Type: Business
Pages: 3 | Words: 814
Reading Time: 4 Minutes

AGRANA’s growth is due to the competitive advantage it enjoys over other firms in the same industry. This is partly due to heterogeneity of resources which makes the company to benefit from both the monopoly and high profits. Heterogeneity gives an impression of the firm’s capabilities to effectively compete within the market environment at the lowest breakeven. The ricardian profits for AGRANA arise from scarce inherent supply of resources while those of a monopoly type of competition accrue from restricting of output deliberately. 

The company majorly engages in a monopoly type of market competition. This is the main reason behind revenue increase in the two consecutive years. The monopoly is unique in its way. The fact that the company deals in different products that is sugar, starch and fruit gives it a heterogeneous spatial competition in the monopolized market. The aspect of the presence of the barriers of intra-industry mobility which is characterized by different groups of firms gives AGRANA an additional competitive advantage in the market.

Resource-Based view is a framework that combines that strategic perspectives of both internal and extern environment. Internal includes the core competence while the industry structure is in the external environment. Firms have different intangible and physical capabilities and assets. RBV refers to this as resources. Valuable resources ownership is an attribute of competitive advantage. In broad view, resources can be organizational, physical or intangible. Companies cannot share similar resources. Every company establishes its own organizational culture, assets and skills and experience. The values of these resources are easily determined through market forces interplay.

Thus, for the case of AGRANA, one of these valuable resources that contribute to the company’s growth is the skills and experienced in the staff. This can be derived from the table which clearly depicts that staffing the company has greatly contributed to the company’s growth. The skills and experience that the employees have are competitively superior as compared to other companies. They are also sustainable, durable and inimitable.

Heterogeneity of resources is another factor defined in terms RBV that fosters the growth of AGRANA. The Company has capabilities and resource bundles across it. Dealing in different types of products gives the company a unique market advantage. AGRANA deals in sugar, starch and fruit. This act of trading in differentiated products gives the company first-mover advantage. The constant expansion of the company can also be attributed to the fact that better staff is a resource that enables efficient production as compared to other firms.

The VRIO model provides a structure for evaluation. The structure helps to determine which capabilities and resources of a particular company results to particular weaknesses and strength. It requires that all the capabilities and resources of a particular company should be Valuable, Rare, Inimitable and Organizational. In addition, they should be exploited effectively.

AGRANA industry has valuable resources and capabilities. This contributes to the customers’ needs fulfillment at a price that the customer is ready to pay. Customers’ preferences are usually for price determination. The three products that is sugar, starch and fruits that the company deals in are preferred over the alternatives.

Resources and capabilities of the company are rare. The short supply creates a competitive advantage that goes far beyond the parity of competition.  The rarity of AGANA’s resources and capabilities for the production of sugar and starch has persisted for a period of time. This has given the company a competitive advantage over its competitors in the industry and thus the ability to venture into fruit as an additional product.

The high cost of production of AGRANA’s capabilities and resources makes them one of a kind in the sense that they cannot be imitated. Lack of the resources and capabilities poses a disadvantage in terms of cost when obtaining them. The company set a dynamic motion by moving into sugar and starch long before. This had to foster its advantage of the early-mover in magnitude as compared to other related companies. The company’s better management, compensation policies, control systems and business processes gives it a unique organizational structure. This is mainly optimized to the competitive potential exploitation.
Going international poses new challenges to a firm. AGRANA has to be ready to face new and unfamiliar challenges if it decides to go beyond the continental boundaries. Obstacles that the company has never encountered before will emerge during the undertaking of the daily work. Among the obstacles is culture bearing in mind that AGRANA is a European company and it intends to expand to regions in Asia.

Culture might affect the company’s trade in several ways. Most common problems that the industry must be sure to encounter are language barrier, culture collisions and difficulties in price determination. Incase of any mistake during the business transaction, correction might prove difficult. The operation can entirely be destroyed by foreign culture disrespect. Thus, AGRANA should be well informed about the culture and the manners of the region it intents to venture.

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