Welcome to your SL4 - Exam Preparation 01

Question 01Agrochemicals (Pvt) Ltd (AGL) is a manufacturer of chemical pesticides, herbicides, and fertilisers for various agricultural crops, and the company has been in operation for over 60 years. In fact it is the market leader even at present. The inputs are imported, and the finished goods are sold to farmers and estates across the country. Most of the employees of AGL have been with the company for many years, and the company has a reputation for being a good employer. However, AGL uses very little technology, and its production department uses technology that was introduced over 10 years ago. All of the company’s accounts, ordering, and maintaining of records are done manually.

In the recent past various illnesses came up in the regions where AGL’ products are used. This put pressure on AGL to consider shifting to the manufacture and sale of organic products. The pressure from the health authorities as well as the environmental authorities was so strong that the government considered levying taxes and charging a high license fees from AGL and other firms in the industry. As a result, AGL decided to introduce organic products to the market.

However, a survey showed that only 10% of the farmers are willing to use these organic products, and even some senior managers and employees at AGL feel it is not important to implement this strategy. However, the CEO of the company firmly believes that there would be more demand in the future for organic products. The cost of manufacturing these organic products are higher, and as a result the company has decided to sell them at a substantially higher price. These products also called for investment in new technology and training of staff. AGL has decided to revamp its technology and use it for its accounting and other back office functions, as well as its operations.

Required:
(a) Develop a SWOT analysis for AGL as an approach to corporate appraisal. (8 marks)
(b) Evaluate the new strategy of AGL to introduce organic products to the market by applying the McKinsey 7S model. (9 marks)
(c ) Explain how the application of information technology can improve the value chain of AGL. (8 marks)