Integrative Case 1 Agrana

The Austria-based company, Agrana was founded in 1988 with operations consisting of the production of sugar and starch. While relatively small, the company only operated two starch factories and three sugar factories. As the years passed, the company has also focused on the production of fruit preparation, fruit juice concentrate, and ethanol. The new business strategy has enabled the company to not only grow, but 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 Agrana’s 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 other regions, such as East Asia will also be a topic of discussion. Since Agrana’s beginning, the industry has been quite challenging and competitive. Prior to European integration 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 buyers. When applying Porter’s Five Forces Framework, the industry consisted of fierce rivalry from larger competitors, threat of substitution, little to no differentiation which increased the threat of potential 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 compete 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. 382). This move increased their economies of scale. With their new profound strategy, the company was able to improve the quality of its products as they pursued and formed partnerships with larger buyers like Coca-Cola, Pepsi, Nestle, and

References: Peng, M. (2009). Global Strategy, 2nd Edition. Mason, OH: South-Western College Publications