Agriculture Industry Analysis

Topics: Fertilizer, Urea, Natural gas Pages: 43 (2740 words) Published: March 8, 2015

The purpose of this assignment is to understand the business strategy formulation process for companies against the backdrop of a chosen industry by undertaking a situational analysis for the same.

In this assignment, the environmental and organizational information has been analyzed using various analytical approaches and the SFAS matrix technique. Strategic options have been generated using the TOWS matrix and business strategies have been suggested for the corporations of the industry.

The industry chosen for this assignment is the Fertilizer industry in the context of Indian scenario.


Based on the detailed understanding and analysis of the industry, the following key success factors were identified:

Agriculture demand and prices

Monsoon showers

Raw material – availability and prices

Investment for capacity expansion

Government subsidies and other regulations


A Porter’s 5 forces analysis was also conducted to further scan the environment and the following was obtained:

Threat of New Entrants: LOW:

High capital investment with high cost and low returns

Difficult to acquire govt. approval for gas allocation

Shortage of natural gas in India

Production of DAP costly; 65% of requirement is imported

Delays in subsidy payments leads to troubles in management of funds

Bargaining Power of Suppliers: HIGH:

Fertilizers industry is a captive market in India

Very limited number of suppliers

High prices of inputs and less diversity of inputs

Raw materials are scarce being natural resources

Heavy dependence on imports for meeting requirements of inputs / intermediaries / products

Bargaining Power of Buyers: LOW:

High demand for agriculture products leads to high requirements for fertilizer products

Nutrients level deplete in soil with each harvest of crop; forcing demand for fertilizers, else deficiency of nutrients reduces crop yield

High demand of fertilizers with relatively low productivity per unit of fertilizer consumed; leading to higher demand

Low productivity of substitutes

Lack of product differentiation

Threat of Substitutes: MEDIUM:
Bio fertilizers, organic fertilizers, manures, vermi-compost may serve as substitutes

Natural fertilizers are not as effective as chemical fertilizers

Animal manure is not suitable for commercial production
Rivalry: LOW

It is a highly government regulated industry

Pricing subsidies provided by government

Private players are trying to improve supply chain through retail network

Industry is witnessing already high capacity utilization; players are not suffering from under-utilized capacities, hence rivalry is low

Uniform prices across industry leads to indirect mutual co-operation


The fertilizers industry operates in public, private and co-operative sectors with major urea production capacity owned by public and co-operative units, and phosphatic production capacity owned by private players.

In the public sector, National Fertilizers Limited (NFL) is the largest player with 3.2 MTPA production capacity of urea fertilizers. In the private sector, Coromandel Fertilizers Limited (CFL) is the largest player with 3.3 MTPA production capacity of phosphatic fertilizers. Indian Farmers Fertiliser Cooperative Limited (IFFCO) is the largest co-operative player with 3.7 MTPA of urea and 2.7 of phosphatic production capacity.

For the purpose of developing the SFAS and TOWS matrix and analysing the companies of the fertilizers industry, National Fertilizers Limited (NFL) and Coromandel Fertilizers Limited (CFL) have been selected, one from the public sector and private sector each. GENERATING A STRATEGIC FACTORS ANALYSIS SUMMARY MATRIX

The SFAS matrix will be constructed by creating an EFAS and IFAS matrix using the opportunities and threats for the external factors and the...
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