STRATEGIC REPORT 5
StrategicReport
Summary
AllianceGrain Traders Food and Ingredients (AGT) is among the biggestdistributors and processors of pulses, specialty grain and staplefoods material internationally. It started was established as SaskcanPulse Trading company, which was founded by Murad Al-Katibin Augustof 2001(History AGT Food and Ingredients, 2015).In September of 2009, AGT went public with its acquisition of theArbel Group. In addition, the acquirement saw AGT assume theownership of Arbella Pasta Brand. Arbella was best-selling domesticpasta in Turkey. The acquisition of this brand helped AGT to becomean international icon in the operation of export and production ofstaple foods and pulses. The ability to provide packaged foodsincreased the geographical reach of the company, its customer base,and ultimately its profitability. Back in 2014, the organizationaltered its brand name to AGTFood and Ingredientsto suit its expanding commerce. The name reflected the diversecommodities it was handling, such as, packaged and staple diets, foodingredients, as well as pulses. The company’s dynamic andaggressive expansion enables AGT to be a relevant player in the evercompetitive food industry (HistoryAGT Food and Ingredients, 2015).
AllianceGrain Traders Food and Ingredients (AGT) has embarked on a series ofstrategic actions meant to improve its competitive advantage as wellas encounter the challenges in the industry. The firm has acquiredtwo strategic partnerships with Cargill and Ingredion. The twopartners have considerable market share in the food ingredients hencethe move will boost the AGT’s market share and growth. It isnotable that AGT prides itself with the ability to produce highvolumes of food items in their agricultural lands in Canada, Europe,and the US. Internally, the firm has endeared towards providingquality products to their clients around the world. A strongmanagement team and processes support the internal processes (HistoryAGT Food and Ingredients, 2015).
Nonetheless,the company challenges and risks associated with changing weatherpatterns, transportation hitches, supply challenges, and productionprocess. We recognize that transportation is instrumental to ensurethe products reach the market timely and in good state. It is also animportant consideration in the supply logistics. The company hasspelled out various approaches to help meet the objectives as well aslessen the effects of business risks. The firm intends to improvetransportation by looking for alternative platforms and routes. Themove will significantly address the transportation challenges. AGThas also identified pulse ingredients as the main business commodityin the coming days. The thinking is driven by the need to start otherlines of business to supplement the existing ones.
InternalAnalysis
Thereport aims at undertaking an internal analysis for Alliance GrainTraders Food and Ingredients (AGT). The study will involve anassessment of the company’s competitive advantage and corecompetencies. Further, an evaluation of the risks and challenges willhelp in generating appropriate recommendations for contingencyactions. Since changing its name in 2014, AGT has engaged in variedstrategies to help in serving the clients and stakeholders better.
Resources
AGThas enough resources, including human capital, tangible assets,agricultural lands, and strategic business locations. The firm’soperations and financial standing were boosted by the partnershipswith Cargill and Ingredion. The move helped in raising the financialstatus to help expand operations in other nations around the world.Currently trading at Toronto Stock Exchange, AGT benefited fromcredit facility from HSBC Bank of Canada and Rabobank Nederland toboost its financial capacity. Backed by strong management team, AGThas enhanced its ability to leverage the global strengths, includingthe creation of new lines of business (CNW Group Ltd, 2016). Theapproach aims at generating future opportunities as well asincreasing the value of the stockholders. The attainment of positiveoutcomes in an organization requires strong support by the managementwho are largely the vision carriers.
Moreover,AGT has offices and processing plants located agricultural growingregions in areas such as Canada, US, and South Africa, among others.Such an opportunity is instrumental in enhancing the supplylogistics. Merchandising and sales offices in Europe and India play acritical role in reaching out to the underserved markets. The areasalso play a crucial in the coordination of supply and salesfunctions.
Products
Thecompany produces specialty and pulses crops such as beans, lentils,and peas. Other products include food ingredients such as proteinsand starches, among others. These quality food items make the firmattractive to the consumers. The food industry is tricky hence theneed to observe appropriate guidelines in the production process. AGThas interests in many types of food items for people from differentregions (CNW Group Ltd, 2016).The firm prides in offering qualityfood ingredients and retail packaged foods. Among the recentdevelopments in the company include high expansion to the globalmarkets. The firm is in the process of enhancing its value chain byengaging more in food ingredient production and supply. Moreover,quality food products make the company attain a competitive advantageover its rivals in the industry.
Company’sCapacity
AGThas the capacity to enhance its outcomes and its competitiveadvantage. Through collaboration and innovation, the company standsto benefit from the increased demand for food ingredients. Its globalknowledge and experience will help overcome the social,environmental, and economic challenges. Increased collaboration withmajor players in the industry will be instrumental in informationsharing as well as enhance supply logistics. Creating qualityproducts will effectively attract more clients to use AGT’sproducts. Globalizing the business model will meet the needs andpreferences of clients. Marketing, supply logistics, and advertisingfunctions are the essential functions that should be considered usingthe transnational strategy.
Risksand Challenges
Nonetheless,the company faces certain risks and challenges in its operations andmarket.
AGTFoods and Ingredients faces significant challenges since it is in amultinational organization. Furthermore, a number of factors that aredifficult to predict or to control affects its market supply anddemand. These factors include political unsettlement that affects aconsumer country’s economic conditions and different politicaltrading barriers such as tariffs that obstruct entry into newmarkets. Further, legal operation standards of each country that AGTexpands in and needs to comply with and weather fluctuations thataffect crop harvests thus affect supply pose great challenges to theindustry. It is also noteworthy that currency fluctuations thataffect AGT’s operational expenses such as freight, fuel andfertilizer costs, and financial capital to use to expand and keep upwith the growing demands of the market pose great uncertainties tothe business operators in the sector.
Further,the logistical problems affect the retail strategies. It is alsonotable that the business has remained a low-margin operationculminated with year-year volatility. Supply and demand patterns forother food items influence the ingredient prices (PR NewswireAssociation LLC., 2014). Moreover, transportation remains a keychallenge towards the company’s operations. Pulse production incountries such as the US and Canada are located far from the mainports. It is noteworthy that the biggest market is found in India,China, and Europe. Delays in transportation and long transit periodsaffect the importers’ ability to get the products at the righttime. Failure of plant and equipment is another challenge thataffects the production process. Such problems influence the overallsupply chain strategies.
Thepulse industry is substantial and the market is forecasted to getbigger and more stable in the coming years. Pulse crops arepositioned to be a competitive, sustainable, and healthy source ofprotein in the future (Global PulseConfederation, 2016). There is no questionthat AGT Foods and Ingredients has only one way of keeping up withthe forecasted demand for pulses, and that is to expand itsoperations. However, the company needs to be strategic in itsexpansion procedures so as to make sure that it is efficiently usingits resources and not stretching itself too thin.
Ithas been proposed that AGT is going to invest heavily on valueaddition to pulses and staple foods. The move will be instrumental ingenerating healthy products that meet the guidelines proposed byauthorities. It will also help in eliminating wastages of food items.Nonetheless, the risks associated with the approach emanate due poorinformation and awareness about the quality and contents of thepulses ingredients. It is also is likely to be costly for the firm insourcing the required volumes to mitigate the shareholder value.
Thefirm has several options to enhance success in its expansion. TheAGT’s expansion process requires substantial money that can begarnered through equity financing or merger with other businesses.Further, AGT is considering to expand operations of the currentin-demand crops, like dry beans, chick peas, lentils, and fava beansand try to increase their market share for these products, or createa whole new market for other pulse crops such as soy bean, cow peas,and pigeon peas and be the pioneering company for these products. Further, it is appropriate for the company to invest heavily onresearch and development of better crop production to potentially cutexpenses and be able to sell at a lower price or better quality tofurther establish itself in the industry. Another to option is toventure into manufacturing of consumer products such as flours, oils,milk or other protein drinks that their competitors such as Cargill,ADM, and Viterra have done and have been successful in the past.
References
CNWGroup Ltd. (2016). AllianceGrain Traders Inc. Announces Marketing and Distribution Agreementwith Cargill.Retrieved June 6, 2016, fromhttp://www.newswire.ca/news-releases/alliance-grain-traders-inc-announces-marketing-and-distribution-agreement-with-cargill-511806921.html
GlobalPulse Confederation. (2016, June 9). Retrieved from Global PulseConfederation: http://www.cicilsiptic.org/about-us
HistoryAGT Food and Ingredients.(2015). Retrieved from AGT Food and Ingredients :http://www.agtfoods.com/about-agt/history.html
PRNewswire Association LLC. (2014). AllianceGrain Traders Inc. Announces Name Change to AGT Food and IngredientsInc.Retrieved June 6, 2016, fromhttp://www.prnewswire.com/news-releases/alliance-grain-traders-inc-announces-name-change-to-agt-food-and-ingredients-inc-277737331.html