MGT5STR: GrainCorp's International Market Strategy Analysis

This report provides a strategic analysis of GrainCorp, focusing on its international market opportunities within the Australian grain industry. It examines the industry's contribution to the GDP, highlighting the dominance of wheat production. The report identifies international opportunities for GrainCorp, particularly in developing markets, and evaluates various international strategies such as partnerships, digital strategies, optimized supply chains, and cost leadership. The analysis determines the most suitable entry mode for the company, recommending export as the primary strategy while deeming wholly owned subsidiaries as inappropriate. The report concludes with recommendations for future strategic directions, emphasizing the development of new grain varieties and sustainable practices to ensure long-term success in the global market. The report follows the guidelines of the MGT5STR Strategic Management course, including an executive summary, table of contents, and conclusion, and utilizes Harvard referencing with a minimum of eight journal articles and textbook references. The assignment covers key areas such as the Australian food-focused agribusiness sector, international opportunities, strategies, entry modes, and recommendations for the future.

STRATEGIC
MANAGEMENT

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Executive Summary
Demand for farm grain products is increasing and Australia has developed infrastructure for
development of new crops. In this report there is analysis of the Australian grain crop
industry as it contributes higher in the GDP of the nation. Wheat product is the major
contributor in this with 31.8 million tonnes or approx. 53% of the overall grain industry
tonnage. In this report there is illustration about the opportunities available with Grain Corp
Company in the international market. In this regards it was found that developing and
underdeveloped markets have huge potential for expansion. This report justifies the best entry
mode strategy of the company where it was found that export is the best strategy. However
the strategies such as Optimised supply chain, partnership, cost leadership strategy, digital
strategies, and product diversification can help in making this internationalisation process
easier.
Content

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s
INTRODUCTION......................................................................................................................2
Australian grain industry............................................................................................................2
International opportunities for the firm......................................................................................4
International strategies...............................................................................................................5
Appropriate and inappropriate strategies...................................................................................6
Recommendation........................................................................................................................6
Conclusion..................................................................................................................................7

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INTRODUCTION
Grain industry in Australia is touching new heights and there are many companies emerging
in this industry and this has brought tough competition in the industry. There are many firms
that are also doing good as they have innovated their crops to become hybridised and this is
helping them to reach to new markets easily and reduce the problems related to the grain
crop. GrainCorp is a public limited firm that is registered in ASX (Grain Corp, 2019). This
company also sells its crop in Europe. This report discusses the Australian grain industry and
identifies the opportunities in this segment along with the international strategies suitable for
this business. This report also discusses appropriate and inappropriate mode of entry to the
international market. In the last section of the report, recommendation regarding future
strategic direction of the grain industry in Australia has been provided.
Australian grain industry
Agriculture becoming one of the major industries within Australia especially the grain
focused crops are helping the economy within Australia to boost. In the year 2016-17 the
production value of pulses, grains and oilseeds was approx. $17billion which is around 27%
of the total gross value of products that are obtained from the farm (Agric, 2019). In terms of
value and tonnage, Wheat remained to the most important product as it contributed around
$7.4 billion (44% of the total GVP for the grain industry) alone in the year 2016-17 and in
terms of production they have produced 31.8 million tonnes or approx. 53% of the overall
grain industry tonnage (Agriculture Victoria, 2019).
Figure 1: Major Farm income drivers

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These figures showed that there is enhancement in the average wheat production year by year
which has resulted in higher farm incomes over the years. Western Australian region is the
major production area for grains which accounts to around 80% of its annual growth
production from this region is exported to more than 50 countries. They are the major
suppliers of Wheat for the Japanese udon noodle market and they are the major feed barley
suppliers in the Middle East. Highly advanced technologies in the areas like production,
marketing and maintenance of the grain crops has made the company to gain success in the
market. Utilisation of sustainable practices along with advanced technologies has increased
the efficiency for the Grain Corp Company which might lead to sustainable business. Remote
sensing technologies have also empowered firms such as Grain Corp to effectively utilise
resources. These technologies have improved the quality and health of the grain crop.
Australian grain crop industry gives an additional A$430 million for the research in the
agriculture. In between 2000-01 to 2017-18 the grain farm’s average equity ratio is around
85% (Grain Corp, 2019). In 2017-18, the average farm debt of Australian gram farms
increased by around 14% to reach to $1,035,700 and in the succeeding year it will be
enhanced by 2% (Australian government, 2019). In the last few years the performance of the
Australian grain industry is on the lower side.
Figure 2: Number of Grain farms year wise

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This graph reflects that area wise reduction in the grain farms all across the globe. Due to the
challenges related to environment such as climate change and global warming, production
quality and quantity has degraded. Farmers are leaving their jobs because there is increase in
the unpredictability of the weather which is causing huge damage to the crops and the most
severe impact is on the smaller farmers (Davies and Tonts, 2010). Bigger marketing
challenges are confronting the smaller farmers as they do not have resources to avail
maximum benefits from the limited resources they have.
International opportunities for the firm
The demand of the grain products is increasing both within Australia and other parts of the
world which is an opportunity for the company in terms of increasing their sales and
enhancing the scope of the firm in the international markets especially in terms of
enhancement of sales. Since Grain Corp provides high quality crops at the lower prices hence
they have larger scope to capture the increasing target market in different parts of the world
(Frølich and Åman, 2010). Grain Corp is listed on the ASX Australia and they have recently
extended its reach in the Australian State by amalgamation with other grain handling
operations.
Opportunities
 In the developing markets, there is a need of high quality grain products as in spite of
higher competition in the market, there are lesser numbers of products in the market
that is actually of the quality that Grain Corp is delivering. In the markets such as
India and China the demand for such products is going to get on the higher side as
they have big population too (Robertson, et al. 2012).
 In the African market, there is large food security issues and there is unavailability of
high quality grain items and since there are many cities in the region that are
developing hence people also want healthy products for which this company’s
products can be appropriate substitution (Whelan and Taylor, 2013).
 This firm also has opportunities to sell their items through the help of bigger
supermarkets such as Wal-Mart. This will provide the company with bigger markets
and will also allow them to make sure that they are able to reach to larger population.
E-commerce websites such as Amazon can give further boost to sales of their

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products as these companies have bigger supply chain network (Kirkegaard, et al.
2014).
 Since this company is innovating their products at the regular intervals hence they are
able to develop genetically modified crops that will be able to provide and special
kind of minerals or proteins. This will help the company to target the niche market
especially in the developing nations.
International strategies
In order to cross boundaries, it is critical for the firms to make sure that they have applied for
the best of international strategies. Selection of the strategies allows the companies to expand
in any market without many problems. Some of these strategies are as follows:
 Partnership: There are larger numbers of big and small firms that are looking for
opportunities. Partnership will help the firm they will have larger amount of resources
or extend their resources base in terms of supply chain within the country which will
allow the firm to make sure that they can reach to larger section in the market.
Partnerships with the government will also allow the firm to make sure that they have
strengthened the supply chain routes within the country (Robertson, et al. 2016).
Partnerships with the small and big farmers will help them in having new food
products and will also empower the farmers within the nation. This co-operative
model will also allow the stakeholders to build a better network which will again
improve the quality and quantity of products being delivered in the country.
 Digital strategies: It is also critical for the Grain Corp to utilise more technologies in
their operations. This will help them in enhancing their efficiency as better
communication can be built in the between the stakeholders. This is also necessary for
doing effective marketing. In this regards the use of content marketing and online
technologies such as SEO can be very much helpful. Finding out the quality of the
soil on the basis of which they can enhance the productivity. Personalised marketing
can be boosted so that people will also be able to know that there are such kinds of
products in the market.
 Optimised supply chain: It is critical for the Grain Corp to have an understanding
about the supply chain. This will help them in improving the overall efficiency of the
firm. This can be understood in terms of the fact that effective supply chain will
ensure that products do not get spoiled. This will also reduce the cost of the supply

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chain which will reduce the overall product prices (Biswas, et al 2011). In the
expansion process this will have impact on the strategy developments such as quality
and low cost pricing. Optimised supply chain will also ensure that company is able to
manage its trade especially in terms of the fact that the balance between demand and
supply is managed.
 Cost leadership strategy: In the time when the global economy is facing multiple
challenges it is essential that this firm reduce the cost of productions which will also
have impact on the cost of the products. This will ultimately help in achieving cost
leadership strategy which again is helpful in penetrating into different markets. Since
this company is already providing high quality products hence this price leadership
will allow the company to gain better position in the new markets that too instantly.
 Product diversification: In today’s time the companies that is having variety is able to
attract larger numbers of people. Since people are looking for different kinds of
products hence it is critical for the management to do research on the grain crops so as
to develop new genetically modified products that are cost effective and provide high
nutritional value to its customers (Maraseni and Cockfield, 2011). With variety and
quality a company will be able to attract specific niche market.
Appropriate and inappropriate strategies
There are different strategies to enter into any country and hence the mode of entry needs to
be selected wisely. Seeking the nature of the product, the best entry strategy for this company
is export. Since Australia has the technology and capability to grow such a high variety of
crops hence the company can continue to grow their products in this part of the world and
taking the help of global partners along with the suppliers of bigger and smaller scale they
will be able to efficiently export products in different parts of the world (Nidumolu, et al
2012). With increasing trade relationship of Australia with different countries, they will be
easily able to reduce the taxations on their products. Since there is no specific infrastructural
investment that needs to be done by the company hence the cost of the operations is also on
the lower side.
The inappropriate strategy in this regards is wholly owned subsidiary. This is because the
cost of this strategy will be higher as the company will have to make infrastructural
development within the nation. It is also seen that there is no specific need of such
investments and at the same time it will also have impact on the overall strategy development

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of this company (O'Keeffe, 2017). This is also inappropriate as getting back from this
strategy is difficult as lots of money gets wasted in case company does anything similar.
Recommendation
It is recommended that this company should focus on development of new types of grains
that is capable of providing additional minerals to the firm. This is also essential in terms of
the fact that quality of grains will also ensure that they can store these grains for the long
term. In the years where the production is not adequate due any kind of natural calamity,
these sustainable products can be sold by the company. These genetically modified crops can
also help in ensuring that company will not face challenges in case there is bad weather or
any kind of natural calamity as it will not get effected by the changes in the weather (Zheng,
et al 2015). It is also recommended that China is developing new kinds of grains that are
genetically advanced hence this company needs to make sure that they remain ahead of their
rivals in China for which this company will have to pump new set of investments. It is also
recommended that this company does partnership with the local firms that could help in
improving their stake in the market.
Conclusion
From the above based report it can be concluded that Grain Corp has huge potential in the
Australia and outside Australia. Increase in the demand for quality grain products will give
the opportunity to the Australian grain industry to expand in other parts of the world. Use of
high quality technology has helped the company to develop some genetically modified crops
that can withstand in any weather. Optimised supply chain, partnership, cost leadership
strategy, digital strategies, and product diversification are some of the strategies that could
help the firm in their international strategies. The best strategy for entry into the new markets
will be export.

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REFERENCES
Agric, 2019. Agriculture and food. [online] Available at:
https://www.agric.wa.gov.au/crops/grains. [Accessed on 28th September 2019]
Agriculture Victoria, 2019. Grain and other crops. [online] Available at:
http://agriculture.vic.gov.au/agriculture/grains-and-other-crops. [Accessed on 28th September
2019]
Australian government, 2019. Grain farms. [online] Available at:
http://www.agriculture.gov.au/abares/research-topics/surveys/grains#detailed-physical-
characteristics-findings [Accessed on 28th September 2019]
Biswas, W.K., John, M.B., Batt, P.J. and Noonan, J.B., 2011. Environmental supply chain
management in Australian grain industries: a life cycle assessment approach. Handbook of
corporate sustainability. Edward Elgar, USA, pp.93-111.
Davies, A. and Tonts, M., 2010. Economic diversity and regional socioeconomic
performance: An empirical analysis of the Western Australian grain belt. Geographical
Research, 48(3), pp.223-234.
Frølich, W. and Åman, P., 2010. Whole grain for whom and why?. Food & nutrition
research, 54(1), p.5056.
Grain Corp, 2019. About Grain Corp. [online] Available at:
http://www.graincorp.com.au/about-graincorp. [Accessed on 28th September 2019]
Grain Corp, 2019. Company. [Online] Available at: http://www.graincorp.com.au/about-
graincorp/company. [Accessed on 28th September 2019]
Kirkegaard, J.A., Hunt, J.R., McBeath, T.M., Lilley, J.M., Moore, A., Verburg, K.,
Robertson, M., Oliver, Y., Ward, P.R., Milroy, S. and Whitbread, A.M., 2014. Improving
water productivity in the Australian Grains industry—a nationally coordinated approach.
Crop and Pasture Science, 65(7), pp.583-601.
Maraseni, T.N. and Cockfield, G., 2011. Does the adoption of zero tillage reduce greenhouse
gas emissions? An assessment for the grains industry in Australia. Agricultural Systems,
104(6), pp.451-458.

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Nidumolu, U.B., Hayman, P.T., Howden, S.M. and Alexander, B.M., 2012. Re-evaluating the
margin of the South Australian grain belt in a changing climate. Climate Research, 51(3),
pp.249-260.
O'Keeffe, P., 2017. Contestability in the Australian wheat export industry. Journal of
Australian Political Economy, The, (79), p.65.
Robertson, M., Kirkegaard, J., Rebetzke, G., Llewellyn, R. and Wark, T., 2016. Prospects for
yield improvement in the Australian wheat industry: a perspective. Food and Energy
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Robertson, M.J., Llewellyn, R.S., Mandel, R., Lawes, R., Bramley, R.G.V., Swift, L., Metz,
N. and O’Callaghan, C., 2012. Adoption of variable rate fertiliser application in the
Australian grains industry: status, issues and prospects. Precision Agriculture, 13(2), pp.181-
199.
Whelan, B. and Taylor, J., 2013. Precision agriculture for grain production systems. Csiro
publishing.
Zheng, B., Chapman, S.C., Christopher, J.T., Frederiks, T.M. and Chenu, K., 2015. Frost
trends and their estimated impact on yield in the Australian wheatbelt. Journal of
Experimental Botany, 66(12), pp.3611-3623.