Best Coal Corporation

• Main Author: Dimayuga, Ponciano L.
• Format: text
• Language: English
• Published: Animo Repository 1998
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2132
• Institution: De La Salle University

Coal is a major source of energy in the country particularly in the cement industry. Because of unavailability of good quality, most players are traders who either have their own mining claims or those with foreign strategic partners. Competition in the coal trading industry is tight because of the numerous small traders, especially the new entrants, who resort to cutthroat competition in order to get bigger share of the market. The playing field, however, is dominated by two (2) major firms with Best Coal Corporation ranking as second in the industry. From a good performance in the past years due to high demand for cement brought about by the construction activities have significantly dropped since the start of the financial crisis. Best Coal Corporation (BCC) is an outfit engaged in the trading of coal. It was organized in September 1990 by Asian Management Company, Inc. (AMCI), its parent company that owns and manages six (6) other cement plants in the Philippines. The firm was established principally to consolidate an supply the coal requirements of the AMCI Group to be able to get favorable terms from its suppliers for lower prices of coal. Since its perception in 1990, BCC has been operating profitability as sales continued to grow. Last year, the company suffered negative returns due to foreign exchange losses triggered by the peso crunch. The company was financing its importations from dollar denominated loans. Despite being hit by the financial crisis that rocked the Asian region, Bcc still enjoys financial support from its banks as its financial condition remains to be stable. The vision of BCC is to become an integrated coal company engaged in centralized coal supply planning and operations with its own coal mine and logistics infrastructure. This goal can be achieved over time as it involves a huge amount of investment. To realize its vision, BCC must be able to take advantage of its close affiliation with AMCI. BCC should continue to adopt cost leadership as its generic strategy to get bigger market share. Its coal terminal in Bataan, which must be covered by a long-term lease contract, helped it to be cost effective. However, it has remained focused on the cement industry which comprises the core business of the AMCI Group. The company should expand its natural market to include other cement manufacturers and the utility sector. Strategies to be adopted include setting up of a foreign company in order to penetrate those who are averse to the AMCI Group for fear of losing their trade secrets. For the utility market, it is necessary to have a tie-up with a strong foreign partner because of the high investment involved. It is also important to have proper connections as most of the utility firms are government owned and controlled. Once market is secured, the company should also explore the possibility of investing in a coal mine while the entry cost is still low. In addition, BCC should continue to train its personnel on the latest developments especially in the field of coal mining and trading. The compensation structure should be upgraded from time to time in order to be above industry level and to further motivate its employees. Likewise, BCC should have its own Treasury Department to give priority to companys interest over AMCI, especially during crisis situation. Finally, information technology should be extensively used to achieve a good turnaround time for reports and other management requirements.