CHS Inc is one of the leading agricultural companies in the world. Although the speed of the market’s development is extremely high today, and the world economy has not the best scenario of its development, CHS Inc has not only retained its positions at the market but rather constantly grows and develops with ever increased economic indices. In order to find out what factors are crucial in its development, the organisational, financial, and business components of the company’s activity have been thoroughly researched and disclosed in this paper.
Company’s Organizational Structure and Business Model
Being a membership cooperative, CHS Inc is “owned by farmers and ranchers and their local cooperatives across the U.S” (Plunkett, I. 2008). CHS members include certain producers and associations of producers of agricultural products adhering to the Agricultural Marketing Act and the Capper-Volstead Act. The company counts nearly 72900 members, of which nearly 1,200 are cooperative association members and 71.700 individual members (USSEC, 2011).
The company’s headquarter is located in Inner Grove Heights, Minnesota (Bloomberg Businessweek, 2012). The company Cenex Harvard States Cooperatives was renamed to CHS Inc in 2003. But, Cenex still remains the energy brand of the company (CHS Inc, 2012). For example, crude oil and refined petroleum are sold under the Cenex brand name.
Based on an assessment of how the company operates and sells its products and services, CHS Inc divides its business activities into the segments. Till the second quarter of 2011 the company`s operation was divided into three segments: Energy, Ag business and processing (Plunkett, I. 2008). But, because earnings from the Processing segment declined year-over-year, the company’s segments were realigned (‘CHS Inc reports earnings’, 2011). Since 2011 it is divided into the following segments: Energy, Ag Business, Corporate and other (USSEC, 2011). Thus, the company has no longer a Processing chief operating officer and the operations previously included in the Processing segment are largely reallocated into the Ag Segment and Corporate and Other, leaving the Energy segment without changes (CHS annual report, 2011). Each business segment is represented by different entities that are fully owned by CHS or share some percent of ownership with it. So, CHS conducts a great deal of its operations through investments into the equities and joint ventures (Bloomberg Businessweek, 2012
With the mission to provide the indispensable resources that improve lives throughout the world and a goal of leveraging the company`s diversity and forming strong business partnerships with organisations that share its goals and values (Neumann, B. 2005), CHS capitalizes its connections with farmers’ fields, local cooperatives, as well as domestic and global customers.
Company’s Development in its Sector
There are some serious economic challenges for CHS in its sector. Global financial crisis as well as climate change has seriously influenced the agriculture sector causing increased food prices, decrease in production and bans on grain exports. Besides, many activities of the agricultural corporation are highly seasonal. Therefore, the company’s earnings fluctuate throughout the year, being highest during the third fiscal quarter and lowest in the second fiscal quarter (CHS annual …