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BUSINESS STUDY REPORT ON YANCOAL SCN LIMITED
Your Name (First M. Last)
School or Institution Name (University at Place or Town, State)
Business Study Report on Yancoal SCN Limited
Introduction to the Business and General Business Environment
Name and Location of Business, the Type of Business (e.g retail, manufacturing)
YANCOAL is the first famous Australian company that deals in Coal and Mining. It has first established back in 2004. Since then, it has been operating with business expansion through strategic acquisition becoming Australias most innovative coal exploring company.
What the business produces or sells
Yancoal deals in exploration of coal and mining. It is known for introducing the pioneer coal mining method in 2006 which is known as LTCC, after acquiring former Southland Coal Min, in Hunter Valley, NSW. Yancoal produces a variety of metallurgical and thermal coal products for export. The product split in 2013 was 45 Metallurgical coal / 55 Thermal Coal, with a similar split forecast for 2014. In New South Wales, Yancoal produces low ash, high fluidity, semi-hard coking coal product from its Austar Coal Mine a low phosphorous semi-soft coking coal product from its Ashton Coal Mine and a number of thermal coal products from its Moolarben Coal Mine. In Queensland, Yancoal produces a Pulverised Coal Injection (PCI) product from its Yarrabee Coal Mine located in the Bowen Basin. These coals are used by steel mills and power companies across Asia. Yancoals diversified product mix and its sale ability across Asian markets provide the company with a strong base for future growth.
Who the customers are
Customers of Yancoal are the ones who utilize thermal and metallurgical coal for different purposes.
Where most of the customers are located
The major customer bank of Yancoal is located in New South Wales, Queensland and Western Australia. Yancoals New South Wales region includes the mines of Hunter Valley Operations, Mount Thorley Warkworth, Moolarben and Stratford Duralie, with the Queensland region comprising of Yarrabee and the Middlemount.
Who the main competitors are (i.e those producing similar products, and selling to similar customer base)
The main competitors of Yancoal limited include but not limited to Auster, Cameby Downs, Donaldson, Hunter Valley Operations, Middle Mount Operations, Moolarban. Mount Thorley, Warkworth, Standford Duralie.
Where the competitors are located and
The Competitors are Located in various parts including New South Wales, Queenland and Western Australia.
The approximate market share of key competitors including your business
According to market assessment Yancoal enjoys 80 of market share as compared to its competitors, whereas 20 market is captured by respective competitors.
Given the major market share it can easily be assessed and claimed that the company is the major player in the target market, with other competitors having minor share. However, in such a business environment competitive threat can never be ignored, unless products are delivered to the customers with the best quality along with ensuring to manage competitive threat.
Production cost and scale
Provide a description of the required factors of production
The Basic factors of production include extraction and refining of mines. This involves using of multiple mechanical advanced techniques in extractions and exploring of metallurgical and thermal mines. Consequently, different fixed costs are associated during completion of the exploring procedure.
Fixed and hence unlinkely to vary much according to the quantity of goods produced or sold or variabcel and hence likely to increase with increased production or sales.
The fixed cost incurred during the production process includes the plantation costs, machinery cost and supplies cost, whoever, the cost of supplies may vary depending upon the economic changes occurring in the respective countries. Moreover, variable costs including electricity utilization and other administrative and operational costs are also associated with production process.
Use above information to comment on the likely overall cost structure of your business. For example are fixed costs large or small relative to variable costs Does this mean that firms optimal size is likely to be small, medium or large
Given the nature of fixed and variable costs concerning the Yancoal operational production process, it is revealed that the size of fixed cost is higher as compared to variable cost. Meaning thereby the companys optimal size is likely to be large, rather than small or medium, as it encompasses huge number of installations, machinery and production material to export the final products in the international market.
2.2 Macro Business Environment
Provide a description of the macroeconomic environment in which the business operates
The macro economic environment in which Yancoal operational its production activities is quite stable with regard to political, economic, technological, environmental and legal point of view.
2.2.1 The overall stability of the political system/government of the country in which the business operates.
The political environment of Australia and other areas where Yancoal operates in favorable for undertaking of production process as well as performing overall business activities. Given the stable political situation, any dramatic change in near future in political atmosphere can never be ignored. Therefore, company needs to have contingent strategy to cope with any sort of expected emerging political challenge in future.
2.2.2 The general level of inflation, unemployment and average interest rate of the country in which the business is physically located ( and also countries in which most customers live if different from the location of the firm). Discuss any recent changes in those variables. Does economy seem to be in a recession, boom or otherwise
Assessing the general level of inflation, unemployment and interest rate of Australia and other relevant areas where Yancoal operates, it is revealed that the rate of inflation is stable, unemployment is not so alarming against the standard benchmarks of unemployment. Moreover, no recent abrupt change have been observed in macroeconomic indicators. Furthermore, the economy does not seem to have undergone any sort of recession or economic depression in the recent past.
2.2.3 Use above information to comment on whether or not the overall macroeconomic conditions faced by the firm are likely to become more or less favourable over the coming years. In this part you should consider such things as
Given the macro-economic conditions faced by the firm it is likely to predict that the business environment is going to be favorable in order to undertake operational activities.
Whether the main products are likely to be normal or inferior and hence whether demand is likely to rise or fall during recessions and thus whether the economic climate of the countries in which most of the business customers live is likely to reflect well or poorly on businesss sales.
The macro economic conditions as prevailing in the concerned countries are not likely to affect the quality of the product and it is going to normal rather than being inferior. Resultantly, it will not have any considerable impact on the demand of products. Furthermore, climate change also does not have any considerable effect on business customer live since it is coal exploration company.
Where the business is likely to face problems getting access to key factors of production (e.g are skills shortages), and whether this is likely to affect the business future operating costs.
As for current operational skills are concerned, the company has enough resources to undertake current operational activities. However, from future perspective, Yancoal needs to develop and polish skills of employees through training and development to cope with advanced technological challenges emerging in future course of time.
If the business exports its products or import factors of production. Are recent trends in exchange rates likely to be good or bad for costs and/or revenues
Since the business operates in Australian market and vicinity. The external environment indicates stability, therefore, it unlikely that the trends in exchange rates are going to affect on cost of production or revenues.
3. Sustainability practice of the business
Since the business deals in exploration of thermal and metallurgical coal, therefore, it pose concern with regard to environmental challenge, therefore, it is necessary to minimize the environmental pollution using advanced technological technique.
3.1 Does consumption of good produced by the business generate any positive or negative externalities If negative, has the government (or anyone else) put in place any measures to mitigate What is done to mitigate by the business If positive what is done to take advantage of it
3.2 Use the information from above to comment on how the sustainability practice by the business and other businesses in the same industry would affect their long term business viability.
In order to have sustainable business, Yancoal needs to build environmental friecndly initiatives to mitigate environmental challenges resulting from production of coal.
4. Conclusion
After carefully analyzing the internal and external business environment of YANCOAL limited, it is hereby concluded that, currently the business operates perfectly in a competitive environment, however, from strategic perspective the business need to careful enough in coping with the forecasted external environmental problems, so that operational activities of the business are not affected much in future.
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