International Business History of Randfontein Estate Gold Mining Company - Case Study Example

International Business History of Randfontein Estate Gold Mining Company Name Course Name and Code Instructor’s Name Date Introduction There have been numerous studies on businesses and economic development that aim at tabling the history of world economy through comparing and contrasting the transfer of goods, services as well as technology across borders. These studies have attempted to explain the history of multinational enterprises (MNEs) and free standing companies (FSCs) as well as compare and contrast the characteristics of these companies. Though most people may consider these two types of companies to be identical, this is not the case. According to Wilkins (1998) free standing company refers to British foreign direct investment whereby a new independent company/unit is set up abroad to carry out similar activities of other companies whose headquarters are in Britain. On the other hand, a multinational enterprise refers to a company that starts its activities at home and then later moves abroad (Wilkins, 1998). Generally, free standing companies have their origin in Britain whereas multinational enterprises originated in the United States of America. Overview of Randfontein Estates Gold Mining Company Randfontein is a mining company in South Africa that operates in the districts of Gauteng, Westonaria and Roodepoort. This company was founded in 1889 by J.B Robinson as a gold mining company and in the 1930s it was named as the biggest gold producer in South Africa. The mine is 16KM long from north to south and currently has four shafts namely; the Cooke 1, 2 and 3 and Doornkoop (Business Week, 2011). Randfontein Estates Gold Mining Company has for a long time been successful and changed its name to Randfontein Estates Limited in June 1998 (Business Week, 2011). Additionally, Randfontein Estates was the first company to introduce the mining technology of trackless mining which was made possible by the unique nature of the ore belt. However, in the year 2000, Randfontein Estates Limited was acquired by Harmony Gold Mining Company which is currently ranked fifth worldwide in the gold production business (Business Week, 2011) and has other projects in Australia and Papua New Guinea. The company, apart from gold mining was also involved in the treatment of the surface waste materials from the activities of gold mining (Business Week, 2011). Moreover, Randfontein Estates Limited is currently a subsidiary of Harmony Gold Mining Company and is as well a member of the Johannesburg Consolidated Investment Company Limited (JCI). Presently, the company’s chief executive officer is Alwyn Pretorius and has a coproarte family of 9 companies (Mergent Online, October 2011). According to the Financial Industry Class, Randfontein Estates is a member of the mining and extracting industries with the GIS code 15104030 and produces gold as per the US SIC codes (Business Week, 2011). Literature Review This paper is aimed at determining whether the Randfontein Estates Limited was a free standing company. It will also answer the following questions: What are the activities of this company? Did this company reflect the operations expected of companies in its bracket? Did the company have other subsidiaries? How long has the company been in existence? As stated above, Randfontein Estates Gold Mining Company is a gold mining as well as a gold waste treatment company that has been operating in South Africa since its formation in 1889. The company was operating under its original name until 1998 when it was renamed to Randfontein Estates limited and was later in the year 2000 acquired by the Harmony Gold Mining Company. In addition, the company is involved in other gold mining businesses such as treatment of surface waste materials. This company has for a long time been facing stiff competition from other gold mining companies that are located in the gold mining zones of South Africa. In the 1930s, Randfontein Estates Gold Mining Company was ranked as the best gold mining company but as time went by both economical and political factors affected the output of the company which saw it being acquired by the Harmony Gold Mining Company in 2000. Mira Wilkins and free standing companies Wilkins was an economic and business historian who did extensive research on free standing companies in Britain. According to Wilkins (1998), a free standing company is one that was set up with the aim of doing business outside that country and was popular in Britain as a way of encouraging British foreign direct investment. Randfontein Estate Gold Mining Company was a free standing company that was established in South Africa primarily to mine gold. This company was a private company just as Wilkins had observed that most free standing companies were privately owned. Its listing in the Johannesburg stock exchange market was a proof that it had become a public entity but it was later delisted from the stock market after it was acquired by the Harmony Gold Mining Company. Secondly, Randfontein Estates Gold Mining Company fell under the cluster of mining engineers just as Wilkins stipulated that free standing companies were not independent of one another but had to be in clusters that according to Wilkins are promoters, mining engineers, British investment trust companies, solicitors, accountants, geographical locations, members of parliament and other ornamental directors and non mining industry works (Wilkins, 1998). Thirdly, this gold mining company is linked to Wilkins stipulations that free standing companies were producers abroad who sold their output in Britain and other countries such as the USA. It was evident that Randfontein Estates Gold Mining Company had its gold markets in Britain and the USA. Additionally, Randfontein Estates Gold Mining Company was established solely as a gold mining company but later started doing related business activities such as the treatment of surface waste from gold mines. The company was also in the Johannesburg stock exchange reflecting its incorporation of local citizens who were non Britons. All these are linked to Wilkins views that free standing companies were involved in a primary core business and other related businesses in the field of mining. However, the Randfontein Estates Gold Mining Company defied the views of Wilkins that free standing companies would disappear just as quickly as they had emerged. This company had been operating independently since 1889 until 2000 when it was acquired by the Harmony Gold Mining Company. Despite the economic and political factors affecting global economy, this gold mining company managed to pull through the hard times. Management factors as well as migrant culture also affected gold mines in South Africa through promoting violence (Kynoch, 2006). The Randfontein Estates Gold Mining Company was facing stiff competition from other gold mining companies in South Africa such as the Harmony Gold Mining Company. Despite this tough competition, Randfontein Gold mining company managed to be the leading gold mining company in South Africa in the 1930s. This signified the devotion of the company to its core business of gold mining. Gold mining is a wealthy business to venture in and the economic development of South Africa can be linked to the gold mining in the country. As part of their corporate social responsibility, gold mining companies were obliged to develop transport infrastructure. Randfontein Estates Gold Mining Company’s future The company had been operating under its original name until it was renamed the Randfontein Estates Limited in 1998. As stated above the company now operates as a subsidiary of the Harmony Gold Mining Company after acquiring it in 2000. In its operational years the company was faced by great economical, management, cultural as well as political issues but surfaced above all these until 2000 when it was acquired by the Harmony Gold Mining Company. Currently, Randfontein Estates Limited operates under the Harmony Gold mining company as a subsidiary. Conclusion Randfontein Estates Gold Mining Company was established in 1889 in South Africa primarily as a gold mining company operating in the districts of Gauteng in Randfontein, Westonaria and Roodepoort. Later, the company expanded its operations to include treatment of surface waste from gold mines. The investors had confidence in this company as reflected in the way the company was successful despite the numerous political, economical as well as cultural challenges facing free standing companies. This company was indicative of firms of its kind since it carried out mining activities and did not deviate from its original operations. In addition, it was indicative of other firms in the locality all of which were involved in gold mining and treating of surface gold waste. The company characterises the free standing company as per Wilkins’ views. It had strong foreign direct investment, was formed primarily to invest abroad, was privately owned and its outputs were mostly for export. However, in the year 2000, the company was acquired by the Harmony Gold Mining Company has since then been operating as a subsidiary. The only area of conflict with Wilkins view of free standing companies is that they were vulnerable to failure after a short term operating period which the Randfontein Estates Limited defied by staying operational for over a century; it operated since 1889 until 2000. Conclusively, the Randfontein Estates Limited was a free standing company but not a multinational enterprise as many would view it to be. References Bloomberg Business Week, 14 Nov. 2011. Metals and mining: Randfontein Estates Ltd. Retrieved from http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=408555 on 1st December 2011. Kynoch, G. (2006). Your petitioners are in mortal terror: the violent world of Chinese mineworkers in South Africa, 1904–1910. Journal of Southern African Studies, vol. 31, no. 3, pp. 531-546. Wilkins, M. (1998). The 1997 A.C. Davidson Lecture: Multinational enterprises and economic change. Australian Economic History Review, vol. 38, no. 2, pp. 103-132. Wilkins, M. (1998). The free standing company in the world economy, 1830-1996. Wilkins, M. and Schroter, H. (ed.). Oxford: Oxford University Press. Wilkins, M. (1998). The free Standing Company, 1870-1914: an important type of British foreign direct investment. The Economic History Review, New Series, vol. 41, no. 2, pp. 259-282. Read More