Glencore, Xstrata and the Restructuring of the Global...

Glencore, Xstrata and the Restructuring of the Global Copper Mining Industry in 2012 Diana Alvarez Valencia (1310200) University Canada West Dr. Paul Rome MGMT 661 Strategic Management Tuesday, May 12, 2015 Introduction and Problem Identification In this case study we will identify the problems that can be issued in the process of the merger between two of the largest commodities traders in the world, Glencore and Xstrata. It will provide the background of both companies, the situation analysis, identification of alternatives Companies Background. Glencore had been a trading company since their early years with the name of Marc Rich Co. Glencore, was founded by March Rich; Rich was a consummate dealmaker, doing business with†¦show more content†¦In a vertical integration or merge, the two companies are related in terms of their industry and have been competing for many years, such is the case of Glencore and Xstrata, therefore, these two companies, combine their forces and expertise to create a succesful business. (Hitt, Ireland Hoskisson, 2013). Glencore have been creating different advantages through the mining industry such as marketing trading, pricing and freights. In the mining industry, the trades fell into three categories: 1) Geografical arbitrage, where the buyer, in this case Glencore, seek for low cost commodities to sell them in a higher price; 2) Product arbitrage, whre the commodities are more demanded therefore they can increase the price, 3) Time related, to buy now in a lower price and buy in the future for profits. All this practices were done by Glencore, however to make a stronger company and leverage their competitive advantage Glencore needed a partner who can provide them with operation expertise in this case Xstrata. Identification and Analysis of Alternatives. Organizational Culture Integration One of the most important problems and the facts of failure in a merge is the lack of organizational culture integration. (Weber, 1996). An organization’s culture includes the values, beliefs and behaviors that will determine how the people have to do the things in the organization. (Pikula,1999). In the case ofShow MoreRelatedGlencore Case Study1524 Words   |  7 PagesGlencore, Xstrata and the Restructuring of the Global Copper Mining Industry in 2012 Diana Alvarez Valencia (1310200) University Canada West Dr. Paul Rome MGMT 661 Strategic Management Tuesday, May 12, 2015 Introduction and Problem Identification In this case study we will identify the problems that can be issued in the process of the merger between two of the largest commodities traders in the world, Glencore and Xstrata. It will provide the background of both companies, the situation