Editor’s note: In a subsequent issue of Upstream Ag Professional, farming scientist Shane Thomas discusses why so many agtech businesses struggle with foreign weighting. Here’s a summary of that content:
Agtech businesses face many challenges when expanding abroad, outlined by the risk of premature expansion. These observations, according to Patrick Honcoop’s recent remarks, add that diversion is a pressing but frequently neglected problem. Management teams are strained, operational complexity is increased, and home geography market penetration is diminished by shifting focus to a new market. Additionally, this diversion may increase eliminate rates, which could possibly destabilize the business.
Enlargement may stem from power, not desperation. It’s unlikely for businesses to succeed abroad if they do n’t gain much traction in their home markets. Obstacles include adapting to new market needs, cultural differences, language obstacles, and the need for localized product creation, all of which deplete concentrate on core procedures. Also, global growth may destroy the thickness needed for network effects, which are important for some agtech business models.
Northern American agtech businesses are cited as being especially prone to excessive expansion. AgVend is a good indication of caution. Despite global demand, AgVend remains focused on North America, where they have captured about 28 % of wholesale market share. Their” Running the Damn Game” approach emphasizes bolstering their foundation and utilizing network effects in their home business. Each new client in North America builds their product habitat, providing a solid foundation for intentional global expansion.
In comparison, Greeneye Technology’s rise to Australia may indicate a shift that reflects despair or lack of discipline. Resources are being wasted trying to adapt to various plants, plants, and time zones, which is not a guarantee of success. While I understand the pressure from shareholders to grow, early growth risks undermining the bank’s main activities.
Effective agtech companies may naturally expand internationally, but it should only do so from a strong position. Most people believe that pursuing new geographies quickly is more sustainable than focusing on house market growth and achieving significant penetration.
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