2. AGRANA has chosen a good strategy for growth from a local supplier to a global player. Having entered Hungary in 1990, AGRANA had taken a step towards further expansion into CEE, territory well-known for soil and natural resources. Other strategic destinations in this region include Romania, Poland, Ukraine, Russia and also other smaller countries with good potential to grow. Management board of this company successfully identified markets and companies where they could invest with an objective to go global and increase production. For instance, AGRANA entered Russian market in 2005 and is now occupying nearly 48% of the market, generating revenue over 55 million euro there annually. At the moment, AGRANA has production facilities in 22 key regions around the world and capitalizes on foreign direct investments. Another key pillar for growth is product diversification and selection. Every company is striving to maximize profits and minimize risks by creating the right product portfolio. AGRANA achieved success when selected to penetrate such segments as sugar, starch and fruits. Moreover, recently the company started production of ethanol. It is a competitive industry, although it allows re-using waste from production and brings AGRANA step higher when investing into bio fuels. To summarize, AGRANA is successful due to their foreign direct investments and expansion strategy, selection of sites for production, close location of facilities, smart product diversification and integration of all these factors together.
3. The EU as an economic union is a unique organization. It is a great opportunity for AGRANA to be established and based in Austria, one of the strongest EU countries. The biggest challenge lays in economic regulations. In 2006, the EU passed sugar reforms that reduced subsidies and regulated price forcing many companies to go off the market due to fierce competition and inability to be profitable. However, AGRANA Group capitalized on product diversification and took a step to explore CEE countries, including outside the EU. The volatility in raw materials prices will remain a decisive factor for the company’s level of profitability. Currently, the company is among leaders due to several factors, and high prices among them. Entering the Western and Eastern European countries was the best choice that AGRANA could take to reach a higher market share in the region. It offers a lot of opportunities to grow in their segments – sugar, starch and fruits. CEE is a larger playground, and it is located close, so it is easier to ensure that operations are run according to the standards, and the company investigates possibilities to utilize their potential.
4. Based in small Austria, AGRANA has high aims to become a leading producer in sugar, starch and fruit segment around the world. In 2006, it acquired 50% share in Chinese apple juice concentrate and already in 2010 AGRANA expanded to Middle East and North Africa region by establishing a joint venture for the production of fruit preparations in Cairo, Egypt. Nowadays, AGRANA Group is looking for establishing mergers and acquisitions, joint ventures in East Asia too. The biggest challenge in expanding to Asia lies in competition, since this region is famous for producing fruits. Many of the companies, for instance, Euro Fruits Private Limited that is based in India, trade mainly with the European market. Asian markets are occupied by local producers, so AGRANA tries to establish new ways of production by educating local producers to use high end technology. Other challenges include cultural differences, saturation of the market, lack of possibilities to diversify products (fruits), not enough employees, higher dependency of this region on harvest and climate change.
Work cited
1. International corporate website http://www.agrana.com/en/
2. AGRANA Launches Joint Venture in Egypt (2010, February 01) http://www.flex-news-food.com/console/PageViewer.aspx?page=28241
3. Keijiro Otsuka, Food and Agriculture Problems in East Asia. http://www.esri.go.jp/en/tie/ea/ea2-e.pdf
4. Agricultural trade in the Pacific - it's a FACT (2009, November) http://www.new-ag.info/en/developments/devItem.php?a=996
