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  • Subject Name : Strategic Management

Taxes and Entrepreneurship in OECD Countries

Table of Contents

Executive Summary


About Glencore Agriculture

External Environment

Internal Environment




Executive Summary of Agribusiness in Australia

Agriculture industry is the backbone of any country, as it meets the basic necessity of food products by utilizing natural resources for procuring essential farm produce. One of the best examples of the global leader in the agribusiness in Australia is the company GLENCORE. It is involved in wide types of processes to conduct its business operations including farming operations, logistics, handling, accumulation, trading, finance and quality control. The company deals in several agricultural products like wheat, barley, cotton, sorghum, pulses and oilseeds. It is one of the largest buyers in Australia for some of its products including sorghum, oilseeds, pulses and cotton influenced by various external and internal factors. The analysis of the company reports reveals the core competencies and operating management of the company. It is important to have a conceptual model to support the evolution and advancement in earlier policies of agribusiness by the government. The recognition of external as well as internal factors must also be considered while making new policies (Clune 2019). Glencore Agriculture relies highly on the political environment and can take its advantage by expanding its business operations in areas where policies for agribusiness are favourable.

Introduction to Agribusiness in Australia

Agribusiness is the agriculture industry in which an agricultural good is sold to market. It refers to any business that deals in or run with the help of farming or farm-related activities. It is the kind of business that is highly affected by the external environment and is very competitive in the global market (McMullen 2020). In this report, a particular agribusiness will be studied and analyzed critically. Glencore Agriculture is chosen as the business of study for this report. Glencore has its operations worldwide in over 35 countries. It is one of the largest buyers and exporters of Australian wheat, cotton, barley etc. This report analyses Glencore Agriculture’s business and revenue units. It then studies the impact of external and internal environment on the company. Also, some recommendations for future strategic direction are provided. This report focuses on the understanding and appreciation of strategic management inputs in agricultural business.

About Glencore Agriculture

Glencore Agriculture is an essential agricultural industry in Australia. The parent Organization Glencore International plc is based in Switzerland and was founded in 1981, However, it has various Subsidies operating in different countries and is involved in wide types of processes to conduct its business operations including farming operations, logistics, handling, accumulation, trading, finance and quality control. Glencore Agriculture in Australia is the leading brand in Australian food sector with its head office in Sydney. The company deals in several agricultural products like wheat, barley, cotton, sorghum, pulses and oilseeds. It is one of the largest buyers in Australia for some of its products including sorghum, oilseeds, pulses and cotton. It is one of the leading exporters of agricultural products worldwide. They supply their agricultural products in Australia as well as overseas targeting a various range of customers including local shop-owners and government entities. It is ranked as the 3rd largest exporter of oilseeds and grains in various countries including Russia, Canada, Australia and the European Union. Also, Glencore has been among the top three marketers of few products like barley, sunflower, wheat and dried legumes.

The most important revenue unit of Glencore Agriculture is of exporting and marketing some of its best products. Although it has an exquisite production, storage, logistics and refining set up for the entire agribusiness process, it is leading in exporting domain of agribusiness. They lead on marketing their agricultural products and need to maintain smooth transportation and supply chain management from farm gate to the final consumers. The company has built a strong relationship with the producers which is important to have good quality products.

External Environment (PESTEL ANALYSIS)

Every business is affected by its external environment in some way. Moreover, when it comes to Agribusiness, the company becomes highly dependent on its external environment and the impact is much greater. The external environment of Glencore Agriculture is going to be quite broad. The company has made a few measures to improve its external environment. They do not use water from water-scarce areas and use more renewable energy. The company must also take into account all the external factors that may contribute to the success of the project either directly or indirectly.

Several factors affect the agribusiness including political, environmental, economic, social, technological and legal operating factors. The most major external impact to the business will be of environmental factors. The agricultural business is highly affected by the changes in the environment and most of the times completely depend on the certain type of environmental conditions for the particular product. This is because the nature of the products is farm produce, which heavily rely on the quantity of rains, availability of resources such as fertilizers, energy, water, land, soil conditions and the weather conditions.

The political factors are also going to affect the Glencore Agribusiness s it has its operations worldwide. Any change in the policies of the Australian government operations or of any country to which products are being supplied, can have a major impact on the business. If the current political party make policies in favour of the company then it will be positively impacted. This can be done through tax rebates, compensations or by providing rent-free land in certain areas. However, the political environment can have a negative impact as well. An increase in taxes, high import duties in market economies or no favourable policies for the agribusinesses can have negative repercussions to the business.

Economic factor includes the demand and supply of the products. Like any other business in the market, Glencore is affected by the imbalances of the demand and supply curve and also market fluctuations in the prices of the commodities which impacts the operations and revenue of the company. Furthermore, a decline in the economic or financial condition of the nations also impacts the profitability of the company, such as recession, currency exchange and interest rates.

Social factors include the corporate social responsibility and incorporation of the sustainable options in operating and management of the company. Owing to a significant increase in the population, there has also an increased demand for agricultural and food products, which puts an immense amount of pressure on the farming sector and the environment. Being a global player in the agribusiness, the licence to operate is dependant on the effective management of the environmental sustainability challenges by aligning the organizational policies with the national policies and global industry standards of sustainable growth.

Legal factors: For agricultural business the policies or laws of the country in which it is basing its operational unit plays a significant role in its success. For instance, many governments have sought additional sources of revenue by increasing rates of taxation, royalties or resource rent taxes or may increase sustainability obligations (Baliamoune-Lutz 2015). exposed to extensive laws including those relating to bribery and corruption, sanctions, taxation, anti-trust, financial markets regulation, environmental protection, use of hazardous substances, product safety and dangerous goods regulations, development of natural resources, licences over resources, exploration, production and post-closure reclamation, employment of labour and occupational health and safety standards. The legal system and dispute resolution mechanisms in some countries may be uncertain so that we may be unable to enforce our understanding of our rights (Olbert and Spengel 2017). Failure to obtain or renew a necessary permit or the occurrence of other disputes could mean that the Group would not be unable to proceed with the development or continued operation of an asset in that country (Glencore 2018).

Technological factors: these include malfunctions in the operation of the process of procuring the natural resources, technical faults in the machinery or the used equipment, infrastructural constraints, industrial accidents, challenges from the workforce, certain natural calamities such as locust storm, sand storm, torrential rains, which can destroy the farm produce, political protests, overrunning of cost and scarcity of resources, which may occur due to financial losses incurred by the Group during unfavourable laws and policies of a country or market imbalances which negatively influence the profitability of the agribusiness unit of the company (Glencore n.d.). It is crucial to hone a positive employee and union relationships within the organization by effective leadership skill for retaining skilled employees, labourers, and effective management of the challenges in terms of remuneration or fair growth and compensation is essential and crucial to the task of employee performance and company’s success (Glencore Agriculture n.d).

Internal Environment (SWOT ANALYSIS)

Resources and capabilities:

Resource management is one of the strongest pillars of the Glencore Group. The Group has a steadfast Legal as well as Compliance resources which work in aligning with the internal policies and procedures to assist the agricultural business. These resources include capital investment, farmers, surplus source of energy and fertilizers, technology and land. Furthermore, to enhance the capabilities of its human resources, the Group undertakes routine pieces of training and boot camps for obtaining for upskilling of their employees. However, despite of such policies, procedures and controls Group against is still vulnerable to frauds or corruption, due to unlawful activities from its employees of other external stakeholders. For this purpose, a risk committee is established to monitor and regulate a company's ethical and legal aspects of the company and ensure no breeches occur in within the organization (Glencore 2017).

Core Competencies and Competitive Advantages

Glencore's core competency lies in the ability to leverage its skill and rich experience from its operational spots for developing new solutions in the market to meet the everchanging demands of the food and agriculture industry. They are global leaders in providing safe and quality produces to their customers which meet the requirements aligned with the gold standard used worldwide (Glencore n.d.).

Glencore’s competitive advantage is that it holds the high international standards for producing the best quality products in the market. It has obtained various certifications such as “International Sustainability and Carbon Certification”, and is certified with ISO 22000 and ISO 9001 9 (Glencore n.d.). It also hones the best management and operating title as revealed in the data below, providing it an edge over other competitors.

Recommendations on Agribusiness in Australia

Agribusiness has a lot of scope of improvement and growth. Glencore Agriculture too can employ unique and distinct strategies to grow and modernise even more. For instance, providing trainings for upskilling the workers, at increasing remuneration for retaining workers at senior positions. One thing every agricultural business must keep in track to lead in their product is to adopt the newest technology that comes in the market. It is important for the business to consistently innovate and create keeping the advanced technology updated along the way (Ayodele, Garba and Innocent 2019). Glencore Agriculture must keep bringing advanced technology in its business practices. There are several techniques to improve the quality and quantity of the business to sustain in the long run. Some of this can be attained by focusing on the farmers of the products. Sustainability can be maintained by training the farmers, increasing their participation in more broad tasks, providing them with internships on how to use new technologies and to learn the more advanced stuff (Anwarudin and Dayat 2019).

Conclusion on Agribusiness in Australia

The critical analysis and the research on the agriculture business in Australia throws light on the various external and internal factors which contribute towards the operations and management of the business. The external factors such as political, environment and legal issues as well as the internal factors such as management of resources, corporate governance together impact the profitability and growth of the company. However, the annual and other crucial reports of Glencore showcase their pivotal role in value creation and product management deploying various sustainable strategies and market influence which makes it a global leader and key player in the agricultural business in Australia and also worldwide.

References for Agribusiness in Australia

Anwarudin O., and Dayat, D. 2019. The Effect of Farmer Participation in Agricultural Extension on Agribusiness Sustainability in Bogor, Indonesia. International Journal of Multicultural & Multireligious Understanding 6(3) Retrieved from https://ijmmu.com/index.php/ijmmu/article/view/1028

Ayodele, O. J., Garba, S. J., and Innocent, I. O. 2019. Innovation as a mediating of the relationship between internal and external environment in agribusiness performance. Marketing and Management of Innovations 1, pp. 196-207. Retrieved from file:///C:/Users/91870/Downloads/Mimi_2019_1_18.pdf

DOI: http://doi.org/10.21272/mmi.2019.1-16

Baliamoune‐Lutz, M. 2015. Taxes and entrepreneurship in OECD countries. Contemporary Economic Policy, 33(2), pp.369-380.

Clune, T. 2019. Conceptualising Sustainable Development of Agribusiness in Australia. Australasian Agricultural & Resource Economics Society. Retrieved from https://ageconsearch.umn.edu/record/285037/

DOI: 10.22004/ag.econ.285037

Glencore 2017. Risk Factors. Retrieved from https://www.glencore.com/dam/jcr:a485f4ea-a1e0-48f6-9ecf-9fe9c048e50d/Risk%20Factors_October%202017%20offering%20circular.pdf

Glencore 2018. Annual Reports of Glencore. Retrieved from https://www.glencore.com/dam/jcr:7af586be-7f61-44ca-b25d-778162176a52/glen-2018-annual-report-strategic-report.pdf

Glencore International plc n.d. Glencore at a Glance. Retrieved from https://www.glencore.com/dam/jcr:c7bf3049-12a7-4bf2-bef5-c1bcaa38f409/201111030800-Glencore-presentation.pdf

Glencore n.d. Our Approach to Sustainability. Retrieved from https://www.glencore.com/dam/jcr:afc474ef-62c3-4f03-af14-0884b96fcae4/Our-approach-to-sustainability.pdf Mining Global n.d. What is Glencore’s Competitive Advantage?. Retrieved from https://www.miningglobal.com/technology/what-glencores-competitive-advantage

Glencore Agriculture n.d. Sustainability Environment. Retrieved from https://www.glencoreagriculture.com/Sustainability/Environment

McMullen, G. 2020. Grain trade Australia. Australian Fodder Industry Association and Grain Trade Australia. Retrieved from https://www.graintrade.org.au/sites/default/files/GTA_Submissions/NWPGP_GTA_AFIA_Submission_toAPVMA_Rodenticides26June2020.pdf

Olbert, M. and Spengel, C. 2017. International taxation in the digital economy: challenge accepted. World tax journal, 9(1), pp.3-46

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Strategic Management Assignment Help

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