behavior of buyers of products (services),
changes in goods, the nature of competitive relations in the market, profits of
enterprises in the industry and marketing activities. Accordingly, it is
proposed to highlight the stages of the industry development: implementation,
growth, maturity, decline. Alternative
strategies of enterprise development at various stages of the industry life
cycle are considered: the strategy for realizing the
advantages of the pioneer, the strategy of change
response, the strategy of change management,
the strategy of stabilization, the strategy of
reduction, the strategy for finding segments of steady demand, as well
as the strategy of the "last time". The main characteristics of these
strategies are studied. The analysis of the life cycle of the agricultural
industry in Ukraine has been carried out and it has been established that
according to most of the characteristics it is at the stage of maturity. The
industry has established relationships between producers and business consumers,
enterprises receive average profits and specialize in the production of certain
types of agricultural products of sufficiently high quality, and there are
processes of gradual ousting of competitors from the market. It is proposed to
agricultural enterprises as a possible strategy to implement a stabilization
strategy that best suits the conditions of the external environment.
Keywords: Enterprise Strategy; Industry Life Cycle Concept; Agricultural
Industry of Ukraine
1.
INTRODUCTION
The rapidity of the
external environment requires enterprises to react immediately to the changes
taking place and to be able to adapt to them. Agricultural enterprises of
Ukraine, whose external environment is extremely unstable, are no exception.
Thus, in recent years, the process of concentration in the industry continues,
as evidenced by the formation of large agricultural companies and their
displacement of small producers.
In addition,
certain decisions taken at the state level also reduce the attractiveness of
operating in the industry: a few years ago, preferential tax conditions for
farmers were abolished. State programs to support entrepreneurship in
agriculture have also not yet been widely used and operate with some
restrictions.
All of the above allows us to outline the problem of the need to
form strategies for agricultural enterprises as a means of adapting to changes
in the external environment, taking into account the main changes taking place
in it.
2.
LITERATURE REVIEW
The issue of
forming a strategy has been considered by many scientists, the most famous of
which are Ansoff, Mintzberg, Thompson, Strickland, Vikhansky and other.
Thus, scientists (Mintzberg,
Ahistrand & Lampel, 2000) emphasize the complexity of the process of
forming a strategy and propose to consider the strategy as a plan, maneuver,
pattern of action (behavior), position and perspective. In work (Ansoff, 1989) it is proved that the
enterprise can choose one of the opposite types of strategic behavior
(incrementalistic and entrepreneurial) and their differences are considered.
Thorough study of
aspects of strategy development of the enterprise is carried out in the
scientific work of famous scientists Thompson and Strickland (2008): the
factors that shape the strategy, factors that characterize the competitive
capabilities of the organization, the method of analysis of the general
situation in the industry, main types of strategic behavior of business
entities.
Also, scientific
research reflects such aspects of strategic management as the main types of
strategies (Vihanskiy, 2006; Boiarska, 2015), analysis of the enterprise
environment in terms of its components: macroenvironment, immediate environment
and internal environment (Vihanskiy, 2006), the process of strategic planning
with step-by-step selection of optimal enterprise strategy (Zhikhareva &
Saveleva, 2017), stages of formation of strategy (Khatser, 2014; Oliynyk &
Kuznietsova, 2018), typology of enterprise strategies, depending on where they
work: developing or developed countries, and whether they operate within a
single or across multiple levels of host country development (Barnard,
2021).
The authors Rodrigues,
Ruivo
and Oliveira
(2021) consider the influence of the chosen competitive strategy on the value
of the business as one of the hypotheses of the research.
Agustia, Muhammad,
Permatasari (2020) also hypothesize the impact of the chosen business strategy
on the possibility of enterprise's bankruptcy. In their study, they provide
empirical evidence of the use of business strategy as a mitigating risk factor
for bankruptcy.
Researchers Tawse,
Tabesh
(2021) are exploring the implementation of the strategy, in particular: the
actions with help of which managers can influence the implementation process,
the conditions necessary for the effective implementation of the strategy, and
management capabilities to create the best combination of these
conditions.
In the works of
authors the peculiarities of formation of strategy for enterprises of different
spheres of economy and branches are considered: small enterprises (Teslenok
& Vorovska, 2017), industrial enterprises (Venzheha, 2017), enterprises of
food industry (Zhuravel, 2018), non-ferrous
metallurgy (Zhurilo & Sytnik, 2013), agribusiness enterprises (Brenes,
Ciravegna
& Acuña,
2020).
Despite the
presence of multifaceted research on the strategy of the enterprise in the
scientific works of various authors, the issue of forming a strategy for
agricultural enterprises taking into account the stage of the life cycle of the
industry remains unresolved.
The aim of the article is to develop a methodological
approach to the formation of the strategy of agricultural enterprises, which is
based on the concept of the life cycle of the industry.
3.
METHODOLOGY (DATA AND METHODOLOGY)
The
study was conducted using the comparative-analytical method (for establishing
the criteria and stages of the industry life cycle), a systematic approach to
developing a strategy (for forming strategies at different stages of the
industry life cycle), and statistical methods (for analyzing trends in the
development of the agricultural industry)
4.
RESULTS AND DISCUSSIONS
4.1.
Result: it is proposed methodical
approach to the formation of enterprise strategy taking into account the stage
of the life cycle of the industry
The
dissimilarity of enterprises, the difference in the conditions of their
activities, the uniqueness of some characteristics lead to the formation of
organizations' strategies that are radically different from each other. The
successful experience of strategic management, implemented by some companies,
cannot be used as a recipe for others. At the same time, scientists study the
main theoretical aspects and stages of formation of strategy.
Well-known
scientists Thompson, Strickland (2008) in accordance with the five tasks of
strategic management propose to separate the main stages of formation of
strategy, namely: setting strategic guidelines, goals and objectives, strategy
development, implementation and adjustment.
However,
they emphasize that the decision to choose a strategy should be made on the
basis of analysis of the internal and external environment of the enterprise; it
should study both the situation inside the enterprise and outside (the state of
the industry and competition). The
absence of such analysis can lead to the unsustainability of the existing
strategy. The need for analysis of the
enterprise environment and the scientist is emphasized (Vihanskiy, 2006).
In
addition to analyzing the environment of the organization, in the process of
developing a strategy he proposes to separate the formation of the mission and
goals of the enterprise, the choice of strategy and its implementation,
evaluation and monitoring. A similar composition of the strategy is described
in the work (Oliynyk & Kuznietsova, 2018): study of the external
environment, analysis of strengths and weaknesses of the organization and the
formation of competitive advantages, development of goals, formation and
selection of strategic alternatives, implementation of strategy implementation,
monitoring and adjustment strategy.
Thus,
the process of developing a strategy proposed by scientists (with some minor
differences) is similar and generally contains the following stages:
·
analysis of the external and
internal environment of the enterprise,
·
formation of the system of the
purposes of the enterprise,
·
evaluation of several
alternative development strategies and selection of one of them,
·
implementation of the chosen
strategy,
·
strategy adjustment.
In
our opinion, the analysis of the external environment should be carried out in
accordance with the concept of the life cycle of the industry. In this way it is possible to establish at
what stage of development the industry is, which, in turn, prescribes the
variability of the choice of enterprise strategy.
The
concept of the life cycle has found wide application in the scientific
literature: with its help, scientists have studied the product, employee,
enterprise, industry, socio-economic system and more. Most of the scientific developments relate to
the establishment of the stage of the life cycle of the product and enterprise. However, studies of the concept of the life
cycle of the industry are characterized by the lack of a single criterion that
can be used to establish the stage of industry development.
In
addition, the composition of the stages of development of the industry, which
is separated by different authors, also differs.
In
the works of most scientists, as a rule, one or two criteria for identifying
the stage of development of the industry, namely:
·
changes in consumer demand
(Moore, 1996);
·
sales volume (Zhurilo &
Sytnik, 2013);
·
the volume of sales and the
amount of profit (Lotysh, 2016);
·
net profit and its growth rate
(fall) (Yashchenko, 2016);
·
the ratio of supply and demand
(Strokovych, 2011).
The
use of the criterion of changing consumer demand, in essence, means reducing
the theory of evolution of the industry to the evolution of the product. Its application will not provide a complete
picture of changes in the industry, related, for example, to new trends in the
behavior of existing competitors and opportunities to enter the market of new
manufacturers. For the same reason, it
is impractical to use as a criterion only the volume of sales or only profit
indicators. Indicators of the
distribution of market shares between competitors, to a greater extent,
indicate the presence of concentration processes in the industry, which is also
one of the aspects that determine the stage of its development.
The
most thorough study in the direction of the theory of evolution of the industry
is the work of Porter (1998), who separated several criteria for classifying
the industry to a certain stage of development, namely: growth of the industry,
changes in consumer demand and experience, changes in industry, innovations,
presence of competitors, their number and market shares.
On
the one hand, the separation of such a number of criteria makes it difficult to
classify the industry under study to a certain stage of development, because
according to some of them (for example, the growth rate of the industry), the
latter may meet several stages at once. On
the other hand, the identified characteristics of the industry may correspond
to different stages of its development.
Therefore, the decision to classify the industry to a certain stage of
development should be made in accordance with most of the criteria established
by Porter.
As
in the question of separating the criteria for classifying the industry to a
certain stage of development, there is no consensus of scholars on the content
of these stages.
Thus,
in his scientific work, Moore (1996) distinguished three stages of development
of the industry: functionality; reliability and convenience. At the stage of
functionality, the sale of a product of the industry was associated only with
"early supporters" - consumers who will always try new products. The stage of reliability was characterized by
an increase in demand for the product of the industry and the formation of a
circle of "early majority". At
the convenience stage of the enterprise, the industry already had a significant
number of consumers, which was called the "late majority".
Porter
and a number of follower authors distinguish four main stages of the evolution
of the industry: implementation, growth, maturity and decline. Strokovych
(2011), which connects the stages of development of the industry with the ratio
of supply and demand, divides the stage of growth into accelerated growth
(demand grows faster than supply) and slow growth (supply begins to outpace
demand).
A
slightly expanded list of stages of development of the industry is proposed in
(Vlasiuk, 2009): the author proposes to distinguish the stages of
implementation, formation, accelerated growth, slow growth, maturity and
decline. At the implementation stage, the product has just been launched on the
market. The stage of formation assumes that against the background of increasing
sales, the company begins to operate at a break-even point, but it does not
receive sufficient profits.
The stage of accelerated growth assumes
that the company is actively developing production, rapidly increasing profits
and sales. At the stage of slow growth, the first signs of future market
saturation appear: profits are still growing, but growth is slowing. Sales volumes either remain unchanged or
their growth rates begin to decline. The
stage of maturity is characterized by consistency or a slight reduction in
profits and sales. To support them, the
company now needs to make more efforts. At the stage of decline, sales and
other indicators of enterprise activity are reduced.
In
the work (Yashchenko, 2016) it is emphasized that the most fully characterizes
the transition of the industry from one stage of development to another the
value of net profit. Thus, the stage of
nucleation is characterized by a negative net profit and its growth rate greater
than 100%. At the stage of growth, both
net profit and its growth rate increase. The maturity of the industry
emphasizes the positive value of profit and its growth rate of less than 100%,
and its decline - the negative net profit and its growth rate.
The
authors (Zhurilo & Sytnik, 2013) believe that the industry in its
development can go through several cycles, accompanied by both improvement and
deterioration of the activity of enterprises operating in it. Thus, according
to the author's approach, the industry goes through stages: implementation,
growth, destruction, "re-growth cycle", formation,
"re-destruction", "re-restoration and growth", maturity and
decline.
Note
that the separation of repeated stages of the evolution of the industry is
impractical, because the very concept of the life cycle implies the possibility
of transition to certain (sometimes previous) stages of development under
certain conditions.
We
summarize the main stages of development of the industry by different authors
to the analytical table (Table 1).
Table 1:
Stages of the life cycle of the industry
|
Stages of the life cycle of the industry
|
Scientists
|
|
M. Porter (1998)
|
G.W.
Strokovich (2011)
|
TM
Vlasyuk (2009)
|
LO Yashchenko (2016)
|
O.Ya.
Lotysh (2015)
|
Zhurilo IV, Sytnyk IV (2013)
|
|
Implementation
|
+
|
+
|
+
|
+
|
+
|
+
|
|
Growth
|
+
|
|
|
+
|
+
|
+
|
|
Destruction
|
|
|
|
|
|
+
|
|
"Repeat growth cycle"
|
|
|
|
|
|
+
|
|
Formation
|
|
|
+
|
|
|
+
|
|
"Re-destruction"
|
|
|
|
|
|
+
|
|
"Recovery and growth"
|
|
|
|
|
|
+
|
|
Acceleration of growth
|
|
+
|
+
|
|
|
|
|
Slow growth
|
|
+
|
+
|
|
|
|
|
Maturity
|
+
|
+
|
+
|
+
|
+
|
+
|
|
Decline
|
+
|
+
|
+
|
+
|
+
|
+
|
In
our opinion, the most thorough is the content and sequence of stages of
development of the industry, proposed by Porter. In addition, the scientist has the most
detailed features of the stage of the life cycle of the industry, so we use the
approach of a well-known scientist to separate the stages of development of the
industry. Thus, according to this approach, we will distinguish the stages of
implementation, growth, maturity and decline of the industry.
At the stage of implementation, the costs of enterprises
in the industry are much higher than their revenues, so they make almost no
profit. Production is unstable, its
quality can change, because it is in this company that actively experiment with
production technology, actively make changes to the production process of the
product and are generally insufficiently experienced manufacturers.
As buyers do not yet feel the need for the product, its
consumption needs to be increased by raising consumer awareness.
At the stage of growth,
the profit of enterprises and their sales increase, the operating system works
productively.
The circle of fans of production grows, therefore demand
becomes more mass. Enterprises have the
opportunity to reduce the cost of production due to the effect of scale, as
well as to stabilize its quality. At the
same time, the industry is becoming attractive and new producers are appearing
in it, which introduces an element of competition.
At the stage of maturity, the industry is characterized
by stable sales volumes and relatively stable profits (they no longer grow). As
the market becomes saturated, competition between manufacturers becomes
fiercer. The decline stage is characterized by a
reduction in both profits and sales.
Enterprises also reduce investment, innovations are not implemented.
Competitors either pursue aggressive policies or cease operations.
The choice of enterprise strategy is in some way
influenced by the environment of the industry, its stage of the life cycle.
Porter (1998) argues that "evolution is crucial in
the industry" in this process.
A characteristic feature of the stage
"implementation" of life cycle of the industry is the complete
absence of established "rules of the game", as they have just been
formed or have been reformed as a result of technological innovations, the
emergence of new consumer needs. Accordingly, enterprises in such industries
start their activities and their strategies are innovative.
They must be innovatively active, master new production
technologies, introduce new equipment, search for new production methods,
recruit and train staff, establish distribution channels and meet customer
requirements in the best way. Only in this way the company will be able to
quickly increase market share, eliminate the risks of the life stage of implementation
and reduce the uncertainty that characterizes this stage.
For
the success of the enterprise in such conditions, we can recommend a strategy
for realizing the advantages of the pioneer. It aims to quickly penetrate and
establish its "rules of the game" in the industry undergoing the
stage of formation. The strategy is implemented through a deep understanding of
consumer preferences, rapid response to innovation and introduction of new
technologies, the formation of partnerships with key suppliers, the formation
of effective networks of distribution channels.
The growth stage is characterized by high dynamism, which
is due to changes in product quality, price and degree of protection, the
reduction of its life cycle, the growth of consumer demands which should be
reflected in the strategy of the enterprise. At this stage of the industry life
cycle, the enterprise can implement one of two possible strategies (Brown & Eisenhardt, 1998): change response
or change management.
The first strategy involves adapting to changes in the
industry. In essence, this is a variant of the defense strategy and does not
provide opportunities to create new competitive opportunities. The change
management strategy involves forecasting changes in customer behavior and creating
appropriate consumer value, as well as initiating actions to which competitors
are forced to respond.
It is clear the market share of the enterprise that
responds to change will be inferior to shares of the company with a strategy of
"change management", but the effort spent on its preservation will be
less.
At the stage of maturity, characterized by a slowdown in
demand, increased competition and ousting small producers from the market, the
stabilization strategy is relevant, aimed at improving certain areas of
development (areas of activity, products, services, etc.) of the enterprise,
value chain optimization, cost reduction
and active marketing activities. The way to maintain its own market
share can be to seek lower prices to attract consumers, find new uses for the
product, or offer related services. In
any case, companies control their investments and avoid unnecessary costs.
The stage "decline" life cycle of the industry
is characterized by a long decline in sales levels. Strategic alternatives for
this stage are much
more complex. They are characterized by strict control of enterprise costs and
the choice between closing the business and using promising industry segments.
A reduction strategy involves the transfer of capital to more promising
industries. When choosing a strategy for finding segments of steady demand, the
enterprise tries to be one of the few that remains in the industry.
The strategy involves identifying groups of consumers who
are staunch supporters of the company's products, ready to ensure stable sales
for it. At the stage "decline" of life cycle of the industry, the
enterprise can choose an intermediate strategy of the "last time". In
this case, the enterprise focuses on cost savings by gradually reducing the
promotion of products on the market, reducing its quality, the terminating of
additional services to consumers.
The aim is to reduce costs at a faster pace than the
decline in sales and in this way to extract as much invested funds from the
dying business as possible.
Alternative strategies at
different stages of the life cycle of the industry and their characteristics
are shown in table 2.
Table 2: The main
characteristics of strategies taking into account the stage of the life cycle
of the industry
|
Stages of the life cycle of the industry
|
Strategies
|
The main characteristics of strategies
|
|
Implementation
|
strategy for realizing the advantages of the pioneer
|
rapid penetration and establishment of their
"rules of the game" in the industry
|
|
Growth
|
change response strategy
|
adaptation to changes in the industry: improving products, responding
to changes in demand and competitive moves of rivals
|
|
change management strategy
|
forecasting changes in customer behavior and
creating appropriate consumer value, initiating actions to which competitors
are forced to respond, the formation of industry standards
|
|
Maturity
|
stabilization strategy
|
finding ways to retain consumers through lower
prices, high quality, additional services, etc.
|
|
Decline
|
reduction strategy
|
transfer of capital to more promising industries
|
|
strategy for finding segments of steady demand
|
identification of market segments of stable demand
and transfer of enterprise resources to them
|
|
strategy of the "last time"
|
controlled liquidation by reducing costs and
maximizing of extract invested funds from the business
|
Source: Thompson and Strickland (2008), Porter (1998), Brown and Eisenhardt (1998)
4.2.
Result: it is determined the life
cycle stage of the agricultural sector of Ukraine; it is proposed a possible
strategy of activity of agricultural enterprises
Ukrainian agricultural enterprises play a leading role in
shaping the country's food security, as they provide the population with the
necessary food and feed for animals. Given the volume of gross production and
exports of crops, they largely support food security around the world (Kuznetsova et al., 2019).
To select the strategy recommended for agricultural
enterprises, we propose to use the concept of the life cycle of the industry
and use the stages identified by M. Porter, namely: implementation, growth,
maturity and decline.
Consider the features identified by a well-known
scientist to determine the stage of development of the industry, namely: the
behavior of buyers of products (services), changes in goods, the nature of
competitive relations in the market, profits and marketing activities, and
examine the agricultural industry for compliance with these features.
Behavior of buyers of products. Agricultural production
cannot be called stable, which is reflected in the indices of agricultural
products (Figure 1). The index of crop
production changes most dynamically (range of fluctuations - from -15 to 30%).
Figure 1: Indices of agricultural products
Source:
summarized by the authors for Government portal of the State Statistics
Committee of Ukraine
If we consider the distribution of production of crop
products between producers, the share of producers differs by individual
species. Thus, in the production of
grain the largest market share is occupied by agricultural enterprises, in the
production of potatoes - households (Figure 2).
According to the LB.ua website, five companies in the
industry were among the largest producers of the industry by the size of the
land bank, namely: UkrLandFarming (653 thousand hectares), Agroprosperis (430
thousand hectares), and Kernel Group (390 thousand hectares), Myronivsky bread
product (380 thousand hectares), "Ukrainian agrarian investments"
(264 thousand hectares). No revenue or profit information was publicly available.
Note that in the industry there are strong links between
producers and consumers (industrial enterprises, exporters), so business buyers
choose between several manufacturers.
Figure 2: The share of major
producers in the production of crop products, %
Source:
summarized by the authors for Government portal of the State Statistics
Committee of Ukraine
Changes in goods. In general, the agricultural sector
today is characterized as stable; the quality of products is quite high, as
evidenced by the growth of its exports. Against the background of general
stability, it is impossible not to note the sufficiently active development of
organic production. In 2018, Ukraine ranked 11th in Europe in the area of
organic farmland (Figure 3), intensively increasing them, but in recent years
the growth rate does not exceed 2-3%.
Although the number of agricultural producers in organic
farming has increased today, their share does not exceed 0.4% of the total
number of agricultural producers in Ukraine (mainly concentrated in Odessa and
Kyiv oblasts).
The share of organic land is also insignificant and
occupies only 1.6% of the total area of agricultural land. Organic lands are
mostly used for growing cereals (48.1%) and oilseeds (16.2%), of which more
than 90% are exported.
Another approximately 90,000 hectares of land are in a
transitional state (submitted for certification of organic farming). However, a
sharp increase in organic farming is not expected due to strict certification
requirements.
Figure 3: Leading countries in
organic production by area of organic land, million hectares
Source: Willer and Lernoud
(2017)
That is, today the agricultural sector is characterized
by changes in products due to the introduction of organic farming; there are changes
of an innovative nature. However, these changes are not yet widespread.
Profits of enterprises in the industry. The level of
profitability of production of certain types of agricultural products differs.
Thus, according to the State Statistics Service of Ukraine in 2018, the most
profitable was the cultivation of sunflower seeds (32.5%), and the least
profitable - the cultivation of cattle (-17.7%).
If we describe the level of income in the industry as a
whole, we note that agricultural enterprises for a long time paid a single tax
for the fourth group of taxpayers (in fact, were on a simplified tax regime),
and showed high profitability of certain agricultural products.
However, in 2016, the state abolished the special VAT
regime for farmers, citing IMF requirements, which led to some deterioration in
financial results (the share of enterprises that suffered losses increased
slightly) (Figure 4).
With regard to cash, agricultural enterprises due to the
specifics of the activity have a shortage of cash and actively use loans during
the sowing campaign.
Figure 4: The share of
agricultural enterprises that made a profit / loss, %
Source:
summarized by the authors for Government portal of the State Statistics
Committee of Ukraine
The nature of competitive relations. Today, more than
75,000 producers work in agriculture. In
2018, the number of agricultural producers decreased slightly, which was due to
a reduction in the number of individuals - entrepreneurs. The number of legal
entities in agriculture has been growing for the last two years (Figure 5).
Figure 5: Number of business
entities in agriculture, units
Source:
summarized by the authors for Government portal of the State Statistics
Committee of Ukraine
Of the 50.000 legal entities operating in the market, the
lion's share (95.4%) are small businesses. At the same time, they provide only
37.7% of sales volumes (Table 3). Agricultural production is concentrated, to a
greater extent, on medium-sized enterprises.
Table 3: Number of enterprises
in agriculture and volumes of their sales with division into large, medium,
small and micro enterprises
|
Indicators
|
Total
|
Including
|
|
large enterprises
|
medium enterprises
|
small enterprises
|
of them
|
|
microenterprises
|
|
units
|
%
|
units
|
%
|
units
|
%
|
units
|
%
|
|
2017 year
|
|
Number of enterprises, units
|
50115
|
18
|
0.04
|
2383
|
4.73
|
47714
|
95.23
|
42512
|
84.8
|
|
Volume of sold products, UAH million
|
454380.1
|
38879.9
|
8.6
|
237987.3
|
52.4
|
177512.9
|
39.0
|
54238.7
|
11.9
|
|
2018 year
|
|
Number of enterprises, units
|
50504
|
23
|
0.05
|
2298
|
4.55
|
48183
|
95.4
|
42907
|
85
|
|
Volume of sold products, UAH million
|
525097
|
54757.9
|
10.4
|
272210
|
51.9
|
198129
|
37.7
|
60854.2
|
11.6
|
|
2019 year
|
|
Number of enterprises, units
|
50239
|
34
|
0.1
|
2281
|
4.5
|
47924
|
95.4
|
42633
|
84.9
|
|
Volume of sold products, UAH million
|
556325.9
|
74132.0
|
13.3
|
275953.8
|
49.6
|
206240.1
|
37.1
|
65480.0
|
11.8
|
Source:
summarized by the authors for Government portal of the State Statistics
Committee of Ukraine
The intensification of competition is confirmed by the
active development in the market of vertically integrated structures in the
form of agricultural holdings (over the past three years, their number has
increased by 9.5%).
Such enterprises own a significant land bank and
gradually increase it (Table 4).
Table 4: Distribution of land
bank (areas under crops) between producers of agricultural products of Ukraine
(compiled by the author for (Agropolit.com)), %
|
Producers of agricultural products
|
2017 year
|
2018 year
|
2019 year
|
|
share
of enterprises, %
|
share of land bank,
%
|
share
of enterprises, %
|
share of land bank,
%
|
share
of enterprises, %
|
share of land bank,
%
|
|
Agricultural companies
|
100
|
69.88
|
100
|
69.36
|
100
|
69.85
|
|
including farmers
|
99.63
|
58.97
|
99.60
|
56.72
|
99.52
|
57.02
|
|
holdings
|
0.36
|
10.91
|
0.40
|
12.64
|
0.42
|
12.84
|
|
Personal households
|
-
|
30.12
|
-
|
30.64
|
-
|
30.15
|
Agricultural holdings are not
monopolists, but actively influence the level of competition in the industry.
The
nature of marketing activities. Farmers usually specialize in the production of
certain types of agricultural products, which is determined by the quantity and
quality of agricultural land at their disposal, available equipment and
specialists, and so on. The expansion of the product range is mainly due to the
introduction of organic farming, but it is not yet widespread.
The
main consumers of agricultural products are processing enterprises. Also, a
significant share of agricultural products is exported. When selling products
to business consumers, agricultural enterprises have a low share of marketing
costs.
We
summarize our analysis of the signs of the stages of the life cycle of the
agricultural sector and summarize its results in table 5.
Our
analysis of the agricultural sector of Ukraine allowed us to conclude that in
most respects it is at the stage of maturity of its life cycle.
Table 5: Life cycle of the agricultural sector
of Ukraine
|
Signs
|
Typical characteristics of the stage of the
industry's development (according to M. Porter) (1998)
|
Signs of the stage of the agricultural sector's development
|
|
introduction
|
growth
|
maturity
|
decline
|
|
Buyers and their behavior
|
Buyers are poorly informed about the product
|
number of informed buyers
growing
|
knowledgeable buyers choose between several brands or manufacturers
|
knowledgeable buyers prefer a particular brand (manufacturer)
|
in the industry established links between producers and business
consumers (industrial enterprises, exporters), so buyers choose between
several manufacturers.
|
|
Changes in goods
|
low quality, absence
standardization
|
quality, differentiation of goods
functional characteristics
|
high quality, slight differentiation
goods
|
heterogeneous quality, absence
product differentiation
|
rather high quality products, the development of organic farming
|
|
Profits of enterprises in the industry
|
lack of cash, low profits
|
average profits
|
a lot of cash, little debt
|
little cash,
low profits
|
medium incomes, little cash
|
|
The nature of competitive relations
|
insignificant number of competitors
|
increase in the number of competitors
|
gradual ousting of competitors from the market
|
presence on the market only stronger competitors
|
gradual ousting of competitors from the market, increasing the land
bank by agricultural holdings
|
|
Marketing activity
|
significant marketing costs, including
advertising, the market is not segmented
|
significant marketing costs, but less than at the stage of
implementation, the emergence of market segments
|
market segmentation, expanding the range, reducing sales costs
|
insignificant advertising costs and other marketing purposes
|
specialization in the production of certain agricultural products, the
emergence of organic products, minimum
sales costs
|
Taking
into account the stage of the life cycle of the industry should form a strategy
for enterprise development, which according to the preliminary analysis may be
a stabilization strategy.
5.
CONCLUSIONS AND RECOMMENDATIONS
1) According to the results of the
research a methodical approach to the formation of enterprise strategy taking
into account the stage of the life cycle of the industry, which contains the
main stages: analysis of the external environment of the enterprise in
accordance with the concept of development and selection of one of them,
implementation of the chosen strategy, adjustment of strategy.
2)
Based
on the analysis of the life cycle of the agricultural sector of Ukraine on the
criteria of behavior of buyers of products (services), changes in goods, the
nature of competitive relations in the market, profits of enterprises and
marketing activities, it is established that it is mature. In accordance with this, it is proposed to
agricultural enterprises as a possible strategy to implement a stabilization
strategy that best meets the conditions of the external environment.
3) Prospects for further research may
be recommendations for the formation on the basis of the chosen strategy for
the development of possible competitive and functional strategies of
agricultural enterprises.
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FORMATION
OF THE ENTERPRISE STRATEGY BASED ON THE INDUSTRY LIFE CYCLE