An Analysis of the Effects of Nonmarket Forces on Agrium Inc. For course BU-999 | Section 10 Instructed by Professor Arnold Schwarzenegger
Prepared by Michael Liu on November 26, 2012
Agrium Inc. Corporate Research Paper
Table of Contents
Table of Contents
Conclusion & Recommendations
Initially founded in 1931 with just a handful of employees, Cominco Fertilizers has since grown to be what is known today as Agrium Inc. with a family of over 10,000 employee’s strong. Each of Agrium’s employees follows the company’s long term strategic vision of global growth and diversification. This has been the fundamental driver of Agrium’s continued success. The company has quickly evolved to become a leading supplier of agricultural products and services in the North and South American markets. To gain a very distinct competitive advantage, Agrium’s business concept involves the entire agricultural value-chain from growing micronutrients in fields to manufacturing fertilizers in various facilities around the world. The ability to oversee the entire production process allows the company to regulate the necessary quality controls to generate an important value-add to customers. (Agrium.com). Agrium Inc. has not only shown growth in its employee headcount, but also in its global footprint in the agricultural chemicals industry. In 2010 Agrium realized revenues of just over $10.5 Billion USD, a growth of over 500% since 2001 (annual reports). The weed-like growth of Agrium in the past few years has also generated much attention in both its market and non-market environments. This inevitable attention has sparked various issues from minor rumours to large legal suits.
A company that realizes high growth margins year after year is expected to attract attention in both its market and non-market environments. Agrium is an ideal example of a high growth company, and as such, it should anticipate and respond properly to market changes through an analysis of the issues, interests, institutions, and information within both market and non-market environments. (baron textbook) Issues
Agrium Inc. is one of seven major companies that collectively control over 71 per cent of the world’s potash (potassium salts used in the production of fertilizer). This near monopolized power has always caused legal observers to question the possibility of an illegal cartel between several of the seven major players in the industry (Globe and mail). A U.S. lawsuit from 2008 has been recently revived to accuse two of the seven corporate giants in the field for intentionally slowing production to increase demand and ultimately increasing the price of potash. Agrium, being one of the two defendants, denies the allegations and did not respond to a request for a comment (CTV News). In a June 27, 2012 ruling, an appeals court sided with the plaintiffs but has not pursued any action against the potash producers. A submission from the U.S. Department of Justice and the U.S. Federal Trade Commission argued that U.S. antitrust laws should be interpreted more broadly. From the ruling, the alleged cartel drove potash prices in Brazil, India, and China by over 600 per cent and ultimately used the higher prices as a benchmark for U.S. prices. (Globe and mail) Interests
The revival of the lawsuit has had direct and indirect effects on various parties. The three key stakeholders to potentially be affected by the outcome are: the U.S. Government, Potash Producing Companies, and End-Users of Potash. U.S. Government
The U.S. Government has created Antitrust laws to regulate corporations in hopes to prevent monopolies from creating unfair and unbalanced environments in the market (Cornell.edu). The...
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