Olam Case Essay

400 Words2 Pages
1. Introduction and issue Olam (or as “the Group”) is a globally leading supply chain manager of agricultural commodities headquartered in Singapore. It started as a trading company of a single product in Nigeria by an Indian conglomerate KC Group in the late 1980s, who still remained as the largest shareholder of Olam as of the date of the report. Olam has undergone impressive growth into 20 agricultural products over the past 20 years, with operations and over 6000 customers in 60 countries (mainly in Asia and Africa). The adjacency-based growth model was the basis of its organic growth before 2005, and then inorganic growth after its IPO in 2005. Time now stood at Oct. 2008, the beginning of a global financial crisis, Olam is finding its stock at a 3-year low and its growth track record somewhat difficult to sustain. How should Olam adjust in face of the financial crisis, and more importantly, could the success in the past be repeated in the long run? 2. Situational analysis Add external analysis Agriculture is a mature, globally highly fragmented industry marked by low profitability and seasonality. However, Olam was able to achieve turnover growth rate of 52.8% and NPAT growth of 47.9% over the past 18 years, versus industry growth rate of 3-4%. We’d like to explore the reason and the sustainability of such growth. Internal analysis Under the full-service supply chain manager corporate strategy, Olam positions itself to supply multiple agricultural commodities to a large number of customers mainly in emerging markets. This positioning gives them the cost advantage from economies of scale and scope, knowledge with markets, a strong pricing power, and the capability to ensure supply and quality per customer request, a mixed cost and differentiating competitive stance. (Appendix strategy) Olam’s business is characterized by an unique and clear
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