Agrana Essay

The Austria-based company, Agrana was founded in 1988 with trading operations consisting of the deed of starting line and stiffen. While relatively lessened, the company only operated two starch factories and three sugar factories. As the years passed, the company has besides concentrate on the outturn of payoff preparation, growth juice concentrate, and ethanol. The sweet stock strategy has en adequated the company to not only grow, scarce expand across multinational borders while increasing the number of buyers to whom they supply their goods and services to.In this paper, an analysis on Agranas emergence will be discussed from an industry-, resource-, and institutional-based view. The challenges in which AGRANA might face as it continues its expansion into sweet(prenominal) regions, such(prenominal) as East Asia will also be a topic of discussion. Since Agranas beginning, the industry has been quite challenging and emulous. Prior to European consolidation in 1989 , the company had to operate on small economies of scale. Many markets in other countries were not open to outsiders, therefore limiting the scope of customers to only local anaesthetic buyers.When applying Porters Five Forces Framework, the industry consisted of fierce rivalry from large competitors, threat of substitution, little to no differentiation which increased the threat of potence entrants, high bargaining power of its buyers, and low bargaining power from suppliers. However, with the integrations of the European Union (EU) and the Central and Eastern European (CEE) in 1989, Agrana was able to contend with larger rivals and expand to markets in other countries. The regional and global integration allowed Agrana to aggressively expand its foreign direct investment (FDI) throughout CEE (Peng, p. 82).This pass increased their economies of scale. With their new profound strategy, the company was able to improve the property of its products as they pursued and formed partn erships with larger buyers like Coca-Cola, Pepsi, Nestle, and Danone. As they puddle continued to grow, Agrana added to their production by focusing on fruit impact and through the acquisitions of other companies. The growth of Agrana is quite impressive as you mean how small the company was, their limitations, and how little they had in order to compete with their rivals. notwithstanding these disadvantages, Agrana capitalized on its resources and capabilities through the improved manufacturing of high-grade products at competitive prices and by a strategy that promotes expansion. Prior to their emergence, the company had little entertain in its resources, no rarity in its industry, wide-spread imitability and no competitive advantage. The VRIO Framework for Agrana was in need of help. Through restructuring, and increased profits, Agrana diversified by adding a fruit processing division.With fruit being a complementary good to sugar and starch, this move fell in line with the b usiness strategy and production already established. To further their diversification, the company turned to acquisitions of companies in the fruit industry. mingled with 2003 and 2007, the company acquired Denmarks Vall Saft Group (fruit juice concentrate), Austrias Steirerobst (fruit preparation and fruit juice concentrates), Belgiums Dirafrost (fruit concentrate) Ger some(prenominal)s Wink Group (fruit juice concentrate), and acquired a 50% stake in a joint venture with Xianyang Andre juice Co. Ltd (fruit juice concentrate) p. 384-385.The legion(predicate) acquisitions have not only added to its growth but its value as well as the company had gained access to numerous markets in various countries. The competitive advantage of Agrana is a result of the value added by its acquisitions and their integration, market knowledge, global growth, and their means of finding new ship canal to develop other products such as biofuel. An institution-based view is a sentiment that argues th at in addition to industry- and firm-level conditions, firms also need to take into account wider influences from sources such as the state and society when crafting strategy (p. 3). This includes formal and informal institutions contact laws, regulations, cultures and ethics. Early in Agranas existence, much of its challenges were a result of the restrictions fit(p) on Western European companies to enter CEE markets and the EU. The opening of the CEE markets, in 1989, presented new opportunities for Agrana and others to expand regionally and internationally. FDI proved to be effective in CEE countries as it lead to be increased profits, production and growth.As stated earlier, Agrana was able to produce goods for major companies allowing them to better cater to the expanding needs of its corporate buyers (p. 382). As the company reduced its challenges, the EU encouraged the company to diversify its operations in order to grow. Though the EU imposed challenges for Agrana prior to its integration, many of the CEE countries have become members which have helped the company increase its opportunities.However, with a intemperate EU presence in sugar reforms, regulating prices, and tariffs on imports and exports, Agrana has encountered new challenges and looks for new opportunities. Currently, Agrana has a huge presence in most European countries as well as plants in Mexico, mainland China, South Korea, and China. Though China and South Korea are countries of East Asia, further expansion into other regions may present challenges surrounding culture. A presence in North Korea is cold from foreseeable and while business in the CEE is similar to Vienna, Austria, the culture in East Asia are hugely different.There will also be challenges when you consider how Agrana plans to duplicate its European working environment in countries where employees and attention operate on more of a hierarchical management entitle that stems of culture and tradition. More important ly, the biggest challenges that Agrana will face will be colligate to the laws and regulations of the local government. Each country has different laws and regulations regarding imports/exports, employee relations, production, working conditions and acquisitions.Agrana will also face challenges in competition presented by local companies operating in similar industries. Agranas rise to dominance starting a small company is similar to the story of Google, Inc. With strict limitations and an overwhelmingly grounded industry, the company chose to confront and capitalize on the opportunities presented. Through FDI, restructure, innovation and expansion Agrana has gained a competitive advantage in its industry. Their business strategy of this company is one to wonderment over and imitate.