Abstract
This paper describes the goal of Bunge Limited Co. and what techniques did they use in their operations to achieve the goal. Looking to the history of the company starting in Europe and moving to Americas, how transformation from a small company leading the business locally to a global company in the market was done. The company strategy is a practical model of trade-offs which helped them to focus back on their core business, decentralization structure was inherited in Bunge from the days it was privately run that had shown benefits for Bunge in the markets where they exits while in the later stage of transformation challenges raised after the acquisition of ‘Cereol’ that gave Bunge more balance globally helping it becoming a global company working on the goal of becoming the best agribusiness and food company in world. Product development had a big role in Bunge giving total agribusiness solutions for the farmers as well as customers by having fertilizer division. The analysis demonstrates the importance of trade-offs, innovation, product development, line of fit and Information Technology systems in the operations strategy, while showing decentralization structure and effect of it on global companies.
Introduction
Bunge limited is a successful example for transformation of companies to globalization as Bunge CEO Weisser goal to become the best company in the world in agribusiness and food. Performance objectives indicating market requirements from quality, speed, dependability, flexibility and cost for companies to position themselves in the market while decisions areas for operations strategy as capacity, supply network, process technology, and development and organization for companies to set their operation resources capabilities achieving the performance required in the market to reach and maintain the intended market position as a vital part of the overall strategy. As Slack and Lewis(2008, p. 26) stated that any company that have an operations strategy will have history of the intersections between performance objectives and decisions areas that is seen as a matrix named operations strategy matrix, different companies will have different critical intersections depending on the company’s operations nature. All products/services had a life cycle that had effects on operations performance objectives along the four stages from introduction, growth, maturity and decline. As the effectiveness of operations is seen on how well it performs, Slack and Lewis(2008, p.55) explained that ‘trade-off concept’ is important of how operations look to improve their performance that is done by sacrificing some aspects in order to excel in the rest. Trade-off idea was used as a start for Bunge to reach their goal and having significant improvement for their operations.
Historical overview for Bunge
Bunge 180 years experience in agribusiness history goes back to the 19th century when it was established in Europe and moved through a lot of phases moving headquarters to Americas in 1884 in Argentina where the country was expanding in grain exports rapidly. In 1970 Bunge moved its headquarters to Brazil where it saw a rapid growth and became one of the largest employers in Brazil, By 1980 Bunge had diversified business with subsidiaries in different industries of textiles, cement, paint, real estate, banking and insurance. A review on the group’s strategy shown that Bunge should refocus on agribusiness and food operation that between 1993 and 1998 Bunge used trade-off concept by selling all the non-core business focusing on food and agribusiness industry. Bunge growing its operations capability resources and securing market share acquired Ceval Alimentos, which was the largest soy processor company in Brazil. Bunge being dynamic in expanding their operations in Europe and moving to higher level in United States and Canada, acquired Cereol which number four soy processor in the states, leading in Canada and Europe.
Bunge Strategy
The goal was to be the best integrated agribusiness and food company in the world, the strategy was to have a complete value chain as defining factor for integration is superior logistics giving Bunge a cost advantage that was achieved by establishing a global supply chain by the establishment of Bunge Global Markets (BGM) applying lean operations in their strategy. This was another step to globalization as in the previous Bunge used to sell its products to traders where they done good margins in international trade which Bunge missed due to its lack of end- customer contact, and BGM four main activities were marketing physical products, freight, risk management and trade finance. Decentralization structure was applied as Weisser had seen that it reduced bureaucracy and allowed local offices to win more business opportunities.
 Operations
Acquiring Cereol and establishment of BGM was important for Bunge transformation to globalization, in which BGM being customer focused, Bunge implemented lean operations delivering the right products in the right quantity, in right time to the right customer and at the right price. Operations capabilities expanded to cover Americas and Europe and being competed by Asian companies that were important customers for Bunge’s grain and oilseed exports. Lean operations was visible going through the value chain as for example food products made balance in the agribusiness and fertilizers products cycle. Operations decentralization in Bunge affected lean operations between Bunge traders and BGM in the cost of buying, as the decentralization structure focus on regional companies, where profit centers are separate was one of the challenges of decentralization management structure that can lead to risks in prices when the aim was to have cost advantage by having all the parts of the value chain. Slack and Lewis (2008, p. 273) stating the four elements of lean which are customer focus, synchronization, Involvement behavior, and waste elimination was seen in Bunge strategy.
 Product Development
Slack and Lewis (2008, p.224) in competitive markets where customers are looking for updated products and as markets becoming more fragmented, looking for products that fits their needs, technology helped in creating more opportunities having new products or develop it to satisfy existing market needs. Product development is imperative for the companies to compete in the market, secure or improve their market position. Bunge shown product development in the fertilizer division which was a small business that they found a big opportunity from developing the division offering the farmers the fertilizers required to grow the crops, this gave Bunge a significant cost advantage as they supply their own fertilizers to farmers that they sell their crops to Bunge again. Another product development for producing isolated soy protein (ISP) as Bunge was one of the only three big global producers, as the technology for producing ISP had a lot of barriers were Bunge had developed in this area, they were producing it Brazil for low-cost production and to meet market requirements they invested in a new plant to double their production meeting the strict requirements of pharmaceutical industry. These two products development had shown good profits for Bunge and also strengthen their market position.
 Decentralization culture and effects on globalization
Decentralization had benefits were lower risks exist, giving more opportunities in local market, giving local managers more power over the business helping them to gain more business opportunity while there is a big argument if the company is decentralized or centralized will bring better results? Campbell and Kunisch (2011) had shown on a study on two companies asking three questions that each question shows the obstacles that centralization will meet, these questions gives management a wider angel to discuss and convince the idea of centralization, and the decision of centralization requires yes to any of the three at least. ‘Is centralization mandated?’, ‘Does centralization add significant value--10 percent?’, ‘Are the risks low?’ Answering these questions is discussing how to overcome the obstacles and risk that will emerge from centralization. Weisser had seen that Bunge will benefit from decentralization and local managers will work faster gaining more opportunities, on the preparation for IPO Bunge financial functions became centralized while the rest of the functions were locally managed. For Bunge to achieve their strategic goal, they found the importance of centralizing the rest of the functions so that the whole group be in the right direction for their intended market position. Bunge started looking towards another critical intersections in the strategy matrix focusing on development and technology were there was suggestions to invest in global IT infrastructure adapting to the globalization environment. Having global operations rather than local as Buckley and Ghauri (2004, p.86) seen advantages in global operations in economies of scale, achieving efficiency by waste elimination from duplication in their phrase “the cost advantages of standardization vs the revenue advantages of adaption”. Information technology is also important creating a easier communication internally and externally were Swanson (1994, p.1069) saw Information systems (IS) is in the center of this development were it links the history with the present and future intended influencing new ideas to emerge satisfying market requirements which could be a innovation helping the firm to achieve the strategic goal. This development was critical for Bunge as it was impossible to take decisions and implement it across the organization in a decentralized structure holding it back from achieving their goal.
Conclusion
Bunge had implemented a mix of concepts to achieve their goal as it had moved its position from a set of small regional companies to a global firm. Trade-off helped in developing operations by focusing on one industry to excel the performance having a value chain giving advantage in cost and efficiency, also Bunge sustained their market position by product development and the complexity of their operations to be copied due to their long experience in the market industry example of the ISP production technology. Growing in new markets was achieved by acquiring industry leaders in the regions as by acquiring Cereol to reach Europe market. In this phase and in order to achieve the main goal the company should be aligned globally and aligning the operations globally having the same process and knowledge, talking the same business language. This will require to fit ERP systems into the strategy were it will serve the later critical intersections in process technology and development and organization. As management can see it expensive but the lessons from ERP Slack and Lewis (2008, p.286) mentioned that when ERP is implemented successfully its potential in linking the outside world have significant results in improving performance and benefits in greater visibility, more focus and control on the business, sophisticated communication and integration in the supply chain. Bunge existing experience in the world market for agribusiness industry can gain more achievements to reach the goal by centralization for all functions that having a integrated database linking the whole supply chain. Bunge history shows sustainable reconciliation between market requirements and operations resources getting both aligned during implementation, full centralization will serve Bunge towards their strategic goal by having successful lean operations running process and information between all the divisions and sub divisions. References
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