Global trade strategy for Trafigura Beheer BV


My choice of Trafigura

As one of the leading independent logistic houses and commodity trading, Trafigura Beheer BV Company continues to promote trade across the world. Founded in 1993, Trafigura is a global commodity company that trades in energy including oil and metal base (Qi, Chen and Santos, 2014). Trafigura’s investments and assets complement and enhance its core business activities, logistics, and physical trading.  The company is managed through a multinational network of subsidiaries with regional offices and central hubs. The company’s primary focus areas include cementing alliances, building connections, infrastructural investments, and market development. Given its expanded operation in the international market, the company strives to improve its trading activities globally (Waters, 2003). Such is because irrespective of an entity’s position along the value chain (existing partner, producer or end-user), the company’s focus based on global resources and commitment can get the entity closer to its markets.

Methods of Transportation and Routes to Market

Trade is one of the engines that drives the world’s economy and Trafigura help to power that engine. In particular, the company stores, blend and building blocks of global growth, growing transparency by advancing trade. Notably, the company connects places where resources are plentiful to places where they are needed most. Such is done with oil and petroleum products along with metals and minerals. Central to its competitive advantage, is its independence given that it is not tied to producers, it chooses, their best workforce and suppliers. With over 65 offices in 36 countries, the company uses its robust systems, financial strength, and market knowledge to make connections and add value to the supply chain. Its two trading divisions, oil, and petroleum products together with metals and minerals are supported by its assets and investments which complement and enhance trading activities. In particular, Impala Tunnels provides multi-model logistic services. Puma Energy, the global energy business is the company’s major oil affiliate. Trafigura has an extensive network of shipping, chartering and mining groups and other groups with its focus on Africa. In recent times, the company has grown into a global presence while remaining agile and responsive to volatile and first changing markets through continued investment in infrastructure across the world. In Brazil, marketers now have access to markets through ports of Sudeste.

Across Africa and other developing regions, the company’s supply of affordable, high-quality fuel products empowers local businesses. Improved mining investment in the Port of Kayal gives the region’s mining sector a large export hub. In Columbia on Magdalena River, the company has transformed the movement of commodities. Common to all its operations is the quality of its people who believe in working with local communities and building long-term partnerships along with the company’s commitment to acting safely, responsibly and sustainably to growth prosperity.

Customers for its petroleum and oil products include refiners, state-owned oil companies, major producers and electric utilities (Yoo, Donthu and Lee, 2000). On the other hand, its mineral and metal customers range from industrial manufacturers to refined metal retailers and smelters. The following are proposed objectives and strategies for the company aimed at enhancing its global trade distribution activities. Also in this paper is the company’s metal marketing mix.

Proposed Objectives and Strategies

As an effort to gain and maintain its global market share, the company should develop a collaborative approach. Given that local intermediary networks dominate the market, Trafigura needs to collaborate with local distributors (Jacobs, 2014). Such is driven by the aim to benefit from local distributors’ unique knowledge and expertise of the markets within which they operate. On their own, multinationals such as Trafigura face challenges in mastering local business practices, gain introduction to prospective customers, comply with regulatory requirements as well as hiring and management local personnel.  Through local distributors, the company can not only solve the challenges above but also minimize distribution risks within the international markets. With minimal investments in this undertaking, the company should consider hiring some local distributors as noted by Ji, Zhang, and Fan (2014). In any location it operates, the company should forge relations with local communities as an initiative to achieve social progress. The company’s organization structure and culture should be built based on partnerships that offer high quality, precise, comprehensive service, and simple delivery.

Another strategy to improve the company’s distribution activities is building new infrastructure and logistics. Such is aimed to meet the growing demand for its products particularly petroleum products and metals. The company should take advantage of its financial resilience and strength to put in place the infrastructure to propel its business activities. In particular, asserts Olson, Slater, and Hult (2005), the company should consider investing in ports and terminals, storage facilities and transportation. Also, the company’s global distribution network of buying, leasing or chartering vessels and containers will significantly improve. Infrastructural development will aid the creation of a uniform flow in trade (Chapman, Soosay, and Kandampully, 2003). Notably, the company should invest in global terminals that produce quadrangle and installs crude oil along with condensate pipelines. By so doing, notes Kilian and Murphy (2014), its marketing efficiency will eventually improve. The company needs to set regional offices with access to resources, knowledge, and support from the central hub as an infrastructural investment to help respond to customer concerns.

Central to bringing the company closer to its customers through regional offices is the ability to source, blend, store and deliver products according to the needs of the customer notes Vargo and Lusch (2004). Moreover, more investment should be made in logistical processes and systems that equip the company with the ability to operate effectively within complex global markets above their competitors. The regional offices will ensure close listening to their customers a move that helps in meeting their demands and wants more efficiently. Moreover, the company will stand a better chance to improve its services based on the evolving global market given that its operations will be more customer focused. Substantial investments in infrastructure and logistics make its global trading activities more efficient. Given that the company plan to stay within the global industry for a long time, the company should invest in assets that can expand its trading capacities (Zhong et al., 2014).

A strategy to improve its market efficiency, sales and profits are expanding access and injecting innovation. Trafigura should not only boost its international competitiveness through economic integration but also through conducting multiple innovation projects such as product development simultaneously. Such is crucial in exploiting the various technologies within the global environment and reducing dependence on the current markets (Zhang et al., 2014). Through innovation, the company will achieve a greater trading expertise development as well as market awareness. Through such, the company will be able to develop product categories and trade routes. Innovative market research within the global environment is critical in strengthening the relationship and connections the company’s end-users and suppliers.

Another strategy to improve its global trade distribution is by creating flexible and efficient communication system (Pirrong, 2015). Effective communication is always central to achieving efficiency in an organization right from the production process to processing, distribution, and storage. Operating within the global environment inevitably means that the company will be working with different personal and professionals around the globe. Given that most such employees work miles away from the main hub, disconnections possibilities in its activities and strategies, as well as plans, are high. As a move to mitigate this challenge, the company should aim at establishing a relationship with in-market teams. Such is because open communication channels are not only essential nurturing the relationship above but also critical in developing trust among the key partners along the value chain.

In particular, the company should create platforms for regular video calls to keep all the global key partners up-to-date with latest global logistical plans and changes (Meixell and Gargeya, 2005). Also, the company’s key partners can learn about the newest in-market development or even have a better platform to discuss and share essential customer feedbacks and ideas. By creating cohesion within all the key players along its value chain, the company will be able to achieve both joined short and long-term success (Zou and Cavusgil, 2002).

Trafigura’s Metals Marketing Mix

Other than the four Ps of marketing, asserts Constantinides (2006), Trafigura’s metal marketing mix should include packaging, positioning and proper people in the production of its metals. In particular, tactical marketing techniques and tools to achieve desired feedback within its target market should be the company’s priority. For the four Ps (Product, Price, Place and Promotion), the company should manufacture and market a wide variety of metal products that match the dynamic nature of the global market (Goi, 2009). Such metals should not only be of high quality but also sold at relatively low price to achieve a competitive advantage. However, selling at lower prices than its competitors means that the company must put up measures to reduce its production costs as noted by (Chaudhuri and Holbrook, 2001). Through the above-discussed infrastructural and logistical strategies, the company should invest warehouses, stores and use metal retailers to ensure that its metals reach its end-users at the right time and place.

Moreover, the company should primarily use advertisements as its key promotional strategy as asserted by O’Cass and Julian (2003). Such is because advertisements are not only relatively cheap but also cover a wide geographical area, a move that can increase its market share (MeerSMan, Rechtsteiner and Sharp, 2012). Trafigura’s packing should not only be attractive but also one that creates a positive first impression. Also, the company should always be to its key partners and customers as an effort to have a proper positioning in terms good public image and significant market share. Furthermore, the company should select, recruit, employ and maintain the right people with the necessary skills, abilities to make metals that match its customer demand and wants precisely notes (Dixit, 2003).

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