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Olam International SWOT & PESTLE Analysis

ID : 52705153| Jun 2020| 15 pages

COMPANY PROFILE -Olam International

Business Sector :Food and Agribusiness

Operating Geography :Singapore, Asia, Global

About Olam International :

Olam International Limited (OIL) is a multinational food and agribusiness company headquartered and listed in Singapore. The company came into existence in 1989, starting its operations from Nigeria, and has expanded its reach to more than 60 countries. The company deals in five broad product categories –edible nuts and spices, confectionary and beverage ingredients, food staples and packaged foods, industrial raw materials with infrastructure and logistics, and commodity financial services.
The company sells its produce to major FMCG companies across the world like Unilever, Hershey’s, PepsiCo and many others. The company boasts a strong customer base of 25,200 companies buying various products in different categories. The company serves its customers by managing a smooth and streamlined supply of standardized products from company-owned as well as independent farms after processing it to make it suitable for further use. Along with raw material, OIL has now ventured into value-added services like funds management and quant strategies.
The company aspires to “re-imagine global agriculture and food systems”. It has kept this motto as its purpose and aims to work in this particular direction. Its mission or governing objective is to maximize long-term intrinsic value for our continuing shareholders. The company functions on a set of six values –Entrepreneurship, Stretch and Ambition, Partnership, Mutual Respect and Teamwork, Integrity, and Ownership. Olam’s vision statement reads, “To be the most differentiated and valuable global food and agribusiness by 2040.”

Olam International Revenue :


S$ 32.99 billion – FY ended Dec 31st 2019 (y-o-y growth 8.2%)
S$ 30.48 billion – FY ended Dec 31st 2018

Competitive Analysis of Olam International

SWOT
PESTLE
The SWOT analysis of Olam International is presented below:
Strengths
Weaknesses
1. Strong and consistent overall performance
2. Global presence in over 60 countries
3. High integration across the supply chain
4. Defensible and differentiated strategy
1. High debt-equity ratio
Opportunities
Threats
1. Value added services in agribusiness
2. New customer segments and channels
3. Growth in AgTech segment through digitalization
4. Digital platform solution for farmer services
5. Packaged Foods – expand into adjacent markets
1. Price volatility of commodities
2. NGOs protesting against the company
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Olam International

 

Strength

1. Strong Overall Performance: OIL has recently taken a change of course as far as strategy is concerned. Until now, the company had ventured into a lot of products, out of which some, like wood products, rubber and sugar, turned out to be less profitable. The company has adopted a focus strategy, which has worked out well for the company in the year 2019. It has registered a strong growth on all financial parameters. In FY19, total sales volume increased by 21%, although sales revenue increased by only 8.2%, indicating that sales volume increased in a lower priced product category. However, the EBITDA value has gained by 25.6%, indicating that sales volume increased in a high-margin product. After taking all other expenses into account, the PATMI has increased by 62.2% over last year, indicating much better returns as a result of better decisions. Cash and cash equivalents have also increased by 28.2%, indicating a better position in term of liquidity. All these indicators show that the company is in a strong position and can look forward to grow even further.

2. Global presence in over 60 countries: OIL operates in more than 60 countries around the world. It has more than 25,000 customers worldwide, who procure different raw materials and food ingredients for further processing to final consumables. The company boasts of a network of 4.8 million farmers, which is the largest for any company in the world. It has farms in 13 different countries where 16 different crops are grown. The company has 170 facilities across the world where these raw materials are processed into custom-made ingredients. This huge network of farms, farmers and processing facilities gives a huge competitive advantage to OIL firstly in the form of economies of scale, and secondly in the form of shared learning and efficiencies. Apart from these entities, the company also 12 innovation centers which work towards offering value-added solutions throughout the supply chain. These centers help in the integration of the diversified businesses and improvement of operational efficiencies. Overall, the company has built a unique value chain with a global presence which makes Olam a scaled, well-informed and efficient business.

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Weakness

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Opportunity

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Threat

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Check Out Analysis of Other Relevant Companies

TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Olam International Analysis Report

1. Olam Annual report 2019 - https://www.olamgroup.com/content/dam/olamgroup/investor-relations/ir-library/annual-reports/annual-reports-pdfs/olam-annual-report-fy19_3-in-1.pdf

2. Olam Investor Relations 2019 - https://www.olamgroup.com/content/dam/olamgroup/investor-relations/ir-library/olam-insights/olam-insights-pdfs/Olam_Insight2019_Issue1.pdf

3. Olam Insights 2018 - https://www.olamgroup.com/content/dam/olamgroup/files/uploads/2018/09/Olam_Insight2018_Issue1_September2018.pdf

4. Olam Company profile - https://in.reuters.com/finance/stocks/company-profile/OLAM.SI

The detailed complete set of references are available on request in the 'Complete report' on purchase.

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Olam International SWOT & PESTLE Analysis - SWOT & PESTLE.COM

SWOT & PESTLE.com (2020). Olam International SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/olam-international/ [Accessed 09 Jul, 2020].

In-text: (SWOT & PESTLE.com, 2020)

Copyrights and Disclaimer

Olam International SWOT and PESTLE analysis has been conducted by Divyansh Kharadkarand reviewed by senior analysts from Barakaat Consulting.

Copyright of Olam International SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

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