Identify the goal of the company and describe the strategy that was adopted to achieve it. Explain with full reference to available information and data how successful, or otherwise, this strategy turned out to be in practice.
Bunge Company was found in 1818 by a German merchant, Johann Peter Bunge in Amsterdam, Holland. It was to merchandise grains and imports from the Dutch colonies. The company has since grown to become one of the leading agribusiness and food company in the world. (Slack & Lewis, 2008, pg. 338)
Bunge’s products include: soy-protein meal to poultry feeders in Asia; edible vegetable oil to food manufacturers in the Middle East; and corn and wheat ...view middle of the document...
(Slack & Lewis, 2008, pg. 358, 360)
Its suppliers are the many farmers in the various countries that it operates. Bunge works in close cooperation with these farmers to produce the raw materials needed for its productions.
Bunge operate a decentralised management structure where major operational decisions are made by the local management. The company considers this as a source of competitive advantage. (Slack & Lewis, 2008, pg. 344)
The goal of Bunge
The goal of the company according to its CEO, Alberto Weisser, is “to become the best integrated agribusiness and food company in the world”. (Slack & Lewis page 339)
In achieving this goal, the company developed and implemented many strategies some of which were successful and others not.
The rest of this work would attempt to evaluate these strategies and its impact of Bunge’s performance.
1. Corporate Strategy
Bunge’s corporate strategy in the recent years have shifted from pursuing to inorganic growth by acquiring some of its competitors with latest being Cereol. These acquisitions are aimed to strength the company’s position as a major global force in the agribusiness. The company hopes to capitalise on the synergies drawn from these acquisitions to further improve its strategic position in the industry. By acquiring its competitors across the world, Bunge overcomes the various entry barriers present in those countries. It is also able to take advantage and build on the brand image already established by the existing company. These businesses also complement Bunge’s products and as expressed by the CEO, the acquisition of Cereol “… It adds to scale, efficiency and growth...” (Slack & Lewis, 2008, pg. 344)
This strategy is however, has its challenges. The issue of culture and integration are key ones.
Very noted for its decentralised management structure, Bunge is challenged on how to integrate these acquired businesses into its decentralised management structure.
Unlike its own wholly developed business subsidiaries across the world where the company can pursue a decentralised management structure with not much problems, same cannot be said of an acquiring company as Bunge needs exert much control in order to establish its culture and processes in the new company and ensure there is goal congruence.
There is always the temptation for the new companies and even existing ones to pursue goals that are divergent to that of the Group and this requires a level of centralisation.
In spite of these challenges, Bunge’s decentralised management structure coupled with its localisation policy had some positive impact on its performance over the years. The belief that “the person closer to the problem to is closer to the solution” worked well for the company. It promoted idea generation which would be quickly implemented, attracted the skilled people and created a sense of belongingness for the local management.
2. Business Strategy