Reference no: EM132703461

In the early 1990s, Blackgold Coal, the largest Australian producer of premium-quality coal, mainly exported to China. Despite being the largest producer of coal, Blackgold still struggled to fulfil Chinese coal demand. However, in the late 1990s, the demand for coal in China dramatically dropped due to China's rapid industrialisation that instead began relying on alternative power sources. This reduced demand from China caused Blackgold to make losses from its main market base. To add to this, all coal miners in Australia have been facing bans on mining expansion at home due to its environmental impacts. Hence, Blackgold explored the alternative markets and began to export to Asia, Africa, the Middle East and Latin America, which were still using coal as a prime power source for their industrialisation.

• Blackgold's strategy to diversify their coal markets paid off. By the late 1990s its revenue increased by 200% because of demand for its high-quality coal. Multinational operations, however, meant that Blackgold has faced increasingly fierce competition from other coal-rich countries since the mid-2000s. In response, Blackgold acquired the largest coal producers in Asia and Africa, entered into long-term trade deals with its major Asian and the Middle Eastern buyers by cutting prices, and entered into joint venture and strategic alliances in Latin America. Price cuts were possible because of cheap labour in Asia and Africa and the coal mines that were newly discovered by Blackgold in Africa and Latin America. Blackgold benefitted from its overseas production base as well as increased demand for premium-quality coal. By 2010, Blackgold became the number one coal producer around the world and was undefeated by its competitors, but succumbed to the protests from environmentalists around the world. In response, today Blackgold has to spend on the garden restoration, reforestation and afforestation, skill development, employee well-being and local community development.

After reading this case, you are required to answer the following questions:

Question i) What were Blackgold's reasons for going global and what key factors have contributed to globalisation?

Question ii) Has Blackgold received any benefit from its global operations, if so, what are those?

Question iii) Has Blackgold faced any threat from its global operations, if so, what are those?