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GlencoreXstrata...The Profitable and Untethered March to Global Resource Dominance!

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  • Nina Aversano
  • Titos Ritsatos

Abstract

Motivated by the economic causes and effects of their merger in 2013, we study the expansion strategy deployment of Glencore International plc. and Xstrata plc., before and after their merger. While both companies went through a series of international acquisitions during the last decade, their merger is strengthening effective vertical integration in critical resource and commodity markets, following Hymer's theory of internationalization and Dunning's theory of Eclectic Paradigm. Private existence of global dominant positioning in vital resource markets, posits economic sustainability and social fairness questions on an international scale. Glencore is alleged to have used unethical business tactics, increasing corruption, tax evasion and money laundering, while attracting the attention of human rights organizations. Since the announcement of their intended merger, the company's market performance has been lower than its benchmark index. Glencore's and Xstrata's economic success came from operating effectively and efficiently in markets that scare off risk-averse companies. The new GlencoreXstrata is not the same company anymore. The Company's new capital structure is characterized by controlling presence of institutional investors, creating adherence to corporate governance and increased monitoring and transparency. Furthermore, when multinational corporations like GlencoreXstrata increase in size attracting the attention of global regulation, they are forced by institutional monitoring to increase social consciousness. When ensuring full commitment to social consciousness acting with utmost concern with regard to their commitment by upholding rules and regulations of their home or host country, they have but to become "quasi-utilities" for the global industry.

Suggested Citation

  • Nina Aversano & Titos Ritsatos, 2015. "GlencoreXstrata...The Profitable and Untethered March to Global Resource Dominance!," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 1(2), pages 91-106, April.
    • Handle: RePEc:ate:journl:ajbev1i2-1
    DOI: =10.30958/ajbe.1-2-1
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    References listed on IDEAS

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    1. Dunning, John H., 2000. "The eclectic paradigm as an envelope for economic and business theories of MNE activity," International Business Review, Elsevier, vol. 9(2), pages 163-190, April.
    2. Benninga, Simon & Helmantel, Mark & Sarig, Oded, 2005. "The timing of initial public offerings," Journal of Financial Economics, Elsevier, vol. 75(1), pages 115-132, January.
    3. Dunning, John & Pitelis, Christos, 2009. "The Political Economy of Globalization – Revisiting Stephen Hymer 50 Years On," MPRA Paper 23184, University Library of Munich, Germany.
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