The business model of Los Grobo is original as the Argentinian agricultural company deals with activities that aim at increasing the ability of the company to work with people and get its activities done without engaging an increased number of assets or workers. This model of conducting business in the agricultural company has enabled it to increase its productivity as well as its output in terms of workmanship. It has also incorporated technology in its activities to realize its dream, which has made the company build a large network with the providers of its services (McAfee & de Royere, 2007). The company’s business model has remained relevant in the industry, there are number of factors that make the business model of Los Grobo so original. The paper will discuss two reasons that give the company’s business model its uniqueness.
Firstly, Los Grobo neither owns land nor farm machinery but it has created a network that allow it to partner with producers and suppliers, which is the best way of working with new farming paradigms. Between 1998 and 2004 the company doubled its revenue through the network it has created. It has a network of over one thousand participants in Argentina whereby the network comprised of landowners, agronomists, and branch managers (McAfee & de Royere, 2007). The company leased its land to landowners whereby would either give a variable cost that is dependent on the quality of the crop harvest or a fixed cost where they could agree with the company on the amount. The company offer training to the landowners and share information as the season moved up.
The company also networked with agronomists who offers training on how and when to plant as well as when to harvest. The knowledge gained is shared to the landowners to ensure that they get the best yields (McAfee & de Royere, 2007). Similarly, the company networked with branch managers that enhance communications between the purchasers and suppliers of the seeds to be planted so that it communicates to the farmers who do the farming. The networking makes use of technological innovations available to ensure that the activities of the company run smoothly.
Secondly, the company engages in new methods of farming as well as new products. The company changed its farming methods after realizing that they were faced with the problem of soil erosion and soil compaction that forced them to do crop rotation in seven years, which affected the harvest for four years (McAfee & de Royere, 2007). As a result, the company adopted the no-tillage farming method where they only use herbicides to kill the weeds. This method does not interfere with soil thus showing positive results in reducing soil erosion. As the company used the no-tillage farming method it discovered that the soya bean farming was supported by the herbicides used. The company has indulged in a business model that introduces new farming practices as well as new farm produces (McAfee & de Royere, 2007). The company achieves this business model by carrying out research as well as employing technological advances that come their way.
I would recommend the Los Grobo Company to first internationalize it business model in Paraguay before Uruguay. Paraguay has a large amount of soya bean production compared to Uruguay and it also has a lower GDP rate, Los Grobo investing in Paraguay would ensure that its GDP is increased by the increased production of soya beans. Paraguay has a large population than Uruguay, which gives the former a high unemployment rate that reduces its income per capita (McAfee & de Royere, 2007). Thus, internationalizing Los Grobo business model in Paraguay would enable the country to reduce the rate of unemployment and in turn increase it GDP per capita.
McAfee, A., & de Royere, A. (2007). Los Grobo. Harvard Business School Case, 606-014.