Strategic Management Analysis of Glencore Plc

This report outlines the strategic management analysis of Glencore Plc, including external factors, competitive analysis, and recommendations for increasing profitability.

Running head: STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
Name of the student
Name of the university
Author Note

1STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
Executive Summary
This report outlines the strategic management analysis of Glencore Plc. It aims at analysing the
strategical management and performance of the company. The report contains the study of the
external factors using the PESTLE framework. It also provides Porter's five forces framework of
the organisation. A competitive analysis is stated using three close competitors of Glencore Plc.
A complete Competitor Profile Matrix and the critical success factor is included in the report.
The opportunities and threat matrix are developed for analysing the external environment. A
strategic management tool, External Factor Evaluation framework is designed for the assessment
of the current business scenario of the organisation. The reports provide the conclusion along
with some recommendations to plan and take the strategic decision in increasing the profitability
of the company.

2STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
Table of Contents
Introduction:....................................................................................................................................3
Company Overview:........................................................................................................................3
General environment Analysis:.......................................................................................................4
Porter’s Five forces:.........................................................................................................................6
Competitor analysis:........................................................................................................................8
Competitor Profile Matrix (CPM):..................................................................................................9
OT matrix:.....................................................................................................................................10
EFE matrix:....................................................................................................................................11
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

3STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
Introduction:
The report aims to include the strategic marketing analysis of Glencore Plc. The project
contains an overview of the company along with general environment analysis using the
PESTLE framework. Porter’s five forces framework of the organisation is included in the study.
A competitive analysis is stated using three close competitors of Glencore Plc. The critical
success factors and a complete Competitor Profile Matrix is included in the report. The
opportunities and threat matrix are developed for analysing the external environment. A strategic
management tool, External Factor Evaluation framework is designed for the assessment of the
current business scenario of the organisation.
Company Overview:
Glencore Plc is an international company, with an integrated production and marketing of
the commodities. It is a public listed company established in the year 1974 and serve people
worldwide. Its headquarter is in Baar, Switzerland with a registered office at Saint Helier, Jersey.
In May 2013, the company, Glencore merged with another company, Xstrata plc to form
Glencore Xstrata plc but later on, changed its name to Glencore plc (The Statistics Portal, 2018).
Tony Hayward and Ivan Glasenberg is the present chairperson and chief executive officer of the
company respectively (Mergentonline.com.ezproxy.umuc.edu, 2019). This company is involved
in the production, refinery, storage transport, processing and marketing of its products. The
products are segmented into three categories such as Metals and Minerals, agricultural Products,
Energy Products and Corporate Products. It also provides services such as logistics, financing
and other services to consumers and producers of these products. According to the Fortune
global 500 lists of 2013, Glencore plc ranking was tenth among the largest companies of the

4STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
world (Fortune, 2013). The total revenue generated by the company in 2018 is the US $ 219.754
billion with a net income of US $ 2.616 billion (Mergentonline.com.ezproxy.umuc.edu, 2019).
The total number of employees in the company is 158,000.
General environment Analysis:
The PESTLE framework is used to analyse the external environment of Glencore Plc. It
provides a detailed analysis of the impacts that the organisation faces externally. PESTLE stands
for Political, Environmental, Social, Technological, Legal and Economic factors affecting the
external organisational environment (Rothaermel, 2015).
1. Political: political factors play an essential role in determining the profitability of the
organisation in a particular country. The various political risks and environment affect the
resources of operations of Glencore plc in several countries. The company analysed the
stable political factors across the states to diversify the systematic political risk in an
external environment. Before investing in the particular market, Glencore plc carefully
examines the elements of political stability, taxation laws and rate, legal contract
enforcement, wage legislation, trade regulations, employee benefits, product labelling,
technical safety regulations and price regulations (Glencore, 2016).
2. Environmental: The profitability of an organisation can be affected by the different
markets in different countries due to various environmental laws and standards that affect
the organisation externally. Even the rules followed in a particular country, varies from
state to state. Glencore Plc has a significant impact on the environment. The current
weather condition in the US market favours the transportation of both the raw materials
and the finished products. Climate change such as unexpected monsoon can affect the
delivery date of the final products of the company (Glencore.com, 2017). The

5STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
environmental habits affected due to massive wastes and pollution is a financial strain on
the company as it is as fines on the company (Sanderson & Hume, 2018).
3. Social: The social factors that affect the organisation is the cultural beliefs, values,
attitudes. These social factors have an impact on the marketing aspects of Glencore Plc.
The consumers' needs, demands, tastes and preferences, their way of living and education
level help in designing the products accordingly and this contributes to the organisation's
success (Saddler, 2017). The various social factors that affect Glencore plc are the
population demographics that determine age and gender. The company would be unable
to promote its premium category product to the lower section of the society. Glencore plc
should be aware of the health hazards and claims, along with its environmental protection
significance prevailing in that in the company (Glencore.com, 2017).
4. Technological: The continuous innovation in a particular company not only helps in
increasing the profitability of the company but also strengthen its presence in the market.
It is essential for Glencore plc to avoid getting obsolete in the market by spending more
on research and development of the new or existing products of the company in a
particular country (Commodity.com, 2019). The technological factors that may affect
Glencore plc are the innovative products of its competitors. If the company encounters a
new product by its competitors, it should focus on monitoring the popularity gained by
that product. This will require an urgency for innovating a new product in the company
(Transcripts, 2018).
5. Legal: Several governmental laws and regulations affect the pricing policy of the
company. The policy of Glencore plc is not efficient in protecting the employment laws
and regulations of its workers. The government place the discrimination laws for the

6STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
employees' protection in Glencore Plc. It is ensured that all the employees are treated
fairly and with respect irrespective of their age, gender, disability, sexual or religion
orientation. The laws are implemented to make sure that the excellent quality products
are provided at a reasonable price to the consumers (Keay & Iqbal, 2019).
6. Economic: The economic factors that influence the growth of any organisation are the
change in inflation rate, taxation rate, gross domestic product rate, foreign exchange rate
and the current scenario of the the economic cycle (St, 2018). The GDP rate of a
particular country affects the future growth of Glencore Plc. The financial market affects
the increasing capital rate of Glencore Plc. The higher level of unemployment means
more people will be willing to work at a lower wage and this will lower the cost of
Glencore plc (The Economic Times, 2019).
Porter’s Five forces:
Michael Porter designed a five forces framework to evaluate the market situation and
analyse the financial performance of the company (Omsa, Abdullah & Jamali, 2017). This
framework shows whether it is profitable to invest in Glencore plc or not. The five forces are as
follows:
Bargaining
Power of Buyers:
Bargaining
Power of
Suppliers:
The Threat of
new entrants:
The Threat of
substitutes:
Competitive
rivalry:
 Buyers
have
 Suppliers
have low
 Cost of
productio
 Fewer
substitu
 Very few
competito

7STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
limited
options as
the
number of
firms in
this
industry is
less.
 Product
differentia
tion is
high, and
switching
costs of
buyers are
low
 The
income of
buyers is
low
 Buyers are
less price
sensitive
bargainin
g powers
as they
have less
control
over
price
 Highly
standardi
sed
products
and
switchin
g cost
are less.
Thus,
making
it a weak
force.
 The
suppliers
provide
reasonab
n is high
for the
new
entrants.
 Capital
expenditu
re is high
 Research
and
developm
ent cost
is high
 The
distributi
on
network
is easily
accessibl
e to new
entrants.
tes are
availab
le
 High
quality
substitu
tes are
more
expensi
ve
 Less
chance
of
switchi
ng to
other
product
s
rs in this
industry
 High
fixed
costs
within the
industry
 The
highly
differenti
ated
product
that
means
products
are
unique.
 Large
capital
investmen
t and
more
chances

8STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
as the
quality of
products is
essential
for buyers.
le pricing
as
Glencore
plc is a
significa
nt
customer
of these
suppliers
.
of exit
barriers.
Competitor analysis:
The main competitors of Glencore in the U.S market are China Minmetals, Femur and
Peabody Energy (Furse, 2018). Below is presented a review of its competitors in terms of
different aspects.
Elements Glencore China Minmetals Femur Peabody Energy
Founding
date
1974 1950 1922 1883
Type Public Private Public Public
No. of
employees
158,000 200,000 5,357 7,400
Target
Market
- Extensive
domestic and
international
coal, precious
metal, quarry
mines and base
metal
companies
- Coal
companies
- Metal
companies
- Financial and
accounting
companies
- Domestic and
global Coal
companies
- Metal
companies
- Domestic and
global Coal
companies
- Metal
companies

9STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
- Oil companies
- Agriculture
firms
Distribution - Physically
source the
commodities
from the global
supplier base
and sell them
to the
customers
worldwide.
- Dealership
- Physically
source the
commodities
from the
global supplier
base and sell
them to the
customers
worldwide.
- Offline selling
- Dealership
- Dealership
- Sourcing the
products and
commodities
Brand
Reputation
Strong brand
image
Strong brand
image
Weak brand image Weak brand image
Product
Range
- Energy and
utilities
- Industrial and
manufacturing
- Agritech
- Mining
- Oil
- Metal products
- Coal
- Exploration
and
development
- Mining
- Financial
services
- Industrial and
manufacturing
- Mining
- Metal products
- Machinery
- Coal
- Industrial and
manufacturing
- Mining
- Coal
- Industrial and
manufacturing
- Energy and
utilities
Location Global Global Global Global
Customer
service
Worldwide Worldwide Worldwide Worldwide
Competitor Profile Matrix (CPM):
CPM (Competitor Profile matrix) is a strategic analysis which allows a company to
compare and contrast itself with the other present competitors in the market in ways to reveal the
strengths and weaknesses (Capps & Cassidy, 2016). To develop the CPM for Glencore, two of
its major competitors in the US market are assessed based on components like marketing, brand
reputation, product quality, location and product range. The score has been put based on the
performance of the companies in terms of these components within the industry. They are scored
out of four where 4= superior, 3= above average, 2= below average, 1= poor. It is to note that

10STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
the critical success factors are assigned the given weighting from 0.1 to 1.0 where 0.1 suggests
the lowest, and 1.0 indicates the highest.
Components Glencore China Minmetals Femur
Critical
Success
Factor
Score Score Weighted
Score
Score Weighted
Score
Score Weighted
score
Marketing 0.25 4 1.00 4 1.00 1 0.25
Brand
Reputation
0.25 3 0.75 4 1.00 3 0.75
Product
Quality
0.10 4 1.00 3 0.75 1 0.25
Location 0.05 2 0.10 4 1.00 3 0.75
Product
Range
0.10 3 0.30 3 0.75 3 0.75
Total score 1.00 3.50 4.50 2.75
OT matrix:
The OT matrix for Glencore is presented below. It is to note that OT matrix here refers to
a partial SWOT (OT) analysis for the external environment of Glencore (David, David & David,
2017). The key opportunities and threats present for the company in the U.S market are
highlighted in the table below.
Opportunities Threats
- Improving its brand image in terms of
diversity using employing female staffs
in its different units.
- Being a widely admired company by
means of employing some transparent
tax paying policies in different nations
of operations
- Diversification of business
- Engagement in society by means of
some inclusive development plans and
community growth and development.
- Being tagged by the name of an anti-
social organisation or environment
harming organisation
- Price competitiveness from the local
players in the industry
- Threats of government policies
- Pressure from the NGOs in different
nations.

11STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
EFE matrix:
EFE (External Factor Evaluation) matrix is one of the strategic management tools that is
often used for assessing the current business conditions of a chosen company in the market. It
helps in visualising and prioritising the threats and the opportunities that a particular company or
business is facing within the industry (Tomy & Pardede, 2017). Below is presented a brief EFE
matric for Glencore based on its identified opportunities and threats.
However, it is to note that developing an EFE matrix is a very intuitive process. To
develop the below matrix, firstly, a list of several external factors are identified and are divided
into two groups, namely- the opportunities and threats. Secondly, weight is assigned for each
identified factors and the value of each one of them are placed in between 0 and 1 (Bhattacharjee
& Dey, 2015). It is to note that 0 means that the factor is not essential and 1 means, it is highly
important. The total value of all the weights together is 100. After that, a column of rating factors
is added where ratings are assigned to each of the factors. It is in between 1 and 4, where 1=
Poor, 2= below average, 3= above average, 4= super. After that, the weighted scores are
provided based on multiplying each of the factor's weight with their respective ratings, i.e.,
(12/100)*3 = 0.36. Lastly, all the weighted scores for each of the elements are added and is
named beside the total weighted score.
Opportunities Weight Rating Weighted
Score
- Improved brand image in terms of diversity by
means of employing female staffs in its different
units.
12% 3 0.36
- Being a widely admired company by means of
applying some transparent tax paying policies in
various nations of operations
8% 4 0.32
- Diversification of business 16% 3 0.48
- Engagement in the society by means of some 11% 4 0.44

12STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
inclusive
- Development plans and community growth and
development.
10% 2 0.20
Threats
- Being tagged by the name of anti-social
organisations or environment harming organisation
15% 1 0.15
- Price competitiveness from the local players in the
industry
5% 2 0.10
- Threats of government policies 8% 2 0.16
- Pressure from the NGOs in different nations. 5% 3 0.15
- Economic downturn 10% 1 0.10
Total weighted score 100% 2.46
1= Poor, 2= below average, 3= above average, 4= super
Conclusion:
From the above, it can be concluded that strategic management analysis of Glencore plc
helps in improving the profitability and success of the organisation. The external environment
analysis of the company is done using the PESTLE framework. Porters’ five forces help in
analysing the market situation and the financial performance of the industry. The competitive
analysis is done to evaluate the position of Glencore plc among its competitors. Competitor
Profile Matrix determines the critical success factors. The external factor evaluation framework
is developed for assessing the current scenario and growth of the organisation.

13STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
References:
Bhattacharjee, D., & Dey, M. (2015). Competitive profile matrix: a theoretical review. ABAC
Journal, 35(2), 61-70.
Capps III, C. J., & Cassidy, C. M. (2016). Expanding the competitive profile matrix (cpm):
introducing the financial, competitive profile matrix (fcpm). Academy of Strategic
Management Journal, 15(2), 9.
Commodity.com. (2019). Glencore PLC (GLEN): The Commodity.com Guide. Retrieved from
https://commodity.com/glencore-share-price/
David, M. E., David, F. R., & David, F. R. (2017). The quantitative strategic planning matrix: a
new marketing tool. Journal of Strategic Marketing, 25(4), 342-352.
Fortune. (2013). Fortune 500 2013. Retrieved from http://fortune.com/fortune500/2013/
Furse, M. (2018). Evidencing the Goals of Competition Law in the People’s Republic of China:
Inside the Merger Laboratory. World Competition, 41(1), 129-168
Glencore. (2016). 2015 Annual Report of Glencore plc (“Glencore” or the “Company”).
Retrieved from https://www.glencore.com/media-and-insights/news/2015-annual-report-of-
glencore-plc
Glencore.com. (2017). Retrieved from https://www.glencore.com/dam:jcr/f3e8dd81-97b4-4b96-
925c-ab3b6ea13c4a/2017-Glencore-Sustainability-Report-FINAL-.pdf
Glencore.com. (2017). Retrieved from https://www.glencore.com/dam:jcr/2e48c7cc-7245-4294-8153-
ff348208a3d6/Glencore+GRI+Databook_FINAL3.pdf

14STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
Keay, A., & Iqbal, T. (2019). An Evaluation of Sustainability in Large British
Companies. Common Law World Review.
Mergentonline.com.ezproxy.umuc.edu. (2019). Shibboleth Authentication Request. Retrieved
from http://www.mergentonline.com.ezproxy.umuc.edu/companydetail.php?
compnumber=132398
Omsa, S., Abdullah, I. H., & Jamali, H. (2017). Five Competitive Forces Model and the
Implementation of Porter’s Generic Strategies to Gain Firm Performances.
Patterson, S. (2019). Glencore to Cut Production at Major Copper, Cobalt Mine. Retrieved from
https://www.wsj.com/articles/glencore-to-cut-production-at-major-copper-cobalt-mine-
11550585206
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Saddler, H. (2017). Glencore continues looking for opportunities to expand ag business.
Retrieved from https://www.world-grain.com/articles/8532-glencore-continues-looking-
for-opportunities-to-expand-ag-business
St. S. (2018). Are Glencore Plc's (LON: GLEN) Interest Costs Too High?. Retrieved from
https://simplywall.st/stocks/gb/materials/lse-glen/glencore-shares/news/are-glencore-
plcs-longlen-interest-costs-too-high/
The Economic Times. (2019). Glencore plans to cap coal output in climate shift. Retrieved from
https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/glencore-
plans-to-cap-coal-output-in-climate-shift/articleshow/68086175.cms

15STRATEGIC MANAGEMENT ANALYSIS OF GLENCORE PLC
The Statistics Portal. (2018). Topic: Glencore. Retrieved from
https://www.statista.com/topics/2081/glencorexstrata/
Tomy, S., & Pardede, E. (2017). Opportunity evaluation using uncertainties in software
entrepreneurship. Entrepreneurship Research Journal, 7(3).
Transcripts, S. (2018). Glencore PLC (GLNCY) CEO Ivan Glasenberg on Q2 2018 Results -
Earnings Call Transcript. Retrieved from https://seekingalpha.com/article/4198793-
glencore-plc-glncy-ceo-ivan-glasenberg-q2-2018-results-earnings-call-transcript