Academic journal article Business: Theory and Practice

Large Mineral and Chemical Companies and Their Reaction to Calls of Global economy/Mineraliniu Ir Cheminiu Medziagu Kompaniju Reakcija I Pasaulines Ekonomikos Issukius

Academic journal article Business: Theory and Practice

Large Mineral and Chemical Companies and Their Reaction to Calls of Global economy/Mineraliniu Ir Cheminiu Medziagu Kompaniju Reakcija I Pasaulines Ekonomikos Issukius

Article excerpt


According to intensification of business competition on the global resources markets, degradation of business environment, decrease of the investment activity and high-profitable giant fields depletion international majors in mineral resources industry develop new competitive advantages so that to sustain effective operations on global market.

The new global challenge facing the world community is to solve food problem and provide economic growth and in presence of the finiteness of land resources it requires planned and balanced gain in agricultural production output by increasing yield capacity. The mineral fertilizers (principally nitrogen (N), phosphor (P) and kalium (K)) play key role in this process. 24% of the world demand capacity for mineral fertilizer sis accounted for by phosphor. That is the reason why the major volume of the phosphate raw materials extraction provides the production of mineral fertilizers. The global market of phosphate fertilizers is notable for demand prevalence over an offer caused by the finiteness of the global phosphate-resources base.

The technological business integration is a clear trend in this sector. The formation of the integrated corporate structures ensures an active role in global economy for both mature and emerging economies. The integration process provides company with competitive advantages but restricts the alternative capabilities for its business. For this reason this process can be described as complex process. Modern mineral commodity markets are the oligopolies where the degree of participant's freedom and mode of entry are predicated upon the market's structure. The high level of concentration and prevalence of large diversified, integrated and network structures are common to companies operating at the mineral resources markets.

Changing tendencies of the global mineral resources markets are due to the determining influence of such factors as: markets globalization, decrease of economic environment, intensification of business competition, development of innovative processes and decrease of investment activity.

The research objective is to forecast export strategies of the head phosphate producers according to the variety of approaches to the strategic behavior's models choice with account of degradation of business environment, globalization of the phosphate market, intensification of business competition and decrease of the investment activity.

Research techniques:

--It was gathered and summarized the data from the mineral and chemical companies' corporate reports for 5 years. Integration factors and expected changes in external environment were estimated. All data related to the consolidation and acquisition of companies in mineral and chemical industry for 5 years was picked up and analyzed. It was worked out complex approach due to system, scenery, situational and monetary approaches to management of the mineral and chemical companies. The statistical analysis of demand factors for the mineral and chemical production, ethanol's production. A review of the rare-earth elements was carried out.

--Methods: analysis of the theory of the integration cooperation and sectorial markets, analysis of the models of the strategic behavior, strategic analysis of the global phosphate market, forecasting methods, methodology of the system approach and situational analysis.

1. Theoretical framework

The estimation of integrative processes' motives and effectiveness is distinct in variety. The neoclassic approach of economics colligates integration not only with increase of the effectiveness but also with possibilities to gain monopolistic advantages and technological factor of production. The exponents of the institutional approach of economics inquire into integration process in terms of transaction costs, agency relationship and property's influence. The dynamic competitive advantages economics approach considered the integration in a context of innovations and adaptation to the lifecycles of products and technologies. …

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