agricultural and beef produces. The company is engaged in various activities of farming and grazing properties, growing, breeding and providing beef cattle.
Business units and products and services lines
Australian Agricultural Company Limited is one of the largest beef producer and meat processing company in Australian agribusiness industry. The company is on 729th rank in top 2000 firms in the country. The business units of AACo are categorized as per their tasks and operations. Along with beef, the company also offers wheat, dry land, chickpeas, sorghum and irrigated cotton (Australian Agricultural Resources Group Pty Ltd, 2018). Currently, it provides its products in market through various brands such as Wagyu, Takumi, Kobe Cuisine, Premium Beef and Master Kobe. It has its business operations in New South Wales, Queensland, Western Australia and Northern Territory.
Business revenue units
In the year 2018, the company generated total revenues of $545,616,000 that include other revenues and sales. Among its all the product and service offerings, majority of its income and revenues are generated from meat processing business unit. The major reason behind this is that Australian beef sector is the biggest agriculture sector (Kalkine, 2017). This country is the second biggest beef exporter all over the world. This revenue unit is very important for AACo as it helps the organization to become one of the largest agribusiness organizations in Australia and across the world.
External Environmental Analysis
External environmental analysis is the process of evaluating different external forces which can affect the operations and business of any company (Ho, 2014). This external effect on AACo Company can be identified by looking at different factors which are discussed below:
Australia emphasizes son the free trade market so AACo can seek for expanding the business in other nations. It will assist the organization to gain more competitive advantage over its competing brands like Kidman & Co., NAPCO and The Consolidated Pastoral Company. Apart from this, around 70% of Australian beef production is exported to other nations. As a result of this, exchange rates, export markets and international competing brands can have a considerable effect on the prices which are paid for AACo’s cattle and its returns. To manage this industry, Australian government has placed various regulations like Livestock Production Assurance and Livestock Identification System. This firm may confront the issues from political aspects because government offers lowermost subsidy assistance to farmers.
Agribusiness is the major employer in Australia and contributor to country’s economy. This sector assists in offering food for the country’s population. Around 65% of agriculture produces of Australia are exported that contributes 3% to the country’s Gross Domestic Product. Currently, Australian economy is one of the largest mixed economies all over the world that can have positive impact on the business of AACo in the country (Dixon, et al, 2013). Additionally, it is the largest exporter of beef products that can increase the business of AACo.
There are various social factors which have huge impact on the growth of AACo in the country. The company is offering beef and agricultural products for a longer time. In the country, there are various food outlets which use beef as the chief ingredient in their offerings. Hamburger is an example that uses beef and meat in its food menu. With the growth of food industry in Australia, there will be growth in sales and revenues of AACo. Additionally, country’s population love to have beef and other related products. AAC’s brands like Kobe Beef and Wagyu Beef offer quality beef and these are preferably considered for great taste. A major part of country population is covered by high income level people so they can purchase the prices of AAC’s agribusiness and beef products (Gold, 2016).
This beef producer and provider can utilize new and advanced technologies in its farming and agricultural activities. By using upgraded technology, the company can develop new production processes. It can assist the company to reduce the agricultural costs and increase the quality of beef and other products. The company can develop new and innovative system to meet the needs and expectations. It can help in real time data to the suppliers (Hill, Jones and Schilling, 2014).
Trade restrictions and laws may have significant role in the business operations of AACo. Other nations can pose restrictions on export from Australia that will not only affect the operations of AAC but also other companies also. While expanding business in other nations, the company needs to analyze its legal environment and regulations (Hunger and Wheelen, 2011).
It is the most important concern for any agribusiness company. It includes the changes in climate and weather. Domestic conditions like drought and flood may affect the prices paid to the agriculture producers. Variation in temperature can affect the farming processes of AACo.
Apart from external environmental analysis, it is very important to evaluate the internal environment of an organization as its components support it to attain its overall objectives (Australian Agricultural Resources Group Pty Ltd, 2018). Here, internal environment of AACo is analyzed by considering its resources, capabilities and competitive advantages. Internal environment of AACo is analyzed below:
Resources & Capabilities
Being one of the largest agribusiness companies in Australia, Australian Agricultural Company owns various physical resources which assist it to gain significant competitive advantage. These resources are land, feedlots, cattle stations etc. Currently, it is operating its business by owning 24 cattle stations, 3 farms, 2 feedlots which consists more than 565,000 beef cattle. It uses advanced techniques and machines for farming the beef and meat processing (AACO, 2018).
Human resources play a significant role in the business operations of this company. This company has a team of talented and skilled employees which support in processing the meat and beef. Farmers are the key resources of AACo as they help in producing the crops. It conducts training and development program while it hires fresher candidates (Australian Agricultural Resources Group Pty Ltd, 2018).
Financial performance of this company is very good and it is continuing to enhance every year. The company and its business activities have the capability to generate increased revenues than other players in the industry. At AACo, meat processing is the biggest revenue generator. In the year 2018, it produced revenues of $545,616,000 that has increased significantly from last year (AACO, 2018). Thus, it can be stated that this firm is financially capable to gain more competitive edge.
Systematic Organizational Structure
AACo has established an organized structure which helps it to manage the responsibilities and roles of its staff. In business operations, the company follows divisional structure as it has its operations in different locations in Australia (Hahn and Powers, 2010). All the teams are self-administered and focused on beef processing and agricultural activities of AAC.
Innovation is one of the major core competencies of Australian Agricultural Company. However, it is the oldest agribusiness firm of Australia but still company is able to innovate its farming and processing techniques effectively. It is using advanced technologies to innovate its processes. This innovation differentiates the company from other brands in agribusiness industry in Australia (Galanakis, 2018).
Leadership is another core competency of AACo that differentiates it from other players in agribusiness industry. The leaders at this company implement democratic leadership style which helps them to lead all the members. About the leadership and management of AAC, it can be said that leaders of AAC give equal opportunities to all the followers from different background and culture (Tannenbaum, Weschler and Massarik, 2013). It motivates the employees to perform better so that they can contribute to attain overall objectives of company.
Competitive advantage enables the company to get better place among competing brands by offering products on affordable prices. Australian Agricultural Company is the oldest firm in Australian agribusiness industry so it is very famous for its processing and farming techniques. This is the main reason that allows the company to attain competitive edge against its competitors in form of grants and knowledge and experience of several years that is difficult for others to replace. AACo is working effectively in this sector against other brands such as the Consolidated Pastoral Company, S. Kidman & Co., and NAPCO etc. It is making efforts to improve the cattle quality and increase herd by over 38,000 head. It continued to generate quality beef and meat and its sales by 14 percent (Fleisher and Bensoussan, 2015). In this way, AAC is able to attain significant competitive advantage in Australian agribusiness industry.
Recommendations for Future Direction
However, Australian Agricultural Company Limited is a leading player in Australian agribusiness sector and holds top position, but still there is need of improvement its operations and processes. The company needs to make improvement in its strategies by focusing on these strategic recommendations. At functional level, the company should utilize innovative technologies to upgrade and enhance is agricultural processes. These technologies can help the company in improving its financial performance among competing brands. In addition to this, the company should make efforts to expand its business in international markets so that it can increase its brand presence all over the world. AAC should adopt a strategy that aids its core activities and businesses.
The major resources of company are funds, marketing processes and human resource management so AACo should focus on improving them. It is essential to establish coordination among all these components and resources. In Australia, it has strong business so it should focus on spreading business in other nations. Under this process, it should focus on the countries which consume beef and meat products in large quantity. It should implement the market penetration and market development strategies so that it can attain its overall objectives. Furthermore, the company should make better relationships with the farmers and suppliers. By implementing these recommendations, the company will be able to improve its overall performance and position in international agriculture industry. It will assist the organization to future strategic direction.
From the above discussion, it can be concluded that Australian Agricultural Company holds a top position in Australian agribusiness industry. The environmental analysis of the company shows that external factors are favorable for the future growth and development of this company in Australia. The company has enough resources, capabilities and core competencies which can help the organization to overcome the competition and attain competitive advantage against competing brands. The above strategic analysis of AACo states that company is using effective strategies so that it can attain its objectives and achieve increased revenues every year.
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