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Group2 Sunflower
MID-TERM ASSIGNMENT
A report on
Ha Noi, 17/04/2024
Executive summary
This report focuses on an in-depth exploration and analysis of the Agrochemical Product
Differentiation Strategy for Specialty Crops case. This aims to clearly understand the
process of identifying product differentiation for Specialty Crops. From there, it applies the
reasoning approach of Case 89 as a premise for application and analysis of Nufarm's case.
Finally, this report demonstrates the clear differentiation between Nufarm Limited
company and its competitors.
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TABLE OF CONTENTS
Executive summary................................................................................................................1
I. Introduction industry & company.......................................................................................3
1.1. Introduction about Case 89..........................................................................................3
1.1.1. Risk assessment....................................................................................................3
1.1.2. Strategic planning.................................................................................................3
1.1.3. Specific case..........................................................................................................3
1.1.4. Post-Implementation and result............................................................................4
1.2. Introduction about Nufarm Limited company.............................................................5
1.2.1. History...................................................................................................................5
1.2.2. Industries and products.........................................................................................6
1.2.3. Vision, mission and core values............................................................................6
1.2.4. Organization structure...........................................................................................6
II. Situation analysis...............................................................................................................7
2.1. External environment analysis.....................................................................................7
2.1.1. Pestel-G model......................................................................................................7
2.1.2. Micheal Porter’s Five Forces model.....................................................................9
2.2. Internal environment analysis - 7S Frameworks Mckinsey model...........................11
2.3. SWOT model.............................................................................................................13
III. Strategic management process.......................................................................................15
3.1. Definition...................................................................................................................15
3.2. Strategy execution.....................................................................................................16
3.2.1. Product differentiation strategy...........................................................................16
3.2.2. Price differentiation strategy...............................................................................17
3.2.3. Brand differentiation strategy.............................................................................17
3.2.4. Service differentiation strategy...........................................................................18
3.3. Comparison to competitors........................................................................................19
3.4. Comparison to case 89...............................................................................................19
3.5. Mini-conclusion.........................................................................................................20
IV. Critical evaluation and problems-defined......................................................................20
V. Recommendations...........................................................................................................20
VI. Conclusion.....................................................................................................................21
References............................................................................................................................22
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I. Introduction industry & company
A mid-sized agrochemical company that specializes in goods for specialized crops is called
Agrochemical Product Industry.
Despite a solid product line and extensive industry understanding. However, given the
competitive landscape and internal financial pressures, it is assumed that the organization's
difficulties arise from a lack of clear product differentiation and poor product portfolio
management. Furthermore, the firm may not be fully utilizing customer insights to inform
product development and marketing efforts. The firm then struggles to differentiate its
offerings in a highly competitive industry. The company's growth has slowed, and profit
margins are under pressure as a result of product commoditization and rising R&D costs.
A five-phase consulting technique that includes market analysis and customer insights,
product portfolio assessment, value proposition design, strategic roadmap development,
and implementation planning can be used to rejuvenate this organization's product strategy.
The organization implemented its strategy by carefully defining and monitoring pertinent
KPIs, learning the value of a customer-centric approach and cross-functional collaboration,
and utilizing best practices and resources to innovate and differentiate their products after
deciding which strategic initiatives to pursue in the short- and medium-term horizons.
Their distinctive and customized product offers allowed them to stand out in the market
thanks to their all-encompassing strategy.
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Additionally, as a result of better product market fit, the company claimed a 20% increase
in customer retention.
• A 15% gain in market share in the targeted segments as a result of the launch of unique
products catered to niche markets.
• By streamlining the product line and implementing premium pricing for distinctive value
propositions, the gross margin increased by 12%.
• Improved cross-functional cooperation, which raised the success rate of new product
introductions by 25%.
• Product development cycles were sped up by 30% through the use of agile development
methodologies.
From the analyses above, it's evident that differentiation strategy holds significant potential
for a company's growth. Based on the theme of applying a differentiation strategy in an
agricultural chemical company, this report is written with the purpose of providing a
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clearer understanding of the differentiation strategy implemented in a specific company -
Nufarm Limited Company.
1.2.1. History
Nufarm Limited, a renowned global crop protection and seeds company, maintains its
headquarters in Australia where it was established in 1956 by Max Fremder (Nufarm,
2023). With a dedicated workforce of 2,400 employees across 11 manufacturing sites and
four product development centers, Nufarm continues to innovate and support sustainable
agricultural practices worldwide. Over the years, Nufarm has built a strong reputation for
its service quality and product excellence, marked by significant milestones and strategic
growth.
In 1979, the company shifted its headquarters to Melbourne, reinforcing its commitment to
providing top-notch customer service (Nufarm, 2023). The year 1988 saw Nufarm and
NZFF merge, initiating a phase of accelerated growth with a steadfast focus on customer
needs. Entering into a joint venture with GrainCorp and Vicgrain in 1998, Nufarm aimed
to provide Australian growers with access to the most advanced biotechnology, ensuring
profitable and sustainable agriculture practices. In 2002, the acquisition of CropCare
significantly bolstered Nufarm’s portfolio in the cotton and broadacre selective grass
herbicide sectors. By 2006, Nufarm had established Nuseed, a seed technology platform
dedicated to offering hybrid crops that add value for farmers. Between 2011 and 2013, the
company signed a pivotal agreement with Sumitomo to co-develop innovative crop
protection products. During the same period, Nuseed collaborated with CSIRO and GRDC
on a plant-based omega-3 project and expanded its seed platform by acquiring Seeds 2000
Inc in the USA, specializing in sunflower seed and research.
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The years 2017 to 2019 were marked by strategic investments and acquisitions (Nufarm,
2023). Nufarm invested in Enko to harness disruptive technologies from the
pharmaceutical industry for agriculture, acquired key EU crop protection assets from
Adama and Syngenta, and forged a partnership with Marrone Bio Innovations to develop
Grandevo Bioinsecticides. Furthermore, Nufarm collaborated with the University of
Queensland, securing federal government funding to establish a new Australian Research
Hub for Sustainable Crop Protection.
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II. Situation analysis
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that farmers need. They could make new chemicals for farming or sell their
products in more places to reach more customers.
Economic:
- The Movement Index says that Australian wages are likely to go up by about 4%
next year, which is more than in the UK, US, and New Zealand, where it's expected
to be around 3%. Because of the recent growth in the economy, Australian workers
now earn about 10% more than those in the US and 40% more than those in the
UK. This will lead to an increase in people's purchasing power.
Social:
- Consumers consistently care about farmers’ engagements in sustainable programs,
and they are willing to pay a price premium for products from such programs
(Chengyan,2020). This is a good opportunity for Nufarm because they are
responding to this shift by developing and promoting products that are less harmful
to the environment such as biopesticides, organic fertilizers,...
- The population has been growing and is expected to grow at a positive rate for the
upcoming years. Australia's population in 2022 (26 million) is projected to reach
between 34.3 and 45.9 million people by 2071. This is beneficial for Nufarm
Limited as there will be an increase in the number of potential customers that it can
target.
Technology:
- More and more people are using social media all around the world. Facebook,
Twitter, and Instagram have seen the biggest jumps in the number of people who
use them every month. Nufarm Limited can use social media to advertise its
products, talk to customers, and get their opinions.
Environmental:
- Although utilizing renewable energy can be costly, it typically garners backing
from both governmental bodies and consumers, who may be willing to pay extra
for goods associated with it. This can enhance their credibility within the
community and help them attract consumers interested in products that have a
positive impact on the environment.
Legal:
- Australia has a well-developed legal system that protects the intellectual property
of businesses and individuals like protection of domain names, design, and
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copyrights. With this policy, Nufarm will feel secure and ready to invest and
develop in the agricultural chemical industry.
Global:
- International trade policies: Changes in tariffs, trade agreements, or sanctions can
impact Nufamr's export/import activities and access to global markets.
- Global competition: Nufamr faces competition from both local and international
players in the agricultural industry, requiring it to continually innovate and
differentiate its products.
- Supply chain disruptions: Global events such as pandemics, natural disasters, or
geopolitical tensions can disrupt Nufamr's supply chain and operations.
Threat of competition:
- The agricultural chemical industry typically has high barriers to entry due to
significant capital requirements for research and development. These factors
weaken the threat posed by new entrants in this industry.
- In this industry, product differentiation is robust, with companies offering distinct
products rather than standardized ones. Customers actively seek out these
differentiated products, while advertising and customer service play significant
roles. Consequently, these factors collectively diminish the potential impact of new
entrants in the industry.
- In this industry, there are strict rules set by the government that companies must
follow before they can start selling their products. This makes it hard for new
companies to join the industry, so they're not much of a threat.
- Newcomers can easily join the distribution network by making their own channels
and selling products. With only a few stores selling this type of product, it's easy
for new players to get their product on shelves. This makes the competition from
new entrants strong in this industry.
Bargaining power of Suppliers:
- Suppliers in the agricultural chemicals industry may include raw material
providers, manufacturers of active ingredients, and distributors.
- The bargaining power of suppliers can vary depending on the availability of raw
materials, uniqueness of the inputs, and the number of suppliers.
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- Nufarm may face moderate to high bargaining power of suppliers if there are
limited sources for key raw materials or if there are few suppliers dominating the
market.
Bargaining Power of Buyers:
- High product variation within the industry implies that buyers struggle to find
alternative companies offering a specific product. This challenge in switching
reduces the bargaining power of buyers within the industry.
- Buyers prioritize product quality and make frequent purchases, indicating their
lower sensitivity to price. As a result, the bargaining power of buyers within the
industry is diminished.
- In the agricultural chemical industry, there are significantly more suppliers than
companies producing the products. Consequently, buyers have limited options to
choose from, resulting in less control over prices. This diminishes the bargaining
power of buyers within the industry.
Threat of Substitutes:
- There aren't many other options for products like organic farming methods, (Few
substitutes for the products manufactured in the industry: cái này cho vào slide
thôi) alternative pest control methods,... that Nufarm Limited makes. The few
alternatives are made by industries that don't make much profit. This means
companies like Nufarm can make a lot of money without any limit. Because of this,
the risk of other products replacing theirs isn't very strong.
- Few substitutes are both high-quality and affordable like Nufarm Limited's
products. Competing companies in the same industry like Incitec Pivot Ltd, Bayer
Cropscience Ltd offer similar quality at lower prices, making it unlikely for buyers
to switch. Thus, the threat of substitute products in the industry is weak.
Competitive Rivalry:
- There aren't many competitors in Nufarm Limited's industry, and most of them are
big. This means that any actions taken by companies in the industry are likely to be
noticed by others. As a result, competition between existing companies isn't as
strong.
- The agricultural chemical industry is getting bigger each year and is expected to
keep getting bigger for a while. When an industry is growing like this, it means that
companies in that industry are less likely to fight each other for customers. So, the
competition between these companies isn't as strong.
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- The products made in the industry where Nufarm Limited works are really different
from each other. So, it's hard for other companies to get customers from each other
because their products are special. That's why competition between existing
companies isn't as strong in the industry.
- It's really hard for companies to leave the industry (barriers to leave the industry:
cái này cho vào slide thôi) because they've invested a lot of money in equipment
and buildings. Also, there are lots of rules from the government that make it tough
to shut down. So, even if they're not making much money, companies stay in
business because they don't want to leave. This makes competition between them
even tougher.
- The variety of strategies (product differentiation, pricing strategies, innovation,...)
used by companies in the industry causes them to clash over their approaches,
making competition among existing companies a significant force in the industry.
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decentralized organizational structures. This movement will transfer some authority from
the top to the bottom, resulting in a new balance of strict and fluid-structure.
Systems
In order to guarantee that business activities are efficiently managed and that there are no
conflicts or disputes, Nufarm Limited has put in place clear and well-defined processes
(Harvey, 2020). The majority of Nufarm Limited's systems are departmental in nature.
Some of these systems are supply chain management, public relations, finance, marketing,
operations, sales, and human resource management. In order to guarantee that all divisions
and systems within the company are interconnected and function well together toward
objectives and productivity, Nufarm Limited additionally employs unique protocols and
techniques. Additionally, Nufarm Limited's performance is assessed on a semi-annual or
quarterly basis, contingent on the demands and urgency of tasks and projects. Supervisors
and managers use this official procedure to find operational delays and propose
improvement measures.
Style
Nufarm's leadership style is defined by fostering an open work atmosphere in which all
employees can share ideas and be creative. Nufarm accepts risk and is open to new ideas,
enabling staff to do their best to achieve goals without fear of expressing new ideas or
failing. Nufarm promotes healthy competitiveness. Respect, unity, and mutual support are
core values encouraged in the workplace, ensuring that employees use collaborative ways
while keeping integrity and ethics to fulfill assigned duties, since the corporation regards
integrity as a core value (Harry, 2020).
Staff
Nufarm Limited employs a sufficient number of people to staff its international activities
(Harvey, 2020). Every job role is created to make it easier to accomplish organizational
goals. Consequently, Nufarm Limited needs workers whose skill sets align with the
demands of their respective roles and positions. The human resources department plans
internal training courses to acquaint employees with the organization and its ideals, as well
as recruiting that may be contractual or long-term in nature, depending on the demands.
Strategy
In order to maintain transparency and establish a connection between the company's
actions and obligations, Nufarm Limited regularly establishes precise strategies and
objectives and communicates them to all stakeholders and workers (Harvey, 2020). This
methodology facilitates performance management by providing direction and creating a
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range of strategies that are in line with the business plan. For both short- and long-term
goals that align with the business plan, SMART targets are set. Furthermore, Nufarm
Limited's flexibility and adaptability allow it to continuously assess shifting consumer
demands and trends as well as alter consumer market patterns and behaviors. This helps
the business to find gaps in the market for consumer demand while maintaining its
competitiveness and relevance to its target consumer groups. This helps the business to
find gaps in the market for consumer demand while maintaining its competitiveness and
relevance to its target consumer groups. As a result, it enables the business to react swiftly
to changes in worldwide consumer trends and prepares it to localize its products for use in
other nations and locales.
Skills
The crew of Nufarm Limited is highly skilled and capable, which is impressive. The
organization places a strong emphasis on achieving its goals and giving itself a competitive
edge. As a result, it mandates that all candidates be chosen on the basis of their credentials
and accomplishments. To support employees' personal and professional development, they
frequently host workshops and training sessions (Harvey, 2020).
Strengths: Weaknesses:
1. Nufarm Limited 1. The investment
offers a diverse in research and
array of products product
known for their development is
consistent quality minimal.
and strong
reputation among 2. There is a
customers . significant
turnover of
2. Nufarm has employees,
posted positive accompanied by
earnings for the low motivation
past year, and morale
indicating a good among the
financial workforce.
condition.
3. The skilled
workforce at
Nufarm is diverse,
creative, and very
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qualified.
4. It has a strong
presence on social
media.
(Facebook)
5. Nufarm Limited
possesses a robust
distribution
network, boasting
a substantial
number of outlets.
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(S3,S6,O2)
Analyzing both the internal and external environments of Nufarm reveals the company's
strengths, weaknesses, opportunities, and threats. The increasingly competitive market
demands that Nufarm Limited establish a clear differentiation strategy. This strategy aims
to create unique elements to enhance competitiveness against competitors in the same
industry while making a lasting impression on customers, ensuring they remember the
brand more.
3.1. Definition
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responsible manufacturers (Soegoto, 2018). Implementing a differentiation strategy helps
the company attract a significant portion of customers in the target market while
maintaining a competitive advantage based on the uniqueness and value of the product.
The strengths, weaknesses, opportunities, and threats of Nufarm are revealed through an
analysis of its internal and external settings. A distinct strategy for product differentiation
must be established by Nufarm Limited due to the existence of an increasingly competitive
market. This tactic seeks to give its products special qualities, features, or advantages
above those of rival items on the market. Most significantly, in order to develop a
distinctive and appealing product, Nufarm must comprehend the demands and expectations
of its customers, carry out market research, and recognize its competitive advantages.
While the agriculture sector benefits greatly from the use of pesticides and other crop
protection goods, there is no denying that these products also have drawbacks, including
frequent exposure that can have a direct harmful impact on human health, effects on food,
environmental effects, and loss of vegetation. Customers are hesitant to use agricultural
protection goods because of these risks (Aktar et al., 2009). In addition, the Australian
government has established subsidies for industrial chemical companies that produce
ecologically friendly products. Nufarm Limited might take advantage of this opportunity
by concentrating on these eco-friendly products. Modern technology and Nufarm's highly
skilled personnel are key components that enhance its goods.
Superior product features, less environmental impact, and product safety for users' health
are examples of how the product differentiation strategy is implemented. Nufarm Limited
has made an effort to reduce its negative effects on the environment and human health by
making sure that its production and carbon emission policies are followed. Nufarm Limited
also wants to create operational procedures that lessen pollution of the soil and water.
Nufarm Limited processes all of its manufactured and delivered goods to maximize their
recyclability and decrease waste (Harvey, 2018). Additionally, the business raises its R&D
expenditures in an effort to provide Nufarm Limited a stronger competitive edge over
rivals. Nufarm's methodology places a strong emphasis on collaborating with top-tier
partners, as stated on their website. In an effort to commercialize cutting-edge
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technologies, the company is working with partners like the Commonwealth Scientific and
Industrial Research Organization (CSIRO), the University of Adelaide, the Olds College of
Agriculture & Technology in Alberta, Canada, and the US-based product discovery
company Enko. Regarding product attributes, Nufarm keeps pushing the boundaries of
plant-based remedies and plant defense goods to meet evolving nutrient and energy
requirements. The company has made strides in developing new plant protection solutions
to assist farmers in managing pests that are becoming more resilient, as well as items that
will enable them to harvest greater crop yield from their current acreage.
Price differentiation strategy is a business strategy that a company uses to create and
maintain differentiation in the price of its products or services compared to competitors in
the same industry. The goal of this strategy is to attract and retain customers by providing
the best or most unique value within a certain price range. Nufarm may offer products at a
lower price than competitors in the market or provide products at a higher price to
demonstrate quality, uniqueness, and special value.
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physical activity and a healthy diet to have a better lifestyle. The organization achieves this
by creating programs and information-sharing networks to assist people in learning about
healthy eating and making educated dietary decisions, in addition to offering nutritional
value through its own goods.
For the Community
Rural development: In addition to creating jobs, the company builds infrastructure and runs
programs for education and career training to raise the community's standard of living.
Promoting diversity: The business has created policies and initiatives to guarantee that
every community group is involved in the hiring process. The business also plans training
and skill-building events for all community groups, including individuals with special
needs and disabilities.
For the Planet
Preserving water sources: Nufarm Limited works to supply the community with clean
drinking water by installing filtration facilities in response to the lack of clean drinking
water.
Preserving natural resources: Nufarm Limited makes certain that the natural ecosystem is
not harmed or put at risk in any of its working places.
Environmental protection: Nufarm Limited's operations, like to those of other businesses in
the sector, are impacted by variations in the weather and climate. Nufarm Limited works to
establish secure green spaces through significant forestation in an effort to counteract these
changes and save the ecosystem. This aims to ensure the sustainability of the environment
and enrich the ecosystem (Harvey, 2018).
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organize training sessions and educational programs to enhance customer awareness and
knowledge about new products and technologies. This helps customers use products
effectively and safely.
Nufarm can provide post-sales support services by answering queries, handling complaints,
and providing solutions to issues that customers may encounter after using their products.
By offering quality services, Nufarm can create differentiation and help their customers
achieve success in agriculture management and plant protection.
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3.5. Mini-conclusion
Overall, Nufarm's differentiation strategy can focus on providing superior and distinctive
value to customers through product characteristics, pricing, community responsibility, and
support services. This positions Nufarm as a reliable partner for farmers seeking to
optimize their crop production while minimizing environmental impact. Product
differentiation and customer loyalty can create barriers to entry for other companies
attempting to enter the industry. Consequently, eliminating new competitive rivals
becomes easier without sacrificing benefits. This further helps Nufarm maintain a strong
presence in the market and seize monopolistic opportunities.
Furthermore, when using a differentiation strategy, the company's products or services may
quickly be imitated by competitors in the industry. This can lead to a loss of uniqueness
and competitive advantage that the company has tried to build. Therefore, maintaining
differentiation and protecting the product's exclusivity becomes a challenge for the
business.
V. Recommendations
To minimize risks and ensure success in differentiation strategy, Nufarm may consider the
following recommendations:
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Firstly, the company should invest in seeking and training highly skilled human resources.
Training and developing employees will enhance the quality and efficiency of work while
minimizing risks due to lack of knowledge or skills among staff.
Secondly, Nufarm should create good welfare policies for employees to retain talent.
Providing a comfortable and career-progressive work environment, along with attractive
benefits packages such as health insurance, travel support, and personal development
programs, will retain existing employees and attract new talent.
Thirdly, when implementing projects, the company should seek sponsorship or collaborate
with other organizations to share risks and optimize resources. Additionally, thorough
research and evaluation before making spending decisions will ensure that projects are
carried out effectively and have long-term benefits.
Lastly, registering intellectual property rights including trademarks and patents will help
the company protect its products from copying and imitation by competitors. This will
maintain the exclusivity of Nufarm's products and strengthen the company's position in the
market.
VI. Conclusion
In conclusion, by analyzing internal and external factors, and SWOT analysis, Nufarm
aims to identify strategic levers to further differentiate its product offerings. The goal is not
merely to participate in the market but to lead it by anticipating farmers' needs, embracing
sustainable practices, and harnessing innovation to deliver superior agricultural solutions.
In doing so, Nufarm not only commits to its growth but also to the advancement of global
agriculture, ensuring food security and environmental stewardship for future generations.
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