Organisational Purpose Of Anglo American Business Essay

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The UK's strong financial system, political stability and business-friendly regulation make it a location of choice for investors from around the world. It's also a gateway to Europe with the world's single largest market - the European Union - on its doorstep. Over the last ten years, GDP growth in the UK has regularly outpaced or matched growth in the European Union. As with other major countries globally, the UK economy contracted in 2009 before returning to growth in 2010. The UK Government has policies that encourage a stable and competitive pound, consistent with the objective of price stability. The official Bank Rate in the UK, set independently by the Bank of England, is 0.5% as of May 2012 although the rate is subject to review on a monthly basis. 

Task 1

For-Profit (Business) Organizations

A for-profit organization exists primarily to generate a profit, that is, to take in more money than it spends. The owners can decide to keep all the profit themselves, or they can spend some or all of it on the business itself. Or, they may decide to share some of it with employees through the use of various types of compensation plans, e.g., employee profit sharing. Some examples of for-profit organizations include sole proprietorships, partnerships and corporations. [1]

Not For-Profit (Business) Organizations

A non-profit organization exists to provide a particular service to the community. The word "non-profit" refers to a type of business -- one which is organized under rules that forbid the distribution of profits to owners. "Profit" in this context is a relatively technical accounting term, related to but not identical with the notion of a surplus of revenues over expenditures. Most nonprofits businesses are organized into corporations. Most corporations are formed under the corporations' laws of a particular state. Every state has provisions for forming non-profit corporations; some permit other forms, such as unincorporated associations, trusts, etc., which may operate as non-profit businesses on slightly (but sometimes importantly) different terms. [1]

Organisational Purpose of Anglo American

Anglo American is a socially aware organisation which uses environmental friendly techniques to confirm its sustainability in the long run. As well as being a profit organisation, its main aim is also to lower it social and environmental footprint and leave as much resources as we have now to upcoming generations. This is the main organisational purpose of Anglo Americans and through environmental friendly environment, it also improves the efficiency of it operations. [2]

Objectives of Different Stakeholders

Anglo American is a socially aware organization and according to the company, every creature is involved in its list of stakeholders whether they may be internal or external, narrow or wide, voluntary or involuntary and legitimate or illegitimate. Larger stakeholders of Anglo Americans are the employees and Government. The organization is taking steps to reduce its environmental footprint which means that as a green and environmental friendly organization, its reputation will be enhanced and hence it will attract more people to work for the organization. On the other hand, due to careful and efficient operation, most of the costs associated with the wastages are eliminated and hence profits are enhanced which means that employees will see a prosperous and healthy future in the organization. [2]

Responsibilities and strategies


As Anglo American is a profit organisation with its shares held by different shareholders, it is the primary responsibility of the company to generate profits. Furthermore as the company is presenting itself as an environmental friendly company, so it is also its responsibility to take steps in order to minimize its social and environmental footprint. [2]


Anglo American is currently working on different strategies based on its six guiding values which are safety, care and respect, integrity, accountability, collaboration and innovation. Some examples of the current strategies of Anglo American include the cost saving of $1 million on purchases in order to enhance the profits. Another example would be that in order to minimize the impact on environment, company wants to eliminate as little as it can to the environment and a clear example are two mine gas power stations in Australia.[2]

Task 3

Competition policy

The aim of competition policy is promote competition; make markets work better and contribute towards improved efficiency in individual markets and enhanced competitiveness of Anglo American within the European Union single market. [2]

Competition policy aims to ensure

Wider consumer choice for Anglo American customers.

Technological innovation which promotes dynamic efficiency within mining industry.

Effective price competition between its suppliers. [2]

Legal Collusion - Horizontal Cooperation between Businesses

Not all instances of collusive behaviour are deemed to be illegal by the European Union Competition Authorities. Practices are not prohibited if the respective agreements "contribute to improving the production or distribution of goods or to promoting technical progress in a market." [7]

Development of improved industry standards of production and safety which benefit the consumer - a good recent example is joint industry standards in Europe for mobile phone chargers

Information sharing designed to give better information to consumers.

Research joint-ventures and know-how agreements which seek to promote innovative and inventive behaviour in a market. The EU has introduced a "R&D Block Exemption Regulation" for this. [7]

Different types of Market

Perfect Competition

In economic theory, perfect competition (sometimes called pure competition) describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. [8]


A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity (this contrasts with a monophony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few entities dominating an industry). Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods. [8]

Monopolistic competition

The model of monopolistic competition describes a common market structure in which firms have many competitors, but each one sells a slightly different product. [8]


An oligopoly is a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. Although only a few firms dominate, it is possible that many small firms may also operate in the market. [8]


A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market. In the field of industrial organization, it is the most commonly studied form of oligopoly due to its simplicity. [8]

Determination of Price and output in Perfect competition

Price is determined by the market and Output level is the only choice the firm has to make. Since firms want to maximise profit, it will produce at a level where Marginal Cost equals Marginal Revenue. This is the profit maximisation point

Determination of Price and output in Monopoly

High prices

Monopolies can exploit their position and charge high prices, because consumers have no alternative. This is especially problematic if the product is a basic necessity, like water.

Restricted output

Monopolists can also restrict output onto the market to exploit its dominant position over a period of time, or to drive up price.

Market forces and Organizational Responses

Market forces describe the interaction between supply and demand within a market.   Organisational response is the reaction given by a company or business to an economical or business circumstance.


In microeconomics, the first thought that springs to mind when we talk about perfect substitutes is Coca-cola and Pepsi. Since these two essentially taste the same and have similar pricing, we would expect that demand for both products is similar. However, until recently, the market share for Coca-cola and Pepsi has heavily favoured Coca-cola in Australia. It is estimated that Coca-Cola outsells Pepsi Cola by around three times in Australia and New Zealand supermarkets, and around five to six times in the whole cola market. There are of course many factors that make Coke dominant over Pepsi such as its pricing strategies, marketing, product design etc. However the Coke Dominance Chain can be largely attributed to Coca-cola's dominance over Pepsi. This is because if we swap Coke and Pepsi around to form the 'Pepsi Dominance chain', it is likely that we would all be buying Pepsi instead of Coke. This is due to the fact that they are perfect substitutes and we have no individual preference between the two in the first place, and so as Pepsi is widely available it creates the convenience effect and then the dominance chain. [9]

Effect of Cultural environment on UK Businesses

The businesses conducted by multinational companies have brought today's managers in direct touch with diverse nations a number of which appear quite strange. The significance of comprehending the cultures of UK wherein some multinational companies undertake their operation-as also resemblances and disparities among such cultures comes to light very dearly when we take a glance at the host of blunders committed by contemporary managers in multinational business. Comprehensive analysis of various problems and fiascos of overseas business undertaken by multinational companies has exhibited that cultures serve as the first dominant factor. The age of old Japanese parable regarding the management styles of monkey and fish puts into focus the outcomes of ignorance of what can be billed as the cultural factor in the arena of business and it appears to be a very apt metaphor for the types of problems that emerge when people belonging to diverse cultures get in touch suddenly or without prior preparation much as the monkey in the parable held that the environment of the fish bore resemblance to his and showed its behaviour farther accordingly, many managers in the same way, assume without consciousness that all people have the same way of feeling and thinking as they do. Practices of management which are appropriates for cultural environment they themselves possess may trigger uncalled for, probably terrible, outcomes in some other culture. In order to advert problems it is imperative for modern manager to comprehend the basic concept underlying the "culture" (Miroshnik,2002).

Task 4

Importance of International trade to UK mining companies

The increase in mineral price volatility since 1970 and worries about the impact of rapidly growing but unstable mineral exports on the economic growth of developing countries have created a sustained interest in mineral trade flows and policies. Exporters of minerals and other mining products in UK saw particularly large income effects because of changes in the terms of trade. This is the result not only of the large swings in their export prices but also of the high dependence of their economies on those products. More diversified economies, which generally also have a greater share of manufactured exports, typically suffer much less from terms-of-trade shocks. [11]

Some important benefits of International Trade for UK mining companies

Enhances the domestic competitiveness

Takes advantage of international trade technology

Increase sales and profits

Extend sales potential of the existing products

Maintain cost competitiveness in your domestic market

Enhance potential for expansion of your business

Gains a global market share

Reduce dependence on existing markets

Stabilize seasonal market fluctuations

Expansion effect on UK Mining Industry

As one of world's oldest and most established industrial markets, you could be forgiven for thinking that mining had reached a state of perpetual equilibrium. However, to the contrary, global demand for energy and materials, such as steel and concrete, is fuelling a period of growth and expansion. At the same time, a few industry giants are taking their first exploratory steps into new territories, such as Mongolia and parts of South America. It is an exciting and yet worrying time for forward-planning mining businesses as they consider how to fill the vacancies that arise from expansion. [12]

Labour effect on UK Mining Industry

Fast-forward to the present day, and the coal mining workforce is ageing. As the post-war generation reach retirement age, there are few workers waiting in the wings to step into their senior and mid-level manager positions. Without an injection of fresh talent, the labour resourcing requirements of global projects will soon become impossible to meet. This is particularly evident in UK. Of the current mining workforce within the country, 40% is due for retirement within five years. [12]

Impact of European Union Policies on UK Businesses

Agency Temps and Working Time Directive

Following a deal between the CBI and the TUC, the UK Government removed its opposition to the Agency Workers Directive.  Employment ministers across the EU agreed that temporary workers should enjoy equal rights as permanent workers from the first day of their employment; the UK government won a concession that it could apply the rule of equal treatment from 12 weeks into employment.  In addition, the other member states agreed that the UK could keep its opt-out from the Working Time directive, up for review but also blocked in Council.

European Company Statute (aka SPE)

As currently drafted, it provides a relatively cheap and simple way of setting up a company that can operate in one or more member states.  It would allow businesses to follow the same company law provisions across all member states and aims to reduce compliance costs arising from the disparities between the 27 national rules on the creation and running of companies.