Afu (Agricultural Farmers’ Union)

Agricultural Farmers’ Union

For a company to become global there has to be many steps taken and many things achieved. The company has to achieve certain positions in the market when the only way to grow becomes to invest in other markets. The company primarily has to become vertically integrated, it has to own all the steps of production of their product. The company has to be able to grow wheat, store it, transport it to the port and finally export it. Secondly, the company has to be diverse in terms of its products, it has to sell not just wheat, but other grains as well. Thirdly, when the company eventually decides to go abroad it must know the laws of this country, if there are any quotas on imports or exports, the logistics, the company must know the culture of the people and the culture of doing business in that country and finally the company must find connections that can be trusted in that country. Finally, the main motivations of the company to become global in this specific market is to diverse its product and possibly cut costs. If something happens to an American market and it will become impossible to export US wheat then the company can provide wheat from another market. This case will be about how US company called Agricultural Farmers’ Union (AFU) that specializes in grains started buying and selling Ukrainian wheat.

AFU started as a union of farmers, by joining forces they were able to overcome many difficulties in terms of costs and produce larger amounts of wheat. This company would produce their product and sell it to brokers and traders domestically. As they grew in the wheat market they became their own transportation company and build their own storage houses. It was still too early for them to export on their own so they went into other grain products. When AFU hit its maximum capacity for growth and sail of their products they began looking for new places to grow. Any good manager will always look for new ways to earn more money and...