Glencore PLC: The World's Leading Company in Zinc Production

Glencore PLC, a Switzerland-based multinational, is now the leading company in mining zinc and trading of essential metals for making steel. It is said that the organization controls half of the world’s trading of zinc metal and the basic materials from which the product is made. They have also expanded its production assets in this heavily traded metal as they expect it will become more widely used in developing countries. Yet, they have become richer by taking several mines out of production and withholding refined zinc from the market. Their strategy has driven prices of zinc metal higher. This risky plan helped reverse the mining-and-trading downward spiral that was affecting the company to bring more benefits and profits to their business. In fact, zinc prices rose to 7%  in October 2015 when the company said it was shutting down production amounting to 4% of global production of this essential metal.

Relevance to Marketing:

Glencore’s executives working together to shut down production and elevate their prices is a good illustration of the marketing concept. All of these individuals do their best to accomplish their risky strategy in order to make their company more profitable. To explain, reducing production in large facilities can result in economies of scale that lead to a higher average cost per unit; it potentially can enable a company to increase its prices. For instance, increasing prices can decrease the total number of units sold. Also, the competition concept is also fundamental in this article since Glencore is the leading company in mining and trading zinc, and almost no competition is present. Therefore, they could shut down some of their production with no problems at all as other companies do not offer the same quality and services.

Application to Other Businesses:

This article demonstrates that some leading companies with almost no competition are able to increase or decrease their production without any issues. Customers will still look for these organizations and pay their high/low prices with not hesitation since their unique products cannot be found in other markets.

Name: Javier León

Class: MKTG 3343

Article: The Magic Behind Glencore’s Recovery: Mastering the Zinc Market

Link to WSJ Website: https://www.wsj.com/articles/the-magic-behind-glencores-recovery-mastering-the-zinc-market-1489759358