Besagi Case Study List and Case Study

  • Length: 10 pages
  • Sources: 4
  • Subject: Business
  • Type: Case Study
  • Paper: #45887933

Excerpt from Case Study :

Indeed, harvest time should not come as a surprise to these professionals, and it is reasonable to assert that given adequate notice and preparation, a sufficient number of casual laborers could be employed for the time period required to complete the harvest in a timely fashion. The company's strategy to close down cultivation had a concomitant impact of further eroding labor-management relations and cost the company around a half a million dollars to boot.

3. Need to identify additional sources to satisfy demands of canned pet food manufacturers. The company would be well advised to look to the burgeoning economic powerhouse of China and its neighbors as potential markets for its pet food seed products. Although not on the same level as many Western countries, pet ownership in China is on the rise and is expected to continue to increase in the future. According to Zhuang (2005), "Pet ownership in China is on the increase and attitudes towards pets are changing, with Chinese people demonstrating greater love and care towards their pets. China's fast-paced economy and increasing levels of disposable incomes are having a positive impact on the pet industry" (p. 1). In the past, the pet food market in China was not highly regarded by Chinese pet owners because of a dearth of governmental oversight into production standards; however, that has also changed significantly in recent years with a new level of confidence being evinced by pet owners in response to new governmental regulations. In this regard, Zhuang adds that, "New research shows that pet ownership in China substantially increased between 1999 and 2004. Driven by the growing population of pets, demand for pet food products has also been stimulated to a large extent. Although small in scale compared with Western developed countries, the Chinese pet food market offers high growth potential as it becomes increasingly regulated" (p. 1).

Furthermore, in response to the ease of breeding restrictions on dogs and cats by the Chinese government, dog and cat ownership increased rapidly during the period from 1999 to 2004, with the percentage of the Chinese population owning dogs and cats increasing from 5% and 14% respectively in 1999 to an estimated 7% and 15% in 2004, a clear reflection of the increasing popularity of dogs and cats in China (Zhuang). Based on these trends, analysts project that sales of dog and cat food grew 13% in 2004 over 2003, and sales of other pet food products that Besagi also manufactures such as bird food and fish food also increased fully 11% in 2004 over 2003 (Zhuang). According to this Euromonitor analyst, "Euromonitor forecasts that the pet population will continue to grow strongly between 2004 and 2009, thus creating lucrative sales opportunities for the pet food industry. Sales of pet food are mostly generated in big cities such as Beijing, Shanghai and Guangzhou. Pet food, especially dog and cat food, are expected to develop as foreign major players increasingly see China as a lucrative pet food market" (Zhuang, p. 4).

3. Using at least 2 "Academic Journal articles" on this topic, write 1200 words essay addressing this statement: "The external environment provides both opportunities and threats, impacting on managers' decision."

This observation is particularly relevant for seed producing companies competing in an increasingly globalized marketplace, with the external environment providing some very significant opportunities as well as some profound threats. For example, the company's funding of research into generic seed production represents a clear opportunity for a number of reasons. According to Wildfong (1999), "Since Western farmers have all but given up the age-old practices of on-farm breeding and seed saving, these activities are now performed by a scant few seed companies" (p. 12). As noted above, this increased concentration of a few major producers in the seed production industry has resulted in cost efficiencies of scale realized through a focus on a few major cash cow seed strains to the exclusion of other varieties that could help ensure the species' long-term viability.

This trend in the reduction of the number of animal seed companies has resulted in fewer strains of seeds being produced as these enterprises concentrate on their big money-makers. For example, Wildfong notes that, "Generally, it is more profitable for a large seed company to sell a few mass-market varieties, rather than many little-known seeds. The economies of scale that come from producing and selling fewer varieties, but more of each kind, allow the modern corporate seed giants to sell the same seeds coast-to-coast at a greater profit than could be had by selling [different] varieties" (p. 12). This trend has been good for Besagi, of course, and the company continues to pursue generic seed research with its strategic partner to identify even better strains of its existing seed products.

This opportunity and the short-term profitability is carries, though, is balanced by a potentially larger threat that affects all of mankind. The increasing concentration of a few major seed producing companies has introduced economies of scale, certainly, but it has also resulted in a greater control over the direction of future research into seed production technologies that remain controversial. For example, Halweil (2000) reports that, "In some cases the influence is indirect, as manifested in government funding decisions, while in others it is more blatant" (p. 12). Citing the tendency of large seed producing concerns to focus on so-called "terminator" seed strains that require constant repurchasing, Halweil suggests that companies competing in the animal seed industry may experience an increasing amount of adverse reactions from the scientific community as well as the public at large in the future as a result.

Furthermore, the pace of concentration has been increasing in recent years. According to Blay-Palmer (2007), "The agrochemical industry has been increasing substantially since the late 1990s. The three leading corporate groups (Bayer, Syngenta and BASF) would account for approximately half the global market (by 2004 reported sales)" (p. 39). The same forces that are driving globalization accounted for some of these trends, most especially the introduction of innovations in technology that have revolutionized the manner in which seed companies have refocused their efforts on a few high-profit strains to the exclusion of others. In this regard, Blay-Palmer notes that, "The largest agrochemical companies branched out into plant biotechnology and the seed business, heralding a move towards unprecedented convergence between the key segments of the agriculture market (agrochemicals, seeds, and agricultural biotechnology)" (p. 39). As a result, the agricultural biotechnology industry in which Besagi competes is one of the most concentrated in the world today (Blay-Palmer).

This focus on producing a few types of animal seed products to the exclusion of a wider variety fails to ensure the production of heritage seed types that may help ensure the overall health of a particular seed strain in the future. In this regard, Wildfond reports that, "Since 1984, over 125 seed companies in Canada and the United States have gone out of business. Many more have been bought out by pharmaceutical and chemical companies. There is a clear correlation between the concentration of seed company ownership and the number of varieties that fall out of production each year. For instance, in 1981 there were 50 varieties of non-hybrid broccoli on the market whereas in 1994 only 38 were available" (p. 12).

Not surprisingly, the response to these trends has not been universally positive. According to Kapczynski (2008), "Farmers in developing countries have protested in the hundreds of thousands against seed patents and the licensing practices of multinational seed companies" (p. 804). While the case study did not indicate whether the company was actively pursuing genetically modified seed products in favor of its research into generic seed products to any extent currently, the industry itself is faced with this problem of terminator seed strains that may spell trouble in the years to come. In this regard, Kapczynski suggests that companies such as Besagi may be "shooting themselves in the foot" with this focus on the short-term profitability of a few seed strains without taking into account the long-term consequences of these trends. For instance, Kapczynski emphasizes that, "Local varieties may also be better adapted to local circumstances than the monocultures sold by seed companies and will be the inputs for bioprospecting in the short- and long-term" (p. 804).

In the final analysis, Besagi is beset by both threats and opportunities. It would appear reasonable to conclude that many of the threats such as its labor-management relationships and a failure to discern recent trends in the industry are of its own making. Nevertheless, hindsight is 20-20 of course and the trends that Besagi's leadership team failed to detect concerning changes in the pet food market and consolidation of pet suppliers can be forgiven in some part. The lack of planning for its acquisition of its smaller competitor, though, provide some valuable but hard-learned and expensive lessons for the company in the future.


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