What are the competitive forces of the agricultural industry?
Hello fellow farmers. I’m doing a group research project on an agricultural company that consists of designing a strategic management plan for the company. I’m using two environmental tools to analyze the external environment of the company, which is the agricultural industry.
What are the political, environmental, sociocultural, and technological forces that effect the agricultural industry?
What are the substitutes, threats of entry, buyers, suppliers, and rivalry amongst competitors in the agricultural industry?
The company sells spreaders and sprayers.
First the company sells spreaders and sprayers leaves a question , spreaders of what? Chemicals? manure? It makes a difference.
The external environment then is not the agricultural industry so much as the agricultural services and supplies industry and the financial industry that surrounds agriculture.
Your competitors are not primarily coming from the agricultural industry but the services and supplies industry. If for instance some competitor locks up sprayers for all Monsanto products to be used only in their sprayers, your sprayers will be out of the market. If Cargil provides all its customers a ‘free’ service of a competing fertilizer spreader, your sales of fertilizer spreaders is shot. This is not hard to imagine happening. We already see widespread use of ‘free spreader’ or tied selling of spray components to free equipment loans.
This means that ease of entry into competition can be ridiculously low to impossible .
We have deals made that change who becomes the buyer of these products, tying buyers to brands of machines over prolonged periods, And making those buyers the sole suppliers of the service within a market.
These shifts can be brought about most readily if a competitor produces a product that presents a new standard, more precise distribution for example, (new technology) that allows them to claim environmental improvement, gets a political endorsement, even legislation, that forces our competitors unable to match the new standard, and they have a patent that makes it impossible.
The market can shift as licensed operators are recruited as agents of a competitor, and decline to work with your product.
Because of scale in production, your competitor my be more likely to produce products that have substantial advantages compared to your companies, even leap-frogging on your patent protections.
The big risk here is to spend large amounts of money in producing a product that may quickly become obsolete without protecting against technical innovation and innovation in business plan.
February 7th, 2010 at 10:57 pm
First the company sells spreaders and sprayers leaves a question , spreaders of what? Chemicals? manure? It makes a difference.
The external environment then is not the agricultural industry so much as the agricultural services and supplies industry and the financial industry that surrounds agriculture.
Your competitors are not primarily coming from the agricultural industry but the services and supplies industry. If for instance some competitor locks up sprayers for all Monsanto products to be used only in their sprayers, your sprayers will be out of the market. If Cargil provides all its customers a ‘free’ service of a competing fertilizer spreader, your sales of fertilizer spreaders is shot. This is not hard to imagine happening. We already see widespread use of ‘free spreader’ or tied selling of spray components to free equipment loans.
This means that ease of entry into competition can be ridiculously low to impossible .
We have deals made that change who becomes the buyer of these products, tying buyers to brands of machines over prolonged periods, And making those buyers the sole suppliers of the service within a market.
These shifts can be brought about most readily if a competitor produces a product that presents a new standard, more precise distribution for example, (new technology) that allows them to claim environmental improvement, gets a political endorsement, even legislation, that forces our competitors unable to match the new standard, and they have a patent that makes it impossible.
The market can shift as licensed operators are recruited as agents of a competitor, and decline to work with your product.
Because of scale in production, your competitor my be more likely to produce products that have substantial advantages compared to your companies, even leap-frogging on your patent protections.
The big risk here is to spend large amounts of money in producing a product that may quickly become obsolete without protecting against technical innovation and innovation in business plan.
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