Improving The Business Model And Policies Of Mining Corporations

Abstract

The article discusses the problem of improving the business model and policy of mining corporations. It is shown that the new model should include the social and economic responsibility of business, risk management and innovation management aimed at adapting the enterprise to the results of scientific and technological development. It is determined that the new business model of corporations requires corresponding changes in state, sectoral and corporate industrial policy. It has been determined that the unclear terms and rates of recovery of economic activity in the industries that consume raw materials make it necessary to adjust the approaches and methods of strategic planning at enterprises. The study highlights the incentives and constraints in the organization of new enterprises in the extractive industry. It was determined that the new business model of mining enterprises should take into account economic, social and environmental constraints and ensure sustainable operation and development. Corporate industrial policy must necessarily include innovation policy and be correlated with the social and environmental policies of the corporation and the state. It is shown that the development of the ecosystem of mining enterprises, including social and economic infrastructure, determines the relationship of the corporation with the local community. The importance of proactive forecasting and strategic planning is revealed. Some mechanisms of industrial policy of corporations have been developed.

Keywords: Business model, corporate policy, mining

Introduction

The high rates of geopolitical, geo-economic and geosocial changes pose the challenge of improving the business model of mining corporations. The important issues that the new business model must address are:

• social and economic responsibility of business, development of relations with stakeholders, consolidation of the corporation's ecosystem with the ecosystem of the regions;
• risk management aimed at forecasting and managing benchmark points of development, the possible appearance of "black swans", ensuring the sustainable operation of the enterprise in conditions of high market volatility;
• innovation management aimed at adapting the enterprise to the results of scientific and technological development, both in the industry and among consumers of products.

The new business model of corporations requires corresponding changes in government, sectoral and corporate industrial policy.

Problem Statement

The business model of mining enterprises, based on maximizing profits, optimizing taxation with going offshore, minimizing non-corporate social responsibility, is becoming ineffective in modern conditions.

Conflicts with the local community are growing, the basis of which is the growth of the ecological, ethnic, religious self-awareness of the population. In many cases, the understanding of natural resources as a public good causes public rejection of approaches to their appropriation by business without return to the memty community.

The crisis of the past year, caused by the pandemic, further exacerbated the problems of the mining industry that have been accumulating over the years, affecting the demand for its products. Unclear terms and rates of recovery of economic activity in industries - consumers of raw materials need to adjust the approaches and methods of strategic planning at enterprises.

Research Questions

• The study examines the problems of the development of the enterprise ecosystem, which allows you to move from the value chain, which is traditionally the basis for building a corporation, to a value creation network, with the inclusion of the company's stakeholders. The study highlights the incentive (market, systemic and behavioral) and constraining (technological, environmental and political) factors of organizing new enterprises in the extractive industry, which provides the opportunity to develop a program for the development of the industry in the region.
• The high volatility of economic processes requires the use of methods of preactive forecasting of development. It is possible to single out the incentive (market, systemic and behavioral) and constraining (technological, environmental and political) factors of the organization of new enterprises in the extractive industry, which provides an opportunity to develop a program for the development of the industry in the region.
• The main provisions of strategic planning in the extractive industries are currently based on the dualism of the vision of the future of the economic system and the use as a strategy of the "life period" whose internal task is to satisfy the interests of owners, managers and employees of the enterprise, and the external task is to ensure the sustainability of the sectoral and intersectoral economic systems in the planned period, as well as an alternative strategy of "revival and development", the internal task of which is to realize the interests of owners, managers and employees of the enterprise, and the external task is to ensure the stability of regional economic systems in the post-plan period.

Purpose of the Study

The purpose of this article is to develop a business model and corporate industrial policy in the extractive industries in the context of the formation of an innovative environmentally-oriented economy, which determines the limitations and principles of management in the field of non-renewable natural resources in a strategic perspective.

Research Methods

The concept of a business model, as a concept for organizing a company's business, appeared in the middle of the last century. The business model is based on an approach to strategic company management. That is, it is associated with models of corporate strategy formation and business process management.

A number of foreign researchers, such as Drucker (2017); Porter (2008) and others, consider the business model as an organizational mechanism for implementing strategies.

Authors such as Johnson et al. (2008); Lewis (2004); Magretta (2002) consider the business model as a mechanism for ensuring the processes of achieving financial results - profit from sales

Alexander Osterwalder (Osterwalder & Pignet, 2012) used a structural approach to the formation of a business model, including the resources and processes of economic activity”.

The problems of limited resources as a basis for the socio-economic development of the state and regions were considered by Meadows et al. (2007); Pestel (1988) and others. The heterogeneity, complexity and quality of resources in the theory of economic growth were considered by Belomestnov (2018); Dzarasov (2002); Yaremenko (2001) and others. The theory of innovative economic development was founded in the works of Schumpeter (2007).

A new business model for mining enterprises must take into account economic, social and environmental constraints and ensure sustainable operation and development.

Corporate industrial policy must necessarily include innovation policy and be correlated with the social and environmental policies of the corporation and the state.

Findings

Conclusion

The proposed improvement of the business model and the policy of its implementation by mining corporations allows the organization to adapt to the conditions of high market volatility, turbulence of economic and political processes, high rates of development and implementation of innovations.

It helps to localize conflicts with the local community and to solve the problem of strategic development of the enterprise.

References

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