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Vale Global Expansion in the Challenging World of Mining Case Solution

Solution Id Length Case Author Case Publisher
1432 302 Words (1 Pages) Tarun Khanna, Aldo Musacchio, Ricardo Reisen de Pinho Harvard Business School : 710054
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Vale is a Brazilian company origin that enjoyed diversified operations. It was also the largest ore producer globally. Despite its competencies, the company faced pressure because of two impertinent issues. Firstly, the company faced increasing challenges from china. The rising power of the Chinese market meant that they were now also one of the largest and most important consumers of iron ore. However, the shift of buyer power to china had changed the pricing system for iron ore from negotiated benchmarked prices that were internationally accepted to contractual deals based on spot pricing.

Case Analysis for Vale Global Expansion in the Challenging World of Mining Case Solution

The latter usually meant that the mining companies were also responsible for shipment of the ore, thereby increasing operational costs. The second pressure faced by Vale was more political in nature. The Brazilian president, who had previously been a union leader, was concerned about the increased layoffs at Vale during the financial crisis that impacted the industry.

The president was also concerned about the company’s rapid global expansion, which was obvious through its purchase of Chinese vessels to deliver iron to Asian clients. This meant decreased job opportunities for local Brazilians. Keeping the national welfare in mind, the president had increasingly pressured Vale to make a considerable investment in the integrated steel mills in Brazil. In order to come to terms with the political pressures, Vale’s CEO – Roger Agnelli, decided to meet with the president to discuss the situation. The case is important as it helps in presenting an overview of challenges faced during the internationalization process of businesses – both at local and global levels.

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