Business-Level and Corporate-Level Strategies
Business strategy involves the decisions that the organization undertakes so as to maintain and use its competitive advantage. This may be enhanced by the carrying out of research on the target market, the level of competition and the product line of the company. These business level strategies usually affect the company’s functional decisions which may involve the implementation of some of the changes in the company’s operations. Business strategy will, therefore, ensure that the company is focused on satisfying the needs of their customers and that the company is able to attain profits. This strategy is mainly concerned with gaining competence through the exploitation of the chief competencies. The corporate strategy involves the identification of the opportunities that lie outside a company’s initial industry. This may integrate the aspect of diversification within the company. This will ensure that the company is effective, efficient, profitable and also competent. This cooperates strategy is only available in the case where the company is in a position to extend and develop a competitive benefit over the two businesses. Glencore Company is one of the publicly traded companies whose headquarters are located in the Baar, Switzerland. This is a global corporation that leads in integrating the production and marketing of commodities. It has a worldwide operation in production, sourcing, processing as well as refining, distributing, financing and storage of the metals and minerals. It also is involved in agricultural and energy product production. Customers across the world rely on the Glencore’s supply of products that either is from the company directly or they are outsourced from other third parties. This paper, therefore, will discuss on the business level and corporate level strategy that is used in the Glencore Company to ensure the long-term success of the company (Trask & DeGuire 2013). The paper will also focus on the competitive environment surrounding the company.
The company has over time developed different business strategies that it has implemented so as to achieve its objectives. The company focuses on the maintenance of a strong investment and a responsible operation as well. This company, therefore, uses three major business operations so as to enhance it to have a competitive advantage in the competitive environment. One of the business level strategies involves the cost reduction mechanism in the company that is enhanced through the use of the flexible balance sheet in the company. This ensures that the shareholders receive their returns while the entire company is able to sustain the cyclical nature of the natural resources in the industry. The company, therefore, is interested in increasing returns on capital invested and the cash flow within the company. However, on the other side, the company ensures that they reduce their net debts and funding (Glencore Annual Report 2015). Through this strategy, capital is disbursed when necessary with strict and clear defined financial measures that relate to profits and payback. The company’s assets are low cost and are durable which reflects the considerable investment into the existing assets. The company generally ensures that they control costs and generates sustainable functional and capital effectiveness.
The marketing strategy of the company supports the creation of the increased value as they are able to blend, store and geographically arbitrage. They thus are involved in maximizing their profits and cash flow from the pool of the distributed capital. This helps in the strengthening of the company’s balance sheet which ensures that the company is able to improve their operations and thus they have the competitive edge (Glencore Annual Report 2015).
The company takes the approach of continuous improvement where they believe in no-end for improvement. This approach enhances the sustainability of the company and good performance as well. The company strongly believes that there is no end in providing quality products.
Thus they continually ensure that they become a better operator than all the other competing operators. The company thus has a better reputation for operating their operations in the right way. The company is committed to operating responsibly and thus they develop and maintain and also strengthen their relationship with all the stakeholders. They thus are actively engaged in an apparent and open manner where it realizes the constructive relationships which are important in their social license to operate. This ensures that they are producing quality products that satisfy the customer’s needs (Glencore Annual Report 2015).
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Another business strategy is the ability to utilize the human resource in the company. The company is able to utilize the available employees in the company and their overall economy. This ensures that highly qualified workers are employed and the right number of employees is employed so as to meet the goals of the output from the company.
Cooperate level strategy that the company is utilizing is through its merging approach. The company is merging with the Xstrata Company so as to seize the outside opportunity with an aim of increasing value for its shareholders (Breiding 2012). This merger will ensure that the company is able to diversify on its operations and is also able to increase their competitive advantage with an increase in market value, the uniqueness of the business model and increase in the value chain of the commodities that they produce.
The merger will offer an exciting opportunity where they are able to create an outstanding business which is better able to seizure value from the fluctuating industry underlying forces and hence they are able to redefine their competitive landscape (Breiding 2012). The company will also be able to expand its operations including the positions in the next major mining venture where they will be able to operate in wide range of companies. The company will as well benefit from the merger as they will be able to increase their measure and market situations in the production and marketing of the main products. They will also be able to diversify their products and this will increase the cash flow divergence. This will also enhance the company to be competent in accessing the resources while the operational costs are low thus allowing the company to win contracts as they are able to offer lower prices than their competitors (Breiding 2012).
It is, therefore, clear that both cooperate and business level strategies are important in any company. Thus as the company has been able to realize maximum profits and cash flow through the implementation of the important and well enabling strategies. Diversification has proven to be the most appropriate form of co-operating strategy that the company has been able to use so as to increase their competence. The merging of the two companies is another cooperate strategy that ensures that the company experiences strategic advantage hence increase the profits and also ability to diversify in their productions and this makes them more competent. With the right integration of both the corporate as well as the business strategies, the company will be able to make the business and the corporate business unit a success.
The global competition and the local competition within the environment is a major concern in the operations of the company. One of the main competitors is the BHP Billiton Company which is a potential giant in this business line.
On a worldwide basis, competition is open and even when the company merges with Xstrata they still are not able to compete with the BH Billiton Company (Blowfield 2012).
The company has better business and corporate strategies which enhance the company to be the leading competitors than the Glencore Company. They have had stable performance over the years that has enabled them to deliver superior margins than their competitors throughout the economic as well as commodity cycles for many years. Their products are low cost and they deal in the diversification of products and services. This enhances their resilience of their cash flow through reduction of their exposure to any product.
This allows them to be in a position of financially operating well and thus they are able to invest in and grow their business throughout their economic cycles. This allows the company to deliver superior long-run value to their stakeholders. The company diversifies on their geography, their market and products which allow them to succeed. The company is also able to develop skills and abilities of their employees and the people who believe in the company’s performance. It is through this ability to differentiate that makes them outstand among their competitors. The company utilizes their employees well through ensuring that they employ high caliber people who are determined in the success of the company and maximization of the profit (Blowfield 2012). This company, therefore, the best in the business and thus leaves the second position for the Glencore Company.
The company’s position may differ in the long run in both the fast and the slow cycle market. In fast cycle market, the company’s main goal is sustaining competitive advantage through the taking of small steps and also the launching of a counter attack before the opportunity fades away.
Through this approach, the Glencore Company will be in a position to change the status of their competitive environment. With slow cycle market, the company’s competitive benefit will be protected from the imitation for long term duration though the imitation is costly. Hence the competitive advantage in this cycle is more sustainable. Therefore it is clear that if the Glencore Company is not limited to be at position two in the market.
However, if they are able to implement the small steps in the fast cycle market with the launching of their products and with time they will be able to identify the opportunities in the market where they seize the opportunity for their advantage. Hence the state at which Glencore is today might be totally different from the future. This will only be enhanced through better business and corporate strategies in the business that outweighs that one of the BHP Billiton Company.
References
Blowfield, M. (2012). Business and sustainability. Oxford: Oxford Univ. Press.
Breiding, R. J. (2012). Swiss made: The untold story behind Switzerland's success. London: Profile Books.
Glencore Annual Report 2015
Trask, A., & DeGuire, A. (2013). Betting the company: Complex negotiation strategies for law and business.
