Agrana: From a Local Supplier to a Global Player

Integrative Case 1:

AGRANA: From a Local Supplier to a Global Player

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.

In this globalized society, there is now growing pressure for companies to compete against their competitors locally as-well-as globally. Thereby, strategy within the company is fairly important in order to survive. In any form of business or organisation, strategy management and thinking are the most vital activities embarked on. The determination on how successful a business could be depends on how these strategies are carried out (Campbell, Stonehouse and Houston 2002). AGRANA Food Company is a very good example of a superior business strategy as AGRANA has grown swiftly over the past few decades from a local supplier to a global player (Peng 2009). The discussion on how AGRANA has done such an exceptional