Agrana
Introduction
When a company is managed correctly and happens to be in the right place at the right time, success is achieved as was the case for the Austrian company Agrana. With only five factories in Austria in 1988, the company successfully grew under a well working strategy to spread operations to 55 factories throughout Europe in 2007. While they opened strong with the production of sugar and starch, Agrana’s largest success came from fruit preparation, a section of the company that grew very rapidly when they diversified into this segment in 2003. This case study reviews the careful steps that Agrana took to become the successful company they are today and the strategic acquisitions that were made to build their competence and strength in fruit processing.
1. From an industry-based view, how would you characterize competition in this industry?
The timing of formation for Agrana was indeed fortunate. Just after arriving, Central and Eastern Europe (CEE) were opened up to the larger markets in Western Europe in 1989. This gave them the ability to finance their operations through foreign direct investment in the CEE. This was necessary in order to boost their economies of scale to compete with larger rivals from Western Europe. Being an Austrian company, Agrana also had a slight advantage over other Western competitors because of their ties with the CEE from before the Cold War. They understood the market better than others and were able to react faster to the opportunity.
Competition in this industry was probably fairly strong which makes the Agrana story even more interesting as they were fairly small when they entered the market. Potential entry of other firms could have been a concern for Agrana since they produced two very generic products: sugar and starch. This made differentiation a problem, until their fruit processing sector began giving them a unique upper hand with solid knowledge of the refinement process and thus a strong new product. Since
When a company is managed correctly and happens to be in the right place at the right time, success is achieved as was the case for the Austrian company Agrana. With only five factories in Austria in 1988, the company successfully grew under a well working strategy to spread operations to 55 factories throughout Europe in 2007. While they opened strong with the production of sugar and starch, Agrana’s largest success came from fruit preparation, a section of the company that grew very rapidly when they diversified into this segment in 2003. This case study reviews the careful steps that Agrana took to become the successful company they are today and the strategic acquisitions that were made to build their competence and strength in fruit processing.
1. From an industry-based view, how would you characterize competition in this industry?
The timing of formation for Agrana was indeed fortunate. Just after arriving, Central and Eastern Europe (CEE) were opened up to the larger markets in Western Europe in 1989. This gave them the ability to finance their operations through foreign direct investment in the CEE. This was necessary in order to boost their economies of scale to compete with larger rivals from Western Europe. Being an Austrian company, Agrana also had a slight advantage over other Western competitors because of their ties with the CEE from before the Cold War. They understood the market better than others and were able to react faster to the opportunity.
Competition in this industry was probably fairly strong which makes the Agrana story even more interesting as they were fairly small when they entered the market. Potential entry of other firms could have been a concern for Agrana since they produced two very generic products: sugar and starch. This made differentiation a problem, until their fruit processing sector began giving them a unique upper hand with solid knowledge of the refinement process and thus a strong new product. Since