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Agrium Research Paper

In: Business and Management

Submitted By Kevinnharding
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Executive Summary Our teams goal is to establish how Agrium has transitioned from a local Calgary based Corporation to a large corporation with an apparent “Global Organization” model. We are interested in understanding how they have grown into a world leader in their industry. We will identify where they started, where they are today in mining and technology, and how they reach consumers all over the world while maintaining their vertical control from their headquarters in Calgary; by analysing Agrium’s history, corporate structure, and three key business units. At the end of this case study we hope other Canadian organizations will adopt the Agrium model when they consider expanding operations globally.
Keywords: Agrium, Agro-food, , clusters, global, mining, and vertical integration

Table of Contents
Introduction.................................................................................................................................................. 1 History .......................................................................................................................................................... 1 Corporate Division ...................................................................................................................................... 2 Governance ............................................................................................................................................. 2 Board of Directors .................................................................................................................................. 3 Chief Executive Officer .......................................................................................................................... 3 Code of Business Conduct and Ethics................................................................................................ 4 ENVIRONMENT, HEALTH, SAFETY AND SECURITY COMMITTEE (EHSS) ........................... 6 International Operations ............................................................................................................................ 7 Retail ........................................................................................................................................................ 8 Wholesale ................................................................................................................................................ 8 Advanced Technologies ...................................................................................................................... 10 Agrium Advanced Technologies Inc...................................................................................................... 11 Company Strategies and Mission ...................................................................................................... 11 Advantages of Using Strategic Business Department.................................................................... 12 Company Structure (Global Company) ............................................................................................. 14 Cluster .................................................................................................................................................... 15 Mining Operation ...................................................................................................................................... 16 Location ................................................................................................................................................. 16 Operations ............................................................................................................................................. 17 Nitrogen ................................................................................................................................................. 17 Phosphate ............................................................................................................................................. 18 Potash (Potassium) .............................................................................................................................. 18 Logistics ................................................................................................................................................. 19 Conclusion ................................................................................................................................................. 20 Appendix .................................................................................................................................................... 21 Appendix A ............................................................................................................................................ 21 Appendix B ............................................................................................................................................ 22 Appendix C ............................................................................................................................................ 23 Appendix D ............................................................................................................................................ 25 References ................................................................................................................................................ 26

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Introduction
Researching Agrium, a Canadian Corporation, we plan to identify the layout of the organization, as well as how they have broken down their operations to make things manageable on a global scale. Our goal is to establish how Agrium has transitioned from a local Calgary based Corporation to a large corporation with an apparent “Global Organization” model. Agrium is such a pervasive company and we are interested in understanding how they have grown into a world leader in their industry. We will identify where they started, where they are today in mining and technology, and how they reach consumers all over the world while maintaining their vertical control from their headquarters in Calgary. By analysing Agrium’s history, corporate structure, and three key business units, we will be able to gain a better understanding of how this company has managed to be successful in its expansion, while maintaining autonomy at the head office in Calgary.

History 1

Agrium Inc. started out as Cominco Ltd in 1931 specializing in the fertilizer industry. The name Cominco Ltd formally became Agrium Inc. in 1995. Within the same timeframe as the name change Agrium acquired two companies Nu-West industries and Western Farm Service (WFS). Agrium also established its global presence under the trade name Agroservicios Pampeanos (ASP). Before 1995 Agrium (Cominco) was busy growing its regional operations within Canada in Alberta and Saskatchewan. The choice for Agrium to move into the global market when they did provided them with huge pay offs. Agrium has been on a continued path of
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See appendix A

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global expansion. They have established operations all over the world here is a list of some of the important locations: the United States, Argentina (2000), Beijing (2008), and Egypt (2008). At the time of writing this paper, Agrium is currently trying to acquire, Viterra’s Agri-products, another asset that will expand their retail footprint both nationally and globally. With such a diverse history, how has Agrium been able to manoeuvre the pit falls of growing globally? We will go into detail about how they have set themselves up to succeed in the global market place by first looking at the Corporate Division.

Corporate Division
Governance
Agrium, through its growth both locally and globally, has defined a set of Corporate Governance Guidelines. What is the importance of this document for Agrium as they continue on their global dominance in their marketplace? This document lays out the role of the Boared of Directors, the role of the Chief Executive Officer, and how to deal with Business risks. Of course, this does not account for all the information within the Governance document. The sections that will be expanded and explained are crucial to Agrium's success and future endeavors as a global company. (CORPORATE GOVERNANCE GUIDELINES) The Corporate Guidelines purpose is to create the framework of authority and accountability of the Board of Directors and Agrium’s management team to allow them to make timely and effective decisions that comply with applicable laws and Agrium’s commitment to ethical conduct, integrity, and transparency. (CORPORATE GOVERNANCE GUIDELINES)

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The purpose of the Corporate Governance Guidelines for Agrium is one of the tools that they have leveraged to gain their global presence from a locally operated company and apply the rules in all aspects of their operations.

Board of Directors
What role does the Board of Directors have when it comes to the operation of Agrium? The Board’s primary responsibility is to foster long-term success of the Corporation to maximize all stakeholders’ value. (Board of Directors)The board of directors functions are keep independent of Agrium’s management. Agrium’s Board of Directors accomplishes this independence by the establishment of the Board Chair. The Board Chair’s primary responsibilities are to foster ethical and responsible decisions for the Board and the oversight of management of Agrium. The appointment of the Board Chair happens annually among those Directors who are independent of the Guidelines and independent under any laws and regulations applicable to Agrium. (Board of Directors) This separation is vital to the responsibilities that this position holds. Agrium separation of functions between the Board of Directors and Management team is a major strength to the success of this company as they continue to grow and acquire additional companies to strengthen not only the corporation but also the shareholder, stakeholders and image of Agrium in a global operating environment. (Board of Directors)

Chief Executive Officer
The primary responsibility of the CEO position is to lead Agrium; this is accomplished by executive leadership and operational management of the corporation. The CEO formulates

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Agrium’s proposed goals, strategies, and objectives. (Board of Directors) The CEO then presents this information to the Board of Directors for final approval. The Board of Directors throughout the operating period will communicate with the CEO as Agrium makes progress towards the company’s goals. (Board of Directors) The CEO is also responsible for the identification of principle risks of Agrium and implements appropriate systems to mitigate these risks. (CORPORATE GOVERNANCE GUIDELINES) When you have a single person in charge of identifying the associated risks across Agrium’s global operations, you have a vertical chain of command. Of course, the CEO is not the only person responsible for the identification of risks but the Board of Directors and Shareholders holds the CEO accountable and it becomes the CEO's responsibility to find out from Agrium's global management team in order for the CEO to take appropriate action. This needs to happen so Agrium can react in a timely fashion to ongoing changes in the Agro industry (CORPORATE GOVERNANCE GUIDELINES)

Code of Business Conduct and Ethics
The code of business conduct and ethics document purpose is to make sure Agrium is maintaining the highest standard of legal and ethical conduct in all of their activities. (CODE OF BUSINESS CONDUCT AND ETHICS) It also establishes that all individuals associated to Agrium Inc. will maintain the corporation’s reputation for ethic, integrity, and respect, to create a culture of honesty and accountability. (CODE OF BUSINESS CONDUCT AND ETHICS) Within this code, three important parts have a direct impact on Agrium’s vision of continued global expansion they are fair dealing, giving, and receiving gifts, and improper payments.

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First, fair dealing, lays out the framework that Agrium will deal fairly with their customers, suppliers’ competitors, and others with whom Agrium has business dealings. What this means is Agrium and the employees will not “take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing” (CODE OF BUSINESS CONDUCT AND ETHICS). The meaning behind the fair dealings clause has to do with the activities that Agrium is involved in and to make sure there is no anti-competitive course of conduct related to price fixing among their competitors and divide the marketplace to allocate customers. (CODE OF BUSINESS CONDUCT AND ETHICS) While vigorous competition is permissible, prohibited activities also include predatory trade practices and attempts to create a monopoly within Agrium’s marketplace. The second aspect of this policy is the giving and receiving of gifts. The giving of gifts in a commercial setting is to create good will and sound relationships. Agrium does not offer these gifts or receives them in order to gain an unfair advantage with current/ potential customers, and to take unfair advantage of suppliers. (CODE OF BUSINESS CONDUCT AND ETHICS) Agrium “must not offer, give, provide, or accept any entertainment or gift, nor must any member of our family or anyone acting on our behalf, unless it: (a) is not a cash gift, (b) is consistent with customary business practices, (c) is not excessive in value, (d) does not violate any applicable laws, and (e) does not violate the provision of this Code entitled “Improper Payments and Foreign Business Dealings.” (CODE OF BUSINESS CONDUCT AND ETHICS) From this part of the code of Business Agrium has in place a check and balance to make sure the people that are representing Agrium, including family members, follow a predefined set of conditions in order to act on their behalf both locally and abroad.

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The last part of this policy that has provided Agrium with the ability to grow is “Improper payments and Foreign Business Dealings.” (CODE OF BUSINESS CONDUCT AND ETHICS) This last piece is the cornerstone to how Agrium handles the business aspect in foreign marketplaces. Agrium will not pay, loan or otherwise disburse any funds or assets as bribes or kickbacks to influence the other party in anyway form. This same principle holds true when dealing with foreign governments, political parties or public international organization because Agrium and their employees are not allowed to contribute to these groups for the purpose of directing business towards Agrium. (CODE OF BUSINESS CONDUCT AND ETHICS) Agrium has taken great strides to create an environment that removes the ambiguity of how Agrium will conduct business when it comes to how they deal with their stakeholders, future and current business relationships and how to deal with foreign business that is outside of the traditional western style of business conduct. If Agrium did not have this policy in place, they would not be to expand their operations into the current markets that they operate and reap the benefits of this expansion.

ENVIRONMENT, HEALTH, SAFETY AND SECURITY COMMITTEE (EHSS)
What is the purpose of the environment, health, safety, and security committee role within Agrium and what benefit does it provide for global expansion of Agrium? First, the Board of Directors establishes the EHSS committee to ensure that Agrium activities are conducted in an environmentally responsible manner and the company maintains the health, safety, and security policies that have been established (Environment, Health, Saftey, & Security). Without the EHSS committee, it would have been difficult for Agrium to meet the demands of operating in various countries that have diverse cultures compared to their

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headquarters in Calgary, Alberta Canada. This also allows the CEO to focus on the important matters of continuing to expand into new markets knowing there is a group of people in place that can handle and deal with any issues related to the environment, health, safety, and security of Agrium and the public (Environment, Health, Saftey, & Security).

International Operations
Agrium has transitioned from having a simple corporate structure to target a small local market, to a completely global, integrated corporate structure reaching multiple markets all over the world. This integrated corporate structure operates within three “Operating business units” that all have some level of international operations. These three units are retail, Wholesale, and Advanced Technologies. Each of these three business units operate independently from one another, however they all feed off each other and give Agrium a competitive advantage in many agricultural markets. The structure of this company today is clearly that of a “Global organization” model. All operations across the globe are fed back through the company and treated as pipelines in order for Agrium to have a unified global market. Agrium has very good control over their operations in various companies through their “three business units.” With such a pervasive value chain spanning across many areas of the agricultural industry, Agrium is able to respond to customer needs and changing markets faster than many smaller companies. According to the Article “Agrium Heads up to 40 list” written by Marilyn Scales, Agrium was the top Canadian Mining company with revenues of over ten thousand million in both 2008 and 2009. (Scales) It is only through using a “global” strategy that Agrium has been able to respond to consumer needs so fast and so targeted. Agrium is not a decentralized company, but a

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company with tight control of decisions, resources, and information. They are a company that’s has prevailed over their competition by optimizing their supply chain and reaching the entire global market in a consistent manner. In order to understand Agrium’s International Structure more clearly each business unit needs to be taken into consideration with more detail. 2

Retail
Agrium’s Retail business unit markets seeds, crop protection products, crop nutrients, custom application, and other agronomic services to customers throughout the world. This unit is mostly focused in North America with nearly 94% of retail revenues in 2010 coming from Canada and the US (Sustainability Report).This being said, there are outlets in countries such as Australia, Argentina, Chile, and Uruguay. While this business unit does not incorporate a significant percentage of international operations, the nature of this sector is one that encapsulates that of a “Global” Organization. The reason for this is that the Retail Business Unit is in no way decentralized. Agrium does not attempt to give autonomy to another country in running its Retail Operations. Instead, Agrium focuses on reaching the entire global market by strategic marketing and relying on its research and development team to provide insightful information regarding various markets all over the world. Agrium’s retail centers are located in fixed locations used to deliver the same products all over the world. Agrium is saving money by offering the same products throughout the world. Resources are not being used to tailor products to local markets and therefore a significant amount of time and energy can be used to focus on things that are more important.

Wholesale

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see Appendix B

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Agrium’s wholesale business unit manufactures, purchases, and markets a variety of different nutrients. These nutrients include nitrogen based, potash, and phosphate based products. The wholesale business unit owns and operates five large nitrogen facilities in North America. This sector also went into a 50% partnership with Profertil, a major nitrogen facility in Argentina. (Sustainability Report) This allows Agrium some control over products sold in Argentina, and other South American customers that purchase from Profertil. Agrium has also bought into an export oriented urea facility in Egypt. The wholesale business unit also owns a potash mine in Saskatchewan with a capacity of over 2 million product tonnes. Approximately 40% of the product from the mine is sold internationally. In addition to these significant assets, Agrium owns and operates several other production and storage locations and distributes a significant amount of nutrients to Europe. Agrium’s wholesale unit is essentially, what has made the company the agricultural powerhouse they are today. Agrium’s sales have increased from $300 million, to over $2 billion in the last ten years. According to the article “Agrium Carves out a cost Advantage” written by Peck Hwe Sim, this incredible success is due to “a string of acquisitions and Investments” (Sim) It is clear that Agrium has a strategy that incorporates a large amount of takeovers in order for them to reach as many markets as possible. Agrium has recognized that in order to control these markets, subsidiaries need to be controlled and decisions need to be centralized. In the textbook “A Global Shift” written by Peter Dicken, a truly global organization is one that has “tight control of decisions, resources, and information. (Dicken 129)) It is obvious that Agrium’s Strategy is to control as many entities and natural resources as possible in order to gain a large market share all over the world. Agrium’s wholesale unit is the business unit with the responsibility of growing the company’s natural resource base. Peck Hwe Sim talks about an

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example of the wholesale unit’s future endeavours in the article. In this article CEO and vice chairperson of Agrium, John Van Brunt, says, “New plants will be built in regions with low-cost trapped natural gas such as Alaska, Australia, The Mideast, and Trinidad.” (Sim) The acquisition of valuable resources such as these are what has made Agrium as successful as they are today, and will be the determining factor of Agrium’s future success. A Global Strategy has been essential in Agrium’s International development. This is especially true in the wholesale business sector as this has been the major profit producer for the company.

Advanced Technologies
The last business unit incorporated into Agrium’s strategy is “Advanced technologies.” This unit deals with nutrient technology including micronutrients and control release crop nutrients that are sold worldwide. All control release and micronutrient products are produced in North America and are sold in both domestic and international markets. Advanced technologies use an extensive distribution strategy and operate a large storage network in efforts to facilitate effective distribution. (About Us) The Advanced Technologies business unit has been essential in the global expansion of Agrium. It is through this sector that innovative expertise has been solidified through strategically locating production and research facilities in areas that complement the technology industry. Agrium has proved to be aware of the “cluster effect” referenced in the Global Shift textbook and has capitalised on reaching new markets through new innovative technologies (Dicken 71).This business unit has served as an effective way for Agrium to take advantage of new markets and expand their increasingly global strategy.

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As you can see, Agrium is involved in a variety of international activities. Agrium’s extensive distribution strategy and significant expansion into other countries enables them to capture new markets. A global strategy has proved to be essential in Agrium’s International Expansion and has served as the most effective strategy in dominating a variety of agricultural markets.

Agrium Advanced Technologies Inc.
Agrium Advanced Technologies is a strategic business department of Agrium Inc. It is the world's largest producer of enhanced efficiency fertilizers with core operations that include 9 production facilities, 26 storage facilities, and 1 technology innovation lab (Who We Are). The Headquarters of this department is located in Loveland, CO, United States. Agrium Advanced Technologies is also the leading manufacturer and marketer of controlled-release fertilizers and micronutrients in the agricultural, professional turf grass, horticulture, consumers’ lawn and garden markets. They are at the forefront of environmentally friendly fertilizer technologies, and provide effective pest control solutions. Agrium Advanced Technologies delivers innovative, premium quality products with unsurpassed customer service, and they achieve this mostly through ensuring employee expertise. They have developed strong relationships with customers through their passion of developing technologies, and leveraging them into new markets. (What We Do)

Company Strategies and Mission
In the past few years, Agrium Advanced Technologies has realized a significant amount of growth because of efficiently meeting the needs of customers in their service. (A big market in

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the current and future society) They also have indicated plans to expand their business by increasing production capacity (Strategy). In order to achieve this goal there are several factors/ strategies, that need to be taken into consideration. The first strategy involves promoting and selling products to more people in their current market segments, as well as different ones in North America. Second, they need to create innovative solutions to enhance customer value while protecting the environment. Lastly, Agrium Advanced Technologies plans to expand its business operations internationally. Its mission statement, “Providing the ingredients for growth”, is heavily related to this final strategy (Why We Do It). Agrium Advanced Technologies focuses on giving customers smarter ways to grow healthier turf and crops that feed the world. They plan on doing this through using innovative technologies, practices, and products that will help customers do their job more effectively with less environmental impact such as, ground pollution, water pollution etc. (Strategy)

Advantages of Using Strategic Business Department
Since Agrium Inc. has been growing so fast in the last eighty years, they have decided to separate its technology department from Agrium, into a separate “business unit. The reason for this separation was to maintain an effective work process in order to keep a competitive advantage (Strategic Business Unit). Moreover, Agrium Inc. has received several advantages in making this decision. First is it can make everything (goal, mission, and work process) more organized. The first mission/principle of time management is to organized things. Therefore, the priority is to get organization clearly, that can only happen when incorporations is organized well (Strategic Business Unit). For example, if one department/manager is handling 5 to 10 different products or services, the department or manger will lose their focus and become confused with operating all of them. Hence, there will be no time to innovate and create new products. The

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department/manager will spend all their time on handling the existing work rather than expansion and innovation. On the other hand, the main concept of growing internationally is expansion. Thus, the biggest advantage of using strategic business department is that helps incorporation organized. (6 Reasons Strategic business units are important) Second advantage of using strategic business department is micro management. Once an incorporation is organized, the incorporations can micro manage area such as services and products. (6 Reasons Strategic business units are important) Just take an example of a large company like Acer. It has huge number of different products and services at same time worldwide. Each requiring separated labour resources, expenses, strategies, and returns. Therefore, Acer needs micro managing to maintain good quality of products and service. With strategic business department idea, another important factor is focus. Focus in different aspect of services that can help incorporations compete with others in the world. Moreover, micro management also affect the speed and quality of decision-making (6 Reasons Strategic business units are important). A good performing business is supposed to have ability to handle large amounts of work, which contain a lot of decision-making. These decisions can be from the micro level to the macro level. Strategic business department that focus and micro manage can help the business to reach their goal with correct and efficiency decision-making. (Quick response to environmental change is also included) On the other hand, each strategic business department also has power to control its own products and resources. As a result, the strategic business department principle can minimized problems associated with sharing resources across functional areas, quick response to environmental change and increased focus on products and markets.

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Since, Agrium Inc. separates its technology department from the incorporation as an independent business called Agrium Advanced Technologies Incorporation. Agrium Inc. is less concerned about Agrium Advanced Technologies Inc. technology. Clearly, Agrium Advanced Technologies Incorporation helps Agrium has micro management system, by fast response, innovation spirit, fulfill customers’ needs. These success elements can keep internal business competition and make it harder to imitate its services from other competitors. (Dicken 104 - 105)

Company Structure (Global Company)
Agrium Advanced Technologies Incorporation has a similar structure with global company, except Agrium Advanced Technologies only expands domestically in the United States. However, this fits to the main principle, of a centralized global company. There are several reasons that Agrium Advanced Technologies Incorporation only expands its facilities in USA. First, it wants to maintain its vertical control of its services in different global markets like the parent company Agrium Inc. (Where We Are) If Agrium Advanced Technologies builds a subordinate company in another county, there is, a higher chance that it will lead to a chaotic situation cause by conflicts between headquarter and subordinate companies. The cause of the conflict maybe related to a power struggle by the subordinate company and different aspect of value (relationship based vs. revenue based). Therefore, Agrium Advanced Technologies Incorporation wants to have vertical control with its strategic, resources and decisions making.

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The other key element is knowledge/technology developed and retained at the center. (Dicken 104) Agrium Advanced Technologies Incorporation wants to keep its technology in its hand. There is a high probability that Agrium Advanced Technologies technology will be stolen or disclose to competitor by a subordinate company employee if they expand their facilities internationally. On the other hand, since Agrium Advanced Technologies Incorporation has all the technology in its hand, it has more technology resource which can help itself developed a more useful and helpful technology to maintain high quality service with high competitive advantage in the current market. As a result, Agrium Advanced Technologies, global structure has the benefits for Agrium Inc. and Agrium Advance Technologies Inc. has control over centralized decision, and knowledge/technology developing/retaining.

Cluster
Agrium Advance Technologies Inc. only expands in the United States; we can see it as a big cluster of technology segment in the world. Cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. According to our research, United States has the highest technology in the world. (Technology Top 10 Countires) Therefore, it is reasonable that Agrium Advanced Technologies Inc. only builds its facilities in the United States. First, Agrium Advanced Technologies Inc. has more interfaces with other high technology companies. They can exchange their information or maybe cooperate together to build a meaningful project to contribute the world (Technology Clusters and Innovation). United States is a stable country in regards to the government and economic system. Hence, many companies build their headquarters and subsidiaries there. The United States is a

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very big market that can access with other markets in the world. As a result, there a lot of benefits for Agrium Advance Technologies Inc. to build their facilities in the “Cluster of Technology in America”3

Mining Operation
Location

Part of Agrium’s success as an international company comes from their strong supply lines and when Agrium initially expanded from its original store in Calgary they realized the potential of not only selling the products retail but producing and selling the product wholesale as well. As a result of this realized potential Agrium opened their first mine near Vanscoy, Saskatchewan. In total Agrium has four mines currently in operation; three Phosphate mines and one Potash mine. The phosphate mines are located at Kapuskasing, Ontario and Soda Springs Idaho, with their production facilities being located in Conda, Idaho (Sustainability Report) Agrium’s primary potash mine and production facility is located in the County of Vanscoy No. 345 which is located 35km southwest of Saskatoon Saskatchewan. The Saskatoon area is well known for its potash reserves and makes it the ideal location for any companies dealing with mining or potash. Currently the mine covers a 77 square kilometre area and is located nearly one kilometre underground but Agrium currently is expanding the mine to increase production but improvements have not yet been completed (Sustainability Report)

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See Appendix C

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Although Agrium does have a quite large presence in the potash industry one notable competitor is Potash Corp. Potash Corp (like Agrium) has mines and production facilities in the Saskatoon area, some of their facilities include their Cory, Lanigan, Patience Lake and Rocanville production facilities all located southeast of Saskatoon.

Operations4
Agrium is a major player in all three primary fertilizers; Nitrogen based, Phosphate based, and Potash based. Agrium has 12 production plants throughout their organization, with a total production capacity of 5 million tonnes of nitrogen, 2 million tons of potash and one million tonnes of phosphate (Sustainability Report).

Nitrogen
Nitrogen fertilizer production for Agrium is primarily located in Alberta at their facilities in Joffre, Fort Saskatchewan and Redwater. Additionally Agrium has a smaller Nitrogen production facility in Borger, Texas which doubles as an Anhydrous Ammonia Storage facility (Sustainability Report) Nitrogen based fertilizer is the only product Agrium produces that requires a supplier. This is because unlike Phosphate based and potash fertilizers; Nitrogen based fertilizer is made from Natural Gas and given the relatively low price of Natural Gas it would not be cost effective to vertically integrate. This is because even though Nitrogen is Agrium’s biggest product, by volume, due to the high number of Nitrogen based alternatives (such as Anhydrous Ammonia) it sells for a much lower price per tonne making it a difficult market to expand.

4

See Appendix D

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Phosphate
The Phosphate operation of Agrium is primarily located in Idaho, USA with a small mining operation in Kapuskasing, Ontario. Southern Idaho is home to Agrium’s two primary phosphate mines dubbed Dry Valley Phosphate Mine, and Rasmussen Ridge Phosphate Mine. The production of Phosphate is a very simple process which basically includes crushing the phosphate rock into powder in order to produce fertilizer and by-products like Phosphoric Acid and Ammonium Phosphate (which is shipped to the Anhydrous Ammonia facility for production) (Sustainability Report)

Potash (Potassium)
As stated earlier Agrium’s Potash operations center on Saskatoon, Saskatchewan, in Vanscoy County. At this facility they produce premium granular grade potash, premium coarse grade potash and standard grade potash. Potash can be used for many things other than fertilizer such as medicine, soap and even meat tenderiser. Currently Canada has the largest known reserves of potash and is the largest producer of potash based products in the world. Agrium’s Vanscoy mine alone produces approximately 2 million tonnes a year of potash which is about 3% of total world production and when current upgrades are complete Agrium estimates that they will increase their world production to 4.5% (Sustainability Report). The production of Potash is both a simple and complex process whereby to produce potash fertilizer it simply must be crushed to a powder and then must be separated into its many forms including; potassium carbonate (fertilizer), potassium hydroxide (lye), potassium nitrate (oxidiser for gunpowder) and many more (Canpotex).

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This could be Agrium’s most potentially lucrative product because as the developing countries grow so do their food demands, and with all the agricultural land being used the only way to increase production is fertilizer and in those regions potassium is a high demand product (Canpotex)

Logistics
In the agro-food industry logistics is perhaps the key to whether a company succeeds or fails, luckily for Agrium they have some of the best logistics possible. Agrium manages all their fertilizer logistics though Canpotex which is wholly owned by Potash Corporation of Saskatchewan (54%), The Mosaic Company (37%) and Agrium (9%) (Canpotex). Canpotex has a partnership with CN railroads and operates a fleet of more than 5500 covered rail cars. Agrium has an additional fleet for their United States and South America operations that consists of 3600 leased rail cars. In addition to the rail fleets Canpotex owns and operates two warehouses for international export; one in Vancouver (Neptune with 210,000 MT storage) and one in Portland, Oregon (135,000 MT Storage) (Canpotex). At this time, Canpotex has an agreement with exporting companies to transport the products overseas but Agrium and Canpotex have committed to building 15 cargo vessels specially designed for fertilizer transport that should be completed by 2014 increasing their transportation operations to over 200 Vessel trips per year, making over 700 port calls to 100 ports worldwide. When the cargo vessels are competed Canpotex will be the largest exporter of potash and fertilizer in the world. With all the production of Potash Corp, Agrium and The Mosaic Company going through its logistic channels Canpotex will encompass approximately 35% of the global market share for fertilizer exporting (Canpotex).

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Conclusion
Agrium’s success stems from the vertical integration of policies and procedures from their headquarters in Calgary, Alberta Canada. Agrium’s strong vertical command has enabled them to leverage their company using a series of joint ventures and large-scale acquisitions to capture key segments in the global market within the Agro-food industry. By analysing Agrium’s history, corporate structure, and three key business units, we have been able to gain a better understanding of how this company has managed to be successful in its expansion, while maintaining autonomy at the head office in Calgary. Agrium has proved to be an exceptional example of a company that overcame the challenges of a “global organization” model, and became a marker leader in a variety of different agro-food markets. Our group finds Agrium, to be a model that other Canadian organizations should look towards when they are considering expanding operations international outside of the North American Marketplace. Researching Agrium’s Inc. corporate structure, how they operate, and how they made the global transition provided us with a better understanding of global corporations, and the global shift our planet is experiencing today.

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Appendix
Appendix A

(History)

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Appendix B

(Sustainability Report)

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Appendix C

(Technology Top 10 Countires)

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(Technology Top 10 Countires)

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Appendix D

Production (Million Tonnes)
1

2
5

Nitrogen Potash Phosphate

(Sustainability Report)

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References 6 Reasons Strategic business units are important2012MarketingG91http://www.marketing91.com/6-reasons-strategic-businessunits-important/ About Us2009Agrium Advanced Technologyhttp://www.agriumat.com/about_us.jsp Agrium carves out a cost advantage36 AGRIUM HEADS TOP 40 LISTCanadian Mining Journal11 - 15 Board of Directors2011http://www.agrium.com/governance/board_of_directors.jsp CanpotexThe CompanyCanpotexhttp://canpqlx.sasktelwebhosting.com/company.htm CODE OF BUSINESS CONDUCT AND ETHICSAgriumhttp://www.agrium.com/includes/CodeofBusinessConductandEthics.pdf CORPORATE GOVERNANCE GUIDELINESAgriumhttp://www.agrium.com/includes/Corporate_Governance_Guidelin es_v2.pdf Environment, Health, Saftey, & Security2011http://www.agrium.com/sustainability/environment_health_safety_and_secu rity.jsp Global Shift: Mapping the Changing Contours of the World EconomyNew YorkThe Guilford Press2011 History2010Agrium Inc.http://www.agrium.com/about_us/agrium_history.jsp Strategic Business Unit2010BusinessiHubhttp://www.businessihub.com/strategic-business-unitsbu/ Strategy2009Agrium Advanced Technologyhttp://www.agriumat.com/about_us/agrium_strategy.jsp Sustainability Report2009Agrium Wholesalehttp://www.agriumwholesale.com/sustainability.jsp Technology Clusters and Innovation2005Institute of Technologyhttp://howe.stevens.edu/fileadmin/Files/research/HSATM/newsletter/v09/v9i 4.F05/Fallah.pdf Technology Top 10 Countires2012Maps of Worldhttp://www.mapsofworld.com/world-topten/technology-top-ten.html What We Do2009Agrium Advanced Technology Inc.http://www.agriumat.com/about_us/what_we_do.jsp

Case Study of Agrium

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Where We Are2009Advanced Technology Inc.http://www.agriumat.com/about_us/where.jsp Who We Are2009Agrium Advanced Technology Inc.http://www.agriumat.com/about_us/who_we_are.jsp Why We Do It2009Agrium Advanced Technology Inc.http://www.agriumat.com/about_us/why_we_do_it.jsp

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