Critical Analysis Of Sugarcane Industry Environment, Opportunities And Threats

Environmental Factor Political / Economic et

Issue(s) pertinent to the industry. How might organizations in the industry be affected?

Implications for the industry What should the organizations in the industry do?

Political factors

 Government interventions such as changes in interest rate might influence the demand pattern of an organization. Political instability will affect business operations especially the ones that operates internationally (Alava et al, 2018).

Companies should apply political risk insurance cover to protect them from financial losses that come as a result of political events such as war and terrorism. They should consult with government leaders on national development plans and political changes that might affect future investments.

Environmental factors

Sugarcane production is negatively affected by rise in frequency and intensity level of the harsh environmental conditions such as flood and drought caused by climate change. High temperatures that are accompanied by draughts affects the agricultural production of sugarcane hence limiting its availability and accessibility to sugar companies. Temperature changes or precipitations indirectly result to increase in pest pressure that might attack sugarcane plants thereby hindering their growth

Organizations should invest in irrigation, planting drought tolerant and high yielding sugarcane verities, improving drainage systems and management practices such as fertilizer applications, soil tillage etc. Sugarcane companies should increase their level of adaptive capacities so as to overcome the problem of severe environmental changes. They should also introduce Crop Simulation Models (CSM) in their operations.

Social factors

Change in society such taste and preference influence the growth of sugarcane business. Some customers prefer to purchase their sugar from specific companies due to their beliefs and culture.

Companies should conduct market research to know the trends and patterns of the society (Alava et al, 2018). The firms should analyze customers attitudes and lifestyles to know their taste and preference.

Technological factors

Change in technology affects the overall operation of companies, their methods of marketing and how the interact with their customers and suppliers.

Organizations should implement new operational strategies to cope with the technological changes. They should change their production methods, marketing techniques, information and communication resources.

Economic factors

High interest rates will greatly affect businesses whose strategies depend on acquiring huge loans (Proches and Bodhanya, 2015). Change of exchange rate will affect businesses who export or import their products since they will be forced to pay more to their international suppliers so as to satisfy them hence affecting the business profit margin. High inflation lowers the spending power of

consumers hence businesses will have low sales

Businesses should monitor their cash flow, expand their customer base by drawing them from the company business rivals. They should improve in their marketing strategies to attract more consumers and finally they should review how they monitor their inventories.

Legal factors

Factors such as laws and regulations affect business operations and how customers behave. Security laws controls business investments. Taxation regulations which are unfriendly to the business will lower its profit margin.

firms should apply business etiquettes in their operations. Treat their employees, customers and stakeholders to avoid legal issues. They should ensure that all their operations are done within the laws and regulations provided y the government.

Porter’s Force

Strength

Justification/ Reasons for your decision about the strength

Bargaining power of buyers

The higher the number of buyers compared to suppliers, the stronger the purchasing power. They can therefore put pressure on the company to lower its products prices, improve quality and offer excellent survices

There is a vast bargaining power from buyers due to many available sugarcane products. The firm, therefore, is forced to sell its products at a lower cost (Moraa et al 2017).

Bargaining power of suppliers

Suppliers can put a lot of pressure to firms by raising the cost of their raw materials and decreasing their level of supply

Due to high number of sugar companies in the industry that require a lot of sugarcane raw material, the few suppliers available to supply these materials have high bargaining power

Industry rivalry

Intense rivalry in the industry limits the profit margin of companies. This results to cut-off pricing strategies, new innovations and high advertisement expenditures.

The entry of new firms in the sugar industry does not require a lot of investment hence encouraging more people into the business

Threats of substitutes

Companies are threatened with substitute products and services thar can displaces in the market. This threat is high when rival companies produce more attractive products or lower the products cost.

The availability of various types sugar companies in the industry is a massive threat to other companies (Moraa et al 2017).

Threats of competitors

Competitors react to the strategic plans that are used by a company hence forcing it to react back to those moves (Singh and Kumar, 2020).

There are many firms who manufacture sugar products hence the level of competition in the industry is very high. Therefore, the firm should innovate new marketing strategies and produce high quality products.

Stage in the industry life cycle (just its title)

There are five stages in the industry cycle which are; startup, growth, shakeout, maturity and decline (Tavassoli, 2015).

Implications

Product life enables companies to know how to effectively make their decisions from pricing to cost-cutting.

Megatrend

Key issues affecting the industry

Impact and Implication

Rapid urbanization

Increase in population in cities and towns leads to inadequate infrastructure, pollution and less resources for the business

It provides new markets for businesses and customers who move from rural to urban places have huge income (Traub et al, 2015).

Firms should create more job opportunities and provide important services in rural areas

Demographic change  

Age groups, geographical locations and educational level affects customers taste and preferences.

Shortage of labor force will affect businesses

This affects the rate of growth of the country’s economy, investment, lifestyles, and production growth.

Businesses should implement systematic approach that will analyze future labor supply and demand.

Scarcity in resources

Less resources disrupts the flow of raw material in the company’s supply chain (Batt, 2016)

The products prices will be high when there are less resources

Firms should innovate new sustainable products into their supply chains.

Rise in technological inventions

Business operations such as marketing strategies, manufacturing and communication techniques are more effective due to change in technology (Proches and Bodhanya, 2015).

Technology has improved the productivity rate in all the company’s operations

Organizations should offer training to their employees to cope up with the new technology practices.

 Climate change

The firm’s infrastructure can be destroyed by some weather disasters such as floods and tsunami.

It might raise the prices of products and raw materials as they might be scarce hence lowering their supply while their demands remain high.

Climate change inspires the innovation of new products and services which can reduce the level of carbon available in the atmosphere

Companies should improve their resource production so as to minimize operational costs.

Issue

Survival factor

Success factor

Planning a head-this gives the company an opportunity to keep up with market changes

A new business idea-the firm need to provide a new experience to its customers therefore it should innovate a new product or improve an existing product

Plan- this is the most essential factor for the success of the business. A firm should clearly state the direction of its business so that employees and investors can work towards it (Kim et al, 2021)

Maintaining shares in the market-research should be continuously done concerning the customers wants so as not to lose them

hard work-a company need to put ore effort in its operation so as to survive in the competitive industry.

Maximization of available resources-companies need to deal with shortages of available resources hence they should fully put use into them

Solving of problems-there are daily challenges that are experienced in the business hence the company should be able to solve them

Perseverance-every company should be perseverance the difficulties during its operations. Lack of this factor can hinder the survival of the company hence it should work towards its goals and visions.

Motivation-the company members should still be commitment and motivated even during the difficult period.

Efficient information system-these allows the business to keep track on its operational records and its relation to its customers and investors (Proches and Bodhanya, 2015).

Good network-this provides support to the company in terms of advice during the initial stages of the firm.

Clarity on the company’s vision-the goals and vision must be understood by every employee for the purpose of good performance