MGT5STR: Strategic Management and Agri Fibre Industries Analysis

This report provides a detailed analysis of Agri Fibre Industries' business-level strategy, focusing on its implementation of a differentiation strategy within the industrial hemp industry. It examines the company's background, its emphasis on high-quality products through vertical integration, and its competitive advantage over companies like Ecofibre, which employs a cost leadership strategy. The report also assesses the strengths and weaknesses of Agri Fibre Industries' approach, highlighting its strong brand image and higher operating costs. In conclusion, the report emphasizes the importance of strategic choices in achieving sustainable growth and creating a competitive edge in the market. Desklib provides a platform for students to access this and other solved assignments for study purposes.

0
Strategic Management
Agri Fibre Industries

1
Table of Contents
1. Introduction........................................................................................................................2
2. Types of business level strategies.......................................................................................2
3. Agri Fibre Industries and Industrial Hemp..........................................................................3
4. Business Level Strategy of Agri Fibre Industries.................................................................4
4.1 Analysis of Competitor’s Strategy....................................................................................4
5. Conclusion...........................................................................................................................5
6. References..........................................................................................................................6

2
1. Introduction
In this paper, the discussion will be made on the company Agri- Fibre industries. The first
phase of the paper will discuss about the types of the business level strategies that will be
elaborated in terms of cost leadership, differentiation, focus low cost and focused
differentiation. The next phase of the paper will describe about the Agri Fibre industries and
Industrial Hemp and then identification of the business level strategy will be done in context
to the Agri- Fibre industries. It is important for the companies to focus on these strategies s
it helps to maintain growth in the highly competitive market.
2. Types of business level strategies
There are different generic strategies that are considered by the Agri business industries as
it helps to maintain the competitive advantage over the industry rivalries. The company also
focuses on competing across broad market. The strategies can be described as follows:
 Cost leadership
The companies compete for the wide customer base that emphasizes on price. The price is
concerned with the internal efficiency so that it could be easy to maintain the margin that
will assist the average returns and also the cost of the customer will be maintained. In
relation to cost leadership, the emphasis is given on having the lowest cost of the activities
in the industry. The cost leadership is the strategy that is considered by the companies to
boost the efficiencies and to minimize the cost of production (Leonard, 2019).
 Differentiation
The main purpose is to maintain the position as a provider with the unique characteristics of
the products and services provided in relation to the overall cost. In this focus is given on
high product quality, high customer service and also on rapid innovation are known as the
point of differentiation (Brenes, Montoya and Ciravegna, 2014).
 Focused low cost

3
In this strategy, the emphasis is on offering only the small segment of the customers at the
less cost. The low-cost providers supply the products only to the specific country and also
maintain the need for the small segment (Sumer and Bayraktar, 2012).
 Focused differentiation
By considering this, the companies compete on differentiating its offering, but it is only done
for the small target segment of the customers. But in this, the companies are able to serve
the customer base so that it could be easy to offer efficient services to the clients. In this,
there are also the risks that are related such as high competition and also the level of
interest (Leonard, 2019).
 Integrated Low-cost/Differentiation strategy
With the globalization, the companies emphasizes on considering the strategy so that
changes in the environment can be adopted new technology in relation to the core
competencies. The core competencies also provide differentiated products at less cost
(Wheelen et al., 2017.).
3. Agri Fibre Industries and Industrial Hemp
AFI was established in Australia in 1998, and it focuses on bring the experts together in
relation to the industrial hemp breeding and agricultural practices. The main emphasis is on
the food and fibre markets that are created in context to the subtropical hemp varieties
with the low content of THC. The team of the company emphasizes on the approaches
related to hemp development and regulatory approaches for the industrial hemp industry.
The mission of AFI is to offer next-generation products from the industrial hemp (AgriFibre,
2019a). The AFI has the different varieties that are registered with the plant breeder’s rights
of Australia with 6 registered varieties and 1 pending. Industrial hemp is considered as a
remarkable plant that grows plant, and it can also be used maintaining the quality of the
different products (AgriFibre, 2019b).
4. Business Level Strategy of Agri Fibre Industries
Agri Fibre Industries has implemented ‘differentiation’ business level strategy in order to
conduct its business operations. This strategy is implemented by the company in order to

4
generate a competitive advantage in the industry to ensure that it offers high-quality
industrial hemp to its customers (Bloomberg, 2019). The company did not focus on reducing
the prices of its products; instead, it focuses on improving the quality of its products by
controlling its operations from end-to-end. The company has implemented vertical
integration policies in order to provide hemp plant breeding programs by managing
harvesting, agriculture, product extraction, development and breeding practices (AgriFibre,
2019c). Due to its integration and expertise in the industry, the company is able to deliver
higher quality products than compared to its competitors. The process of implementation of
differentiation strategy begins from the first part which is breeding of hemp which the
company conducts through its breeding facilities. As per its business-level strategy, the
company has built strong relationship with its hemp breeding partners which it closely
operates with to achieve high quality of products. By considering the differentiation strategy
the company focused on maintaining the overall cost of the products in the market and also
it has created a perceived value among the potential customers.
The management of the company also takes business decisions while catering to the
principle of differential business level strategy. For example, they have merged with IEco
Industries that offers material expertise to the company in order to bring innovation in the
industrial products (AgriFibre, 2019c). Differentiation strategy is considered by the company
so that it could be easy to maintain the market position in the market. The company has
also merged with Agricultural Microbes in order to bring the valuable intellectual property
in new-generation medicinal breeds to bring value to its products by ensuring that they
remain protected. The strategy related with product differentiation has allowed the Agri
Fibre industries to compete in the different areas other than the area related with price. The
cost saving can be related with the initial selling price of the product that emphasizes on
longer term life cycle costs. Due to its effective differential business level strategy, the
company has the most Australian Plant Breeders Rights (PBR) for industrial hemp than
compared to all other companies operating in Australia (LinkedIn, 2019).This shows that the
company has sustained its growth in the market due to its effective business level strategy
which enables it to focus on the quality of its products to create a strong brand reputation in
the market which is the key to its success. Due to differentiation strategy the unique image
has been created of the company in the market which assist in boosting the overall profits.

5
4.1 Analysis of Competitor’s Strategy
One of a major competitor of the company is Ecofibre which has been offering its services
for over 20 years in the hemp industry. Ecofibre has adopted ‘cost leadership’ business level
strategy based on which it focuses on providing its products at competitive prices to attract
more customers. The company achieves this by owning and managing most parts of its
value chain which is focused on conducting its operations in a cost-effective manner
(Ecofibre, 2019). However, Agri Fibre Industries is able to generate a competitive advantage
over Ecofibre due to the strengths of its business level strategy. The products offered by Agri
Fibre Industries are considerably better than compared to Ecofibre since it manages and
controls the entire supply chain operations which allow it to ensure that it did not
compromise with the quality of the products. However, Ecofibre focuses on generating a
cost advantage by reducing the costs of its operations which enable the company to offer its
prices at competitive pricing. However, a key weakness of the business level strategy of Agri
Fibre Industries is that the operating costs of the company are considered high and the
company faces challenges while managing its operations due to the complexity of
operations (News Mail, 2018). These challenges are overcome by Ecofibre since the
company only manages some part of its value chain and it hires other organisations to
conduct other processes. However, Agri Fibre Industries has built a strong brand image due
to its business-level strategy which enables the company to expand its operations in the
market while attracting new customers that did not prefer to compromise with the quality
of hemp.
5. Conclusion
In conclusion, there are different types of business level strategies which companies can
choose based on their characteristics which enable them to expand their operations and
generate a competitive advantage in the market. Agri Fibre Industries operates in the hemp
industry, and the company has built a strong brand by controlling most of its supply chain
operations. The company has adopted differentiation business level strategy in order to
generate a competitive advantage over its competitors. Ecofibre is a major competitor of
the company which has adopted cost leadership business level strategy. Strengths of
differentiation strategy are integrated management and control on the quality of products.
Its weaknesses include higher operating costs. However, due to its business-level strategy,

6
Agri Fibre Industries has created a positive brand reputation in the market which enables
the company to sustain its growth in the hemp industry.

7
6. References
AgriFibre.(2019a)About Industrial Hemp.[Online] Available at:
http://agrifibre.com/industrial-hemp/[Accessed on 6 April 2019].
AgriFibre.(2019b)Agri fibre industries. [Online]Available at: http://agrifibre.com/[Accessed
on 6 April 2019].
AgriFibre.(2019c) About AFI.[Online] Available at: http://agrifibre.com/history/[Accessed on
6 April 2019].
Bloomberg. (2019) Company Overview of Agri Fibre Industries Pty Ltd. [Online] Available at:
https://www.bloomberg.com/research/stocks/private/snapshot.asp?
privcapId=427954641[Accessed on 6 April 2019].
Brenes, E.R., Montoya, D. and Ciravegna, L.(2014) Differentiation strategies in emerging
markets: The case of Latin American agribusinesses. Journal of Business Research, 67(5),
pp.847-855.
Ecofibre. (2019) Global Issue [Online] Available at: https://ecofibre.com/about/[Accessed on
6 April 2019].
Leonard, K. (2019) Business level strategies.[Online]Available at:
https://smallbusiness.chron.com/five-types-business-level-strategies-781.html[Accessed on
6 April 2019].
LinkedIn. (2019) Agri Fibre Industries Pty Ltd. [Online] Available at:
https://in.linkedin.com/company/agri-fibre-industries-pty-ltd[Accessed on 6 April 2019].
News Mail.(2018) How hemp could change Bundaberg forever. [Online] Available at:
https://www.news-mail.com.au/news/how-hemp-could-change-bundaberg-forever/
3310193/[Accessed on 6 April 2019].
Sumer, K. and Bayraktar, C.A.(2012) Business Strategies and Gaps in Porter’S Typology:
A. Journal of Management Research, 4(3), pp.100-19.

8
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E.(2017)Strategic management
and business policy. Boston: Pearson.