Running head: CF HOLDINGS QUESTIONS
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CF Holdings Questions
Lydia Wray
BUSI 690
Liberty University
CF HOLDINGS QUESTIONS
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CF Holdings
Alternative strategies
Understanding that the new CEO, Wilson, wanted to have more of a financial return
“rather than security of supply for the member-owners” (Busse, 2016, p. 54), showed that the
company needed to seek new and different strategies and alternatives to keep their high rankings
within the fertilization spectrum. As CF Industries continued to focus on new leadership, the
company’s acquisitions of two main companies, Keytrade and Terra, showed just in what
direction and demographic the company wanted to be in. Being in the business of providing
nitrogen, ammonia and UAN to farmers throughout the south and many other places, CF
Industries had to make sure that their production and also their storage capabilities were still met,
but just now with a larger network of plants for the numerous tactics. Agricultural application of
synthetic N fertilizers is one of the largest global sources of NH3emissions, accounting for
about 17% of emissions around the globe and 30–36% of those in China (Jiang, Deng,
Bloszies, Huang & Zhang, 2017, paragraph 2).
CF Industries must form new and different strategies to continue to “improve internal
operations, and orient the business more effectively to serving a financial performance rather
than a security of supply objective” (Busse, 2016, p. 54). The company should still continue to
improve their operations and logistics, yet they need to also focus on innovation to “redefine the
marketplace in their favor and achieve a competitive advantage” (Rothaermel, 2017, p. 210).
Taking this drive and architectural innovation allows CF Industries to take the acquisitions that
they had bought and reconfigure their operations and business into new novel ways that different
market opportunities can be built from within the US and outside. Taking this approach can
allow CF Industries customers to see the safety, pricing influences and strategies that the
company is taking into account every day so that their fertilizer continues to “produce materials
essential to the mission of feeding the world’s people” (Busse, 2016, p. 61).
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If CF Industries does implement new given strategies, they must make sure that they
continue to focus on the two main goals of competitiveness and also the pricing at which their
given fertilizer and other companies are being sold at. If the company wants to maintain their
goals of providing specific fertilizer products at given times for their farmers, they need to make
sure that they are surveying all the different influences within the area and see which best fits the
company. CF Industries made a statement to knowing that their products are key to farmers and
their families and others by commenting that “that's how we've transformed from a member-
owned cooperative for the first 60 years of our existence to a financially successful
publicly traded company today. From a company founded to purchase fertilizer for its
owners to a leader in nitrogen manufacturing. From a regional focus to a global
perspective” (CF Industries, 2018). With keeping this in mind, the company can still focus also
on the different acquisitions and d could save 60 to 70 percent of transportation costs through
merger” (Busse, 2016, p. 56).
Specific recommended strategy and long term objectives.
CF Industries was on the right path in acquiring their first two companies and then trying
to grow within the North American market. However, if they want to grow and expand their
knowledge and understanding of fertilizers and even storage of them, a specific recommended
strategy would be for further acquisitions and restructuring of the different departments and
companies. Restructuring describes the process of reorganizing and divesting business units and
activities to refocus a company in order to leverage its core competencies more fully
(Rothaermel, 2017, p. 280). Acquisitions allow for CF Industries to really get into the market of
how pricing is influenced and how different strategies are formed from those ideas. If there are
different ideas and thought strategies within the acquired company, suggestions could be made
that others may have not thought of before.
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With the right business model ingredients, what we think of as impossible may be
just doable. “What if” questions help us break free of constraints imposed by
current models. They should provoke us and challenge our thinking. They should
disturb us as intriguing, difficult-to-execute propositions (Osterwalder & Pigneur,
2010, p.140).
Interest in enhanced-efficiency N fertilizers (EENFs) has increased in recent years due to
the increased cost of more commonly used water soluble N fertilizers, increased crop value,
increased environmental concerns associated with N application, inefficient crop N uptake, and
improved manufacturing technology (Halvorson, Snyder, Blaylock & Del Grosso, 2014,
paragraph 3). Knowing this, some of the long term objectives that CF Industries can look
forward to are the consolidation within the industry, due to the acquisitions and more of a drive
in even the non-agricultural markets. CF was also able to glean information from its agricultural
dealers, who had insights into what farmers were buying, planning, and doing in specific
geographic markets (Busse, 2016, p.59). The company must take into consideration the
concerns, wants and needs of their farmers and also suppliers, since CF was actually committed
to the corporate citizenship with its people.
The main objective the CF Industries needs to take into account is that the earth and soil
are continuously changing, and sometimes the fertilizer that was used the previous year for the
farmers may not always be the correct blend this given year. The continued growth and interest
in the “clean air” and “going green” act can help the company see how some tactics that are
being used today either benefit or hinder then to other clients as well. Understanding that a
company should venture and pursue more strategic alliances and mergers with outside
companies, Group 1 proposes an approximate $4.3 million for new revenue from a projection of
steady and reasonable growth over the course of the next year. In achieving this growth within
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their revenue, the company can try to implement this given time frame and try to obtain more
non-members and companies so that their given foot prints within the nitrogen fertilizer business
can grow. Given the new goals and objectives that CF Industries would want to achieve, the
company should try to reassess their editions in those given years and see if they are still aligned
with the deliverables in their new strategy.
Proposed new business model
“A critical aspect of the new model was a more economically driven approach to the
marketplace, with the company pursuing markets and customers and making pricing decisions
with a primary focus on enhancing its financial performance…CF changed its business model,
for the first time selling to non-members, including many prospective customers who had wanted
to buy from CF for years but had been unable to” (Busse, 2016, p.54-55). However, if CF
Industries wants to continue to be the lead provider in offering specific fertilizers for farmers at
given times of the year and providing them with safe and effective product, the ideas and
implementations of other companies could be more beneficial. According to the press release
from CF Industries, "despite lower volumes, we generated $101 million in cash and are
well-positioned to meet the strong demand we expect through the second quarter" ( CF
Industries, 2018).
After deciding that the company wanted to expand the North American nitrogen fertilizer
production in 2012, the new proposed business model of strategic alliances and mergers with
more companies within the North American region takes “successful innovation requires a deep
understanding of customers, including environment, daily routines, concerns and aspirations”
(Osterwalder & Pigneur, 2010, p.128).
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The basis for competitive advantage is formed when a strategic alliance creates
resource combinations that are valuable, rare, and difficult to imitate, and the
alliance is organized appropriately to allow for value capture. In support of this
perspective, over 80 percent of Fortune 1000 CEOs indicated … that more than
one-quarter of their firm’s revenues were derived from strategic alliances
(Rothaermel, 2017, p. 300).
CF industries should continue to enhance their products for their farmers but also try to get
involved in mergers that can help the company grow and expand. Whether it is the expansion of
more UAN for farmers or even more ammonia storage facilities, CF Industries needs to make
sure that they keep in mind that “lower dependence on farm work reduces the
motivation/incentive to acquire specific information to improve farming-related business (Ma,
Ma, Su & Nie, 2017, paragraph 29).
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References
Busse, M., (2016). CF Industries. Kellogg School of Management, KEL966
CF Industries. (2018). Press Release. Retrieved May 8, 2018, from
https://www.cfindustries.com/our-commitment/pressrelease
Halvorson, A. D., Snyder, C. S., Blaylock, A. D., & Del Grosso, S. J. (2014). Enhanced-
efficiency nitrogen fertilizers: Potential role in nitrous oxide emission
mitigation. Agronomy Journal, 106(2), 715-722. Retrieved from https://search-proquest-
com.ezproxy.liberty.edu/docview/1509959817?pq-origsite=summon&accountid=12085
Jiang, Y., Deng, A., Bloszies, S., Huang, S., & Zhang, W. (2017). Nonlinear response of soil
ammonia emissions to fertilizer nitrogen. Biology and Fertility of Soils, 53(3), 269-274.
Retrieved from https://link-springer-com.ezproxy.liberty.edu/article/10.1007%2Fs00374-
017-1175-3
Ma, W., Ma, C., Su, Y., & Nie, Z. (2017). Organic farming: Does acquisition of the farming
information influence Chinese apple farmers’ willingness to adopt?. China Agricultural
Economic Review, 9(2), 211-224. Retrieved from https://search-proquest-
com.ezproxy.liberty.edu/docview/1886951484?pq-origsite=summon&accountid=12085
Osterwalder, A., & Pigneur, Y. (2010). Business model generation. Hoboken, NJ: John Wiley &
Sons.
Rothaermel, F. T. (2017). Strategic management concepts (Custom 3rd ed.) New York, NY:
McGraw-Hill.
