Applied Corporate Strategy: Anglo American & Sirius Minerals Analysis

This report provides a comprehensive analysis of Anglo American's acquisition of Sirius Minerals, focusing on the corporate strategy involved. It includes an external analysis using PESTLE and Porter's Five Forces to assess the industry attractiveness and identify opportunities and threats. The internal analysis employs resource-based view and VRIO framework to evaluate Anglo American's strengths and weaknesses. The report concludes with a strategy evaluation, offering insights into the strategic implications of the acquisition. This document is available on Desklib, a platform offering a range of study tools and resources for students.

Contents
INTRODUCTION...........................................................................................................................................3
EXTERNAL ANALYSIS....................................................................................................................................3
PESTLE Analysis........................................................................................................................................3
Porter’s five forces...................................................................................................................................5
INTERNAL ANALYSIS....................................................................................................................................7
Resources................................................................................................................................................7
VRIO analysis...........................................................................................................................................8
STRATEGY EVALUATION..............................................................................................................................9
CONCLUSION.............................................................................................................................................11
REFERENCES..............................................................................................................................................13

INTRODUCTION
Anglo American, a mining corporation, has agreed to pay £405 million for
Sirius Minerals, saving efforts to construct the UK's first deep mining in 40 years
beneath the North York Moors. The parties said that they were in advanced
negotiations for a transaction that would transfer the ailing fertilizer producer to
Anglo for 5.5p per share, valuing the business at £386 million. According to the
agreement, shareholders, and workers of Sirius, which had a former worth of
further than £1.5 billion, would get a combined £405 million. This sum includes
around 85,000 individual investors (Halpern, 2018).
In this report analysis corporate strategy of Anglo American acquire Sirius
Minerals. In this report consist of PESTLE analysis, ports five forces, internal
analysis, and many others.
EXTERNAL ANALYSIS
PESTLE Analysis
Political: The elements that might affect mining industry lengthy competitiveness
in a particular nation or market are heavily influenced by political concerns. A
stable and welcoming business climate with anticipated revenue growth tendencies
is provided by strong government consistency. Nevertheless, political unrest
discourages investment and damages stakeholders' faith in the economy and, as a
result, informs readers. Mining industry is already in several nations, each of which
is experiencing its own political unrest. The expansion of the business market may
be hampered, and mining industry may have less prospects for growth because of
rising political unrest and instability on a worldwide scale (Anglo American Our
Code of Conduct, 2022).

Economical: Understanding economic issues including inflation, access financial,
labor market circumstances, and currency swaps rates is crucial for mining
industry as they affect the nation's gross domestic product economic climate. The
development trajectories of the sector and the organisation may be predicted by
mining industry with the aid of a thorough grasp of the economic climate. Mining
sector must consider the following economic aspects to make wise judgments.
mining industry may anticipate the future growth of not just sector name sector
but also that of the organisation by using country-level economic factors like
growth rate, inflation, and industry-level economic data like Basic Materials
growth of sales, private consumption, etc (Hsieh, Ma and Novoselov, 2019). The
British economy boasts consistently strong GDP growth due to almost no
distinctness risk. As they're more culturally aware and advanced, mining
operations are trying to negotiate mostly with the surrounding area.
Social: The manner of life and traditions of the community influence the
organizational culture in each setting. To comprehend a market's clients and start
promoting strategy that appeals to customers in the Basic Materials business,
Anglo American Plc's strategists heavily rely on the common views on the world
of the populace. For worldwide corporate companies like Anglo American Plc,
changes in demographic patterns including the ageing population, migratory
patterns, and socioeconomic characteristics are of the extreme implication. The
proper market sector or sectors with significant growth potential may be selected
by Anglo American Plc. by carefully examining the demographic parameters.
Migration influences the company and marketing strategy as well. Understanding
the overall attitude of the populace about migration is crucial for Anglo American
Plc. since it might affect businesses' capacity to hire foreign management in the
host country(Anglo American Sustainability Report, 2021).

Technological: The fourth PESTEL analysis component is technology.
Considering technical aspects throughout the process of creating business choices
has become more crucial due to the fast growth of technology and its global
spread. Anglo American Plc. can take advantage of technology trends to gain
specific competitive edge, including such expanding revenue, accelerating the
innovation activities, and improving operational effectiveness, by conducting a
thorough examination of the technological environment. To keep ahead of the
competition, Anglo American Plc. should thoroughly examine the continuing
technical developments. The possibility for the 5G to improve corporate goals via
improved customer experience, better performance, and more accessibility should
be closely monitored (Juliana, Gani and Jermias, 2021). Mining costs have
decreased due to advancements in mining equipment and methodologies, making
previously ineffectual extraction process more financially viable.
Legal factors: The PESTEL study' sixth element is "Legal." Without thoroughly
researching the legal system and legal regime of the emerging customer industry,
Anglo American Plc. cannot enter that market. To avoid major difficulties, a
detailed assessment of legal issues is necessary. Ignorance in this area may result
in adverse outcomes for Anglo American Plc., such as a loss of strategic edge due
to the infringement of copyright and a damaged organizational reputation because
of benchmarks for the protection of consumers, employees, and the surroundings.
While investigating a new market, Anglo American Plc. should take the following
legal considerations into account. As certain nations have severe requirements to
safeguard health and safety at work, Anglo American Plc. must abide by the laws
governing employee/labor health & wellbeing (Anglo American Our Code of
Conduct, 2022). The country has enforced for the mining industry in terms of

facilities, gets spread, taxation policies, nationwide safety/defence, religious moral
codes, international policy, opponents, profession, and similar environments.
Environment: Environmental analysis is now a significant component of PESTEL
analysis due to rising environmental awareness and related greenhouse gas
emissions circumstances. Global markets have distinct environmental norms, rules,
and regulations. Due to its global reach, Anglo American Plc. must carefully weigh
these distinctions to prevent undesirable outcomes. Prior to opting to launch a new
product portfolio or explore new markets, a conduct comprehensive investigation
is essential. The usage of green/eco-friendly items is becoming more popular.
Anglo American Plc. may seize the chance and implement green business
strategies to gain the confidence of customers. Objectives for product innovation
are changing because of regulatory organizations’ emphasis on maintaining
conformity with environmental standards. Anglo American Plc. must put a higher
priority on promoting the eco-friendliness of its products than on traditional value
arguments(Kitsios, and Kamariotou, 2019).
Porter’s five forces
Competitive rivalry: When corporations are fiercely vying to preserve their
dominance within an industry, it is easier to determine how profitable that market
is. The American-English Additionally, a competition is based on diversity, sector-
specific growth, and entry-level barriers removal. Competitive rivalry is the
examination of products and brands, including their advantages and disadvantages,
rivals' strategy, and customer base(Miao, Saide and Muwardi, 2021). Mining
industry competition is moderate to fierce. The demand for resources and industrial
facilities, which differs from other industry sectors, is a strong competitor for the
mining industry. Because resources are insufficient and non-renewable, as well as
the ever-increasing consumption of resources, including coal consumption in

China and India, the fighting to utilise and build innovative mines is fierce. In
addition, there are numerous competitors in the industry. However, because the
exit barriers to entry are low, competitive rivalry inside of established businesses is
restricted. Players in the industry may compete for a bigger market share, but new
entrants pose little danger. As a result, the company's competition is classified as
medium to high.
Threat of new entrants: To keep new competition from entering and disrupting
existing businesses, barriers must be put in place. The businesses could be start-ups
or businesses looking to broaden their product offerings. Both industrial and legal
restrictions may apply. In addition, the size and standing of the businesses that
already are active in the industry are crucial. Additionally, the price of entry,
source of raw resources, cultural problems, and technical specifications all play a
significant impact and might influence the choice of new competitors. New
competitors may present an impact to the business by launching innovative
creative products at affordable prices, eroding their brand image and customer
commitment. Owing to excessive barriers of entry, the threat of new entrant for the
coal and uranium industries is generally low. This is largely attributable regulatory
burdens imposed on coal and uranium mining industry. Coal and uranium
resources are intertwined. The investment spending or start-up costs of a mining
company are extremely high. Furthermore, mining products have a large exit cost
due to the need for specialized assets.
Threat of substitute: A replacement product is an alternative that is offered in the
market at a price that is comparably lower. These items are successful because of
innovation and technical improvement. Because of this, items made by firms
already in the market and utilizing the same expertise are quickly replaced by
many of those manufactured overseas, whose commodities are superior in terms of

both cost and performance and are manufactured in industries that generate
substantial profits. Because the corporations are always in danger of being
supplanted, the replacement items are hazardous. Financial distress results from a
high danger of substitution because it caps industry earnings by setting a price
floor out of concern that it will be replaced by another product. In addition, it
lowers the revenues and profitability while also affecting the industry's overall
development potential(Peng, 2020).
Bargaining power of suppliers: When negotiating the transaction, the supplier in
the mining sector has significant bargaining power. The sector is highly
consolidated, yet mining suppliers outnumber the sector's needs. Mining
electronics companies are often the suppliers. The technology is expensive. The
expense of moving to different vendors is far too expensive. The supplier
frequently currently operates with other industries as well. Making frequent
changes to the output of makes it challenging to pay the bills. Industries require on-
site technical assistance from suppliers for regular inspection and repair. The
mining corporations also want a provider for the upgrading of machinery following
acquiring it since they cannot afford to lose their priceless machinery. In that
situation, the supplier has greater negotiation leverage.
Bargaining power of consumer: Whether there are competing items on the
market, the purchasers have negotiation power. In the context of mining, goods
like coal, platinum, and diamonds. Typically, the product on the market will be the
same. Since the mineral wealth are not replenish able, the commodity is
constrained. The creation of power is intimately related to the consumer product,
such as coal. The nation's economy may be directly impacted by a company's
products. These agreements are longer-term contracts that nations sign. They are
unable to pay the switching costs. The only significant power they possess is the

assurance of a high-quality product. By establishing a large customer base. This is
beneficial in 2 directions. This should decrease buyers' bargaining power that
provide an opportunity for companies to simplify its marketing and inventory
processes..
INTERNAL ANALYSIS
Resources
Human resources: At Anglo American, we encourage an inclusive workplace
where employees can contribute their entire selves daily and welcome change. To
further promote diversity throughout our organisation, they are implementing new
strategies for hiring, developing talent, mentorship, paternity leave, and flexible
work arrangements. Anglo American has about 62,000 workers in 2021, dropping
from 105,000 in 2012. Anglo American is a global mining corporation with offices
in both London and Johannesburg. On Ambition Box, Anglo American has
received a score of 4.1 out of 5 depending on 9 employee evaluations. Anglo
American is well renowned for developing skills, which received a rating of 4.3
and is rated as the best. The lowest rating, a 3.3, is given to job stability, which can
be raised (Anderson, 2019).
Strength: Anglo American is financially strong, which gives it the ability to grow
and invest in new resources.
Weakness: The weakness of this COVID 19 impact on the working style of
company.
Financial resources:
 Sales growth, high pricing, and dependable operational efficiency drive the
$20.6 billion in actual EBITDA*.

 $8.6 billion in profit that may be attributed to equity stockholders.
 $3.8 billion in financial liabilities* (0.2x underlying EBITDA): robust cash
flow creation mitigated in part by expansion investments
 $6.2 billion shareholder return: committed to returning surplus cash and
capital restraint
 According to our 40 percent payment policy, the $2.1 billion recommended
final dividend would be $1.18 per share. It would also include a $0.50 per
share special dividend.
 Split announcement of a $4.1 billion return included a $1.0 billion special
dividend and a $1.0 billion repurchase(Chen and Keung, 2019).
Brand reputation: From 2009 and 2022, Brand Finance estimated the brand value
of the Anglo-American brand 12 times. The strength and value of the Anglo-
American brand have been highlighted in 23 brand rankings, which included the
top worldwide, UK, and industrial, commodities, and mineral brands (Brand
Finance, 2022).
Physical resources: Anglo American's portfolio of world-class mining companies
and uninhabited resources, which includes diamonds (via De Beers), copper,
platinum group metals, iron ore, coal, copper, and minerals, enables a relatively
clean, greener, more sustainable world. Researchers plan for the mine's lifecycle
and beyond, and we use our own technologies to reduce waste and protect the
environment.
VRIO analysis
The Anglo American A PESTEL study and the Anglo American A VRIO analysis
are essentially extensions of each other, allowing the organisation to fully
appreciate its capabilities, competitive advantage, business model, and market

value. Analyzing the factors that are important to the organisation is the
fundamental tenet of the Anglo American A VRIO model. These might be things
like the effectiveness of the distribution chain, product lifecycle upkeep,
technology, or other things that are valuable to the business and enable it to
provide customers with equal value (Johnson et al., 2019).
Valuable: The Anglo-American Plc VRIO Analysis demonstrates the high value of
Anglo-American Plc's financial resources, which are used to invest in new external
prospects. These aid Anglo American Plc in fending off attacks from the outside.
Anglo American Plc's local food items are a significant resource since they are
particularly distinctive, according to the VRIO Analysis. Clients therefore believe
these to be of great value. Due to the unique nature of these items, people value
them higher than the competitors (Sánchez-Herrera and Donate, 2019).
Rare: The VRIO Analysis of Anglo-American Plc reveals that the company's
financial resources are scarce. Only a small number of businesses in the sector
have substantial financial resources.
According to Anglo American Plc VRIO Analysis, the local processed foods are
not found to be unusual. These are readily available on the market from rival
businesses. This implies that rivals may utilize such capabilities similarly to Anglo
American Plc and undermine competitive edge. This implies that Anglo American
Plc experiences core competitiveness because of the regional food items. Anglo
American Plc can still utilize this resource since it is valuable(Jansson, 2020).
Imitable:The Anglo-American Plc VRIO Analysis concluded that it would be
expensive to replicate Anglo American Plc's financial resources. The corporation
has amassed such capabilities throughout the generations via consistent

profitability. For rivals and newcomers to amass huge sums of money, they would
need to generate comparable earnings over a protracted period.
According to Anglo American Plc's VRIO Analysis, it is not very expensive to
copy local produce goods. When rivals spend a lot of money on research &
innovation, they can also obtain these. As a result, Anglo American Plc's local food
goods give it a short-term competitive edge that rivals can eventually equal(Travis
and Hodgson, 2019).
Organisation:The VRIO Analysis of Anglo-American Plc has organized the
financial resources of the company to maximize value. These resources are
spectacular corporate to make the proper investments, capitalize on opportunities,
and counter threats.
According to the Anglo-American Plc VRIO Analysis, the Trademarks of that
company are not managed correctly. This indicates that the organisation is not
making the most of these patents. When Anglo American Plc begins marketing
patented goods even before patent has expired, an untapped competitiveness might
be transformed into a long-lasting one.
Anglo American value chain analysis
Support
activitie
s
Firm infrastructure
 Financial planning
 Investor relation
Human resource management
 Recruitment in mining
 Compensation system
 Training
Technology development

 Product design
 Market research
Procurement
 Services
 Advertising
 Data
 Machines
Primary
activitie
s
Inbound
logistics
Operations Outbound
logistics
Marketing
and sales
Service
Customer
access
Data
collection
Income
material
storage
Branch
operation
Assembly
Component
fabrication
Order
processing
Warehousing
Report
preparation
Sales forces
Promotion
Advertising
Proposal
writing
Installation
Customer support
Complaint resolution