Tuesday, September 30, 2014

Essay about Agrium and PotashCorp

Agrium Inc. and Potash Corporation are the Canadian companies dealing with production of nutrients and fertilizers in a number of countries in and outside of North America (Atrium Inc., 2011; PotashCorp, 2011). BHP Billiton, an Australian company with head offices in Australia and Great Britain, is a global company managing the world’s natural resources (BHP Billiton, 2011). The first two companies can be identified as direct competitors to each other because of the type of their operations, while the third one deals in the adjacent sphere and has similar scale and value chain.

Agrium Inc. is a full-cycle producer of agricultural products involved in all steps of production beginning with raw material collection and ending with the distribution the products to all continents (Agrium Inc., 2011). Its strategy is based on investing in the top brands in the portfolio, which allows the company to grow and succeed, working in economy pricing segments for the reason of affordability to the end customers, and global presence helping to sustain the business worldwide.

PotashCorp is known for the production of three primary crop nutrients, which are distributed in the areas of their highest demand – in the developing countries with considerably large population like China, India, Brazil, etc. The strategy of the company lies in the connection of the production sites to the marketplace and supporting the main operations with adjacent businesses allowing maintaining leadership in the areas of business activity. The company also keeps in touch with global trends and evaluates the feedback from the customers as the primary source of business information (PotashCorp, 2011).

BHP Billiton offers a high range of affordable products and services in 25 countries dealing with mining and extraction of natural and energetic resources. Being an international merger of two companies in the adjacent fields, BHP Billiton covered a huge market share in the sector groups of metals, coal, petroleum and precious materials.

The company is also known for its takeovers, and the aforementioned PotashCorp could become a part of BHP Billiton in 2010 as well (“BHP Billiton Launches Hostile Bid”, 2010).

Arguments and debates arose around this issue because historically PotashCorp was an important part of regional community and the one to obtain subsidies from the Canadian government at the times when the industry emerged. Therefore, the acquisition was an unsuccessful business transaction for BHP Billiton and did not take place because PotashCorp was undervalued. By acquiring PotashCorp, one of the leading companies in the industry, BHP Billiton was planning to expand into the new attractive segment of market benefiting from global presence. According to BBC News Business (“BHP Billiton Launches”, 2011), the market of nutrients and fertilizers will be growing for at least a couple of decades in both developed and developing countries, and that is how the interest of BHP Billiton in PotashCorp is explained.

At the same time, Agrium, a recognized enterprise in the native country of Canada (Agrium Inc., 2011), has made around 10 acquisitions of Asian and Australian companies in same and similar industries in the past years improving its competitiveness in the world market and proving the effectiveness of the strategy (Pugh, 2010).

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