Enhancing the Wealth of the Stakeholders of Illovo Sugar Group - Research Paper Example

Section 1

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Strategy innovation and evaluation summaryIllovo Sugar Group Company is the Africa biggest sugar producer who has got an extensive agriculture and manufacturing activities in six countries (Studios, 2017). The group is responsible for the provision of raw and refined sugar for the local, regional Africa, European Union, United States and the world market from sugarcane supplied from its agricultural operations. It contains out growers who are independent, and they supply the canes to the Illovos factories (Studios, 2017). The manufacture of the downstream of high-value products is sold internationally into the niche markets. The energy that the group used emanates from installed generating capacity, fuelled by renewable resources that account for 90% of energy annually (Studios, 2017). Illovo is a wholly owned subsidiary of the Associated British Foods Plc whereby the association is a differentiated international food, ingredients and retail group that operates in 48 countries.

Illovo employs more than 12,000 permanent individual and 18,000 people on a temporary basis (Studios, 2017). The group is a major sugar supplier to the consumers and industrial markets in their market and also in the neighboring regions in the African markets. With the use of extensive networks and logistic channels, it can distribute and export sugars to EU and USA through the South Africa industry (Studios, 2017). Sugar and syrup are particularly produced in South Africa and Zambia for domestication consumption while the sugar made from Malawi and Zambia are for preferential markets in the EU and also for the USA.

Illovo operates and sells its products in the countries that face considerable challenges in the form of poverty, unemployment, inequalities and also diseases (Studios, 2017). It has been found to have significant positive impact on the rural communities where it holds its operations. It is praised for creating significant job opportunity, providing accommodation, health services, education assistance and overall essential services to employees (Studios, 2017). Training is given to the medium-scale growers in the act of promoting sustainable agriculture and economic development activities. Some cane supplies from the producers in the community-based schemes amount to around 3.6 million tons in a year. Also, it is the main aim of Illovo to provide cost effective energy for the utilization of bagabasse and biomass that is generated from all the operation (Studios, 2017).

Its primary objective is;

To enhance the wealth of the stakeholders and in turn optimize the long-term returns and growth of business.

It also works towards being a world class organization which will have the most efficient and low-cost producers globally (Studios, 2017).

To achieve a supportable, balanced and integrated economic, social and environmental performance.

To provide employees with a secure environment that is safe from health risk.

To profitably expand the production of the sugar and cane production (Studios, 2017).

To consolidate and improve the profitability of downstream products and further establish new applications if need be.

To maximize the usage of green energy like biomass and biogases which can provide enough power for operations (Studios, 2017).

It opens up new chances for sugar and down streaming products both at the national level and international too.

The vision of Illovo is to make the Group into being the most efficient organization in Africa adding value to its core producers of sugar, fiber, and molasses (Studios, 2017). It seeks to optimize growth and reduce the cost of production such that shareholders and stakeholders can achieve sustainable, balanced and integrated economic, social and environmental performance.

Section 2

Business strategy report

Introduction of selected company

Illovo Sugar Group is one of Africas biggest producers of sugar. The company has various agricultural and manufacturing operations in more than six countries within Africa (Illovo Sugar: 2016). The companys focal point is producing raw and refined sugar which they provide to local and international markets, throughout the continent. The company also has a vast expanse of positive influence towards the environment in which it operates, obtaining greater than nighty percent of the groups electricity from solely renewable sources of energy. The group is currently hundred percent owned by the Associated British Foods (ABF). ABF is thoroughly diversified international food focused company.

The company currently employs 12 000 individuals on a permanent basis as well as more than 18 000 employees on a temporary basis. Therefore, Illovo is deemed to have a large workforce (Illovo Sugar:2016).

The companys strategic intent

A strategic intent is defined as a captivating statement which an organisation makes, that describes where the organisation intends to go as well as what they wish to achieve in the long term (University of Illinois: 2012).

Illovo Sugar currently, portrays several strategic intents as listed below (Illovo Sugar Group: 2017):

The company wishes to hold the leading position for sugar production throughout Africa as well as the vast supplier in the international market.

Illovo would like to be saluted in the surrounding communities, in which the company operates.

They would also want to be the lowest cost producer both locally in Africa and globally.

The company wishes to increase all its profits and provide an increased return to all its shareholders.

The company would like to use innovative technology to improve its overall operations.

They want to increase the overall participation of its employees.

To provide a completely safe and precautious environment for its employees and all other stakeholders.

To be the market leader simultaneously providing all their customers needs.

To uplift rural communities which their operations surround as well as alleviate poverty.

Evaluation of Illovos strategic intentThe company has surely made their statement of being the leading sugar producer in Africa and globally, reality. Illovo is currently Africas leading producer of sugar as well as the owner of majority of the market share both locally and internationally (World bank: 2015). The company currently holds 75 percent of the global market share in the sugar production industry (Wikipedia: 2016).

Illovo, with assurance, is saluted in surrounding companies in which it operates. The company participates in many corporate social responsibility programmes within local communities, where it aims to gain the communities loyalty (CSR Hub: 2014). They invest in boreholes for the local community members to benefit from, sponsor sport teams and provide bursary funds, to name a few. This in return meets the strategic intent to uplift rural communities, as vouched by Illovo. All these programmes collectively alleviates poverty as the more children become educated, the more uplifted their lifestyles will become.

Illovo is surely a low-cost producer as they take the necessary steps to ensure that their costs are kept at a minimum (Annual Report: 2015). These steps include harvesting the sugar can plant parallel to the sugar mills (plants) which requires it (Fin24: 2016). This step avoids all logistic related costs which decreases the companys overall expenses. Illovo also employs members from the local communities where employees are not required to travel far distances to arrive at work. This step avoids compensating employees for travelling costs which decreases the companys overall expenditure (Illovo History: 2016). The company also stores rain water into storage reservoirs which is used to harvest sugar cane as well as used when the country is experiencing drought conditions. This avoids water expenditure costs. The more expenditure not incurred, the more profits the company must distribute to its shareholders (Investopedia: 2015).

The company has a relatively advanced research and development department, which ensures that the company is constantly up to date with the latest technological advancements (Techno: 2014). The department ensures to keep the lead time in the production process at a minimum as well as to avoid unnecessary production issues that the company may face within its production process (Illovo: 2016).

Therefore, the company has a strong strategic posture which contributes greatly to the success of the Illovo Sugar Group and its sustainability.

How can a strong strategic intent posture benefit the company?A strong strategic intent posture can greatly benefit any given company. Strategic intent provides a sense of guidance for any company. With this guidance, the work towards achieving their vision and mission (Chron: 2015). Therefore, Illovos strong strategic intent posture, has contributed greatly to the companys success. It has improved every level within the company, providing an improved image for Illovo.

Analysis of the companyThe fundamental purpose of the Illovo Sugar group is to enhance shareholders wealth as well as to be a world-class organisation whilst being a low-cost producer both globally and internationally. The company aims to achieve a sustainable balance between their economic and social performance, not just focusing on making money (Illovo: 2016). If the company had to go bankrupt, it will have a negative impact on more than one stakeholder; the African economy would be impacted the worst as the continent depends on Illovos returns to increase the overall economical GDP (Investopedia:2012). As Illovo is the biggest sugar producer, if they stop producing sugar, the demand for sugar will not meet the current supply, therefore consumers would be negatively impacted. Lastly, shareholders will lose their investments.

In the recent times, Illovo has not experienced any human resource problems where employees had to be laid off or retrenched, proving that Illovo invests much value into its employees and the overall workforce.

The company had one CEO in the past ten years, Gavin Barry Dalgleish BScEng(Chem), MScEng(Chem) (Bloomberg: 2016). This is an indication that the company has staff who have exceptional leadership ski...