Glencore SWOT & PESTLE Analysis
ID : 52247353 | Aug 2017COMPANY PROFILE - Glencore
Business Sector : Commodity trading and mining
Operating Geography : Switzerland, Europe, Global
About Glencore : Glencore is an Anglo-Swiss multinational company. The company name Glencore is essentially an acronym for Global Energy Commodity Resources. It was formed through a merger between Glencore and Xstrata. It is the third-largest family business in the world and was the largest commodity trading company in the world in 2010 with a global market share of 60% for internationally tradable zinc and 50% for internationally tradable copper. It has also got 14th rank on Fortune’s Global 500 list. It has a strong marketing policy and a widespread distribution network that caters to the needs of customers in the diverse fields of industrial, food processing industries, power generation, construction, steel, automotive and oil.
Glencore Revenue : 152.9 billion USD (2016)
Competitive Analysis of Glencore
| 1. Global presence with production facilities in 50 countries. 2. Profitable investments for future in Africa 3. Strong backing as it is family owned business 4. Large quantity of high quality reserves. 5. Low labor and conversion costs | 1. Accused of not paying enough tax on its profits at one of its mines. 2. High debt 3. Accused of violation of licenses 4. Management issues regarding women in top management |
| 1. Diversification of business. 2. Heavy industrialization at global level, causing an increase in demand for fuel (Coal) 3. Large mining reserves. 4. High purchasing power and more investment opportunities. 5. Declining energy prices and depreciating operating currencies. | 1. Price competitiveness from local players 2. Threat from Government Policies 3. Selling of assets to reduce its debt 4. Currently weak global commodity market 5. Pressure from NGOs |
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Strengths
1. Global presence with production facilities in 50 countries: Glencore has its units scattered all over the globe with a strong presence in all of the major continents. It has around 150 assets which mine a variety of minerals including Nickel, Copper, Zinc, Iron and Oil. Other assets include warehousing facilities at a number of places as well port access and storage which enables it to transport its products easily from one place to another.
Glencore SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.References
1. Glencore Home Page- http://www.glencore.com/ 2. Annual report 2016-http://www.glencore.com/assets/investors/doc/reports_and_results/2016/GLEN-2016-Annual-Report.pdf
| 1. Increasing mining taxes. | 1. Long-term commercial customers. 2. Bargaining power of buyers reduced as, Glencore’s ability to arrange short- and long-term financing for customers. 3. Reduced bargaining powers of suppliers. |
| 1. Glencore’s Kidd Operations. 2. Corporate social initiatives in 2015, representing 2.2% of group profit before tax 3. Glencore's shows active engagement in sustainability development. 4. Mining recognitions. | 1. Enhancing processes in the mining industry through collaboration. 2. Developed proven technologies. 3. Innovative approaches reducing costs. 4. Use of renewable energy. |
| 1. Legal action. 2. Mine acquisition raised legal issues. | 1. Water pollution in area of Glencore mine in Peru 2. Greater environmental awareness. |
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Political
1. Increasing mining taxes: It has been seen that countries with mining resources are boosting mining taxes and other fees, and are also planning to renegotiate existing tax deals. Mining is a very capital intensive process. Glencore is thus highly dependent upon the political situation within the host countries. As returns are noticeable only in the long term, maintaining a long term relationship with the countries is very essential. Taxes and royalties demanded by host countries have to be accepted on most counts.
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Anthem PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.References
1. Glencore Home Page- http://www.glencore.com/ 2. Annual report 2016-http://www.glencore.com/assets/investors/doc/reports_and_results/2016/GLEN-2016-Annual-Report.pdf
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