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•  A  A Brief History of BUNGBrief History of BUNGE LIMITED.E LIMITED.

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• Bunge’s current Bunge’s current strategy.strategy.

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• Bunge’s Agribusiness.Bunge’s Agribusiness.

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• Their aTheir a!ue chain!ue chain..

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• Turnaroun" an" I#$.Turnaroun" an" I#$.

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• Bunge’s o%erations in agribusiness.Bunge’s o%erations in agribusiness.

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• $%eration strategy &atri'.$%eration strategy &atri'.

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• Bunge G!oba! Mar(ets an" cha!!anges.Bunge G!oba! Mar(ets an" cha!!anges.

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• $rganisation an" )u!ture.$rganisation an" )u!ture.

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• Integrating )ereo! an" cha!!anges.Integrating )ereo! an" cha!!anges.

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A BRIEF HISTORY

• 1818: *oun"e" in A&ster"a& by +ohann #eter Bunge , )o.

• 1884- Bunge as estab!ishe" in Argentina by gran"son/ Ernest Bunge

• 1905- Bunge then e'%an"e" into Bra0i!

• 1923- Bunge North A&erican Grain )or%oration foun"e" in Ne 1or( )ity to tra"e ra agricu!tura! co&&o"ities

• 2001: )hange" its na&e to Bunge North A&erica %rior to the initia! %ub!ic offering of Bunge Li&ite"

• 2002: Bunge Li&ite" ac2uire" )ereo!/ hich inc!u"e" )entra! 3oya in the Unite" 3tates an" )ana&era *oo"s in )ana"a

CURRENT STRATEGY

Global Agribusiness

Bunge’s strategy rests on its newly founded Bunge Global

 Agribusiness divisions whose focus is on vertically

integrated operations improving value by linking dierent

regional and international markets together.

AGRIBUSINESS

• 3oybean / heat an" corn accounte" for &ore than 456 of U3 cro% area %!ante" in 7889.

• In 7889 / &ore than 948 &i!!ion tonnes of soybeans ere consu&e" or!"i"e as &entione" in E'hibit 5. Unite" states/ bra0i! an" Argentina accounte" for &ore that :86 of or!" soybean an" corn e'%orts an" &ore than 586 of heat e'%orts.

• Groth in agricu!tura! %ro"uction ha" &o;e" toar"s 3outh A&erica !arge!y

because of cost a";antages an" the !arger tracts of arab!e !an"s a;ai!ab!e there. • *or Euro%e/ <ussia an" U(raine to resu&e their ro!e as a &ar(et e'%orter

re2uire" the& to go for &a=or in;est&ent in trans%ort/ storage an" %rocessing

infrastructure. These countries being on a %ath of "e;e!o%&ent/ the &ain "ri;er of groth in "e&an" for foo" an" fee" as inco&e , %o%u!ation groth.

CONTD.

• Because of huge !ags in the a"=ust&ent of agricu!tura! su%%!y an" co&&o"ity %rocessing ca%acity to changes in "e&an" &a"e agribusiness high!y cyc!ica!. • >ith Asian crisis in 9??@/ the in"ustry continue" the "oncyc!e of %rocessing ti!!

7888. $;erca%acity in oi!see" %rocessing %ut %ressure on the &argins/ !ea"ing to 98ton fro& an a;erage of 9:ton.

• In 9??4/ genetica!!y &o"ifie" see"s ere a"o%te" by far&ers in U3 , Argentina. Hoe;er/ they beca&e %rohibite" in Bra0i! in EU.

VALUE CHAIN

 E!e;ators- *aci!ities that ere ser;e" as conso!i"ation an" storage %oints

 The abo;e chain cou!" in;o!;e a sing!e integrate" grain co&%any or &u!ti%!e co&%anies ith se;era! changes in onershi% an" ith %rices estab!ishe" &any ti&es at "ifferent !ocations

STRATEGY

• Goa! as to beco&e the best integrate" agribusiness an" foo" co&%any in the or!"

• In a""ition to its strong &ar(et %ositions/ it cou!" "ifferentiate itse!f by its business &o"e! an" its organi0ation an" cu!ture

• 3u%erior !ogistics C )ost a";antage • Three "i&ensions to

!ogistics- C Trans%ort

 C Ha;ing the right in"ustria! foot%rint an" !ocationa!!y a";antage" %ro"uction assets  C E'tre&e!y goo" &anage&ent in the ca%ture an" ana!ysis of i nfor&ation

TURNAROUND

• In or"er to co&%ete g!oba!!y/ it as suggest that Bunge shou!" refocus on consu&er foo"s an" agribusiness o%erations/ "i;est noncore assets/ an" intro"uce %rofessiona! &anage&ent.

• In 9??@/ Bunge returne" to its roots in agribusiness/ i&%!e&ente" ne strategy an" ac2uire" )e;a! A!i&entosFBra0i!’s !argest 3oybean %rocessor.

BUNGE’S STRATEGY

• The co&%anies &o"e! nee"e" itse!f to be integrate" in a ho!e chain.

• This can be attain by focusing on integration , the &ost "efining factor ou!" be !ogistics as state" by >eisserF)*$/ Bunge !t".

• >eisser thought/ !ogistics not to be on!y trans%ortation but getting the right %ro"uct to the right custo&er/ in the right 2uantity at the right ti&e an" the right %rice.

• Manage" !ogistics ou!" gi;e Bunge a cost a";antage o;er co&%anies that co&%ete" in on!y one %art of the ;a!ue chain. This ou!" a!so enab!e Bunge to offer custo&ers better ser;ice in ter&s of trac(ing their or"ers.

•  Accor"ing to >eisser/ !ogistics cou!" be bifurcate" into three "i&ensions-trans%ort ha;ing the right in"ustria! foot%rint an" !ocationa!!y a";antage"

%ro"uction assets an" e'tre&e!y goo" &anage&ent in the ca%ture , ana!ysis of infor&ation.

BUNGE’S OERATIONS IN AGRIBUSINESS

• Bunge’s agribusiness "i;ision consiste" of G<AIN $<IGINATI$N/ $IL3EED #<$)E33ING an" INTE<NATI$NAL MA<ETING.

 G!"#$ O!#%#$"&#'$

 Bunge as strategica!!y groing its grain origination netor( in bra0i! , han"!e" near!y 9Jr" of its soybeans.

 Bunge as &ore e'%ort oriente" than &ost of its co&%etitors/ so o%erate" a nu&ber strategica!!y !ocate" %ort faci!ities in the U3/ bra0i! , Argentina.

 Bunge in 7889/use" &ore than its 586 of oi!see"s , grains it originate" in its on %rocessing o%erations , so!" the rest to thir" %arties for &ore re;enue.

CONTD.

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 Bunge being the !argest oi!see" %rocessor use" a!! soybeans originate" by its on grain origination.

 Ac2uisition of an Argentine agribusiness fir& &a"e Bunge the !argest soybean %rocessor , 7n" !argest e'%orter of agricu!tura! %ro"ucts in Argentina.

 Bra0i! being the or!"’s fastest groing agricu!tura! area Bunge "eci"e" to setu% 7 ne crushing faci!ities there. Bunge so!" :86 of its Bra0i!ian soybean &ea! , 456 of its soybean oi! %ro"uction beco&ing the !argest soybean %rocessor in bra0i!.

CONTD.

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 By 9??8 Bunge ha" beco&e %ri&ari!y an originator , %rocessor of oi!see"s an" grains.

 Bunge so!" &a=ority of its %ro"ucts as K*ree on boar"’ F*$B in %orts in the U3 / Bra0i! , Argentina.

 E;en after earning significant &argins in internationa! tra"e/ Bunge "i" not ha;e the (no!e"ge of en" custo&er contact/ hich affecte" the effecti;eness of its he"ging an" ris( &anage&ent acti;ities.

BUNGE NORTH A-ERICA

Bunge North A&erica/

Inc./ is the North A&erican o%erating ar& of Bunge Li&ite" FN13E- BG/ith faci!ities in the U.3./

BUNGE GLOBAL -ARETSBG-

•  After seeing a&%!e o%%ortunities in the g!oba! &ar(et/ Bunge "eci"e" to bui!" an internationa! &ar(eting ca%abi!ity by estab!ishing BGM in 9??:.

• The ;a!ue of BGM as to ta(e Bunge’s origin ca%acity/ !in(ing ith custo&ers , &anaging the ris( in b- co&&o"ity/ cre"it/ I</ fore'/ freight an" %o!itica!.

• BGM ha" ra%i"!y gron "uring 7889 by "oub!ing its ;o!u&e an" 2ua"ru%!ing its gross %rofit/ hich resu!te" in the groth of net o%erations by 4 ti&es.

• BGM as organi0e" a!ong 7

a'es- C Distribution business- $rgani0e" regiona!!y at the &ain "estinations/ ere focuse" on ser;ing custo&ers in their !oca! &ar(ets

 C #ro"uct Lines- It co;ere" g!oba! functions such as tra"estructure" finance/ ocean freight an" ris( &anage&ent acti;ities.

CONTD.

• BGM ha"  &ain acti;ities

 C Mar(eting %hysica! %ro"ucts  C *reight

 C <is( &anage&ent  C Tra"e finance

 Archie Gath&ey/ MD/ BGM strategi0e" BGM’s (ey %osition by ta(ing "ecisions on o%erations of here to crush &ore/ crush !essho to &anage g!oba! ris( in ter&s of ha;ing the right offsets b the ris( in "ifferent categories.

CHALLENGES AT

BG-• BGM interface" ith a!! of Bunge’s co&%anies in the origins yet as a stan"a!one %rofit centre.

• The &a=or cha!!enge BGM face" as that the ;a!ue f!uctuation aroun" in the ;a!ue chain o;er ti&e "e%en"e" on g!oba! &ar(ets. It &ay be state" that at so&e stages there as %rofitabi!ity in the "e&an" si"e but &ost!y it as at the origin.

•  A!though Bunge as ;ery f!e'ib!e ith integrate" fashion yet ha" the &a=or focus on the botto& !ine/ resu!ting in strong %otentia! for friction an" tension b the&. • 3ince the negotiations ere "one on the basis of *$B/ the transfer %rice issue in

the origin as a &a=or cha!!enge for BGM/ hich resu!te" in %aying too &uch. • $%erationa! ineffecti;eness in the origin a!so affecte" BGM through its Bra0i!ian

CONTD.

• BGM a""resse" the abo;e cha!!enges by "ee%ening %ersona! re!ationshi%s b the& an" Bunges regiona! units.

• *riction ha" "issi%ate" but sti!! so&e of the cha!!enges %ersiste" because of a Bunge’s "ecentra!i0e" structure ith se%arate %rofit centres.

• To ensure that BGM is focuse" on bui!"ing the business rather than =ust a

seg&ent of the chain/ since e;erybo"y as o%ti&i0e" for their !oca! business • To &a(e sure that the %eo%!e in charge of %ro"uction at origin an" the %erson in

charge of &ar(eting ha;e the sa&e goa!s

V)!&#+"(( I$&)%!"&)*

• >or!"’s !ea"ing oi!see" %rocessor an" se!!er of bott!e" oi!s

• Lea"ing &i!!er of heat in 3outh A&erica an" corn in North A&erica

• 3outh A&erica’s !ea"ing ferti!i0er %ro"ucer 

N4&!#)$&,

 Agribusiness

Fertilizer Food Products

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Fertilizer Food Products

R)&"#( !'*4+&, 5 S)!6#+), G!"#$ O!#%#$"&#'$ O#(,))* !'+),,#$% F''*!'+),,#$% R)&"#( "$* C'$,47)!  D#,&!#84&#'$

ORGANISATION AND CULTURE

A *)+)$&!"(#)* 7"$"%)7)$& ,&!+&!)

•  Accor"ing to >eisser/ the source of co&%etiti;e a";antage for the co&%any is its Decentra!i0e" &anage&ent structureO

• Easy for "ecision &a(ing across "ifferent regiona! offices

• Easy for the !oca! &anage&ent to act accor"ing to the !oca! re2uire&ent • It re"uce" bureaucracy an" a!!oe" !oca! &anagers to act fast an" sei0e

business o%%ortunities

• >ant to be seen as a !oca! %!ayer/ not as an ug!y &u!ti nationa!

• >as ab!e to hire ;ery goo" !oca! ta!ent/ %eo%!e ho are bright an" inte!!igent an" ta(e initiati;e/ an" ho fin" the s%ace to &o;e

CHALLENGES OF DECENTRALISATION

• To run an integrate" co&%any in a "ecentra!i0e" &anner  • To obtain synergies across #,L !ines

• To correct!y i"entify the functions that nee" to be centra!i0e" an" the functions that tru!y nee" to be "ecentra!i0e"

• Difficu!t to con;ince an" to gi;e instructions or "irections to a!! regiona! &anagers

INTEGRATING CEREOL

• It as the nu&ber four soy %rocessor in the U3 an" the !ea"ing oi!see" %rocessor in )ana"a

• Its U3 assets ere ;ery co&%!e&entary to Bunge’s an" ou!" &a(e Bunge a strong nu&ber to to ADM

• )ereo! has estab!ishe" a !ea"ing %osition in the oi!see" %rocessing in"ustry ith the %ri;ati0ations in eastern Euro%e

• It ha" a strong soy ingre"ients business an" as a g!oba! !ea"er in soy con centrates an" !ecithins

• It as ise!y res%ecte" by foo" in"ustry custo&ers for its inno;ation an" !ong tra"ition

CHALLENGES IN INTEGRATION OF CEREOL

• Increase the co&%!e'ity in the organi0ation

•  Affect of it to the Bunge’s business an" organi0ation &o"e!

• >eisser ante" Bunge to be the or!"’s best integrate" agribusiness co&%any. 3o he as confuse"/ hether the ac2uisition on )ereo! re2uire a change in

CO-ETITORS

AD- CARGILL

• Large an" "i;ersifie" than Bunge

• $%erate" in oi!see" %rocessing/ et corn %rocessing/ heat &i!!ing etc.

• High!y centra!i0e"/ U3focuse" an" @86 re;enues fro& North A&erica

• Lo cost %ro;i"er/ an" &ore &ar(et share , %ro"uction oriente" than custo&er "ri;en • isua!i0e" itse!f as a !arge foo" in%ut an" fue! factory- ra &ateria!s entere" at one en" an" e'ite" as ;a!uea""e" %ro"uctsO • Has &a=ority onershi% sta(e in A) Toe%fer

Internationa!/ a grain tra"ing co&%any • Toe%fer ha" &ore than 8 sa!es offices

or!" i"e an" tra"e" 8&i!!ion tons of grains annua!!y

• Large an" "i;ersifie" than Bunge • Largest %ri;ate co&%any in the or!"

ith sa!es of 58 bi!!ion in 7887 •  Acti;e &e&ber throughout the

agribusiness chain/ fro& su%%!ying in%uts to far&ers to se!!ing %rocesse" foo"s to consu&ers

• Its strength as in co&&o"ity %rocessing

• Ha" !e;erage" its ca%abi!ities in co&&o"ity tra"ing/ !ogistics an"

%rocessing into nonfoo" businesses inc!u"ing stee! &ini&i!!s an" &eta! tra"ing