Archer Daniels Midland SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Decreasing cost of transportation: Cost of transportation will decrease because of lower shipping prices, thus providing an opportunity to the company. The decreasing cost of transportation will bring down the cost of Archer Daniels Midland’s products thus giving an opportunity to the company. ADM can leverage its ADM Logistics division to boost its profitability or else pass the benefits to the customers to gain market share. The transport industry is flourishing and shows growth potential in the future. Therefore, reducing in transport costs will reduce the overall costs of the company.

2. Rising population and resulting increase in food demand: The global population is expected to rise to 10 billion by 2050 as per an UN FAO report. This will boost agricultural demand by 50 percent compared to 2013. This will result in an increase in demand for fruits, proteins and vegetables. Additionally, about one-third of all food produced – which is approximately 1.3 billion metric tons – are lost or wasted, whereas 795 million of people go hungry. To address these challenges, Archer Daniels Midland can collaborate along the supply chain for precision farming and technological advancements which can help meet the rising global food demand, driving the next wave of agricultural revolution.

3. Increasing demand of non-GMO products: Recent times are seeing a surge in the manufacture of non GMO products due to an ever increasing demand for GMO-free products. GMOs are harmful to both human health as well as the environment according to studies conducted by various scientists and consumer and environmental groups. The potential negative impact that GMOs could have on the planet are also seen to be a deterrent for the more environmentally conscious as these crops require greater herbicide use than traditional crops. GMO crops thus contribute to environmental pollution. Archer Daniels Midland is working towards the creation of more high-protein soymeal free of genetically-modified organisms (GMOs) at its Straubing crushing plant in Germany.

Threat

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Political

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Economic

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Social

Technological

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Legal

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Environmental

1. Waste management and improving resource-use efficiency: Resource-use efficiency and minimization of waste disposal impacts is possible only when the creation of waste is avoided in the first place, especially in the agribusiness industry. ADM has achieved a company-wide waste-to-landfill rate of 19.6 percent by setting a target of reducing waste to landfills to a rate of less than 15 percent by 2020. The company has also made efforts to increase recycling and finding alternative uses for wastes - such as turning unusable grain into useful products such as fuel or fertilizer. Archer Daniels Midland has partnered with Global Omnium and Aguas de Valencia to regain and preserve the biological systems of wastewater treatment plants through a project called BACTIWATER. This project focuses on maintaining microbial balance in wastewater treatment plants and ensuring adequate treatment of wastewater before it is released into the environment. BACTIWATER project includes teams from ADM Biopolis that will combine biotechnological approaches with ADM Lifesequencing’s next generation DNA and micro biome-sequencing technology so as to identify the microorganisms present in the waste water treatment plants. This project is helping in building synergy within the R&D portfolio. Archer Daniels Midland Company also received a 2013 HIS SPECTRUM Excellence Award for Project GEMINI (Global Environmental Management Information Network Initiative), an environmental management information system.

2. Focus on sustainability initiatives: The importance of good supplies of land, water and air are very important to be understood by the global agriculture companies as they are critical to their business and also the people whom they serve. Glycerol which is a renewable and sustainable by-product in the production of biodiesel from vegetable oils is used by ADM. The glycerol is used in the production of propylene glycol. The propylene glycol contains renewable bio-sources of carbon, which lets the waste being prevented, recycled or turned into feedstock for another product. In 2018, Archer Daniels Midland received the award of Collaboration of the Year by Field to Market along with two of its supply chain partners for its Southern Plains Wheat Project that promotes sustainable farming practices. In the RobecoSAM Sustainability Yearbook 2018, ADM was also named as an Industry Mover. It also received the 2018 Collaboration of the Year Award from the Alliance for Sustainable Agriculture.