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Agriculture Industry Analysis

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Agriculture Industry Analysis
INTRODUCTION

The purpose of this assignment is to understand the business strategy formulation process for companies against the backdrop of a chosen industry by undertaking a situational analysis for the same.

In this assignment, the environmental and organizational information has been analyzed using various analytical approaches and the SFAS matrix technique. Strategic options have been generated using the TOWS matrix and business strategies have been suggested for the corporations of the industry.

The industry chosen for this assignment is the Fertilizer industry in the context of Indian scenario.

KEY SUCCESS FACTORS

Based on the detailed understanding and analysis of the industry, the following key success factors were identified:

Agriculture demand and prices

Monsoon showers

Raw material – availability and prices

Investment for capacity expansion

Government subsidies and other regulations

PORTER’S 5 FORCES ANALYSIS

A Porter’s 5 forces analysis was also conducted to further scan the environment and the following was obtained:

Threat of New Entrants: LOW:

High capital investment with high cost and low returns

Difficult to acquire govt. approval for gas allocation

Shortage of natural gas in India

Production of DAP costly; 65% of requirement is imported

Delays in subsidy payments leads to troubles in management of funds

Bargaining Power of Suppliers: HIGH:

Fertilizers industry is a captive market in India

Very limited number of suppliers

High prices of inputs and less diversity of inputs

Raw materials are scarce being natural resources

Heavy dependence on imports for meeting requirements of inputs / intermediaries / products

Bargaining Power of Buyers: LOW:

High demand for agriculture products leads to high requirements for fertilizer products

Nutrients level deplete in soil with each harvest of crop; forcing demand for fertilizers, else deficiency of nutrients reduces crop yield

High demand of fertilizers with

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