Issues and Problems Facing Australian Agricultural Company - Case Study Example

Running Head: AUSTRALIAN AGRICULTURAL COMPANY (AA CO) Australian Agricultural Company (AA Co) Name Institution Date Australian Agricultural Company (AA Co) Introduction The Australian Agricultural company is the leading beef cattle producing in Australia, servicing beef consumers in global and domestic markets. It is the sole listed corporation in Australia functioning as the major beef producer and is also one of the country’s most efficient and largest beef producing entities. Since it has a large size and capital structure, the Australian agricultural company has strong funding abilities to expand through acquisition. Issues and problems facing Australian agricultural company Drought is the major factor affecting slaughter rates, feed prices, saleyard prices, and demand for cattle for restocking. Meager seasonal conditions usually result to a reduction in availability of pasture, higher slaughtering, an increase in costs of fodder and grain feeds and a decrease in flock and herd numbers. Local demand for beef is another significant factor affecting the Australian agricultural company. Henzell (2007) argues that in periods of drought, as the quality of pasture deteriorates and the requirement for supplementary feeding rises, the company, and other cattle producers tend to lessen stock numbers. Slaughterings reduce as producers retain heifers and cows to start rebuilding of herds after drought is over. Subsequently, the number of beef cattle decline in beef cattle which affects beef production and marketing. Local consumption and demand for red meat is another significant factor affecting Australian agricultural company. There has been a rise in demand for pig and poultry meat as substitutes for red meat and some change from consumption of red meat. In spite of the reduction in domestic demand for red meat, beef consumption in Australia is higher when compared to consumption in several other countries. Foreign demand for meat is greatly driven by population growth and income and therefore there has been an increase in demand for beef in developing nations where population growth rates and income are greater than in developed nations (Kennedy, 2007) While the major demands for Australian beef are majorly in developed countries, markets in developing countries are turning out to be more significant as export volume rises. Main markets for Australian agricultural company beef are Republic of Korea, United States and Japan. Exports of beef from Australia to north Asian markets rose as a result of discovery of Bombay stock exchange in the US, after which restrictions on US beef imports were imposed. However, Korean Republic relaxed its import bans on United States beef in 2008, leading to reduction in Australian beef demand. The Japanese bans on United States beef imports have also been relaxed which has resulted to fall of Australian beef in the Japanese market. The exchange rate is a significant economic valuable that affects the purchase and sale of agricultural products which are globally traded. Rate of exchanges amid Australian dollar and currencies of Australia’s chief trading partners affect the cost of imports, demand for domestic prices of sale yard and Australian exports. Whilst imports of beef into the country are insignificant, fluctuations in exchange rates affects the beef sector since a huge proportion of Australian agricultural company beef is exported. A strong Australian dollar deciphers into comparatively more expensive Australian exports in other nations, leading to a reduction in the amount of beef demanded in these markets. Currency appreciation reduces the amount of Australian beef demanded within the export markets because of increases in price. Appreciation in Australian dollar also imposes downward pressure on local saleyard prices and directly affects the monetary bottom lines of the producers, because majority of the exports are priced in US dollars. In the international market, there are trade barriers in sheep and beef meat that influence Australian agricultural corporation. Such barriers, for instance, involve a nations specific EU import quotas on beef and meat, and Japanese tariff upon imported beef. This limits the amount of beef exported to Australian major beef markets. Strategic management Strategic management entails specification of the organizations, vision, objectives, and mission, developing plans and policies, usually in terms of programs and projects. It controls the organization and the industries in which the firm is involved, assessing its competitors and sets strategies and goals in order to meet the potential and existing competitors, and then reevaluates each strategy to determine whether it has been successful in meeting changed circumstances, or a new economic environment. A strategic approach is always oriented towards the future. It identifies that the business environment will change and attempts to anticipate occurrences other than merely react to them as they occur. According to Dickel, & Alan, (2004), the approach makes managers to ask where their company aspires to be at a certain period, what it requires to achieve its goals, and how to establish strategies and ways to get what it aspires, and how to manage the strategies to accomplish the organizational objectives and approaches. It is identified that the future can’t be controlled but an organization can assist to modify and shape the effect of changes in business environment. Strategic planning approaches Basic strategic planning approach The basic strategic planning approach is usually used by companies that are extremely small and busy and do not have a prior strategic planning. The essential strategic planning includes five steps with the initial step being identification of purpose whereby the basic purpose of the company is described. The client’s needs and types of communities served are also described. The second stage involves selection of the goals that the firm should reach if it is to achieve its mission. According to Steiner, (2004), goals are universal statements on what the organization needs to accomplish in order to meet its mission or purpose and addressing main issued facing the firm. The third stage involves identification of specific strategies or approaches that should be implemented so as to achieve each goal. Strategies are usually what change most because the organization ultimately undertakes more stout strategic planning, especially by highly examining the internal and external environments of the firm. The fourth stage involves identification of specific action plans to execute each strategy and these are specific activities that every major function, for instance, department should undertake to make sure that the organization. Objectives must be clearly stated to the extent that corporate members may assess whether the objective have been achieved or not. The final step involves monitoring and updating of the plan. Organizational planners frequently reflect on the degree to which goals are being achieved and if action plans are under implementation. The success of the company can be indicated from positive feedback from customers and positive financial returns. Organizations utilizing basic planning approach usually may require to further undertake third step in order to identify additional goals to further develop administration of the firm central operations , for example, strengthen financial management. Issue based planning approach Issue based planning approach looks at strategies that can be used to sustain the future growth of an organization. Organizations that start with basic strategic planning approach usually evolve to this more widespread and more efficient form of planning. There is internal and external assessment so as to identify strengths and weaknesses and opportunities and strengths. Organizational planners does strategic analysis in order to identify main issues affecting the organization at the moment and then specify action plans on what the organization needs to do and the time of the action so as to address every issue. The company scans both the external and internal environment so as to make sure that the company accomplishes strong internal and external systems (Nolan, 2002). Alignment strategic planning approach The overall aim of this model is to ensure that there is strong alignment of organizational resources and its mission to efficiently operate the firm. This approach is helpful for firms that require to fine tune their strategies or find out why the strategies aren’t working. A firm may also use this approach if it is having a huge number of issues on internal efficiencies. Organizational planners outline the firms programs, resources, mission, and required support. It identifies what is working efficiently and what requires adjustment identifies how the adjustments should be made and then include the alterations as strategies its strategic plan. Application of issue based strategic planning approach in Australian agricultural company Issue based planning is an ideal approach that can be used in strategic planning in the Australian agricultural company. Being an advancement of the basic strategic planning approach which identifies the organizational goals, specific strategies and action plans needed in order to accomplish the goal, the issue based approach also identifies the main issues affecting the organization currently and the specific which needs to be taken to address every issue. The Australian agricultural company has internal influences such as drought and domestic market which affects slaughter rates and saleyard prices. The company is also faced with external problems like fluctuations in exchange rates and limitation in the amount of beef to be exported to global markets. This approach looks at the both internal and external factors affecting an organization help the organization with strategies that can be used to solve these issue. Conclusion The business environment keeps on changing and an organization should use a strategic approach that is oriented toward the future to shape and shape the impact of changes in the business environment. Although it is the largest beef producing and marketing company in the country, the Australian agricultural company is faced with several issues such as drought, changes in domestic beef consumption, and fluctuations of exchange rates in global markets. The company is therefore required to use an ideal strategic approach such as the issue based planning approach to come up strategies that will help it to maintain its growth and profitability within the changing business environment. References Kennedy, K., (2007). The Australian agricultural company. Adelaide: Harwood Academic Publishers. Henzell, T., (2007). Australian agriculture: its history and challenges. Melbourne: CSIRO Publishing. Steiner, G., (2004). Strategic management and planning. New York: Ayer Company. Dickel, K., & Alan, R., (2004). Strategic planning: what every manager must know. New York: The Free Press. Nolan, T., (2002). Applied strategic planning: a comprehensive guide. New Jersey: Transaction publishers. Read More