Role of Internal and External Environment in Strategic Management for Australian Agricultural Company

This research discusses the role of internal and external environment in strategic management for Australian Agricultural Company. It analyzes the resources, capabilities, and core competencies of the company and provides recommendations for maximizing business framework.

Running Head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student:
Name of University:
Author Note:

1STRATEGIC MANAGEMENT
Executive summary
This research is going to discuss the role of the internal and external environment to maximise
the business framework for Australian Agricultural Company. For the external environment,
PESTLE analysis has been taken whereas the internal analysis is going to focus on the resources,
capability and core competency. As the purpose of this research is to understand the business
environment for Australian Agricultural Company in Australia, therefore some issues are found
out that perturbs the smooth business orientation for the company. Therefore some
recommendations are also incorporated into the report.

2STRATEGIC MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Business description........................................................................................................................3
External environment.......................................................................................................................4
Political........................................................................................................................................4
Economic.....................................................................................................................................4
Social...........................................................................................................................................5
Technological..............................................................................................................................5
Legal............................................................................................................................................6
Environment................................................................................................................................6
Internal organisation........................................................................................................................7
Resources.....................................................................................................................................7
Capabilities..................................................................................................................................7
Core competencies.......................................................................................................................7
Competitive advantage................................................................................................................8
Recommendation.............................................................................................................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11
Appendices....................................................................................................................................13
Appendix 1.................................................................................................................................13

3STRATEGIC MANAGEMENT
Appendix 2.................................................................................................................................14
Appendix 3.................................................................................................................................15
Appendix 4.................................................................................................................................16
Appendix 5.................................................................................................................................17
Appendix 6.................................................................................................................................17
Appendix 7.................................................................................................................................18
Appendix 8.................................................................................................................................18
Appendix 9.................................................................................................................................19
Appendix 10...............................................................................................................................20

4STRATEGIC MANAGEMENT
Introduction
Australian Agricultural Company (AACo) is considered to be one of the leading and
oldest agribusiness companies in Australia that was founded in 1824. The company owns around
7 million hectares of land in Queensland. Currently AACo has more than 500 staff operating 24
cattle stations. The company is primarily associated with beef and agricultural business and has
been listed in the Australian Stock Exchange in 2001. It can be argued that AACo is Australia’s
largest integrated cattle and beef producer and the oldest operating company in Australia.
Besides producing beef and cattle, AACo also puts great deal of emphasis on the sustainability
measures as the company believes that it will provide AACo a strategic advantage in the
competitive agribusiness market in Australia.
Based on this understanding, the purpose of this report is to analyse and compare the
internal and external environment for AACo and propose a set of recommendations that will
boost the profitability of the company. In this regard, the external environment will be analysed
with the help of the PESTLE analysis whereas the internal environment puts emphasis on the
Resource capability and competency matrix to evaluate the strengths and threats that the
organisation is facing in Australian market.
Business description
AACo puts great emphasis on its customers and the market demands. Therefore,
manufacturing is always tended to be a concern for the organisation. In this regard, AACo is
generally specialises in grain fed beef and Wagyu beef production. However, due to the market
volatility production and manufacturing of beef products had been decreased robustly from 70.5

5STRATEGIC MANAGEMENT
million kg LW in 2017 to 64.7Mil kg LW in the financial year of 2018 (aaco.com.au 2019). This
decreasing rate in the production also cost huge loss for the company. The financial report of the
company stated that in the fiscal year of 2018 the company faced loss with $102,559 in compare
to the previous year. However, most of the revenue was collected from manufacturing and
selling meats. Besides this, live cattle sales is also included in the selling practice of the
organisation. In addition to this, the total current asset of is amounted $326,601 in the fiscal year
of 2018 which was declined from the previous rate of $356,527 (aaco.com.au 2019).
External environment
Political
As far as the Political stability of Australia is concerned, it can be stated that average
value of the country is 1.01. It connotes effective moderate political stability within Australia.
However, the year 2016 witnessed a sharp increase in the political stability index with 1.5 which
is highest but declined in 2017 (Figure 8). It means there is political instability prevalent in the
country. Besides this, the effectiveness of the government is also an important aspect for
understanding the environment for business Australia (Prajogo 2016). As per the World Bank
report, the average value of the government effectiveness index is 1.72 which stated that role o
the government is quite effective in doing business in the country (Figure 5). The average value
of the corruption Index is calculated 85 that identifies effective environment for the business
organisations to do business in less corrupted Australia (Figure 2).
Economic
As a developed country, it is obvious for Australia to have a steady economic growth and
flourishing opportunities for the business organisations. According to the Australian Bureau of

6STRATEGIC MANAGEMENT
Statistics, an average 3.4% yearly growth in the economy provides further advantages to the
Australian economy (Figure 3). In addition to this, a sharp and steady growth in the Australian
market with an average value of AU$138.35 billion is also identified as an important facet. As a
matter of fact, the average value in the Australian economy is 4.83% which is descending in a
systematic manner (Dobele et al. 2014). Furthermore, the Consumer Price Index mentioned that
average value with 51.49 index that connotes the impact of the buyers’ power (Figure 1).
Social
Australia is one of the most diverse countries in terms of multicultural and multiracial
practices. The indigenous people of Australia are the most important heritage of the country with
a number of other people who migrated from Asia (Mistilis, Buhalis and Gretzel 2014).
Alongside this, there are the white people who were migrated to Australia in 1788. Based on this
understanding, it can be stated that for business Australia has wide range of demographic
customers with different religious and cultural practices. Most of the people are following
Christianity. Besides this other religions like Hinduism, Buddhism, Islam and indigenous
religious are also significantly existed into the country (Rubin, Aas and Stead 2015).
Technological
As far as the innovation index is concerned, it can be stated that the people are generally
tech savvy with a good number of innovative ideas. Technology purchase growth is accounted
4% with an increase of $2 billion more in 2019 (Figure 7). Local and multinational companies
are responsible to facilitate enough exposure and development in the process in order to set
better business environment within the country (Head 2014). The Innovation Index in Australia
is valued 52.75 that connotes Australia enjoys advanced technology oriented growth. In this
regard, the research and development expenditure of the Australian government is increased at

7STRATEGIC MANAGEMENT
an average rate of 1.98% which is quite impressive for the business development in Australia
(Figure 9).
Legal
The legal or regulatory frameworks are also played significant role in order to establish
an effective and healthy business environment (Higgins, Milne and Van Gramberg 2015). In this
context, the power of the Rule of Law in Australia has an average value of 1.78%. It means the
country highly respects the existence of law in every sphere of life (Figure 10). In association to
this, the quality of the regularity is also an important aspect for the regulatory body to maintain.
As per the World Bank report, the Regulatory Quality Index points 1.71. It refers to the
pragmatic and effective legal practice that creates huge environment for better business practice
in Australia.
Environment
For the quality of environment, the government and the business organisations as well put
great deal of focus on the sustainability programs. The environment of the country has variety of
flora and faunas and the natural beauty of the country is always highly rich so that it can attract a
number of tourists across the world (Sheng et al. 2015). Therefore, opportunity for hospitality
and tourism industry can also be possible for Australia. However, the recent climate change
posed a serious threat for the country and pushed the government to set more draconian rule to
deal with the emerging threat (Sheng et al. 2015). The government always creates high value to
the sustainability of society and environment. Therefore, encouraging the organisations in this
regard is also a part of the government job.

8STRATEGIC MANAGEMENT
Internal organisation
Resources
Tangible Intangible
 Skilled employees
 High quality products
 Clear organisational hierarchy.
 Effective use of technology
 Corporate governance
 Supplier contracts
 Brand equity
 Technical expertise
 Effective business environment
 Market capitalisation.
Capabilities
Tangible Intangible
 Speed of service.
 Technological advancement
 Increasing the market
 Effective course of doing business.
 Reputation
 Word of mouth
 Prolonged experience
 Sustainability.
 Customer loyalty
Core competencies
The Capabilities are highly relevant in creating core competencies for AACo. For an
example, it can be stated that as AACo is a manufacturing and service company therefore it is
effective to deal with the practice regarding high speed of service. It is associated with the
intangible factors of capabilities as well. The customer loyalty can be increased a lot due to the
incorporation of speed of service. Moreover, introducing new technologies in course of the

9STRATEGIC MANAGEMENT
business activities will also referred as a strategic advantage for AACo because currently the
organisation is facing sever challenges in market capitalisation. Both the tangible and intangible
factors are highly effective in this aspect to enhance sustainability and customer loyalty with the
help of technology (Friel, Barosh and Lawrence 2014). Furthermore, word of mouth is also
identified as one of the major factor to endorse the reputation of the company in a large scale.
However, it is essential for the organisation to maximise its market with the help of word of
mouth, reputation and the technological assistance.
Competitive advantage
As far as the resource s are concerned, it can be stated that AACo puts a great deal of
emphasis of emphasis on the practice of recruiting skilled employees and manufacturing high
quality beefs. As a result of that, it helps the organisation to establish a brand image with enough
number of equity and revenue earnings. The transparency in decision making with a clear
hierarchy is also encouraged the employees to get accompanied with developing better business
environment in Australia. According to Dong et al. (2017) the employees are considered to be
the most important part for doing successful business. Therefore, AACo also puts great deal of
emphasis on its human resources.
In addition to this, capabilities of AACo also highlights the potential abilities to ensure
healthy growth in the business orientation. In this context, it is highly important for the
organisation to put great deal of importance on its technological incorporation and service
delivery (Visser, Clapp and Isakson 2015). Relationship with the suppliers and effective means
of sustainability framework are identified as the most important part for AACo to register rapid
growth in its market orientation. Those are said to be the effective means of competitive
advantage that push the organisation to deal with capitalise the market more intensely. As per the

10STRATEGIC MANAGEMENT
research of Carayannis, Sindakis and Walter (2015) technological advancement can aid the
organisation in terms of both service deliver an product manufacturing. Therefore, in case of
AACo technological implementation is considered to be highly valued prospect.
In addition to this, the core competencies of AACo are also played significant role in
order to establish firm market capitalisation for the organisation. In this regard, it can be argued
that the core competency factors of AACo are responsible to make effective market capitalisation
for the organisation. For an instance, the prolonged experience in the Australian market is
considered to be a major advantage for AACo to know the ups and downs in the market. As a
matter of fact, the change in the customer behaviour has also intense impact on the business
activity of AACo and the decrease in the market capitalisation in 2017 is also a threat for the
organisation to expand its business further.
Recommendation
Based on this understanding, there are some recommendations that the organisation must
opt for in order to expand its business extensively. The recommendations are as follows,
 Implementing advanced technology is considered to be an important measure for the
organisation to take. With the advent of globalisation it becomes essential for the
corporate organisations to introduce new and advance technology to maintain up-to-date
framework.
 Product diversification is going to be a pragmatic aspect for AACo to sustain in the
Australian market extensively. In this context, only producing beef and selling cattle are
limited the business orientation for AACo. Therefore, putting more focus on alternative
food products can help the organisation to maximise its market capitalisation effectively.

11STRATEGIC MANAGEMENT
 On the other hand, thorough marketing and advertisement is also marked as a prerogative
for the organisation to get a strong foothold in the Australian market. it can be argued that
the role of the marketing and advertisement is also helps the organisation to build
enhance its brand image and a possible driving factor to attract the customers more
enthusiastically.
Conclusion
From the above discussion, it can be stated that the external environment highlights
different aspects of market environment that will encourage to do agricultural business. High
political stability and economic flexibility in the market makes a better business environment for
AACo in Australia. Moreover, it can be stated that the more social and technological
endorsement are also helpful for the organisation to set a better business opportunities for AACo.
In this regard, the resources and capabilities are the key factors that facilitate better business
orientation for AACo to sustain in the high competitive market of Australia. However, the
internal environment analysis finds out that there are some gaps into the internal business
activities of AACo. Lack of diversification in product and ineffective marketing strategies are
considered to be the most important aspect for the organisation to deal with. Therefore, some
recommendations has been mentioned in order to resolve the issues. Henceforth. It can be
concluded that the report effectively evaluates the internal and external environment of AACo
and recommends some suggestions so that the organisation can get strategic advantage in future
business orientation.

12STRATEGIC MANAGEMENT
Reference
aaco.com.au, 2019. About Us | AACo. [online] AACo. Available at: https://aaco.com.au/about-us
[Accessed 30 Mar. 2019].
Carayannis, E.G., Sindakis, S. and Walter, C., 2015. Business model innovation as lever of
organizational sustainability. The Journal of Technology Transfer, 40(1), pp.85-104.
Dobele, A.R., Westberg, K., Steel, M. and Flowers, K., 2014. An examination of corporate social
responsibility implementation and stakeholder engagement: A case study in the Australian
mining industry. Business Strategy and the Environment, 23(3), pp.145-159.
Dong, Y., Bartol, K.M., Zhang, Z.X. and Li, C., 2017. Enhancing employee creativity via
individual skill development and team knowledge sharing: Influences of dual‐focused
transformational leadership. Journal of Organizational Behavior, 38(3), pp.439-458.
Friel, S., Barosh, L.J. and Lawrence, M., 2014. Towards healthy and sustainable food
consumption: an Australian case study. Public health nutrition, 17(5), pp.1156-1166.
Head, B.W., 2014. Evidence, uncertainty, and wicked problems in climate change decision
making in Australia. Environment and Planning C: Government and Policy, 32(4), pp.663-679.
Higgins, C., Milne, M.J. and Van Gramberg, B., 2015. The uptake of sustainability reporting in
Australia. Journal of Business Ethics, 129(2), pp.445-468.
Mistilis, N., Buhalis, D. and Gretzel, U., 2014. Future eDestination marketing: perspective of an
Australian tourism stakeholder network. Journal of Travel Research, 53(6), pp.778-790.

13STRATEGIC MANAGEMENT
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171, pp.241-
249.
Rubin, T.H., Aas, T.H. and Stead, A., 2015. Knowledge flow in technological business
incubators: evidence from Australia and Israel. Technovation, 41, pp.11-24.
Sheng, Y., Zhao, S., Nossal, K. and Zhang, D., 2015. Productivity and farm size in A ustralian
agriculture: reinvestigating the returns to scale. Australian Journal of Agricultural and Resource
Economics, 59(1), pp.16-38.
theglobaleconomy.com, 2019. Australia Political stability - data, chart |
TheGlobalEconomy.com. [online] TheGlobalEconomy.com. Available at:
https://www.theglobaleconomy.com/Australia/wb_political_stability/ [Accessed 30 Mar. 2019].
Visser, O., Clapp, J. and Isakson, S.R., 2015. Introduction to a Symposium on Global Finance
and the Agri‐food Sector: Risk and Regulation. Journal of Agrarian Change, 15(4), pp.541-548.

14STRATEGIC MANAGEMENT
Appendices
Appendix 1
Figure 1: CPI in Australia
(theglobaleconomy.com 2019)

15STRATEGIC MANAGEMENT
Appendix 2
Figure 2: Corruption figure- Australia
(theglobaleconomy.com 2019)

16STRATEGIC MANAGEMENT
Appendix 3
Figure 3: Economic growth in Australia
(theglobaleconomy.com 2019)

17STRATEGIC MANAGEMENT
Appendix 4
Figure 4: GDP in Australia
(theglobaleconomy.com 2019)

18STRATEGIC MANAGEMENT
Appendix 5
Figure 5: Government effectiveness in Australia
(theglobaleconomy.com 2019)
Appendix 6

19STRATEGIC MANAGEMENT
Figure 6: Inflation rate in Australia
(theglobaleconomy.com 2019)
Appendix 7
Figure 7: Innovation index in Australia
(theglobaleconomy.com 2019)
Appendix 8

20STRATEGIC MANAGEMENT
Figure 8: Political stability in Australia
(theglobaleconomy.com 2019)
Appendix 9
Figure 9: Research and development expenditure in Australia

21STRATEGIC MANAGEMENT
(theglobaleconomy.com 2019)
Appendix 10
Figure 10: Rule of law in Australia
(theglobaleconomy.com 2019)