Bunge Limited Review

Table of contents

1. Introduction 2 1.1. Overview 2 1.2. The company core values and approach: 2 1.2.1. Core values 3 1.2.2. Company approach 3 2. Bunge operations 3 2.1. Bunge products 3 2.2. Decentralization impact on Bunge operations 4 3. Performance objectives effects on operations strategy 4 3.1. Operations quality 4 3.2. Delivering orders and dependability 5 3.3. Flexibility and products availability 5 3.4. Maintaining low-cost in production 5 4. Bunge qualifying and motivating factors 5 5. Strength, weakness, opportunities and threats 6 5.1. Strength 6 5.2. Weakness 6 5.3. Opportunities 6 5.4. Threats 7 6. Conclusion 7 References 7

1. Introduction

2.1. Overview

Bunge limited is an agribusiness company founded in 1818 by Johann Peter Bunge, a German merchant. The start was in Holland to merchandise grains and imports from the Dutch colonies. Then, in 1859 it became one of the biggest commodity traders in the world. In 1884, the company was expanded after moving its base to Argentina to handle different types of businesses. Few years later and due to some political issues, the company moved to Brazil where it became one of the largest employers.

Early 1990s, the company faced the unexpected where many international competitors started to accommodate their business in Brazil and Argentina, causing the Bunge Company management to refocus and to begin restructuring their business and strategies. The management decided to sell most of the non-core business and focus on the agribusiness, and then moved its headquarters from Brazil to New York, in order to solve the financial problems and remain in the industry.

Moving from Europe to South America was a dramatic transformation for the company, but also smart (Slack & Lewis, 2008). The move opened the way for the company to increase its business benefiting from the agricultural resources in Brazil, which in return strengthen the company position in Argentina market.

2.2. The company core values and approach:

Because of the 1990s financial problems, a new management was started to rebuild the company strategy in a different vision. As well, to re-evaluate the company performance and how to create new chances to compete with others in the global market.

With the new management the focus of the company has changed. As stated by Weisser, CEO of Bunge Limited, that focusing on integration would increase the company chances to compete other companies, by providing its customers with the required products to their level of expectations (Slack & Lewis, 2008).

2.3.1. Core values

Each company has set some values to identify its approach among others. Thus, Bunge Limited has introduced five meaningful values: Integrity, Teamwork, Citizenship, entrepreneurship, and Openness and Trust (Bunge Limited, website).

Bunge has made the aforementioned values to be the guide for its operations locally and globally, to provide the right products and services to its customers efficiently without delay. Also, within the internal borders of the company, the employees are involved to share their ideas to improve the processes, and it will assist in developing new methodology to satisfy the customer needs and the market requirements.

2.3.2. Company approach

The company linked its approach with the set values to align the internal and external operations performance in all the regions with the global market. And that will enable the company to better understand the marketplace and make the right decisions to improve the services and to build strong relationship with the customers. And with the openness with the employees, they encourage the bottom up approach where the new ideas for development would be very effective based on their previous experiments (Bunge Limited, website).

2. Bunge operations

Turning the business from private to public was a very important step toward success. The transformation exposed Bunge to new products and increased the number of employees in different locations. In the following points, I am going to focus on the company products and how the decentralization helped to seize business opportunities. (Slack & Lewis, 2008)

3.3. Bunge products

Bunge has different products and services that delivered worldwide with no delay in order to satisfy the customers’ needs. Bunge sells fertilizers to farmers, and agribusiness division to process oilseed, and originating grains. Also, it provides food and ingredients to a lot of companies, and produce sugar and bioenergy and exports it to different places in a minimal time. (Bunge Limited, website)

3.4. Decentralization impact on Bunge operations

At the beginning of the company it was private and localized basically in Europe. Then, with the new management actions it became public with different locations worldwide. Integrating but decentralized operations helped Bunge to align its global corporation with the speed of local business, and strengthen the relationship with the customers (Bunge Limited, website). As mentioned in the introduction section, the move to South America was the start of broad vision for success, and the transformation of integration and localizing the Bunge services in different spots in the world helped the company to achieve the goals, and increase the profitability by capturing the great business chances in the most fertilized and rich countries worldwide.

The smart decisions made Bunge one of the largest agribusiness companies in the world, Ben Pearcy, Strategic Planning Director, support that saying, “If we hadn’t done that acquisition, we wouldn’t be positioned as we are today. It was a smart move but also fortuitous.” (Slack & Lewis, 2008)

Moreover, the move to New York was planned as declared by Bunge CEO, where he explained the reasons of accessing the share market IPO. And he emphasized on the benefit of searching for new opportunities to increase the competition with others and increase the inflows to satisfy their shareholders. (Slack & Lewis, 2008)

3. Performance objectives effects on operations strategy

The effects of the decentralization and having many organizations in different regions around the world help Bunge to meet the minimum requirements to the customer expectations and to engrave the company name in the global market. In the following sub-sections I will analyze the company performance, and the present the reason of reaching a high position in the market.

4.5. Operations quality

Bunge with the new focus to the market changes based on the customers needs, it made the production with high quality a goal to applied to all of its products. Maintaining the required quality needs to have reliable internal processes, and competent team. Producing with low-costs, but with high specification is one of the potential external benefits. For example, Bunge is buying the oilseeds from the trusted farmers, and then sell it to the consumers with quality “From the farm to the table” (Bunge Limited, website).

Since the quality factor is important especially in the food products, Bunge pay more attention to the customers’ feedback about its products and services, seeking some comments and ideas on how to rise up the production quality. Bunge have set the integrity to be one of its core values, which is measureable and achievable.

4.6. Delivering orders and dependability

The decentralization made the process of delivery faster and easy. Slack and Lewis (2008) stated that responding to the received orders with speed in a high performance would be a reason to retain customers where the value of short delivery will delight them. So, fast response in handling and delivering orders will be one competitive factor to gain more orders, which is clear in Bunge services.

The new approach helped Bunge to keep its promises to fulfill the customers requirements, and deliver the orders on time “Good dependability can often be helped by fast throughput, rather that hindered by it.” (Slack & Lewis, 2008)

4.7. Flexibility and products availability

Bunge offers the customers more capacity with more options, where the required capacity would be fulfilled to cover the demands, and that is an advantage on the other competitors. With the global capacity provided in more than 30 countries, the flexibility of delivery becomes more. (Chopra & Meindl, 2010)

4.8. Maintaining low-cost in production

As part of Bunge chain, transportation costs were reduced and the development costs as well. Using the online to interact with the customers enabled the company to reduce the costly channels.

4. Bunge qualifying and motivating factors

From the previous section, it is clear that Bunge moving toward its goals in a well designed model. So, what are the main factors that qualify Bunge over its competitors to win more orders?
The advantage of decentralization helped delivering the products to customers faster and with low-cost. And that does add value to the Bunge services worldwide. Also, the well understanding of the market requirements over the management good aspects to make the right decisions to improve their products and services and align their resources with the available capabilities. Focusing on the root business assist the company to increase its profitability. Moreover, being open to receive new ideas from the team members in all regions along with the customer feedback helped to develop more services, such as online services and local management to serve the customers on a timely manner.

All that points assist in building a strong relationship with the customers from one hand, and it increases the chances of gaining more business on the other one. Because of the broad vision of the management to adopt the lean operations approach where they involve others to share their ideas, and it focus on the customer needs. 5. Strength, weakness, opportunities and threats

There are some points that would be usable to measure the power of the business and its impact on the overall market based on its strategic action (Coman & Ronen, 2009). In the following points I am going to explore the strength and weakness in Bunge limited along with the possible opportunities and threats.

6.9. Strength

Localizing the company services in many regions around the world helped in speeding up processing orders, and gives the customers the flexibility of increasing the orders capacity to fulfill the peak times requests.

6.10. Weakness

Focusing on a certain business is perfect if it is under one management, but such as Bunge and the decentralized approach, it makes it hard to control its finance issues.

6.11. Opportunities

Based on the Datamonitor analysis report (2010), that due to the need of the raw materials to increase biofuels, Bunge has a great opportunity to be the supplier. Also, the use of the flex-fuel vehicles in Brazil increased by 90% in sales. And as per the UNICA and Bunge that the flex-fuel fleet will increase to 18% per year, which is a long-term demand in Brazil to replace the fossil fuels with biofuels.

In addition, Bunge is planning to expand its business in Europe and Asia due to the demographics of those countries to supply more products such as soybeans in Europe and grain and oilseed in Asia. Thus, to achieving the corporate strategy to be the biggest agribusiness company would be possible by expanding their products to different markets worldwide.

6.12. Threats

Bunge is not the only agribusiness company in the universe, and so many competitors are around trying to spread their products and increase their business to sustain stable position in the market. Other issues would increase the competition is the products quality, price and delivery. The major competitor in North America is the AMD Company, where it produces soybeans and wet-corn and other bio-products. Also, it started to expand internationally opening overseas offices and ownership stake in AC Toepfer International grain trading company.

Therefore, this competition would effect Bunge business and profitability, in case of price reduction or increase the marketing and expenditures (Datamonitor, 2010).

6. Conclusion

Overall, Bunge limited has a strong and stable position in the agribusiness market. And with the new management ideas, the company could restructure and redesign it model to overcome the financial problems. The right decision to leave the non-core businesses and focus on the agribusiness was a smart move, “Agribusiness economics is concerned with understanding how institutions, organizations, and markets affect vertical and horizontal coordination within the food system” (King, et al, 2010). The company approach was aligned perfectly with its core values in order to meet the customers’ expectations and exceed the market requirements.

Bunge has adopted the lean approach, and it was clear in its values by involving the teams in every region to innovate and share his thoughts to improve the current services or to develop new ones to increase the company profits and remain the at a high position in the market. Another factor is the customer focus, where understanding the customer needs enabled the company to align its operations to the market requirements to achieve stability in its internal and external operations.

References

Bunge Limited Website, http://www.bunge.com/ (Accessed on July 27, 2011)

Datamonitor, Bunge Ltd. SWOT Analysis, Jul2010, p1-9, 9p, 2 Charts

Coman, A. & Ronen, B., 2009. Focused SWOT: diagnosing critical strengths and weaknesses, International Journal of Production Research, 47(20), p.5677-5689.

Chopra, S., & Meindl, P., Supply Chain Management: Strategy, Planning, and Operation, 4th edition 2010, Prentice Hall

Slack, N. & Lewis, M., Operations Strategy (2nd edition, 2008), Financial Times, Prentice Hall

King, Robert P.; Boehlje, Michael; Cook, Michael L.; Sonka, Steven T.; American Journal of Agricultural Economics, April 2010, v. 92, iss. 2, pp. 554-70