Golden Agri-Resources LTD Harvard Case Solution & Analysis

Golden Agri-Resources LTD Case Solution

Introduction

Golden Agri-Resources is one of the most successful companies, which provides a vast category of planted oil products around the world. It is located in Indonesia and has the area covered with 485,400 hectares. Therefore, the company has the largest palm oil plantation in the world and due to this, it is increasing its operational size on a yearly basis. On the other hand,the company is focusing mainly on edible oil and fat. Since it has been in a tough competition with other companies in the same industry, now it is looking to expand the operations into Europe as well as northern America.(Ltd, Golden Agri Resources;, 2016)

Background

The background of the company shows that it was founded in 1996 and after three years, it became listed in the Singapore stock exchange. However, at the end of March 2016, its market cap decreased to 3.9 billion as compared to 4.5 billion in the previous three years due to the fact that the economy had not performed well in the recent years. In addition to this, half of the company’s stock is covered by one of the renowned investment company, Flambo International.

As the industry has shown the relevance of such products produced by Golden Agri-Resources, therefore it has been analyzed that the primary activities associated for these products include the cultivating and harvesting process of oil palm trees, as well as collecting crude palm oil from the bunch of fresh fruits. Moreover,its process includes refining into finished products such as the use of cooking oil, margarine and other fats included in the related products. Therefore,from the following primary activities, it is identified that technology has played an important part in the implementation of these competitive products and that it has increased the competition in the industry.

Under the operational activities performed by the company, it has been analyzed that the business has some related strategies which would allow to improve the performance in the upcoming years. In order to expand the core upstream of the business, the company would implement the sustainable utilization of the particular resources through land and other generating sources in order to execute the material into the finishing one. Moreover,new plants would be introduced for sustainable growth and to compete against the future rivals. However, the long-term strategy of the business consists of developing plants in Africa due to the fact that the sub-continent has cheap resources that would allow to increase the profit margins and decrease the overall cost of operations. Therefore,by the use of Verdant Fund, the company would achieve its desire outcome in the future.

Therefore,from the following discussion of the company’ operations, it is identified that there is a change in trends and economic situation in the countries especially for developing countries where the inflation tends to move upward. Golden Agri-Resources would suffer a loss and decrease the market capitalization rate as it took place in the same year due to the same situation.(Ltd, 2014)

Comparison with other competitors

From the financial perspective, it has been identified that the company’s performance is declining and thus, it would tend to move in a same pace in the future if its performance keeps decreasing. The reason for this is the lack of control over the cost activities by implementing the operations in a country where there is a high risk of economic inflation and interest rates. Therefore,in order to maintain its position in a particular market, Golden Agri-Resources should focus more on implementing the plants in the developed countries where there is a less risk of loss due to lower inflation rate......................

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